Election Campaign Finances in Georgia: 2016 Parliamentary Elections

31 March, 2017

Study of the period from June 8 to November 16, 2016 revealed the following main findings:

Income

In total, qualified election subjects received income of GEL 32 million. The greatest part of it, that is GEL 21 310 211 (66%), went to the Georgian Dream, to be followed by the United National Movement with GEL 2 811 045; the Alliance of Patriots comes third with GEL 1 674 908;
Income received by the Georgian Dream is seven times higher than income of the second place holder United National Movement; meantime, it is nearly twice as much as the total income all other qualified parties taken together. Such a huge difference in revenues of political parties has not been detected since 2010;
The following categories represent the largest sources of revenues: a) state funding, b) private donations and c) bank loans;
With the exception of the Georgian Dream and the Alliance of Patriots, state funding accounted for the greatest share of income for all other qualified election subjects;
In total, qualified election subjects received GEL 21 726 165 as donations. The largest part of donations, that is GEL 19 183 489 (86%) went to the Georgian Dream; it is followed by the Alliance of Patriots of Georgia with GEL 998 001; the United National Movement ranks third with GEL 972 764. Such large sum of donations has been observed for the first time since 2012 Parliamentary Elections;
Donations received by the Georgian Dream 19 times exceeds donations of the Alliance of Patriots and 6 times – those of all other qualified subjects taken together. Such huge defference in donations of the ruling party and other qualified subjects is unprecedented throughout the election history of Georgia;
85% of total donations came from 1 233 natural persons with the remaining 15% - coming from 65 legal entities;
Out of 53 donor companies of the Georgian Dream, only five got direct state contracts through the simplified procedure, with a total amount of GEL 420 000. Since the given companies donated around GEL 313 075 to the Georgian Dream, such low value of direct contracts does not cast doubts in terms of political corruption;
As for contributions by natural persons, 201 out of 1 233 donors were somehow connected (including through family members) with 935 legal entities. 76 out of 201 are connected to companies, which have secured at least one public procurement contract through the simplified procedure in 2016. 55 out of these 76 natural persons are contributors of the Georgian Dream. Throughout the election period, they donated a total of GEL 1 661 470 to the ruling party, whereas 49 companies connected to these 55 individuals secured GEL 2 400 000 worth of contracts;
In the election period, 122 public officials and their family members donated funds. In case of 8 officials, there are questions whether they had sufficient revenues to donate funds to political parties.

Expenses

In the election period, expenses incurred by 9 qualified subjects amounted to GEL 31 618 225. The greatest part of expenses - GEL 22 291 484 (70%) was incurred by the Georgian Dream. It is followed by the United National Movement with GEL 2 613 102; Free Democrats rank third with GEL 1 415 539;
Funds were mostly expensed for goods and services, advertising and salaries;
During three months before the elections, Transparency International – Georgia carried out parallel monitoring of costs incurred by qualified election subjects for TV advertising and billboards in Tbilisi. Figures declared by the election subjects do not contradict our findings, except for one case when the party Free Democrats did not include cost for four advertisements on TV Imedi in its financial declarations.

Other issues

Despite requirement for high standards of financial transparency and response offered by the State Audit Office to detected violations, reporting by political parties/election subjects in a comprehensive manner remains to be a major challenge. The overwhelming majority of the declarations are incomplete or inconsistent. Mandatory information is missing from various fields. One gets the impression that political parties are not well aware about the way to fill in the declaration forms; they do not know which data they should include, or deliberately do not fill the forms properly;
For parliamentary elections, five out of all qualified election subjects had complied with gender quotas in the party list; out of these, only the Alliance of Patriots managed to overcome the 5% election threshold.