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THE MORNING LEAD

Hidden Figures: Source of political money disclosed for just 8% of donations over four years

A cross-European investigation with Noteworthy also found unclear laws make Ireland’s donation framework among the least transparent in the EU.

Noteworthy and The Journal logos, with arrows and a rolling euro design.

THE SOURCE OF just 8.37% of donations to Irish political parties between 2019 and 2022 has been revealed to the public.

This places Ireland’s political donations framework as one of the least transparent in the EU, when compared to other member states.

As part of a major investigation into political donations in collaboration with 26 media outlets across Europe, Noteworthy has identified severe lapses in clarity in relation to Irish laws around the source, declaration and later movement of funds.

On some occasions during 2019 and 2022, individual parties were only required to reveal the names of less than 1% of their donors in a year.

Tough rules, but very little transparency

Political parties must disclose the identity of any donor who makes an individual donation of over €600 to the Standards in Public Office Commission (Sipo).

Sipo later make reports of these donations available to the public and details the names of donors. Donations in Ireland can only be accepted from residents of the Republic of Ireland or Irish citizens abroad.

Individual donations to politicians cannot exceed €1,000 from one person. If a politician does accept more than €1,000, normally due to an accountancy error and rarely in malpractice, the politician must pay back the difference.

The maximum anonymous donation is €100. If an anonymous donation exceeds €100, it’s the responsibility of the politician to find and identify the donor themselves.

Individuals cannot donate more than €2,500 to one party in a year. If multiple donations from one individual total €1,500 or more in one year, they must also be identified.

Despite the strict rules in place, there is a severe lack of transparency once it comes to the identity of donors.

 

Map of Europe with title 'Where are the donors unknown?' showing that Ireland is among the countries with the highest amount of donors unknown. Ireland has one of the highest levels of unknown donors in the EU. Follow The Money Follow The Money

Noteworthy, the crowdfunded community-led investigative platform from The Journal, supports independent and impactful public interest journalism.

For example, a donor can donate €599 twice in any given year, donating a total of €1,198, and their name will not appear on Sipo’s reports as their individual donations did not breach the €600 or €1,500 thresholds.

Transparency International Ireland has urged politicians to give more control to Sipo in order that the Commission can properly audit what is submitted to them by politicians.

Speaking to Noteworthy the advocacy group’s head of policy and research Dr Alexander Chance said the rules around money and politics are “very disjointed”.

“In terms of the framework around political party funding and expenditure around elections, it’s really complex,” Chance said.

“We would certainly be arguing for consolidation of that framework in a way that’s easier for, not just for parties to understand and the candidates to understand, but for the public to understand.”

Around 40% of donors in the EU never identified

Across the EU, 40% of donors who donated funds between 2019 and 2022 were never identified to the public. Almost €1 billion was donated to political parties during that period.

Chance said that while political funding is necessary for party activity and a healthy democracy, funding should be provided in a transparent and traceable manner.

The annual financial reports of more than 200 political parties were examined by 50 journalists from 24 EU member states for this investigation - Transparency Gap: The Funding of Political Parties in the EU - led by Follow The Money.

All these parties have a reasonable chance of gaining a seat in the next European Parliament.

A common trend identified in EU member states was that countries which were previously communist one-party states embrace best practices around disclosing donors’ identity, while countries further west tend to protect the identity of their donors more.

The proportion of funds without an identified donor is high in Ireland but the total sum of donations given to politicians is much lower compared to EU member states.

This is because the majority of funding to political parties in Ireland comes from public funds. A total of €75 million of taxpayer funds were given to parties between 2019 and 2022.

Poland ranked as the most transparent, with the identity of almost every donor (99.87%) publicly disclosed. No data was available from Malta to identify any of the donors of the over €8.8 million that was donated to just two parties since 2019.

Politicians passing on personal donations

Noteworthy can also reveal that there are no rules that stop individual politicians making donations to their respective political parties by using funds which were originally donated to them from members of the public.

This means that TDs, MEPs and local councillors can use money, in part or in whole that was previously donated to them, to fund their donations to their party and do not have to disclose the identity of the original donor.

Some politicians’ donations to their parties exceed €2,000 every year.

In Ireland, very few private citizens appear on the list of donors who gave money to political parties and the majority of listed donors are elected representatives of that group.

The remainder of donations are unknown to the public. In other European states, the identity of most donors must be publicly disclosed.

It is understood that a politician’s only requirement is to declare the personal donation if it reaches over the legal thresholds.

These rules change once it comes to corporate donors.

For example, if a private company pays for multiple tickets to a political event for their employees and the employees pay them back, the party declares the employees names as the people who made the donation, rather than the company.

Sipo also frequently requests that parties make clear in their accounts that a number of donations came from multiple companies that are owned by the same company.

Chance said: “Any obligations to declare donations need to show where that money originally comes from. And if funds go through a few different stages, you need to be able to identify and track-back that funding.”

Chance said that a law that would require parties to track the source of the funds and later disclose those sources would make for a more transparent and traceable political donation framework and would be “critical to the health of our democracy”.

Fundraiser costs removed from donation totals

Current legislation makes that tracking process very difficult.

Under clauses in Section 22 the Electoral Act 1997, the cost of organising and hosting a fundraiser event must be removed from the total sum of donations which were generated at the event.

But there are no obligations for political parties to disclose the amount of associated costs which were removed from their donations in their publically-available annual accounts.

Therefore, it could be the case that the total of donations received by political parties in any given year is actually much higher than what is declared annually.

Fianna Fáil is the only political party that clearly details the exact amount of costs that it deducts from their donations in its annual accounts statement.

Person taking €20 out of a wallet. The costs associated with hosting and organising fundraisers must be removed from overall donations each year. Shutterstock (Photo) Shutterstock (Photo)

A Fianna Fáil spokesperson told Noteworthy that the cost of hosting and organising standalone, local fundraisers is removed each year as the amounts can change on an annual basis.

“The income disclosed in the financial statements reflects this, and similarly the associated costs that don’t directly link to mainstream activities,” they added.

While a spokesperson for Sipo said the Commission could not make comments on individual cases of compliance, they did confirm that the practice falls in line with their own accounting guidelines.

The spokesperson added that the Commission may contact a political party if the calculations in the net donations warrants “further questioning”. Sipo may later request the party make an amendment to their calculations.

Chance, who has worked on anti-money laundering legislation for a number of years, said that it was interesting how much of the political party funding in Ireland comes from lotteries or similar activities.

“Gambling is a notoriously high-risk sector for money laundering – it’s no great secret – because you’ve got a large amount of cash and it’s very hard to trace,” he said.

“This isn’t to say party lotteries are used for illicit purposes, but some of the principles used in anti-money laundering could be applied to the traceability of party funding – a ‘know your donor’ approach, if you like.”

Addressing all from the findings, Chance suggests that mandatory ID check for online donations, phasing out cash and banning untraceable lotteries could make the donation framework more transparent.

Sipo ‘needs more powers’ to enforce laws

Chance said Sipo needs the necessary powers and resources to be able to audit and enforce compliance with legislation. 

Without those powers, the laws “undermine” ethical frameworks and the public’s confidence in them, according to Chance. He added that annual account statements need to be standardised so the same standards are met party-wide.

The Standards in Public Office (Amendments) Bill 2023, proposed by Sinn Féin TDs Mairead Farrell and Pat Buckley last year, looks to make changes to the Ethics in Public Office Act 1995 and the Standards in Public Office Act 2001.

These changes include giving more power to Sipo to audit and investigate the submissions by political parties.

Despite being proposed and accepted more than a year ago, the Bill has not made it to the floor of the Dáil and has been sitting dormant in the Oireachtas since February last year.  

A separate bill, proposing amendments to the Ethics in Public Office Act 1995, is being developed by Government. It aims to introduce a legislative framework for ethics that is “underpinned by a set of overarching integrity principles”.

According to Minister for Public Expenditure and Reform Paschal Donohoe, these principles include better transparency of disclosures, the broadening of and strengthening of Sipo’s remit and post-term employment restrictions to be in line with existing lobbying regulation.

 

Read more articles in this series >>

Cartoon of a hand putting coins in another hand with headline - The Transparency Gap - The Funding of Political Parties in Europe - Powered by Follow the Money.

By Muiris O’Cearbhaill for Noteworthy

This article was created through the research and input of the 50 journalists across 26 media partners who participated in The Transparency Gap project. 

HOW WE DID THIS:

Follow the Money led this investigation and collected party declarations / accounts for “relevant” parties across the EU. Noteworthy and The Journal were the project’s Irish partners. 

“Relevant”, for the purposes of the cross-country income analysis, includes parties who are currently represented in the European Parliament and those considered relevant at a national level, as selected by journalists working in each country.

Income data was collected from the individual parties’ own declarations or accounts or those published by the relevant authority or a trusted third party in each country.

The income figures were inputted by Follow the Money and independently checked by journalists in each country. For more information, see here

Design of arrows with a rolling euro.

This work is co-funded by Journal Media and a grant programme from the European Parliament. Any opinions or conclusions expressed in this work are the author’s own. The European Parliament has no involvement in nor responsibility for the editorial content published by the project. For more information, see here.