PROBLEMS AND SHORTCOMINGS IDENTIFIED IN POLITICAL PARTY FINANCING IN BiH

The legal framework is obsolete, ambiguous and insufficient in scope
Penalties prescribed for violations and abuses are inadequate and can even be encouraging for the violators and political subjects that take part in the violations and abuses
Misuse of public resources for political parties’ election campaign is neither defined by the legal framework nor is subject to penalties
The engagement of legal entities associated with the political parties is not regulated
GRECO recommendations are not adequately implemented
BiH does not have a single law on political organizations, which would, inter alia, regulate the operations of the political parties and principles of financial operations

Most of the political parties’ revenue comes from the budget, i.e. the citizens principally finance the political parties
Political parties are not obligated to record revenues not exceeding 100 BAM
Political parties do business using several transaction accounts and cash, which restricts adequate tracking of the money and proper control
Not all contributions are recorded, including contributions made by persons associated with the party who are working in the public sector
Personal information of persons are exploited so they could be formally presented as donors of the political parties, although they are not – thus avoiding violation of provisions concerning the limit of annual individual donations
Black funds are created, which are used for campaigning purposes as hidden money, thus diminishing equal starting positions of the political subjects in the campaign

The annual financial reports do not present expenses in detail, and the structure of spending in the post-election financial statements on election campaigns is vague
Not all expenses are recorded in the financial reports, although the non-partisan election observers identified their existence (such as costs of engaging party observers on the Election Day)

The legislation does not recognize stealth marketing, and political parties invest exorbitant funds in media marketing that they do not report and exercise pressure on the media outlets, editors and journalists even in case of state public media outlets

Political parties are not sufficiently transparent, and they either hide or unwillingly provide financial performance indicators, also failing to proactively publish financial reports on their websites, although it is obligatory
Financial statements of political parties are not in line with open data standards in elections, i.e. most of them are not available in a reasonable period, the data cannot be processed or immediately analyzed, the data are often not available online or are incomplete, etc.
The deadlines for submission of financial reports are continuously violated by a significant number of political parties, and adequate penalties are often missing for violations of deadlines

The capacities of the Audit Office of the BiH Central Election Commission (CEC), which is primarily responsible for the control of the political parties’ financial operations, are insufficient and limited, which leads to untimely analyses of financial reports and the release of the statements on audit of political parties’ financial reports
Other institutions, such as entity tax administrations or banks, are not involved in the control of political parties’ financial operations and do not have coordination mechanisms with the BiH CEC’s Audit Office
The CEC pays insufficient attention to the findings of the civil society organizations’ independent monitoring in political party financing segment when controlling their operations and imposing eventual penalties
The political influence of election administration is evident in terms of tolerance to the problems identified and inadequate sanctioning of political parties, which can be characterized as corruptive influence that harms the public and the country in general.