Parties fail to provide source of their billions details

Billions of shillings raised by political parties to finance their General Election campaigns are not reflected in their audited accounts – signaling lack of transparency and accountability and creating a veil of secrecy on who finances our politics.

Documents filed with the Registrar of Political parties show that political parties are not only underreporting their incomes – but are also not capturing the billions of shillings that they raise privately and from million-a-plate dinner public parties held to finance their campaigns.

While the government spent approximately Sh350 million last financial year to finance major political parties, a legal ban on cash funding by foreigners have left individual politicians to control any funding given to their political parties by private entities.

As a result, political party leaders are not only the new titans of extravagance – but also the symbol of opaqueness, too.

While party presidential candidates are known to hire helicopters, buy fleets of four-wheel drive cars, and splash cash around during campaigns– that expense is not reflected in the party’s accounts filed with the Registrar of Political Parties.

“The political parties and their leaders know they are under-reporting but there is no law to control them,” says Omweri Angima, a Senior Programme Officer in charge of Political Parties Strengthening at the Centre for Multi-Party Democracy (CMD).

CMD estimated that during the 2007, President Kibaki's PNU and Raila Odinga's ODM used a total of Sh6 billion in their campaigns in the months of November and December.

In the last General Election, it is independently estimated that the two main contestants, Uhuru Kenyatta of Jubilee Alliance and Raila Odinga of Coalition for Reforms and Democracy used in excess of Sh10 billion.

This money is not reflected in their party audited reports although the law demands that it includes donations in “cash and in kind”.

“Individual politicians can get as much funding as they want as long as it doesn’t go to the political party accounts,” affirms the registrar of political parties, Ms Lucy Ndung’u.

REGULATION

Because the Political Parties Act bars an individual or organization from contributing more than five per cent of the total expenditure of a political party in any year, pundits say that politicians retain the money donated to their party lest they break the law.

Though the law bans foreigners from making cash contribution to a political party, it still allows parties to get “technical assistance” from a “foreign agency, or a “foreign political party which shares an ideology” with the Kenyan-registered party.

“This can be in form of vehicles, computers and other equipment and the amount of aid is not limited. It also consists of trainings,” says Ms Ndungu.

While this is supposed to be captured in the audited reports, none of the major political parties lists any such donations.

Although the Campaign Finance Act was passed in 2013, to provide for the regulation, management, expenditure and accountability of campaign funds during election there are still no regulations in place to cap any spending.

Last week, the Independent Elections and Boundaries Commission invited the parties to discuss the regulations but they didn’t.

“At the moment there is very little we can do about that. We hope that with the regulation in place, the IEBC will be able to monitor the spending” says Ms Ndungu.

Although Section 28 of the Political Parties Act says that a political party which receives funds from a non-citizen commits an offence, the “technical assistance” clause has opened the door to foreign agents and wealthy donors to influence Kenya’s politics via such donations.

Kenya is not alone in this. In 2006, a scandal emerged in Britain after it was established that its three largest parties were too dependent on a handful of wealthy donors.

During the 2005 UK General Election campaign, Labour party was found to have secretly received a £14m loan while the Conservatives had received £16m.

The Liberal Democrats said they borrowed £850,000 from three backers.

PRIVATE ENTITIES

While some countries have banned candidates from receiving donations from private corporation and public sector companies, this is not the same in Kenya.

France, for instance, has since 1995 banned candidates and parties from receiving such funding but this has not deterred corrupt dealings since funds could still be channeled through private citizens.

The problem in Kenya, according to political scientists, is that political parties are still “owned” by their political financiers and by their leaders.

“The initial thinking was that Political Parties would evolve into institutionalised bodies, but they are still personal outfits run like private companies,” observes Prof Karuti Kanyinga of the Institute of Diplomacy at the University of Nairobi.

It now appears that private technical funding of political parties is almost wholly unregulated and public disclosure of party incomes and expenditures from this kitty has become entirely discretionary. At best, it is disclosed.

When the BAT scandal broke out this year, Narc Kenya leader Martha Karua admitted to receiving Sh2 million from a BAT man – which she took as a “personal donation” to her presidential campaign.

Yet, in the party’s comprehensive income statement, there is no information of that donation.

Narc Kenya lists its source of income as from a government grant and membership contributions.

Paul Hopkins, the man who gave the money to Narc Kenya, says it was a “bribe” to influence policy and the British Independent newspaper claimed that the amount paid by BAT to the party leader, a former Justice minister, was £50,000 (Sh7.6 million).

The aim: to prevent a rival company supplying Kenya with technology to combat cigarette smuggling.

CONCEALED DETAILS

What that means is that senior politicians do not disclose all donations or that political parties run other parallel accounts for their presidential campaigns which are never disclosed to the Registrar of Political Parties.

“This is because cash donations given to individuals cannot be captured in the party’s annual filings,” says Ms Ndungu.

Narc Kenya is not alone.

Major political parties are not willing to disclose the amount of money they receive from local well-wishers – and such donations running into hundreds of millions are not reflected in audited reports too.

Political parties indicate that their main cash-cow is the nomination fees received ahead of general elections and the government funding.  They also tend to receive money from undisclosed well-wishers.

From the party audited reports, in our possession, The National Party (TNA) of President Uhuru Kenyatta indicates that it received Sh151 million from well-wishers ahead of the 2012 elections, while nomination fees raked in Sh114 million. By the end of the financial year, June 2013, the party had only Sh71,000 at the bank – an indicator of the cost of running a political party campaign. The TNA income for the election year was Sh345.5 million.

“That was beside the presidential campaign kitty which was run separately,” says a source familiar with Uhuru’s presidential campaign.

Insiders say that the Jubilee Coalition presidential campaign was bankrolled by the larger Kenyatta family and other wealthy supporters who donated campaign gear worth millions of shillings and money. The cost of freebies forms a huge chunk of campaign financing.

Kenya’s second largest party by parliamentary strength, the Raila Odinga-led Orange Democratic Movement (ODM) had an income of Sh244.6 million and is silent on any funding received from well-wishers.

It states that it gets its money from membership contribution and government funding.

CORRUPTION

In previous election, the source of funding for Kanu was via scandal such as Goldenberg and swindling of major parastatals.

In the on-going Samuel Gichuru case in the Island of Jersey, the British tax-haven, one of the companies said it provided money to fund the elections. “Gichuru asked one contractor to put something…which would support our next elections. That contractor records indicate the money was paid to SG Mafia.”

Account books of the once giant coffee miller, Kenya Planters Co-operative Union (KPCU) show that the farmers body donated cash to Kanu for its 2002 campaign.

According to Kenya’s 2011 Political Parties Act, direct public funding is available to eligible political parties and at the moment only The National Alliance (TNA), United Republican Party (URP) and ODM are eligible.

At the moment, Kalonzo Musyoka’s Wiper, Moses Wetang’ula’s Ford Kenya, United Democratic Forum and New Ford-Kenya have returned to court seeking a share of the Sh205 million political party kitty.

They are challenging a legal requirement that a party must garner at least five per cent of the total votes cast in a preceding general election to qualify for the funds.

Centre for Multiparty Democracy (CMD-K) have however indicated that to-date, only about 10 per cent of the amount provided for by law is being provided to the parties, and only three out of 60 registered parties receive (share these public funds).