Final Report_ley De Partidos Politicos

An Analysis of the Strengths and Weaknesses of Peru’s Political Party Law Megan Sowards, J.D. May 23, 2009

Introduction

Approved in October 2003, Peru’s Ley de Partidos Políticos (LPP) is the first comprehensive political party law in the country’s history. The LPP governs three major areas of party activity: formation and registration, internal democracy, and financing. Its fundamental aims are to consolidate Peru’s political party system on a national level, to introduce mechanisms of internal democracy and to ensure greater financial transparency.

To be sure, the law represents a significant step toward these goals. Peru’s general, regional and municipal elections held in 2006 were the first to be conducted under the new legal framework and should be celebrated as an important milestone in the consolidation of Peru’s democracy. For the first time, parties submitted detailed financial disclosure reports and designated internal electoral organs to organize the process of internal party elections. At the same time, analyses of the law and how it functioned in practice during the 2006 elections reveal areas of the law that must be refined or supplemented. Now is the time to do so. Indeed, as Transparencia noted earlier this year, 2009 presents a window of opportunity for Congress to tackle this important work.1 The country has had sufficient time to reflect on the lessons of learned from the last elections, yet the next elections are far enough in the future that there is a reduced risk

1

Medina, Percy et. al. La Otra Reforma: 40 Soluciones Elementales para la Legislación Electoral. Lima: Asociación Civil Transparencia y National Democratic Institute for International Affairs, 2007. P. 9.

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that gamesmanship designed to achieve short-term political gain will distort proposals for the law’s reform.

This analysis is the fruit of an eight-week investigation funded by the University of Michigan Law School’s Clara Belfield and Henry M. Bates Overseas Fellowship and sponsored by the International Republican Institute’s (IRI) Peru Program. In formulating her recommendations and assessments, the author interviewed academic experts, political party leaders, civil society members and government officials at Peru’s electoral organs. However, the recommendations and opinions it contains are those of the author and may not necessarily represent the views of IRI.

‘Regional Movements’ and ‘Local Political Organizations’ Not Subject to Major Sections of the Law

Though there are three types of political organizations in Peru --- political parties, regional movements, and local political organizations --- the vast majority of the requirements set forth under the LPP apply only to the political parties. The law should be amended to include regional and local political movements.

Regional and local political organizations are a significant force in Peru’s political landscape. While there is no legal definition of a regional movement enshrined in Peru’s electoral law, these groups are best understood as a spontaneous, grass-roots organizations composed of members who feel alienated by the national parties. They

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typically activate during campaign season, but are otherwise dormant. At the present date, there are 159 registered regional movements in Peru.2 Four hundred and sixty-four local political organizations registered to participate in the 2006 municipal elections.3 In recent years, the movements have logged many electoral victories. Twenty-one of the 25 regional governments in Peru are now headed by officials who belong to regional movements. This is a marked decline from the prior regional elections of 2002 in which the parties controlled 17 of the 25 regional presidencies.4 Indeed, from 2002 to 2006, the Alianza Popular Revolucionaria Americana APRA went from holding 12 regional presidencies to holding two.

Under the LPP, regional movements may participate in regional or municipal elections and local political organizations may participate in municipal elections; neither may compete in national elections (presidential and congressional).5 Although Article 17 of the LPP sets forth some registration requirements for regional movements and local political organizations, they are exempt from the vast majority of the LPP’s requirements, most notably the law’s requirements regarding financing and internal democracy. As such, the LPP sets up a very unequal playing field between parties and regional movements in regional and municipal elections. While parties must spend precious resources conducting the internal elections and preparing the financial disclosure reports required by the law, regional movements can focus resources elsewhere. Clearly, this 2

http://documentos.jne.gob.pe/OrgPol/default.aspx. Last accessed May 24, 2009. The registration of a local political organization is cancelled automatically at the conclusion of the election pursuant to the Reglamento de Registro de Organizaciones Políticas, Article 49. Number of organizations confirmed by OROP/JNE. 4 Participa Peru: Nota de Información y Análisis, December 2006, p 2. http://www.participaperu.org.pe/apc-aa/archivos-aa/3c6bb51ada688b58c57cb18308d59d73/NIA_60.pdf 5 Ley de Partidos Políticos (LPP), No. 28094 (2003), Art. 17. 3

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disparity creates a disincentive for a candidate considering running for election in a regional or local election to do so with party backing and a financial disadvantage for the parties that do present candidates.

The LPP’s haphazard regulation of regional movements is surely a consequence of the way in which the law was negotiated. According to those involved, only after the first draft of the law was approved in committee, Congressman Walter Alejos --- head of the decentralization committee in Congress --- was partially successful in persuading his colleagues to amend the law to include movements.6 While Alejos won passage of his proposal to require movements and organizations to register with the Jurado Nacional de Elecciones (JNE), his proposal to require movements to comply with the law’s other requirements was rejected.7

While it is an oversimplification to suggest that the resulting disparity is the sole reason for the parties’ dismal performance in the 2006 elections for the regional presidencies, it is clear that it creates a legal environment in which regional movements can flourish. Indeed, one scholar suggests that the disparity is so pronounced that it caused some parties to not participate in sub-national elections because they lacked the necessary infrastructure to supervise internal elections required under the LPP.8 Thus, the LPP’s provisions regarding internal democracy and financing must be extended to regional movements and local political organizations. 6

Vergara, Alberto. “El Choque de los Ideales: Reformas Institucionales y Partidos Políticos en el Perú Post-Fujimorato.” XXVI International Congress of the Latin American Studies Association. Montreal, 5-8 Sept. 2007. P. 25. 7 Id. 8 Id., p. 26.

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Among the stakeholders in this debate, there is broad agreement on this point. However, some doubt Congress has the political muscle to take on the movements. For example, individual members of Congress may fear losing political support among their electorate if they do so. Still, the Comisión de Constitución has approved a bill that would obligate movements and local organizations to comply with the internal democracy requirements of the LPP.9 Although the Comisión transmitted the bill to the full Congress for its consideration, it is unlikely to be placed on the legislative calendar. The full Congress used a parliamentary procedure to return the bill to the Comisión for further consideration, a move that is widely perceived as placing the bill in a political freezer. Another bill pending before the Comisión would extend law’s financial requirements to the movements and regional groups.10 It has not been considered as of the date of publication.

The approval of these two proposals would go a long way to close the law’s loopholes regarding the movements, but there are many other areas where the law must be extended to cover the movements. For example, the movements are not required to submit to JNE by-laws which outline how internal decisions are to be made within the organization.11 Furthermore, unlike the parties, the movements are not subject to the annual requirement of turning in their list of registered voters12; nor are their registration

9

Proyecto de Ley No. 2214-2007. Proyecto de Ley No. 2528-2007. 11 LPP, Arts. 5, 9. 12 LPP, Art. 18. 10

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cancelled if they do not demonstrate a certain threshold of support in the election.13 In all of these areas, the law must be expanded to require the movements to do the same.

As policy makers develop proposals to address these disparities, the issue of ensuring compliance given that movements often appear and disappear during election season must be considered. In addition, lawmakers must consider whether and how to provide public funding to regional movements.

Party registration

Despite the fact that the LPP includes more rigorous registration requirements for political parties, the number of registered parties has only increased since the law’s passage. There were 24 registered parties when the law was enacted in 2003; prior to the 2006 elections there were 36 registered political parties.14 There are indications that this upward trend continues. In April 2009, the Oficina Nacional de Procesos Electorales (ONPE) reported that it had sold 302 electoral kits, the purchase of which is the first step in the party registration process.15 While only a small percentage of those who purchase kits actually become registered parties, those familiar with the registration process estimate that, based on these reports, there could be more than 50 registered political parties eligible to participate in the 2011 elections.

13

LPP, Art. 13. Tuesta Soldevilla, Fernando. “Regulación Jurídica de los Partidos Politicos en Perú.” In Regulación Jurídica de los Partidos Politicos en América Latina, ed. Daniel Zovatto. Mexico: IDEA y el Instituto de 14

Investigaciones Jurídicas de la UNAM, 2006. P. 779.

15

“Vendieron 302 Kits Para Inscripción de Partidos.” Perú 21 13 Apr. 2009: http://peru21.pe/impresa/noticia/vendieron-302-kits-inscripcion-partidos/2009-04-13/243753.

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JNE’s Oficina de Registro de Organizaciones Políticas (OROP) oversees the registration of political parties and ensures that those seeking to form a new party have met the law’s requirements. Key among these are the requirements that the applicant submit approximately 145,000 signatures of voters who support the formation of the party, proof that local chapters consisting of 50 members have been formed in 65 provinces located in at least 2/3 of the country’s 25 departments, and by-laws that describe how the organization will make internal decisions.16 Those I interviewed pointed to areas in this section that require further refinement: the signature requirement, the committee requirement, and finally, the number of days that OROP has to verify a party has met the requirements.

Consider the signature requirement. Political parties must gather approximately 145,000 signatures of adherentes. ONPE authenticates the signatures by ensuring that the signer actually exists, that his signature is authentic and that his name and DNI correspond. While the scope of my investigation did not permit me to interview the division within ONPE responsible for verifying the signatures, some report that this requirement has given rise to so-called “signature factories.” Furthermore, given that an adherente has no subsequent obligation to a political party, the signatures are a weak indicator of party support. As such, there is broad agreement among representatives of the political parties that the signature requirement should be eliminated.17 Those who advocate the elimination of the signature requirement suggest that, instead, the JNE

16

LPP, Art 5. Balance de los Cinco Años de Vigencia de la Ley De Partidos Políticos. Lima: International Republican Institute (IRI) and Oficina Nacional de Procesos Electorales (ONPE), 2009. P. 17. 17

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engage in a more vigorous verification process of the 65 party committees.18 This proposal has merit and should be considered. The government’s resources are better spent ensuring that the party committees are dynamic, active branches of the party within the provinces rather than confirming that signers who may hold little allegiance to a political party in fact exist.

Regardless of whether the signature requirement is eliminated, the existence of party committees should be more vigorously scrutinized. As the LPP is currently written, OROP confirms the existence of party committees and of their 50 members by dispatching its staff of eight to each of the provinces in which the committees are located. However, the LPP does not grant OROP the authority to investigate anything more than the committees’ location and identity of its members. In order to ensure that these committees exist more than simply on paper, the LPP should be amended to require that the committee convene a meeting in the presence of an OROP functionary. The law should also authorize OROP to make periodic, unannounced visits to the committees to ensure their continued operation. Those I spoke with suspected that many parties’ 65 committees disappear once JNE has confirmed their existence for registration purposes. To ensure compliance with this requirement, policy makers should consider implementing a graduated sanctions regime for parties found to have moribund committees. In the most severe cases, OROP should have the authority to cancel the registration of a party whose committees have ceased to exist.19

18

Id. at 17. For a fully developed legislative proposal to this effect, see Balance de los Cinco Años de Vigencia de la Ley De Partidos Políticos, p. 17. 19

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While the parties may balk at greater scrutiny, strengthening the registration requirements to ensure parties have a robust presence in the regions would ultimately benefit the parties politically. The success of regional and local movements in the last round of elections demonstrates voters’ preference for candidates who address local matters. Therefore, encouraging active party participation in the provinces would sensitize party leadership to local concerns and raise the party’s profile among voters beyond Lima, ultimately helping the party win more votes.

The law’s registration requirements should also be amended to extend the time period by which OROP must complete the verification process. Pursuant to Article 14 of the Reglamento del Registro de Organizaciones Políticas, once the appropriate electoral organ has verified the signatures presented by a prospective party or movement, OROP has five working days to review the rest of the party’s application to ensure that it complies with the remaining requirements.20 In practice, OROP begins its field visits to the provinces while ONPE is verifying the signatures, so it has more than five business days to realize all of these trips. Even so, five days is a very short period of time for OROP to conduct adequate due diligence on the other fronts. I recommend extending the period of time OROP has to review party applications so that it can conduct a more vigorous investigation into whether the party is a bona fide political organization.

20

Reglamento del Registro de Organizaciones Políticas (RROP)/Jurado Nacional de Elecciones (JNE) No. 120-2008-JNE, Art. 14.

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While a prospective party’s registration application is pending, any citizen or association may, pursuant to the LPP, bring a challenge to the process.21 It is laudable that the law provides for direct citizen participation in this manner. However, bringing a challenge to a party’s registration is costly (approximately 18,000 soles) for the average citizen.22 Still, in 2006, groups brought five challenges; none succeeded. The formation of watchdog groups with the resources to monitor the registration process and mount these types of challenges should be encouraged.

Another means of ensuring the vibrancy of political parties is the LPP’s current requirement that each party submit to OPOP its padrón or list of affiliates who are eligible to vote in internal party matters.23 Yet, there is no sanction for parties who fail to submit this document. Despite this fact, only three parties failed to present their padrón in 2008.24 Electoral officials at the JNE note that this uptick in compliance corresponds to the fact that elections are approaching. In previous years, the rate of compliance was much lower. For example, in 2005 only 5 of the 27 parties turned in their padrón by the deadline.25

The LPP should be amended to require regional movements to submit a padrón and to implement a graduated sanctions regime for those parties and regional movements who fail to do so. For example, parties and movements who are simply late in submitting

21

LPP, Art. 10. RROP/JNE: arts. 17-19, 22. 23 LPP, Art. 18. 24 http://documentos.jne.gob.pe/OrgPol/default.aspx. Last accessed May 24, 2009. 25 “Partidos No Entregan Padrón de Afiliados.” Peru 21 31 Mar. 2005: http://peru21.pe/impresa/noticia/partidos-no-entregan-padron-afiliados/2005-03-31/110845. 22

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the document should be fined, while OROP should have the authority to cancel the registration of those who fail to submit a padrón altogether. This regime must be developed through an amendment to the LPP; it cannot be done through an administrative rulemaking. In addition, JNE should exert pressure on the parties to comply with this requirement by announcing publicly the parties that have complied with the requirement and those who have not. In 2009, JNE released a press release that listed the parties that complied with the requirement but it did not mention the three that did not.26

Internal Democracy

The second major area that the LPP regulates is the internal democracy of Peru’s political parties. While my eight-week investigation did not permit me to conduct an exhaustive investigation of this aspect of the law, a cursory examination of this area reveals two major subjects that deserve further study and possible amendment.

First, the law does not authorize government oversight of the parties’ compliance with the internal democracy requirements, either on the front end through obligatory government assistance with internal party elections or on the back end through sanctions.27 Though the law authorizes ONPE to provide technical assistance to the parties in complying with these requirements, he parties themselves must request this assistance. Roughly half of the registered parties have done so. 26

http://www.jne.gob.pe/prensaypublicaciones/archivonoticias/Paginas/TRECEPARTIDOSPOL%C3%8DT ICOSPRESENTRONPADR%C3%93NDEAFILIADOSALJNE.aspx 27 LPP, Art. 26.

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In crafting proposals to ensure that internal party affairs are conducted democratically, policy makers should consider measures to ensure greater governmental involvement at the outset of the process. While a sanctions regime might deter some from engaging in undemocratic practices, they are likely to be imposed after popular elections have already occurred and therefore would not be as effective in achieving the end goal of ensuring that a given party’s slate of candidates was chosen in a democratic manner. To this end, the law should authorize ONPE to provide obligatory technical assistance to the parties. There is a proposal pending before Congress to this effect and it should be adopted.28

While some have proposed that the JNE assume a greater administrative role in this regard, the JNE’s constitutionally designated role as the highest judicial body with respect to adjudicating disputes regarding a party’s compliance with the electoral law renders it unsuited for this task. The law should ensure a marked separation between judicial and administrative functions to ensure the impartiality and public confidence in JNE’s judicial capacity.

The second major area of the LPP´s internal democracy title requiring further refinement is the gender quota. Under the LPP, 30 percent of the candidates on each party’s slate of candidates for Congress and municipal and regional councils must be either male or female. To be sure, the gender quota has led to the greater representation

28

Proyecto de Ley No. 2297-2007.

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of women in government. For example, since the gender quota was first implemented in 1997, the representation of women in Congress has increased from 11 to 29.7 percent. 29

Nevertheless, the gender quota does not guarantee female representation in Congress. In a proportional representation system such as Peru’s, congressional seats are held by parties and not individual candidates. The number of seats each party holds is determined by the percentage of votes it obtains. The individuals who fill these seats are then determined based on their position on the party’s candidate slate. The LPP does not regulate the order of the candidate slate. Thus, under the LPP, a party could comply with the gender quota by ensuring that 30% of its candidates are women, but place the female candidates at the bottom of the candidate slate. Unless that party won 100 percent of the vote, the female candidates at the bottom of the list would have almost no chance of being seated in Congress.

Peru’s electoral law allows voters some opportunity to reorder a party’s candidate list through the preferential vote. In 2006, six of the 35 female members of Congress were elected as a result of the preferential vote.30 Under this system, voters are allowed to designate two candidates whom they wish to be seated first, despite their position on the candidate list.

29

Gallo, Maxim, Kristen Sample, and Gregory Schmidt. “Las Elecciones Legislativas Peruanas en 2006: Un Caso Exitoso de Cuotas con Voto Preferencial.” In El Impacto de las Cuotas de Género en América Latina: Mujer y Política, ed. Marcela Ríos Tobar. Santiago, Chile: FLACSO, 2008. P. 182. 30 Oficina Nacional de Procesos Electorales (ONPE). Democracia en los Partidos Políticos: Análisis de las Elecciones Internas 2005-2006. Lima: ONPE, 2006. P. 46.

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Indeed, despite these measures designed to facilitate women’s participation in politics, most of those I interviewed agreed that more must be done to achieve this goal. On this controversial political topic, however, there is a sharp divide regarding how to do so. Some advocate requiring parties to list candidates on the slate alternating between male and female. A more middle-ground position would require parties to locate at least some of their female candidates at the top of the list. Others would amend the LPP to impose greater sanctions on those parties that fail to comply with the law’s internal democracy title, but allow the party autonomy in ordering its list.

While time constraints did not permit me to conduct an analysis of this area of the law with depth sufficient enough to recommend a particular approach to ensuring greater female representation, I noted significant confusion among the electorate and members of Congress alike about how the gender quota functions. Groups such as IRI can advance efforts to reform the law in this regard by providing educational materials and trainings for voters, parties, government officials and the news media regarding this mechanism.

In addition, reforms to the preferential vote mechanism, which Congress has recently considered eliminating, should be carefully weighed in light of its link to women’s participation in Congress.31 As I note above, the preferential vote allows voters to reorder the composition of a party’s slate of candidates and has allowed female candidates who occupy an undesirable position on the candidate slate to be seated in 31

Santillán, José. “Habrá 10 congresistas más en el Parlamento tras las elecciones del año 2011.” El Comercio 22 May 2009: http://www.elcomercio.com.pe/noticia/289917/pleno-congreso-aprobo-elevar130-numero-parlamentarios.

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Congress. In 2006, six of the 35 female members of Congress reached office as a result of the preferential vote.32 While there are persuasive arguments both for and against the preferential vote, the fact remains that if it is eliminated, voters would have no mechanism by which to reorder the candidate slate and must depend on parties themselves to place women in favorable positions on the list. Groups such as IRI should make clear this link to those involved in debating reforms to the bill. In my view, any proposal to eliminate the preferential vote should be accompanied by mechanisms to further strengthen the internal democracy requirements of the LPP.

Political Party Financing

The LPP’s title regarding the financing of political parties is transformational. For the first time in the country’s history, it authorizes direct public funding for those political parties that obtain congressional representation and prescribes a formula by which the funds are to be distributed annually over a five-year period: sixty percent of the total funds received by a party is based on the number of votes the party received in the previous congressional election; the other 40% is distributed equally among all of the parties.33 Had the government disbursed public funding to the parties for the five-year period 2007-2011, the 11 political parties currently represented in Congress would have shared in the receipt of approximately 52 million soles or $17.3 million dollars.

32 33

Democracia en los Partidos Políticos, p. 46. LPP, Art. 29.

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Nevertheless, under the law, distribution of the funds is subject to budgetary availability.34 Pointing to this clause as its rationale, the current government --- led by APRA --- has not disbursed public financing as called for under the law. There was broad consensus among those I interviewed that the root causes for the state’s failure to distribute these funds are two: (1) it is politically expedient for APRA to maintain the status quo in which there are numerous, but weak, political parties; and (2) the general public holds the political parties in such low esteem that it would be politically unpopular for APRA to provide taxpayer money to the parties. 35 In short, the parties are trapped in a vicious cycle. So long as there is scant public support for public financing of the parties, it is unlikely that any government in power would risk the political fallout associated with disbursing the funds. Yet, without the funds, the parties have little hope of becoming fully professional entities, and in turn convincing the Peruvian electorate that they are worthy of receiving the funds.

It is critical that Peru break this vicious cycle for the funds would go a long way to help the parties professionalize their operations. Currently, most party officials hold other, full-time employment and many volunteer their time. At the regional level, the base of party operations is often the home or business of a supporter and there is a notable lack of coordination among national and regional party officials. Owing to this reality, there is widespread agreement among the Peruvian political parties that the funds

34

LPP, Disposición Transitoria Tercera. According to a 2007 poll conducted by Latinobarómetro, only 14% of Peruvians had confidence in Peru’s political parties. A December 2008, IRI-sponsored poll of 2500 Peruvians residing in five major regions of the country indicates that only 11.8% of those polled thought that parties should receive state funds.

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should be disbursed. The parties should capitalize on this area of consensus to pressure the current government to release the funds.

Should the parties persuade the government to disburse the funds, it is critical that ONPE develop a legal framework to govern their use and that its budget be increased to adequately ensure that the parties comply with these requirements. There is already a skeleton of a legal framework in place: the LPP and a corresponding administrative rule specify the purposes for which the funds can be used.36 This must be fleshed out to require the parties to keep records of how the funds are used, to authorize ONPE to audit the parties to determine that the funds are being used for authorized purposes and to specify sanctions for parties that might misuse the funds. According to experts in Peruvian administrative law, the accounting and audit guidelines could be developed under a rulemaking by ONPE. On the other hand, any sanctions regime must be implemented through an amendment to the LPP itself. I recommend that to be eligible for public funds, the government require the party to submit a letter of agreement and a written certification in which party agrees to:

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Spend public funds only for formation, training and research;

•

Keep records and supply evidence of qualified expenses;

•

Cooperate with an audit of expenses;

•

Repay misused public funds, if necessary; and

•

Pay any civil penalties imposed by the ONPE.

LPP Art. 29. Reglamento de Financiamiento y Supervisión de Fondos Partidarios (RFSF), Arts. 4-5.

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With regard to the sanctions regime, monetary penalties are perhaps the most appropriate model and the government should consider ensuring that the parties pay these fines by authorizing ONPE to withhold future disbursements of public funding in the event that a party fails to pay the fine directly. This amendment should also specify a mechanism by which the parties can challenge the findings of the government audit or imposition of sanctions.

In parallel with this effort, the parties must work to develop adequate systems to administer the funds. Indeed, ONPE notes that many of the parties have not developed internal accounting systems, as required under the LPP, to ensure the proper handling of party finances. Foreign governments and civil society groups can lend assistance in this regard such as by familiarizing party officials with the permissible uses of public funding and helping officials gain the necessary accounting skills to prepare disclosure reports.

Although it appears that it will be an uphill climb for the parties to convince the government to disburse the funds, the parties should continue to press the state to disburse the funds for it will inevitably spark an important national conversation about the health of the political parties in Peru and their level of responsiveness to constituent needs.

While it would be legally permissible for foreign governments or foreign

political parties to provide direct financial assistance to Peru’s parties for party formation, training or research37, most experts agree that this is an unpalatable option. It would be financially difficult to fund all of the political parties registered in Peru and funding some of them would certainly generate charges of favoritism. In addition, a recent poll 37

LPP, Art. 31.

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conducted by IRI indicates that only 8.2% of Peruvians polled would favor foreign funding of the country’s political parties.38

Indirect Public Financing

One alternative that the parties may wish to propose in their negotiations with the government on this subject is dedicating the funds that the state currently expends on providing the franja electoral to public financing. In 2006, the government spent approximately 20 million nuevos soles to provide the parties with free access to radio and television time between 30 and two days prior to general elections.39 Yet, as many of those I spoke with observed, some parties do not have the financial means to develop a sophisticated, professional advertisement to air during their allotted times. In funding the franja and not party training and formation, the government, in my opinion, has its priorities out of order. Ensuring more professional, better trained and adequately staffed parties with a robust presence throughout the country is a more urgent priority than providing for political advertising.

Private Financing The LPP also limits the amount of money that parties may receive from donors and bars parties from accepting contributions from religious orders, state entities and state-owned businesses. It also limits, to some degree, donations from anonymous

38

Evaluación ex ante del proyecto Todos Hacemos Política, Question #38. Encuesta IRI. Cinco ciudades. Diciembre 2008. 39 LPP, Art. 37.

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donors and foreign governments.40 For example, individual donors as well as legal entities such as corporations can donate up to approximately $70,000 annually to a party. Nearly everyone that I interviewed agreed that this was an appropriate limit though one high-ranking political party officer suggested the limit be increased to keep pace with the rising price of television advertising. Overall this does not seem to be a problem area in the law. Disclosure The LPP requires parties to submit financial disclosure reports to ONPE at periodic intervals. They are required to submit an annual balance sheet detailing income and expenses as well as biannual reports that identify the source and amount of cash and in-kind donations from private sources. During campaign season, parties must submit this information bimonthly. Sixty days after the results of the election are proclaimed, parties must submit an accounting of their campaign expenses. ONPE publishes all of these reports in full on its website.

On the whole, parties are complying with these requirements despite the fact that the sanctions for not doing so are toothless. Indeed, the only consequence for not submitting the information is the loss of public funding, but since the state has not disbursed these funds, this is a hollow threat. Nonetheless, in 2007, only four parties failed to submit their annual report.41 The rate of compliance for the biannual and bimonthly reports is nearly the same. For example, during the 2006 general elections,

40

LPP, Art. 31. http://www.onpe.gob.pe/modFondospartidarios/downloads/Comunicado.22.01.2009.pdf. These include Despertar Nacional, Partido Politico Adelante, Agrupación Independiente Si Cumple, Fuerza Nacional. 41

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ONPE reports that 94 of the required 102 bimonthly reports were submitted.42 The eight reports that were not submitted corresponded to three political parties.43 Despite this generally high rate of compliance, this area of the law should be amended in favor of a graduated system of monetary fines, uncoupled from the receipt of public funding. ONPE has proposed such an approach, though the formal proposal is still being vetted internally. The parties have also begun to develop a consensus regarding what such a regime would look like. In late 2008, IRI convened roundtable discussions on the subject in which party members, government officials, and civil society members participated. The group proposed a very reasonable sanctions regime that would impose monetary fines commensurate with the gravity of the infraction.44

As part of this reform package, Congress should consider requiring the parties to include their campaign expenditures in the bi-monthly reports parties must submit during campaign season. Currently, the LPP requires the parties to submit this information 60 days after the results of the election are proclaimed. Providing this information before the election would have a two-fold effect: it would further pressure campaigns to fully disclose their contributions by providing an indirect mechanism to verify the veracity of a party’s reported donations and provide information that rival campaigns, journalists and citizens could use to make a more informed decision in the voting booth. Financial disclosure reports should also include the donor’s employer information to permit

42

“Primera Experiencia de Rendición de Cuentas y de Verificación y Control.¨ Partidos y Democracia , Año IV, No. 15, Febrero 2007: p. 4. 43 Medina, Percy. “Rendición de Cuentas, Control, y Divulgación: El Dinero en las EE. GG 2006.” In Cinco Años de la Ley de Partidos: ¿Qué Cambió y Qué Falta Cambiar?, ed. Jorge Valladares. Lima: Colección Agneda Integridad, Biblioteca de la Reforma Política Nº 7, 35-50, 2008. P. 38. 44 Balance, p. 53-54.

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analyses of which industries are favoring particular parties. The parties would clearly need greater resources in the form of public financing to comply with these amendments, however. On a practical note, this process could be simplified by requiring that all parties use the same software to prepare these reports.

Though the law does not specify a deadline by which ONPE must publish this financial disclosure information on its website, in practice, ONPE typically makes the information available approximately two weeks after receiving it from the parties and after an initial verification process. ONPE’s speed in publishing the information is laudable, but Congress should consider amending the law to require ONPE to publish the raw data in almost real time. This is especially critical during campaign season. Parties could make their compliance with the transparency rules a selling point in their campaign.

In tandem with legislative reform efforts, it is critical to encourage investigative political journalism and cultivate the growth advocacy organizations that press for greater transparency in government. Providing greater information to the public regarding political financing is one of the most effective ways to ensure greater participation in the political process.45 Civil society groups such should consider sponsoring workshops that train journalists in how to use information available through government websites and the Law of Transparency and Access to Public Information to shine the spotlight on money in politics. They can also provide positive incentives for parties to disclose this 45

Ferreira Rubio, Delia M. “Financiamiento Político: Rendición de Cuentas y Divulgación.” In De Las Normas a Las Buenas Prácticas: El Desafío del Financiamiento Político en América Latina, ed. Steven Griner and Daniel Zovatto. San Jose, Costa Rica: OEA and IDEA, 2004. P. 79.

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information by publishing scorecards that highlight each party’s compliance with the LPP’s major requirements.

Accuracy of Information To administer the new financial disclosure requirements, the LPP authorized the creation of the Office of Supervision of Party Funds (GSFP) within ONPE, to which the parties must submit their disclosure reports. The LPP assigns the GSFP the exclusive responsibility to verify and audit the economic and financial activity of the parties.46 Nevertheless, Article 178 of the Constitution grants the JNE exclusive investigative authority in electoral matters. In short, JNE lacks the statutory authority to investigate the parties and ONPE lacks the constitutional authority to do so. As a result, no one is fully investigating the party reports. To remedy this catch-22, a constitutional amendment would be required to grant ONPE full oversight authority. It is extremely unlikely that this would occur. JNE, which was founded in 1931, is a powerful organization that is unlikely to agree to cede this authority to ONPE. On the other hand, ONPE is unlikely to press for it because, as the younger organization (created in 1993), the fear of being abolished or having its budget cut looms in the background.

This is not to say that ONPE’s GSFP is a rubber stamp. The GSFP’s team of accountants regularly contacts donors listed in party disclosure reports to verify that they indeed donated to the party. This questioning is conducted under oath, so there is some incentive for those contacted to tell the truth. Nevertheless, GSFP does not have the authority to investigate individual donors so they much take those contacted at their word 46

LPP, Art. 34.

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that they did or did not provide the donation in question. GSFP also shares the information with the Unidad de la Inteligencia Financiera (UIF), an investigative body that works to detect money laundering. If the UIF spots a problematic donor on a financial disclosure list, it has the authority to open a government inquiry into the matter. ONPE does not.

Individual candidates failing to notify their party of contributions received

Without government oversight it is difficult to determine the accuracy of party financial disclosure reports. It is clear, however, that most parties’ financial disclosure statements do not fully account for the funds raised and expended by individual candidates. As it is currently written, the LPP requires that candidates inform their party of the contributions that they receive and the party must in turn include these donations in the financial disclosures they provide to ONPE. Despite this prescription, many candidates are not doing so and the parties lack the wherewithal to detect when this is occurring. Indeed, experts widely acknowledge that during the 2006 elections this problem was rampant. To illustrate, an ONPE publication notes that one of law’s principal deficiencies highlighted in the 2006 campaign was a lack of communication between individual candidates and their party regarding funds received by individual candidates.47 A Transparencia publication estimates that during the 2006 election season, individual candidates spent more than 2 million soles on publicity without the knowledge of their party or alliance.48

47 48

Partidos y Democracia, p. 5. Medina, p. 42.

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While a party could be sanctioned for failing to include these contributions, the law does not grant ONPE the authority to sanction individual candidates for failing to report contributions to the party. This is perhaps one of the biggest loopholes in the law’s financing title. Many donors give directly to candidates and candidates actively seek these donations.49 This phenomenon is driven by the very design of Peru’s electoral system. Through the preferential vote, voters in congressional elections may choose two candidates on any party’s slate that they wish to elevate to the top of the list. The slate of candidates is then reordered based on the number of votes each candidate received. This system clearly incentivizes candidates to seek contributions to their individual accounts and to spend money of their own accord.

While there has been some indications that the current Congress may consider legislation to eliminate the preferential vote, experts believe congress is unlikely to eliminate it because many members of congress owe their presence there to the preferential vote and it is also linked to the thorny political subject of the gender quota. Recognizing this political reality, it is advisable to modify the LPP to include greater controls over donations to individual candidates and that ONPE’s GSFP begin to sanction parties for failing to include this information in their reports.

There is a divide about how to regulate individual candidate donations. To be sure, requiring individual candidates to submit disclosure reports would create a great deal of work for ONPE. This was considered when the LPP was debated, but again, 49

Partidos y Democracia, p. 5.

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members of congress, realizing that as candidates they would be subject to these reporting requirements, scrapped them. At the very least, civil society groups should pressure ONPE to sanction parties whose candidates do not report their expenditures.

In the long term, if Peru continues to maintain its preferential voting system, the LPP should be amended to require individual candidates to render accounts and to provide for sanctions for those who do not. This too would necessitate an increase in ONPE’s budget and personnel. In this regard, there are few models employed in the region to look to since few Latin American countries require individual candidates to render accounts.50 Colombia offers one model: it requires presidential and parliamentary candidates to provide regulatory authorities with records of their campaign expenditures.51 Under the Colombian system, candidates must present periodic campaign finance reports to the government, which has the authority to audit the reports and impose sanctions in the form of monetary fines, reduction or elimination of public funding.52 Graver still, a successful presidential candidate proven to have violated Colombia’s financial norms, may be barred by the Congress from assuming the post altogether.53

Publicity being contracted by individual candidates/National Treasurer the only one who can contract publicity

50

Zovatto, Daniel. “The Legal and Practical Characteristics of the Funding of Political Parties and Election Campaigns in Latin America.” In Funding of Political Parties and Election Campaigns, ed. Reginald Austin and Maja Tjernstrom, Stockholm: IDEA, 2003. P. 108. 51 Id. 52 Hernandez Becerra, Augusto. “Regulación de los Partidos Políticos en Colombia.” In Regulación Jurídica de los partidos politicos en América Latina, ed. Daniel Zovatto, Mexico: International IDEA and Universidad Nacional Autónoma de México, 2006. P. 353. 53 Id.

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Another area of the law’s financing title that requires modification is Article 40, which states that the party’s national treasurer is the only person allowed to contract electoral publicity. All reports indicate that this requirement was broadly ignored in the 2006 elections. Obviously in the fast-paced environment of a political campaign, there is little incentive for candidates or local party operations to contact the national treasurer, who is probably based in Lima, to request he purchase advertising. As a result, regional party chapters and individual candidates are purchasing electoral publicity without the knowledge of the party, and the party, in turn, is not including these expenditures it is financial disclosure reports. The rulemaking that implements this portion of the law should be refined to specify that the treasurer may delegate this authority to treasurers at the sub-national level. While one reading of the rulemaking associated with this article of the law would permit the treasurer to delegate this authority, it is worth making explicit in the rulemaking the treasurer’s ability to do so.

Conclusion

As this study demonstrates, there are several major areas of the LPP that must be refined and supplemented. The most urgently needed reforms are those that would level the playing field for movements and political parties, increase the scrutiny of party committees at the sub-national level and require individual candidates to render accounts. In addition, it is critical that the parties band together to pressure the government to disburse the public funding they are due under the law. There are other areas of the law that should be examined more fully to determine whether further refinements are required

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and what form they should take. In particular, an analysis of the gender quota and how it has functioned in practice would be timely in light of Congress’ intention to consider legislation to eliminate the preferential vote. Future studies of the law might also examine the party by-laws on file with OROP to determine whether they include the provisions prescribed by the LPP. Despite this long list of suggestions for future refinements and further study, it is worth remembering that little more than five years ago, Peru was one of the few Latin American nations without a comprehensive political party law. Its passage of the LPP and associated administrative rulemakings represents a significant step forward in the process of strengthening the legal framework that governs Peru’s political parties and in turn ensuring their robust participation in the governance of the country. Now the task is to refine this solid foundation to ensure the further consolidation of Peru’s political party system.

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