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Financing of Czech political parties

The Civic Democratic Party (ODS), the strongest party of the Czech Republic's ruling coalition, has been embroiled in a growing scandal that concerns the financing of the party. The scandal, in turn, has focused the public's attention on the problem of party financing in general. It is increasingly clear that the system of party financing suffers, above all, from a lack of transparency--a fact that contributes to perceptions among the public that political parties, as well as individual politicians, are not immune from corruption.

The case of the ODS is illustrative. In 1995, Prime Minister Vaclav Klaus's party received two large financial gifts. A close examination of party records showed that one of donors was supposedly a Hungarian man, who had been dead for years. Another donor was a resident of Mauritius. A man with the name used in the ODS records was indeed found on the island. He, however, vigorously denied of having ever heard much about the Czech Republic, not to speak of contributing a large amount of money to Klaus's party.

Foreign Minister and ODS Deputy Chairman Josef Zieleniec resigned from his party and government posts in October, accusing the ODS of improprieties in its party financies. Zieleniec's charges, which he has not been willing to substantiate, sparked a new wave of interest among journalists in the way the finances of the ODS has been handled. Prompted by Zieleniec's resignation, the ODS established a commission to investigate party finances. Howeer, contradictory statements by various ODS leaders indicated that the party was really not interested in revealing the truth. The media, in turn, questioned the ODS's sincerity and accused the party of obfuscating.

On 24 November, Milan Srejber, a former tennis professional and currently one the country's leading businessmen, admited that he annonymously donated a large sum of money to the ODS in 1995. ODS Deputy Chairman Miroslav Macek admitted a day later that the sums supposedly given by the two men from Hungary and Mauritius were in fact donated by Srejber.

The confirmation of Srejber as the principal donor more than two years after the sum was transferred into the ODS's coffers raises several questions that the ODS will be asked to answer. Has the party known all along that the money came from Srejber? If so, why did the ODS not want to reveal Srejber's identity? Some journalists have already pointed out that the gift from Srejber coincided with the government's decision to allow the Moravia Steel Company to privatize the state-owned Trinec Steel Company. Srejber was one of the principal shareholders in the Moravia Steel Company.

The scandal has clearly further damaged the already tarnished image of the ODS. But the ODS is not the only party in the Czech Republic whose finances are non-transparent. Both junior coalition partners of the ODS--the Civic Democratic Alliance (ODA) and the Christian Democrats (KDU-CSL)--have received large sums of money from "annonymous" donors. The party finances of the opposition Social Democrats (CSSD), too, have been under scrutiny.

The problem needs to be seen on two levels. First, the system of party financing is far from perfect, and major parties are not interested in changing it radically; all of them have benefited from the system's lack of transparency. Second, the quality of political culture in the country is low. Corruption has not been tackled as a principal issue. Opinion polls show that a large majority of people think that political parties and politicians are tainted by corruption but, at the same time, most people think that little can be done to change such a state of affairs.

Party financing is a problem in every democratic society. A system that would rule out abuses and manipulation has not been invented. The Czech Republic is no exception. For example, although the Czech law allows anonymous gifts only up to 100,000 crowns, the identity of donors of larger sums is often misrepresented or witheld by parties. The law, however, knowns no sanctions to punish such behavior.

The Czech law also sets no limits on party spending during electoral campaigns. Major parties are, therefore, always in search of new funds and are willing to receive funds in exchange for providing political influence. The fact the Czech Republic in the past few years has privatized some 70% of state assets has, of course, contributed to the widespread suspicions that coalition political parties might have financially benefitted from influencing privatization projects in favor of potential donors. Some parties also took large loans from banks in which party officials or members sometimes played decisive roles. At least one such bank later collapsed.

Several party leaders have now proposed reforms of party financing. CSSD chairman Milos Zeman has, for example, suggsted that no private gifts to political parties should be allowed and the state should take compleely over party financing. The problem with such a radical approach is that in the Czech political system political parties totally dominate the affairs of the state. Should financing shift entirely to the state, parliamentary parties would probably keep increasing the level of funds parties should receive from the state coffers.

The Czech Republic's party financing system currently relies on a combination of private donations, state funds awarded on the basis of parties' electoral results, loans, and membership fees. Such a formula is used in many other democratic nations. The Czech system however needs more transparency and clearly defined sanctions that would be used if parties violate the law. And the country still lacks good journalistic standards. Many of the transgressions against political ethics that Czech political parties have committed would in the West result into media investigations that would in the end lead to personnel changes and influence public opinion.

Reuters - 26. 11. 1997