Review of the amendments (29.12.2011) in the organic law of georgia on political unions of citizens

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Prof. Levan Izoria, Irakli Kobakhidze, Paata Turava

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Review of the amendments (29.12.2011) in the organic law of georgia on political unions of citizens

  1. 1. Georgian Development Research InstituteReview of the Amendments (29.12.2011) in the Organic Law of Georgia on Political Unions of Citizens Levan Izoria, Irakli Kobakhidze, Paata Turava January 26, 2012 Tbilisi
  2. 2. CONTENTSI. Amendments in the Organic Law of Georgia on Political Unions of Citizens and the Principle of Democracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3II. Amendments in the Organic Law of Georgia on Political Unions of Citizens and Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5III. Amendments in the Organic Law of Georgia on Political Unions of Citizens and Rule of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5IV. Review of the Legal Norms in the Amendments in the Organic Law of Georgia on Political Unions of Citizens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6V. The Chamber of Control of Georgia as a Monitoring Body According to the Amendments in the Organic Law of Georgia on Political Unions of Citizens . . . . . . . . . 12VI. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Appendix (Amendments to the Organic Law of Georgia on Political Unions of Citizens) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2
  3. 3. I. Amendments in the Organic Law of Georgia on Political Unions of Citizens and the Principle of Democracy The aim of any legislation on political status and the activities of political parties should beto facilitate the development of political pluralism and democracy within a country. Legislatorsshould establish such a law that will support competition and institutionalize a multi-partysystem. Thus, strengthening pluralism on a legislative level is timely in Georgia. Thanks to apolitical heritage of 70 years of totalitarian rule, Georgian society is not yet capable ofsupporting a stable electoral environment. This hampers the current development of nationalpolitical parties and a functioning democratic system. Unfortunately, Georgian legislation since 1995 has not facilitated the institutionalization ofparties in a pluralistic political system. Moreover, it has created extra barriers to that goal,namely: a) In Georgia, established forms of governance have created a situation in which majorplayers become figurehead politicians rather than found sustainable political parties based onideas rather than personalities; b) The electoral system does not ensure proportionalrepresentation of political parties in legislative and administrative institutions; c) Thesignificance of political movements is diminished by the excessive commercialization of thepolitical process; d) Current legislation does not provide substantive guarantees for securingthe objectivity of the mass-media, which has resulted in polarization and radicalization ofpolitical processes; e) Legislation has not established effective guarantees to avoid the misuse ofadministrative resources for partisan political interests. As a result, a sustainable multi-party system was not established in Georgia. The abovelegislative issues developed in an environment of weak socio-political dialogue and regularpolitical crises, impeding the emergence of healthy political parties, and contributing to thepolitical polarization of society (see the 2003 “Rose Revolution”, crises of 2007 and 2009). Within this context, it has been incredibly difficult for Georgia to establish a pluralisticpolitical system, which would have promoted the appearance of a real political competitor for thegoverning party. As such, ineffective legislation and a lack of standard political processes havecontributed to the already-daunting challenges faced by political movements. The suddenappearance of Bidzina Ivanishvili into the political arena prompted many to suggest he holds aunique potential for forceful and motivated pluralistic development. However, the recentrestructuring of the state electoral code, especially in the realm of campaign finance and non-party political organization, has restricting the permissible political activity of Georgian society. The purpose of the amendments to the Organic Law of Georgia on Political Unions ofCitizens is to improve the financing of political parties, prevent corruption, secure transparency 3
  4. 4. and accountability, and to promote political competition. The authors of this paper share thesegoals. However, our analysis of the amendments shows that methods used by legislators toachieve the above-mentioned goals are inappropriate to Georgia’s democratic needs, as well asbeing fundamentally unconstitutional. It is worth mentioning that the recommendations of theVenice Commission and other international organizations were deliberately misinterpreted orconcealed in the drafting of the legislation. For instance, severe restrictions on article 261 werenot mentioned in draft versions submitted to the Commission. Article 261 was adopted1 by theParliament of Georgia only after the Venice Commission published its report. The amendments adopted do not match the fundamental constitutional principle of thedemocratic state, particularly with regards to the concepts of self-expression and freedom ofassociation. The former can be implemented individually (through the right of freedom ofexpression and electoral participation), as well as collectively (through participation in politicalorganizations). Such forms of individual expression secure competition between interests andsupport the existence of a multi-party political system. This competitive environment is anecessary pre-condition for the democratic development of society, and the creation of such anenvironment is the responsibility of any democratic state. Yet the amendments made to the law do not promote the establishment of this necessarypolitical environment. On the contrary, certain articles of the adopted amendments hinder thedevelopment of democratic processes, such as the imposition (in article 261) of excessiverestrictions on those non-party entities which may be generally related to the political process.Active participants (whether they are private individuals or legal entities) now fall under thespecial control of the state. The above-mentioned regulation has a purely punitive and repressivecharacter, intimidating the expression of political opinions and creating an atmosphere of statecontrol, limiting legitimate political activity.1 Article 2611. Restrictions provided by this chapter also apply to:a) A judicial entity if it directly or indirectly is related to a political party, otherwise is under the control of apolitical party, or openly states its political objectives and goals;b) A judicial entity, which through its representatives or other person encourages voters to support a particularpolitical party or refrain from supporting a particular political party;c) A person, who openly states political and electoral objectives and goals, or a person who is related to the above-mentioned person, and also to the person who has a business relationship with the person who has political andelectoral goals or who carries out such activity that influences the will of those Georgian citizens who participate inelections, plebiscites and referenda, and those actions are carried out to avoid the regulations provided by this law.2. A judicial entity, which directly or indirectly is related to a political party, with expenses directly or indirectlyconnected to the activities and goals of the party.3. Restrictions established by this article should not be applied to restrict freedom of expression and civil activity. 4
  5. 5. II. Amendments in the Organic Law of Georgia on Political Unions of Citizens and Human Rights These amendments not only violate the principle of democracy, but also allow state bodiesto legally violate fundamental human rights – such as the right to free development of his/herpersonality (article 16 of the Georgian Constitution); right to private life (article 20); right toproperty (article 21); freedom of expression (article 24); right to form and join publicassociations (article 26); right to free entrepreneurship (article 30); and right to confidentiality ofinformation (article 41). Georgian citizens, entitled to the above-mentioned constitutional rights,are potentially victims of the vague regulations found in the amendments, as the legislation doesnot precisely define who falls under the scope of the new law. Such legal norms deprive citizensof the legal certainty that is the essential pre-condition for personal freedom and safety. The amendments also violate guarantees of informative self-determination and theconfidentiality of personal data. These rights are essential for an unencumbered development ofself; therefore the protections of those rights require a subtle approach. Information about theprivate life of an individual should be accessible to government officials only in exceptionalcases. Even in such circumstances, this information should not be widely available and should beaccessed with discretion and security in mind. The amendments to the political union law grantgovernment officials practically unlimited rights to obtain personal data – in particular,information regarding bank transactions. This clearly contradicts the rights to free development, private life, freedom of expressionand the right to form or join associations, all of which are guaranteed by the UniversalDeclaration of Human Rights, the International Covenant on Civil and Political Rights, and theEuropean Convention on Human Rights. III. Amendments in the Organic Law of Georgia on Political Unions of Citizens and the Rule of Law The changes made to the political union law contradict the rule of law as a fundamentalprinciple of the Constitution. According to this principle, each legal norm should clearly andexactly define its subjects. Those requirements specially apply to legislative norms capable ofrestricting civil rights. Legislators must accurately determine the circumstances and criteriawhich could become the basis for the restriction of rights, ideally before a law is passed. Vaguelegal norms could be applied randomly in practice, and violate constitutional rights. 5
  6. 6. IV. Review of the Legal Norms in the Amendments in the Organic Law of Georgia on Political Unions of Citizens The restrictions enacted by article 261 apply to both individuals and legal entities; however,the amendments do not define who exactly falls under its scope, leaving it open to anunnecessarily wide interpretation. Potentially, restrictions pertaining to the functioning of apolitical party could also be applied to a legal entity which directly or indirectly is related to theparty, or is otherwise under the control of the party – or openly declares political goals andobjectives. Such a legal entity could be a non-governmental organization, commercialorganization, mass-media outlet, or similar civil society group, as the law merely defines theentity as “having [an] indirect relationship with the political party”. Similarly, the meaning of“under the control of the political party” is unspecified, as it is not clear what is meant by a“statement of political goals and objectives”. This raises innumerable questions. How can one identify the indirect relation of a legalentity to a political party? Does a scope “under the control of the political party” mean that alegal entity is under the institutional subordination to the political party, or also commercial orfamilial association? What is “the statement of political goals and objectives” for a legal entitythat is not a political party? The goal of any political party is to gain enough electoral power toform a government. Are activities associated only with parties (such as control of politicalprocesses, participation in democratic elections etc.) the same as a declaration of political goalsand objectives, and participation in a nation’s political life? Is there a civil (rather than explicitlypolitical) method of making such a statement? How does one differentiate between political andcivil activities, so as to prevent regulations intended for parties from being applied to any civilsociety organization? It should be noted that phrases similar to the one in article 261 can also be found in therecommendations of international organizations, which are generally based on common practicein Europe. According to these norms, restrictions on political parties can be applied to a “legalentity if it is directly or indirectly related to a political party.” However, these recommendationsdo not also apply the litmus test of a “statement of political goals and objectives”, as in theGeorgian legislation. Those organizations generally accepted as being subject to similar laws arefoundations that engage in fundraising for a political party, and often receive regular subsidiesfrom the state budget (as in Germany2). Accordingly, the same restrictions are applied to thesefunds as those imposed upon political parties. Such legislation is vital to the enforcement of afair and open political system (one free from corruption), and it operates in concord with2 Adenauer Foundation, Ebert Foundation, Naumann Foundation, Boell Foundation etc. 6
  7. 7. established legal certainty principles. Although accepting legal recommendations frominternational organizations does not require the drafting of identical legislation, the spirit of thetext provides an excellent guideline for those transformative societies such as Georgia. Article 261 contains more vague language in its second paragraph. It reads, “[a] legal entityis directly or indirectly related to the political party when its expenses directly or indirectly areconnected to the activities and goals of the political party.” This note allows multipleinterpretations, some of which may contradict constitutional principles. It should be mentioned that in many traditionally democratic countries, numerousinfluential groups have close relationships with political parties. In Germany for instance, tradeunions support and provide funding for left-wing parties, while employers unions assist right-wing parties. The ties between these unions and political parties are so tight that they are placedunder consideration when the government establishes monitoring bodies or similar institutions.For example, during the distribution of seats on the Board of Trustees for Public Broadcasters inGermany, parity between political parties and their foundations was addressed. A similarpractice is exercised in most democratic states that have a history of influential cooperationbetween political and social organizations. However, legislators do not expose non-partyorganizations to the same financial restrictions in place for parties, as they remain entirelydifferent political beasts. Together with legal entities, restrictions on political parties could also be applied toindividuals – Georgian citizens or foreigners. Legislators distinguish three categories of relevantindividuals: first, a person who has openly stated his/her political and electoral goals andobjectives; second, one who is related to the above-mentioned person, and third, anyone whoengages in commercial activity with that particular person, expresses political goals orobjectives, or who carries out activities that have an impact on the political will of thoseGeorgian citizens participating in elections, plebiscites, and referenda. It is difficult to define what is precisely meant by “political goals and objectives” withregards to an individual. Unambiguously, it does not merely refer to a willingness to seek formalpolitical power as, according to established legislation, only Georgian citizens are eligible to beelected to higher office, whereas the above-mentioned regulation is also applied to citizens ofother countries. Therefore, the regulation creates a basis for broader interpretation. It may applyto the expression of personal political views, as well as public participation in politicaldiscussion, both of which are necessary for personal engagement in civil society and the politicalprocess. The notion of “electoral goals” appears in the same regulation. Any Georgian citizenwho practices his/her right to vote can be said to have electoral goals, even if they are notmembers of a political party. The circle is further enlarged by the inclusion of a “person who is 7
  8. 8. related to the above-mentioned person,” capturing an indefinite and undefined number ofpeople3. Thus, our analysis reveals that article 261 contradicts articles 16, 26 and 30 of theConstitution, and their commitment to the principles of democratic legal certainty andproportionality. The Chamber of Control of Georgia is the body authorized to define which legal entity isrelated to a political party, controlled by that party, or has openly stated its political goals andobjectives. It also identifies any individuals who have openly stated his/her political and electoralgoals and objectives, as well as their relations to relevant political figures and parties. Accordingto sub-paragraph “g” of the second paragraph of article 341, the Chamber of Control isauthorized to demand information regarding the origin of property given or received from thepersons defined according to article 261. Therefore, identification of the persons already vaguelyenlisted by legislators is carried out by a government-appointed body, which can, according to itsown bias, establish the precise limitations for all involved parties. It is unclear how an individual can be subject to the same financial restrictions as politicalparties. The law as written leads us to believe that, for example, a party member or his/her familycan receive income only from sources allowed by law for political parties. This may complicatethe acquisition of personal funds through salaries, entrepreneurial activities, or gifts (especiallyfrom foreign citizens). This suggests negligence in the formulation of this legislation. The first paragraph of article 251 is a confirmation of the absurd vagueness of theseregulations. According to that paragraph, the total amount of the state finances, donations andother type of income received by a political party or related individuals and legal entities shouldnot exceed 0. 2% of the previous year’s GDP of Georgia. Therefore, an individual that conductscommercial activities and is somehow connected (either as a relative, or an associate, or adonator) to a political party is limited in the total amount of income earned from his/her owncommercial activities. Even more absurd is that fiscal restriction on legal entities, such ascorporations, which cannot make political contributions but could be assessed as “related” to apolitical party thanks to commercial or familial ties. An attempt to enforce this law as written could raise serious concerns. We can illustrate theproblem with one simple example: Imagine two political parties have separately mobilized0.15% of GDP each before the September of an election year. In September, they create apolitical bloc and in November they submit a financial declaration stating that the total income ofthe members of the bloc exceed 0.3% of GDP. In this case, the majority of the declared income3 Those individuals could be family members, relatives, friends, neighbors etc. 8
  9. 9. mobilized by the parties would be considered illegal. Hence, article 25 1 contradict article 30 ofthe Constitution. Paragraph six of article 27 is also vague, stating, “Donations on behalf of the other personor by the evasions of restrictions of the law will result in transferring those donations to the statebudget. The violator will be charged according to the Georgian legislation.” For instance, ifseveral members of one family contribute donations to a political party, officials can considerthese donations as on behalf of a third person, or an attempt to evade the established restrictionsof the law. The law should not allow such vague interpretations. According to paragraph seven of the same article, “If donators receive income wholly orpartially from one source (individuals/ legal entities or from the persons affiliated with them),then the total annual amount of those transactions to one electoral subject should not exceed500 000 GEL.” It is impossible for a political party to control whether their donators share thesame source of income or not. Similarly, it is impossible for a donator to determine whetherhe/she violates the established margins of the law or not. Considering the fact that there are verystrict sanctions imposed for contributions which breach the law, the above-mentioned legal normshould be severely criticized. Paragraphs six and seven of article 27 contradict the principle oflegal certainty. According to article 32, political parties are obliged to provide in their financial declarationthe expenses of those legal entities which are directly or indirectly under the control of the party.As mentioned above, the phrase “legal entities which are directly or indirectly under control ofthose political parties” can be interpreted arbitrarily by the government. It is unreasonable to askparties to provide a list of expenses of those legal entities not subordinated to them. Doing sowould contradict the principle of legal certainty and the freedom of public association guaranteedby article 26 of the Constitution. According to article 51 of the new law, political parties are prohibited from providingfinances (directly or indirectly) to a citizen of Georgia. It is not clear from the law whether apolitical party can pay for services provided by Georgian citizens. This leaves a gap for thegovernment to use multiple interpretations, benefiting one party while impairing another. According to the same article, political parties are prohibited from buying goods or servicesat higher than market price. This regulation also gives the government room for arbitraryinterpretation. At the very least, there should not be a radical difference between the market priceof goods and services and their agreed-upon price, but there is no mention of acceptable pricegaps in the law. According to paragraph two of article 51, political parties have the right to operate onpolitical and electoral “promise,” meaning a pledge given to the electorate which is related to the 9
  10. 10. future distribution of budgetary means. The above-mentioned rule does not provide effectiveguarantees to avoid the use of administrative resources for subjective political gain.Unfortunately, the law does not impose limits on such corrupt practices, and so it may benecessary to ban such explicit political promises that are related to budgetary expenses. This alsocontradicts the principle of legal certainty. According to article 33, a political party is obliged to carry out a financial audit of itsactivities. Moreover, the political party should apply only to those independent auditors whosatisfy the established standards approved by the Chamber of Control. This regulation may givethe Chamber unencumbered power for manipulation, such as the use of biased auditors. Article33, therefore, also contradicts the principle of legal certainty. According to article 341, the Chamber of Control is authorized to obtain information relatedto the finances of political parties through commercial banks. In addition, the Chamber isauthorized to receive information about the origin of property transferred or received by bothparties and any entities directly or indirectly related to them. These regulations provide thegovernment with total access, and thus total control, over the finances of parties and, potentially,those organizations and individuals associated with them. Therefore, the law gravely violates therights of free development of individuals, informative self-expression and right to securepersonal data, contradicting articles 16 and 20 of the Constitution. Furthermore, that same article is authorized to establish strict sanctions for violating therequirements of law. Three of these sanctions are worth deeper analysis: a) “Receiving or concealing prohibited financial or in kind donations determined byGeorgian legislation will cause a seizure of illegal donations and their transfer to the statebudget, and the political party will pay a fine of ten times the received financial and in kinddonations. “A party may be unaware of a donation or service received, based on the wide-ranging definition of their “relationship” to individuals or legal entities. Parties may accidentallyconceal this financial information because they were unaware of its relevance. b) A transaction of financial and material donations prohibited by Georgian legislation,from physical and legal entities for a political party’s benefit, will cause a fine of ten times theamount of received financial and material donations. The meaning of the term “donations forpolitical party’s benefit” is not defined in the text, leaving it open for misuse. c) ”The Chamber of Control of Georgia sequestrates property of physical or legal entities(including bank accounts). This can be appealed to the court together with the resolution of anoffence. The appeal does not suspend the sequestration. “The law does not identify in whichcases the Chamber may sequestrate the property of a party, or natural (individual) and legalentities. The seizure may be a disproportionate interference, violating the fundamental 10
  11. 11. constitutional principle of proportionality (article 21). In fact, article 342 clearly contradicts theprinciples of legal certainty and proportionality as well as article 21 of the Constitution. These sanctions contradict the principle of proportionality as they seek to gather ten timesthe amount of the offending financial or material donations as a fine for poorly-defined illegalactions. What is of special concern is that these sanctions are imposed by the Chamber ofControl rather than by a court. The harshness of the sanctions suggests that the law is based onrepressive rather than preventive norms, potentially having a negative impact on the politicalprocess. As illustrated below, the recent amendments to the Criminal Code of Georgia gravelyviolate the principles of proportionality and legal certainty. They do so by leaving a possibilityfor a broad interpretation of the legal norm, and, though vague and poorly-drafted language,potentially criminalize the financial relationship between political parties and citizens. Inaddition to a fine, in some circumstances three years in prison is mentioned as a possible penalty(article 1641 of the Criminal Code). Bribing the voter (article 1641 of the CCG) Offer, promise, transaction, service, with intentional knowledge to request and receiveand/or by evading the established requirements of law to deal ostentatious, hypocritical orother type agreements is penalized up to 3 years imprisonment or administrative fine. Notice:1. Property such as small value of accessories, shirts, caps, flags and other items for theelectoral campaign of political parties do not fall under the scope of this article;2. Persons will not be charged for a political and electoral promise related to the futuredistribution of the budgetary means and future implementation of the state policy;3. Legal entities (except political party which will not be penalized) committing criminal actenvisaged in the article 1641 of the CCG will be liquidated, deprived from the right to conductactivities and/or will be charged to pay fine. Special attention should also be paid to a sanction envisaged by article 1641 of the CriminalCode of Georgia – liquidation of a legal entity, which is applicable to both civil and politicalassociations. This sanction unequivocally contradicts article 26 of the Constitution, which clearlydefines a basis for suspension and prohibition of such groups. (They themselves do not include abasis determined by the Criminal Code of Georgia). Implementation should be in accordancewith the strictly determined circumstances of law; yet the Criminal Code of Georgia is anorganic law. 11
  12. 12. V. The Chamber of Control of Georgia as a Monitoring Body According to the Amendments in the Organic Law of Georgia on Political Unions of Citizens The amendments made to the law governing political unions establish the Chamber ofControl of Georgia as a controlling body, which contradicts the Constitution. The need to establish an independent mechanism4 for monitoring the finances of politicalparties and electoral campaigns was identified by both the Venice Commission and the Group ofStates against the Corruption (GRECO) in their recommendations to the Georgian government.The Chamber of Control was selected as the monitoring body. Doubtless there is a need for aneffective monitoring system; however, the selection of the Chamber of Control by Georgianlegislators did not meet the requirements of the Constitution. The legal and constitutional status of the Chamber is determined by article 97 of theConstitution. This norm establishes following essential requirements: 1. The Chamber of Control as an independent body is removed from the system of thelegislative, executive and judicial branches of the government, and operating separately. 2. It supervises state expenses, and the usage and expenditure of other materials. 3. The authority, organization, procedure activity, and guarantee of the independence of theChamber of Control shall be determined by law. The establishment of legal norms for the Chamber, determined within the scope of theConstitution, exists within article 1 of the Law of Georgia on the Chamber of Control ofGeorgia. It should be noted that other controlling bodies have been established according to this law,which determines that if the necessity of state control overlaps the authority envisaged by theConstitution, control should be exercised by some other body. Article 3 of the Law of Georgiaon the Chamber of Control of Georgia accords this status, naming it as the highest body capableof carrying out state financial audits. Auditing power is granted in article 6, in a form envisioned by the Constitution. Article 17 of the Law on the Chamber of Control of Georgia defines the scope of itsauditing powers; according to paragraph 21, “The Chamber of Control monitors financialactivities of the political unions of citizens based on the Election Code of Georgia and theOrganic Law of Georgia on Political Unions of Citizens.” The compliance of the new amendments to the latter legislation must be compared witharticle 97 of the Constitution. In particular:4 See the explanatory comments to the above-mentioned amendments. 12
  13. 13. 1. What does “monitoring” mean? The monitoring institution determined in paragraph 21 of article 17 of Law on the Chamberof Control of Georgia should not be understood as a new institution. On the contrary, the above-mentioned monitoring institution is identical to the institutions of “Supervision” (article 97 of theConstitution) and “financial economic control” (article 3 of the Law of Georgia on the Chamberof Control). Such an approach corresponds to the system determined by the Law of Georgia onthe Chamber of Control. The goal of article 17 is identification of those who fall under the scopeof Chamber powers, rather than determining the content of those powers. 2. What can be regulated by the Election Code of Georgia and the Organic Law of Georgiaon Political Unions of Citizens? It should be determined what rights and powers are delegated by the Organic Law ofGeorgia on Political Unions of Citizens and whether the scope of these rights is protected by thislaw. If paragraph 21 of article 17 of the Law on the Chamber of Control of Georgia would havebeen understood as a norm for determining the rights of the Chamber of Control it would havecontradicted the above-mentioned law as well as article 97 of the Constitution. Once again, itshould be mentioned that according to article 17 of the Law, its objectives are not determiningthe rights of the Chamber of Control, but rather exercising these powers over the political unionsof citizens. It could be concluded that paragraph 21 of article 17 of the Law on the Chamber of Controlof Georgia would have not contradicted article 97 of the Constitution had it been understood thatthe Chamber of Control would monitor the financial activities of political unions covering theusage, expenditure of the administrative resources and other material values of the state. It should be checked whether the amendments of the Organic Law of Georgia on PoliticalUnions of Citizens correlate with paragraph 21 of the article 17 of Law on the Chamber ofControl of Georgia and article 97 of the Constitution. According to the Organic Law of Georgia on Political Unions of Citizens, a new power hasbeen established – there are new rules for the Chamber of Control to monitor the financialactivities of political parties. These new responsibilities should be compared to paragraph 21 ofarticle 17 of the Law on the Chamber of Control of Georgia and article 97 of the Constitution. According to the updated Organic Law of Georgia on Political Unions of Citizens, whatdoes “financial monitoring” mean? Article 341 of the Organic Law of Georgia on PoliticalUnions of Citizens defines the authority to monitor the legality and transparency of the politicalparties’ financial activities, and interprets “monitoring” more broadly than in previouslegislation. It means not only “supervision” (article 97 of the Constitution of Georgia) but also 13
  14. 14. management functions (“consulting interested persons about the finances of political parties”)and audit powers – financial audit, conformity audit and effective audit. The usage andexpenditure of state funds and other state material values are identified in article 6 of the Law onChamber of Control of Georgia. The law does not provide any other legal tools. Additional instruments provided by theOrganic Law of Georgia on Political Unions of Citizens contradict the Law on the Chamber ofControl of Georgia. According to paragraph 2 of article 1, the authority, rules and organizationof activities have to be specified. It is inadmissible to form the framework of one law by another,as each bill has its own objectives, principles and interests. Article 1 of the Law on the Chamberof Control guarantees that that law can not become a “victim” to the objectives and interests ofany other law. So the amendments also contradict article 97 of the Constitution. What authorities have been delegated to the Organic Law of Georgia on Political Unions ofCitizens? Is their scope protected by this law? As discussed above, delegation of authority wasdrafted incorrectly in the Organic Law of Georgia on Political Unions of Citizens, granting theChamber of Control new powers which differ from those provided by article 97 of theConstitution of Georgia. How justified is omitting the words “and the political unions of citizens” from the sub-paragraph “g”, paragraph 2 of article 17 on the Organic Law of Georgia on Political Unions ofCitizens? And is it proper to identify the authority to conduct audit activities according to thearticle 341 (sub-paragraph “d”, paragraph 1) of the Organic Law of Georgia on Political Unionsof Citizens? A financial audit of a political party should be divided into two parts:1. An audit of the usage and expenditure of state funds and other state material at a party’sdisposal.2. An audit of other funds and materials belonging to a party. The old version of sub-paragraph “g” of paragraph 2 of article 17 of the Law on theChamber of Control of Georgia did not allow an audit on the usage and expenditure of statefunds and other state materials at the disposal of political parties. Why was that? This restrictionemerged because the legal nature of an audit (meaning a financial, conformity, and effectivenessaudit) means the monitoring of expenditures according to legal necessity. In the case of fundstransferred between the government and a party, the latter has broad discretion and the Chamberof Control could not have managed to monitor all such transactions. Distribution of the authority for conducting financial audits on political parties, accordingto the Organic Law of Georgia on Political Unions of Citizens, contradicts the Law on theChamber of Control of Georgia and article 97 of the Constitution of Georgia. Similarly, the 14
  15. 15. extension of financial auditing rights to other property held by a political party as stipulated bythe Organic Law of Georgia on Political Unions of Citizens, contradicts the Law on the Chamberof Control and article 97 of the Constitution. Furthermore, article 261 of the Organic Law of Georgia on Political Unions of Citizensgrants authority over property held by individuals and legal entities indirectly related to politicalparties to the Chamber of Control. Having “direct or indirect” and “business” relations withpolitical parties are such general concepts that this could lead to an unreasonable violation of theconstitutional rights of the above-mentioned entities. The Organic Law of Georgia on Political Unions of Citizens also expands the authority ofthe Chamber of Control and grants it administrative functions apart from mere supervisionfunctions, which contradicts the Law on the Chamber of Control of Georgia and article 97 of theConstitution. Paragraph 2 of article 341 of the law on political union refers to the right toconducting monitoring activities. Most of those rights are represented not only by supervisionpowers, but administrative functions (sub-paragraphs “b”, “c”, “h”, and “i” of the above-mentioned law). It should also be noted that a special department of financial monitoring forpolitical parties was established within the Chamber of Control, with specific administrativefunctions. That does not correspond neither to the functions envisaged by the Constitution nor tothe supervisory functions stipulated by the law. The functions of the Chamber are identified invarious articles of the law: - According to article 271, political parties should provide information about donations to the Chamber of Control of Georgia within three days of their receipt; - According to article 30, written consent on receiving state monies should be submitted to the Chamber; - According to article 32, a political party should submit a financial declaration for the previous year together with an auditor’s report to the Chamber; - According to article 322, the Chamber establishes rules for the transparency of financial data for political parties. These authorities are limited by article 17 (sub-paragraph “k”, paragraph 2) of the Law onChamber of Control of Georgia. According to that law, the Chamber should monitor the legalityof the utilization of funds granted for elections according to the Election Code of Georgia. VI. Conclusion The authors of the amendments in the Organic Law of Georgia on Political Unions ofCitizens aimed to improve the system of financing for political parties, prevent political 15
  16. 16. corruption, secure transparency and accountability, and promote political competition. Althoughwe share those goals, our analysis clearly reveals that the methods used by legislators to achievethe above-mentioned goals were disproportionate, vague, poorly-drafted and in contradiction toGeorgia’s Constitution. The recommendations of the Venice Commission and other internationalorganizations were interpreted arbitrarily, with some of their suggestions excluded from thelegislation entirely. Of particular concern were the restrictions found in article 261, which wereadopted after the Venice Commission published its final report. The adopted amendments also radically complicate the development of a pluralistic andcompetitive political environment in this country. The law not only limits the freedom of theparty system, but also the political and civil activity of individuals and society. Furthermore, the amendments lack certainty in their definitions, and contain the threat thattheir legal norms may be arbitrarily and selectively implemented. All individual and legalentities with tangential links to the political process are restricted by law in the same manner aspolitical parties, without nuance to protect them. Legal certainty is one of the basic requirementsfor the rule of law; without which citizens may become victims of unpredictably repressive acts. In addition, granting broad financial monitoring powers of political parties and thosearbitrarily linked to them to the Chamber of Control of Georgia contradicts the Constitution andthe Law of Georgia on the Chamber of Control. The Chamber of Control is authorized only tosupervise the usage and expenditure of state funds and other state resources, not the privatefinancial records of any political association. Due to a conflict between the new amendments andestablished law, the powers granted to the Chamber can give it grounds to act subjectively. Moreover, the amendments establish disproportionate sanctions that express a repressivespirit of the law, rather than one of preventive goodwill. Especially alarming is the fact that suchsanctions are imposed by the Chamber itself, and not by the court system. Finally, the majority of the population is now subject to greater government control thanksto vague interpretations possible from the new law. The amendments clearly contradict the rightsto free development, private life, freedom of expression and the right to form or joinassociations, as guaranteed by the Universal Declaration of Human Rights of the United Nations,the International Covenant on Civil and Political Rights, and the European Convention onHuman Rights – as well as human rights explicitly named in the Constitution of Georgia. Alegitimate reason for such restriction is not conceivable in a free and open democratic state. 16
  17. 17. Appendix5 Amendments to the Organic Law of Georgia on Political Unions of CitizensArticle 511. It is prohibited for a political party (for its candidate, representative or any other person) togive money, gifts and other material or immaterial values (except low cost accessories – shirts,caps, hats, flags and other similar items), to sell or provide any goods or services with discount;to buy goods or service at higher than its market price; to give or distribute goods or servicegratis (besides exceptions ruled by this law) to citizens of Georgia. Additionally, attracting acitizen of Georgia to provide and promise money, securities, material and immaterial values orservices (including establishment of fictional employment or other type of relations).2. The rule determined in the first paragraph of this article (prohibition of the promise) does notoperate on political and electoral promise, which is related to the future distribution of budgetarymeans and future state policy implementation. Chapter III Property and Finances of Political Party, Financial Monitoring of Political PartyArticle 251. The property of a political party includes: a) Membership fees; b) Donations; c) In certain cases established by legislation - amounts allotted by the state; d) Amounts received by the purveyance and distribution of a political party’s symbols,organizing lectures, exhibitions and other similar events; additionally, sums received fromeditorial and other activities, which do not change the status of a political party as a non-profitjudicial entity, its character and donations received by public events/activities. According to thissub-paragraph, the total amount of the income of a political party should not exceed 60,000 GELper annum.2. A donation is a transaction of money by citizens of Georgia to a political party’s bankaccount; also in kind values and services received with discount/favorable terms or gratis by apolitical party (except a job done by a volunteer) and a bank loan taken with favorable terms.3. A political party is not allowed to take a loan/credit from a physical or judicial entity. Apolitical party or political bloc may take a loan from a commercial bank, but for not more than 1million GEL after being registered as electoral subject according to paragraph “g” of article 2 ofthe Organic Law on Georgian National Bank.Article 2511. The total amount of state finances, donations and other type of income received by a politicalparty or a physical and judicial entity connected with this party, should not exceed 0.2% of theprevious year’s GDP of Georgia; the total amount of expenses of a political party should notexceed 0.2 % of the previous year’s GDP.2. According to the first paragraph of this article, a political party is obliged to transfer the totalamount of money (which exceeds the threshold) to the donators’ bank account within three daysof receiving those sums. In case of non-compliance with these commitments, the above-mentioned amounts will be transferred to the state budget.5 The amendments are highlighted in the law. 17
  18. 18. 3. Expenses for a political party’s expert and/or consulting services should not exceed 10% ofthe threshold established in the first paragraph of this article.4. A political party is allowed to distribute, during celebration events, items as gifts with a totalcost of 5000 GEL.5. The total amount of expenses and income of political parties enlisted in a political bloc shouldnot exceed the thresholds established in the first paragraph of this article.6. Unless it is not defined differently by this law, “year” means the period from 1 November to 1November of the following year.Article 261. It is prohibited to receive financial or in kind donations from: a) Physical and legal entities of foreign countries, international organizations and movements,except organizing lectures, seminars or other similar public events; a1) Legal entities, their unions and other organizational entities; b) State bodies, state organizations, public law legal entities, or from an organizationestablished with state share (except the cases foreseen by this law); c) Non-profit organizations and religious organizations, except organizing lectures, seminarsand other similar public events; d) An individual having no citizenship; e) In anonymous form.2. During the donation, a person should identify their name, surname, address, ID number (orpassport number) and personal number.3. Money donated without providing the information determined in paragraph 2 of this article isconsidered anonymous. Anonymous donations should be immediately transferred to the statebudget by the authorized person of the political party who is responsible for its financial activity.4. Requirements provided in paragraphs 2 and 3 of this article do not apply to the donationsreceived via public events. The amount received during public events should not exceed 30,000GEL per annum.5. The authorized person responsible for a party’s financial activity is obliged to transfer moneyreceived by public event donations to the party’s bank account within seven days.6. Information about donations to a political party, including the information defined byparagraph 2 of this article, is publicly available. The availability of this information is providedby the Chamber of Control of Georgia according to the established rules.Article 2611. Restrictions provided by this chapter also apply to: a) A judicial entity if it directly or indirectly is related to a political party, otherwise is underthe control of a political party, or openly states its political objectives and goals; b) A judicial entity, which through its representatives or other person encourages voters tosupport a particular political party or refrain from supporting a particular political party; c) A person, who openly states political and electoral objectives and goals, or a person who isrelated to the above-mentioned person, and also to the person who has a business relationshipwith the person who has political and electoral goals or who carries out such activity thatinfluences the will of those Georgian citizens who participate in elections, plebiscites andreferenda, and those actions are carried out to avoid the regulations provided by this law.2. A judicial entity, which directly or indirectly is related to a political party, with expensesdirectly or indirectly connected to the activities and goals of the party. 18
  19. 19. 3. Restrictions established by this article should not be applied to restrict freedom of expressionand civil activity.Article 271. The total amount of the financial and in kind donations received by a political party from anycitizen of Georgia should not exceed 60,000 GEL per annum. The annual membership fee forone member should not exceed 1,200 GEL.2. The donator cannot be a citizen of Georgia with 15% of his/her annual income received byhim/her or received in favor of the company created by his/her participation with the simplifiedgovernment procurement.3. A citizen may donate to different political parties throughout the year; however the totalamount of those donations should not exceed the established threshold - 60,000 GEL accordingto this law.4. The restriction established in paragraph 1 of this article applies to all donations, including fora party’s goals and services performed on behalf of it.5. Membership fees and financial donations for political parties should be received through banktransfers from the citizens. Donations should be made only via Georgian licensed commercialbanks or via the donator’s or member’s own bank account.6. Donations on behalf of another person or by evasion of restrictions of the law will result in atransfer of those donations to the state budget. The violator will be charged according toGeorgian legislation.7. If donators (physical entities) receive income wholly or partially from one source (physical/legal entities or from the persons affiliated to them), then the total annual amount of thosedonation transactions to one electoral subject should not exceed 500,000 GEL. However, thetotal amount of a single donation should not exceed 60,000 GEL.Article 2711. A political party should provide information about donations to the Chamber of Control ofGeorgia within three days of their receipt.2. In a case of receipt of donations in violation of the requirements of this law, a political party isliable to return the received amount to the donor within three days of the date of the donation. Incase of a violation of this obligation, the money will be transferred to the state budget.3. If an authorized person of the political party will not comply with these obligations, thisperson will be accountable to Georgian legislation.Article 281. This paragraph has been removed.2. If the total amount of the annual financial and in kind donations received by the political partythrough breaching the law is: a) From 2,000 GEL up to 15,000 GEL, the political party will lose state financing for oneyear; b) From 15,000 to 50,000 GEL, the political party will lose state financing for two years; c) More than 50,000 GEL, the political party will lose state financing for four years;3. If political parties have no right of state financing, the sanctions envisaged by paragraph 2 ofthis article will be applied after obtaining such a right.Article 30 19
  20. 20. 1. This article defines the rule for direct distribution of sources from the state budget to politicalparties.2. The amounts to be distributed directly from the state budget are received by those politicalparties that received more than 4% of the vote in the last parliamentary election, or receivedmore than 3% of the vote in the last local self-governance election.3. The amount earmarked in the state budget for financing political parties is determined by anequation, calculated per parliament member elected through the proportional system and therespective components of received votes.4. The state budgetary finances are calculated according to the following formula: Z= B+ (M*600*12) = (L*100*12) + (V*1, 5) + (W*1) Z is the amount of state budgetary finances for a political party; B is the amount of basicfinances; M refers to 30 or up to 30 members of parliament elected by proportional system; L isthe number of more than 30 parliament members elected by the proportional system; V is theamount of votes received up to 200,000 voters; W is the number of votes of more than 200,000voters.5. The amount of basic financing is 1,500 GEL annually.6. If an electoral subject (political party/electoral bloc) receives more than 8% of the vote in thelast parliamentary election or more than 6% of the vote in the last local self-governance election,the amount of basic financing will be 300,000 GEL. According to the Law on State Budget ofthe current year, the amount of basic financing from the state budget may be increased.7. According to the formula determined in this article, M and L are equal to 0, if the authority ofmembers of parliament elected by the proportional system has been suspended according to therule established by Georgian legislation. M and L also may change (decrease or increase) to anappropriate amount if within three months members of parliament elected by the proportionalsystem, after receiving authorization, leave or join another political party which is also financedfrom the state budget according to the rule established by this article.71. The electoral subject receiving finances according to this article will receive an addition 10%if the political party is represented with a gender diversity of at least 20% out of 10 candidates onthe party list (in all party lists during the local self-governance elections).8. In order to calculate the formula detailed by this article, the overall results of the lastparliamentary and last local self-governance elections will be used according to the politicalparty’s compliance with the conditions of this article.9. If the results shown by the electoral bloc of the appropriate elections are applied to the letter ofthis article, the total numbers of received votes are divided on the number of parties forming theelectoral bloc.10. Basic financing is equally divided among political parties forming an electoral bloc.11. A political party will receive state budget finances based only on preliminary writtenconsent. The latter should be submitted to the Chamber of Control of Georgia no later than the25th November of each year. If written consent on receiving state budget finances for the nextyear is not submitted by a political party by this date, the Chamber of Control of Georgia willnotify them in writing the day after the deadline. Within three days of receiving a writtennotification from the Chamber of Control of Georgia, a political party has to send the consent toreceive state funds. If a political party will not submit a written consent in due time, it looses theright to receive financing from the upcoming year’s state budget. The Chamber of Control ofGeorgia will notify the political party of this in writing. The Chamber of Control of Georgia isobliged to transfer the money to the state budget within five days of the party’s loss of a right tostate funds. 20
  21. 21. Article 3011. With the exception of budgetary financing determined in article 30 of this law, money istransferred from the Georgian state budget into a Fund which aims to facilitate the creation of ahealthy every year, compatible political system for the development of the political parties andthe NGO sector.2. Financing of the political parties and non-governmental organizations from the Fund isregulated by the rules of this article.3. The function of the Fund determined by this article is performed by a Center for electoralsystem development, reforms and training.4. According to article 30 of this law, money transacted into the Fund from the Georgian statebudget should be half of the amount directly distributed to political parties.5. Amounts should be transferred quarterly into the Fund from the Georgian state budget.6. Amounts to the Fund may be attracted from the other sources as well.7. 50% of the amount transferred into the Fund should be distributed to political parties and 50%to the NGO sector.8. The assets of the Fund are distributed proportionally according to the received basic financesfor political parties.9. Assets of the Fund will be distributed to finance only research, studies, conferences, businesstrips, regional projects and for financing civil and electoral educational projects.10. Grants for non-governmental organizations should be distributed only on the basis ofsubmitting appropriate projects in order to facilitate the development of political parties andimproving civil education of the electorate. The amount granted for one non-governmentalorganization should not exceed 10 % of the grants distributed for the NGO sector. Whilediscussing the distribution of grants from the Centre, a minimum of three representatives with aright of advisory vote should participate from the NGO sector, or an appropriately experiencedrepresentative of a foreign Fund.11. A political party should submit an annual report to the Fund about the reasonable expenditureof the received amounts. Financing of a political party will be suspended for one year if the partyfails to submit the report or does not use funds according to the goals determined by this law.12. If political parties and the NGO sector will not utilize the assets of the Fund provided tothem, this amount will be transferred back to the Fund for distribution the next year.Article 321. A political party should submit an annual financial declaration together with an auditor’s (orauditing company) concluding report to the Chamber of Control of Georgia by February 1 ofeach year. Copies of the declaration together with the auditor’s report should be sent to theappropriate local taxation office. The financial declaration must contain information on apolitical party’s annual income (amount of membership fees and donations, names of citizenswho donated, data about citizens who donated, funding from the state budget, also amountsreceived from the publishing activities of political parties and amounts received as a result ofvarious events), expenses (elections, financing events, salaries, business trips and otherexpenditures), and property (information about owned real estate and cars, including makes andmodels, total cost and amount of bank deposits).2. Income and expenses of political parties used for elections must be listed separately in thefinancial declaration. 21
  22. 22. 3. The Chamber of Control of Georgia is obliged to provide information about the financialdeclaration of a political party to all interested persons and also guarantee that financialdeclarations will be published on its website within five days of receiving them.4. A political party is obliged to provide in its financial declaration information about theexpenses of legal entities which are directly or indirectly under the control of those politicalparties.5. The Chamber of Control of Georgia must design a form for financial declaration as well asfinancial audit standards for political parties.6. A political party is obliged to keep financial declarations and all related documents for sixyears, and to follow the duties established by tax law, which are related to the production andstorage of tax documents.Article 321Once every three weeks after an election date is set, all political parties that intend to participatein the election either independently or within a political bloc should submit a financialdeclaration to the Chamber of Control of Georgia in an appropriate form established by theChamber of Control of Georgia.Article 322The Chamber of Control of Georgia in accordance with this law sets rules related to transparencyof party finances and data related to donations.Article 331Any deal which aims to avoid the rules and limits established by the chapter (Chapter IIIProperty and Finances of Political Party, Financial Monitoring of Political Party) of this law isvoid. The property distributed and received on the basis of such a deal will be transferred to stateownership.Article 34If a political party will not submit a financial declaration to the Chamber of Control of Georgiabefore the deadline, the Chamber of Control of Georgia will notify in writing a five-day windowto submit the declaration. If a political party will not submit a financial declaration to theChamber of Control of Georgia after five days, according to article 30 of this law the politicalparty loses the right to receive financial support from the state budget for the next year.Article 3411. The Chamber of Control of Georgia monitors the legality and transparency of a politicalparty’s financial activities.2. The Chamber of Control of Georgia is authorized to: a) Develop an annual financial declaration form for the political parties; b) Establish standards for audits of political parties; c) Verify completeness, accuracy and legality of the financial declarations of political partiesand the report of their election campaign’s fund; d) Conduct auditing of financial activities of political parties; e) Ensure transparency in the financing of political parties; f) In case of need, request information related to the finances of political parties from theiradministrative authorities and commercial banks. 22
  23. 23. g) If necessary, request information about the origin of transferred and received propertybelonging to political parties from the persons determined in article 261. h) Consult interested persons about the finances of political parties; i) Respond to violations of the law regarding the finances of political parties and applyappropriate sanctions according to the law. j) Appeal to the Office of the Prosecutor if criminal activity is suspected.3. If state authorities have reasonable ground to believe that the requirements of this law havebeen violated, they may inform the Chamber of Control of Georgia.Article 3421. Receiving or concealing prohibited financial or in kind donations determined by Georgianlegislation will cause a seizure of illegal donations and their transfer to the state budget, and thepolitical party will pay a fine of ten times the received financial and in kind donations.2. A transaction of financial and material donations prohibited by Georgian legislation, fromphysical and legal entities for a political party’s benefit, will cause a fine of ten times the amountof received financial and material donations.3. Receiving and concealing information about financial and material donations prohibited byGeorgian law for a political party’s benefit will penalize those persons to pay ten times theamount of the fine.4. Avoiding liability determined by the law will result in a fine of 5,000 GEL for the politicalparty.5. Avoiding liability determined by Georgian legislation on providing information requested bythe Chamber of Control of Georgia will result in a fine of 5,000 GEL for the political party.6. Accountability determined by this law may be applicable for six years after committing theoffence.7. In case of repeated violations of the rules determined by this article, or deliberate failure tocomply with a legal request of the Chamber of Control of Georgia, or an offence causing seriousdamage, the Central Election Committee upon a recommendation of the Chamber of Control ofGeorgia is empowered to suspend registration of the electoral subject if the violation involves anoffence committed during a one-year period prior to an election.8. The Chamber of Control of Georgia sequestrates property of physical or legal entities(including bank accounts). This can be appealed to the court together with the resolution of anoffence. The appeal does not suspend the sequestration.9. The Chamber of Control of Georgia compiles a report about the offence determined by thisarticle and takes a decision on imposing an appropriate penalty. For such a case, litigation rulesdetermined by the Georgian Code on Administrative Offences are applied. 23

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