Bulgaria: Under-the-Table Funding 

Bulgaria: Under-the-Table Funding

After undergoing a series of revisions over the past decade of post-communist transition, Bulgaria's party financing system is at best unstable and at worst, experts say, 80 percent illegal.

The Bulgarian law on political parties has gone through several modifications since it was accepted at the round table talks in 1990, and was finally replaced with a new one on 28 March 2001 under the rule of the United Democratic Forces (ODS) government.

Although the 2001 law clearly shows what the official sources of funding should be, there are still plenty of gray zones that allow parties to earn themselves unregulated funds.

"More than 80 percent of party finances are illegal, or should I call them nontransparent," Andrei Raichev, a political analyst from BBSS Gallup International polling agency, told TOL. "This refers to all parties, without any exception. The existing legislation arranges things only formally, but in reality the situation is totally different. It's all about these suspicious anonymous donations that presume the involvement of certain businessmen or criminal groups."

The new law provides for annual public subsidies to political parties. The size of the subsidy is not fixed and is to be determined by the state budget law. The distribution of the funding depends on the number of votes won in previous elections and the number of seats in parliament controlled by the parties.

According to the law, all parties receiving more than 1 percent of the vote are eligible for state subsidies. During election campaigns, political parties and individuals are not obliged to create separate election accounts. They can use their own means, income from assets, membership fees, direct state subsidies, and donations.

Donations from foreign governments and organizations are banned. Financial help from public enterprises is forbidden, too. But according to the law, anonymous donations of up to 25 percent of the state subsidy are allowed. That is where the trouble with transparency begins.

And membership fees are not serious assets. According to the parties themselves, they earn no more than 10 to 15 percent of their total financial needs though membership fees. The Bulgarian Socialist Party (BSP), for instance, charges its members 1 percent of their monthly income. For retired members it is only 0.50 leva ($0.25), or as it was explained to TOL, "whatever they would like to donate." The National Movement Simon II (NDSV), on the other hand, charges its members 12 leva ($6) per year.

SHADY CONNECTIONS

Where the remaining 75 to 80 percent of party financing comes from often remains a darkly shrouded mystery. According to party officials, that money comes from the party's own revenues earned from real estate, publishing activities, copyrights, intellectual property, and donations. But other sources say the money is most likely coming from shady businessmen and organized criminal groups.

"There are certain groups that tend to pay to all parties, depending on who is in power," said Raichev.

"The problem is twofold: 'outside' funding, when the party has relations with a certain organization, and 'inside,' when there is a person in the party related to a certain group, and all the rest are dependent on his decisions," he said. "The only way to solve the problem is by introducing a transparent financing system regulated by the state. But that will happen only when the people in this country understand that there is a direct connection between this particular problem and corruption."

Last year, Transparency International Bulgaria placed the party financing issue on its list of the most popular forms of political corruption, including nepotism, patronage, illegitimate lobbying, trade with p olitical or electoral influence, and political protection. According to TI, illegal party financing is common practice in Bulgaria.

A study conducted by the World Bank in 2000 showed that 42 percent of Bulgarian companies have at some time paid money to political parties in return for favors. At the time of the study, Bulgaria and Moldova shared first place on the list of countries where businesses exercise the most influence over politics.

According to this same study, 28 percent of Bulgarian companies have also paid bribes at least once, or done other things to provide themselves with political support. However, asked if they have taken illegal money from different companies, party officials across the board offer a definitive "no."

TWO SETS OF BOOKS

In order to solve the problem, BSP parliamentarians Boiko Radoev and Nikolay Kamov recently proposed a new draft law on political parties. If accepted, the law will ban anonymous donations.

"The project is quite radical," Radoev told the daily Pari on 5 June. "The current law doesn't reflect the new realities. Reform must begin with the parties. With our draft law we are taking the anonymous donations out, because we see them as a big source of corruption. And the parties are always at the entrance and exit of corruption."

According to the authors of the new draft law, parties' business activities should be limited. Under the proposed law, parties would have the opportunity to create trade organizations with limited activities, such as publishing houses, software companies, souvenir shops, and cafes.

Most of the parties receive office space from the state, paying only symbolic rental fees and then leasing the space out at market prices to earn extra income. Parties receive nearly 15 million leva ($7 million) through subletting what is supposed to be state property. In other words, if the legal state subsidy is 6 million leva, the indirect state subsidy is nearly three times that. Moreover, parties normally do not declare that income.

Following the 2001 parliamentary elections, 177 parties out of 270 failed to report their campaign expenses, as required by law. However, the law does not set out any penalties for such violations.

Anonymous donations combined with the silence of party officials led to a flurry of rumors in the media about certain parties' connections with organized crime groups--mainly the Russian mafia or local criminal groups.

Following media rumors that the NDSV's 2001 campaign was financed by a Bulgarian businessman, NDSV parliamentary deputy Kamen Vlahov confessed he had close connections with the Nove Holding company, owned by Vassil Bojkov, who also owns of one of the most famous football clubs in Bulgaria, CSKA.

And the press also abounds with stories about Michael Chorny, a Russian businessman expelled from Bulgaria in 2000 for illegal activities, and his connections with political parties. Chorny owns a football team, two newspapers, and a telecommunications company in Bulgaria, and the media has frequently accused him of having connections with all the country's political parties.

During its mandate from 1997 to 2001, the SDS was often accused of making shady deals with customs. Using the old communist base, a new network of politicians, customs officers, and former secret service bosses working together has been at the center of many scandals.

Some parties also receive money, indirectly, from foreign organizations. The main foreign sponsors are Germany's Konrad Adenauer, Fridrich Ebert, and Fridrich Naumann foundations, which have donated funds to the SDS, the BSP, and the DPS. The foundations provide money for conferences, seminars, visits, and official meetings. Although legal, experts say the foundation activities are nontransparent.

In a show of good faith, the nati onal council of the NDSV announced on 21 July that it would no longer accept anonymous donations. The party said it hopes this will be taken as an effort to contribute to greater transparency in Bulgaria and serve as a good example for other parties. But despite its stated good intentions, the NDSV is not supporting a change in party legislation.

Though political scandals thrive in the media, party financing itself becomes an issue only ahead of elections. Last summer, the daily 24 Chassa appealed to political parties to make public information about their financing. Unfortunately, the media campaign received little response from either the parties or the public. As Raichev so bluntly put it, little is likely to change until the public itself demands an end to the corruption.

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