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Money politics

Political party donors gained about 220 million Euros from public tenders in the course of a period of time between August 2007 and May 2014. Preportr research shows that PDK donors lead in terms of the total amount gained from public tenders. Vetëvendosje! donors are the second, followed by AAK, AKR, and LDK donors as the last one in this list.

Prishtinë, 06 October 2015

If money translates into influence which enables seizing of a public good, then the best channel to realize a gain appears to be a political party. The financing of political parties, especially during electoral campaigns, proves to be the quickest and the safest way possible to realize profit on an investment. Financial support for political parties and candidates during electoral campaigns might not have a huge influence on the final election result, but Preportr findings prove that political party supporters were exponentially compensated through public tenders for their contributions.

Based on data subject to Preportr research, in the course of seven years (August 2007 - May 2014), it turns out that some political party donors - business entities and owners – gained around 220 million Euros in the form of public tenders. The research shows that donors of the Democratic Party of Kosovo (PDK), which ran the government of Kosovo for seven years, are on top of the list of winners of public tenders, followed by donors of Vetëvendosje! (LVV). Donors of the Democratic League of Kosovo (LDK), Alliance for the Future of Kosovo (AAK), and New Kosovo Alliance (AKR) gained far less income from tenders compared to donors of the PDK and LVV.

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In total, Preportr was able to show that PDK donors gained more than 160 million Euros, whereas LVV donors received around 60 million Euros from public tenders. The total amount that donors of the other three political parties (LDK, AAK, and AKR) gained is less than 14 million Euros. The Democratic Party of Kosovo and Vetëvendosje!, besides a rather similar financing physiognomy, have even the same donors in certain cases. The Democratic League of Kosovo, even though second in terms of the number of votes, declared the least income from donors, and consequently its financers gained the least from public tenders. The two other parties, AAK and AKR, are based on donations coming mainly from party members – in the case of the AAK – or relatives of the president – in the case of AKR, which makes the latter mainly a party of family donations.

Due to lack of access to official data of all contributors to political parties related to the period between 2000 and 2008, ÇOHU! and the Kosovo Center for Investigative Journalism submitted several requests for access to public documents to the Central Election Commission – CEC, and Organization for Security and Cooperation in Europe - OSCE, but also to parliamentary parties involved in this research.

These requests asked for: access to all audit reports (annual financial reports and expenditure reports during elections) since the time of establishment of parliamentary parties (apart from those that appear on the official site of the CEC), the list of assets registered in the name of the party, bank accounts, bank transactions, the account of the party at KTA, lists of people who get their salaries from the party, access to the entire party archive related to the list of donors since party establishment (physical and legal entities), the full list of contributions received from private companies which have contracts with state institutions, and access to receipts archives related to goods and services contracted by the party.

Preportr waited for an answer for nine months, but despite some efforts, no parliamentary political party allowed access to this information and the requested documents. OSCE replied that they have submitted to the CEC all annual financial reports of political parties, including expenditure reports during electoral campaigns for the period from 2000-2008. The latter declared to have destroyed these reports as a result of lack of space to archive them.

In terms of audit of annual financial statements and expenditures during local and national elections for 2013 and 2014, due to lack of constituting of institutions for six months, the Republic of Kosovo Assembly did not manage to engage auditors to audit financial statements of political parties. However, though functional from December last year, the Kosovo Assembly has not yet managed to select auditors to perform the audit of annual financial statements and expenditures of political parties during elections for the years 2013 and 2014.

Nature of funding of political parties

The report shows that the two main sources of funding of political parties come from the public budget, and external donors in the form of cash or contributions in goods and services. In this line, the PDK and Vetëvendosje! have a similar nature of funding, (i.e. for the two political parties, the main sources of funding come from the state budget and different donors which are at the same time, the main beneficiaries of millions of Euros from the public budget.) The Democratic Party of Kosovo and Vetëvendosje! declare income from external physical entities, not excluding private businesses, as their donors with much higher amounts compared to other political parties.

Preportr research showed that the donors of the biggest political rival of the PDK, Vetëvendosje!, besides being the same as the ones of PDK in certain cases, they are second in the list to gain the most tenders from public institutions. The total amount of tenders gained by PDK donors is 162,517,080 Euros, whereas LVV donors received 59,701,559 Euros.

According to official documents, this was not the case with the other three parties, the LDK, AKR, and AAK, even though they were part of government for a long time. In this aspect, data shows that LDK donors in particular gained the least from public tenders. A concrete case for this is the Municipality of Prishtina, which, though ran by the LDK since after the war, gave more than 13 million Euros of public tenders to PDK donors. The data show that LDK donors received 419,631 Euros from public tenders; AAK donors received 9,767,240 Euros, whereas AKR donors received 3,089,817 Euros.

The LDK and AAK declare most of their incomes as incomes from the budget, but even in cases when they declare income from donations, most of those are under the names of party members. In the audit report of 2009, the LDK declared income from the selling of the assets without mentioning said asset that was sold. These incomes constitute more than 50% of LDK incomes for the 2009 campaign. In the case of the AAK, we come across 4-5 names that are in high positions in the party, and most of the incomes listed as donations are declared under their names.

A completely different nature of funding is the party of Behgjet Pacolli, which, during the last election, did not even manage to pass the electoral threshold. With many breaches of the law, relatives of the president of this party, Behgjet Pacolli, financed this party.

During research, Preportr found some shortcomings in audit reports. One shortcoming is that categories of incomes for political parties, such as the “other incomes” category, do not explain the nature of the incomes. Also, these reports contain errors such as where IDs of donors do not correspond with the names of donors, which makes it more difficult to identify said donors and the benefits they might have received from public tenders.

The PDK: A gravitational field for donors

Political party relations - especially ones involving the PDK – with businesses are established on a very close tie in which, based on academic terminology and the quite expressed nature of the practice in the country, may be considered to contain forms of clientelism. This relationship occurs when different individuals and businesses give money during electoral campaigns for the party or individuals within the party, and as compensation, they selectively win public tenders. This kind of relationship is stretched along all government levels, both locally and centrally, and affects many institutions.

After coming into power, the Democratic Party of Kosovo awarded B2 Company, which worked for the electoral campaign of this party during the 2007 elections. Only a few weeks after gaining power, the Democratic Party of Kosovo without opening a call awarded this company with a fund for the celebration of Independence Day on February 17, 2008, to the amount of 562 thousand Euros.

But this was just the beginning of a complex relationship between donors and the PDK. During their seven years in power, the PDK gave tenders for its donors amounting to hundreds of millions of Euros. Previous Preportr researches, including this current one, show that in order to keep and consolidate its power on all levels, the PDK has skillfully used different means such as: clientelism  (selectively awarding companies and individuals that have supported the party and its members during electoral campaigns with public tenders), political patronage (employing party members and supporters in civil service, public companies and independent agencies), and nepotism (employing family relatives of party members in civil service, public companies, and independent agencies).

In total, Preportr research could identify that 52 subjects that funded the PDK, as physical or legal entities, received 325 tenders from public institutions, totaling an amount of 162,517,080 Euros.

Preportr put a special emphasis on two specific Ministries, the Ministry of Education and former Ministry of Transport – now Ministry of Infrastructure, which had larger budgets than other institutions between the years 2007-2014. Preportr downloaded all signed contracts from these Ministries for the abovementioned period, showing that some of the PDK donors received 109 tenders amounting to 128,641,328 Euros.

Preportr also conducted an additional research based on a random sample with other institutions (municipal assemblies, public companies and other public institutions) regarding the benefits of PDK donors. The research found that the businesses which funded the PDK received 216 tenders from these institutions, worth a total amount of 33,875,752 Euros.

During 2009-2012, the PDK received 333,460 Euros from businesses or owners of businesses in the form of donations, while some of them in return were awarded tenders reaching an amount of over 162 million Euros.

Preportr was able to identify three companies that funded the PDK and LVV, which were awarded 27 tenders amounting to 15,071,901 Euros.

Vetëvendosje!, small but plump

Although registered very late as a political party (in 2010), Vetëvendosje!, unlike the LDK and AAK, declares many donors, some of whom are PDK donors for years in a row. Preportr research shows that Vetëvendosje! donors were awarded much more than the donors of the other three parties that were in power on a central and local level, such as the LDK, AAK and AKR.

LVV donors received 42 tenders from MEST, MTPT, and MI in the amount of 58,493,257 Euros, while businesses that funded LVV were awarded 17 other tenders from other institutions in the amount of 1,208,302 Euros. In the course of three years (2010-2012), LVV received 161,618 Euros from businesses or business owners in the form of donations.

One of LVV’s donors, Florim Zuka, at the time when he financed this political party, was under investigation for a case known as "MTPT 1"; where besides other subjects of this investigation were also the former minister of this Ministry, Fatmir Limaj, Nexhat Krasniqi, and Endrit Shala. The aforementioned were indicted in 2013. Florim Zuka is the owner of "Tali" company. He is also a PDK donor.

Preportr found that his company received 14 tenders form public institutions, to the amount of 14,369,241 Euros.

The research shows that LVV donors were awarded tenders amounting to around 60 million Euros, exceeding the amount of tenders awarded to the LDK, AAK, and AKR donors collectively.

Unlike all other parties that are part of this research, LVV is the only party that made public their annual financial and expenditure reports during elections since the time it was part of institutions. Those include reports of 2013-2014, but these reports have not been taken into consideration, considering they were not audited by an independent auditor.

LDK – Large but small

The Democratic League of Kosovo, according to financial statements made public by the CEC, during 2009-2012 received few donations and gave few tenders, even though it was part of the government both at the central level until 2010 (coming back as head of the government after the latest parliamentary elections in 2014), but also in some municipalities at the local level. Moreover, in Prishtina, the LDK run the local government since after the war until 2013.

During the election campaign of 2010, unlike the one in 2009, the LDK, which is the second largest party in the country, presented few incomes from external donations. It also declared very few donors during 2011 and 2012. In the audit reports of finances of political parties published by the CEC, Preportr found that some of the donors of the LDK are businessmen, however according to the findings the majority of them did not win public tenders.

The data show that seven companies that funded the LDK got 13 tenders in public institutions. The amount of these tenders is 419,631 Euros.

Nonetheless, this fact does in no way reveal the transparent nature of LDK in regard to whether or not it employed a selective approach when awarding public tenders to its affiliated companies. The CEC’s reports disclose the audited accounts as they have been reported by the party itself. In fact, the LDK has constantly refused access to financial data requested by Preportr.

Lately, the Office of the Prime Minister, run by the LDK, has awarded a contract for a car servicing company using closed tendering procedures to “Makcar”, a company owned by the Prime-minister’s sons. There were also cases, such as that with “AMM”, a donor of the LDK, which had for a decade held a monopoly on advertisement in public spaces while the party was running the capital city. Moreover, the LDK was also characterized in Prishtina Municipality as favoring construction companies close to the party.

Few donors of AAK

A similar nature of funding of the LDK can be found within the Alliance for the Future of Kosovo. During campaigns this party was financially supported by party members, some of whom are businessmen like Ramiz Kelmendi and Blerim Kuçi. Ramiz Kelmendi was the deputy of this party in the Kosovo Assembly in the previous mandate, and became part of the PDK during the last elections. In the previous mandate, Blerim Kuçi ran the Municipality of Suhareka. Among others who gave donations to this party was the former deputy Burim Ramadani, and Shkelzen Jusaj, a renowned businessmen who entered the list of candidates for deputy during the last elections, but who failed to pass the required threshold to enter the Parliament.

Five companies that financed the AAK were awarded 26 tenders from public institutions. The amount of these tenders reaches 9,767,240 Euros.

During 4 years, the AAK received 147,200 Euros from businesses or their owners in the form of donations.

Huge amounts of money in support of AKR

The party of the businessmen Behgjet Pacolli received many donations, exceeding in 2010 even the biggest party in the country, the PDK. During this year, the AKR received 425,451.43 Euros as donations; compared to the PDK who received 351,734.73 Euros.

The funding of Pacolli’s party is more specific. This party was supported by family relatives of the businessman – this, according to his surname. People from his birthplace also supported his party.

Preportr drew some statistical data from financial statements that this party submitted to the CEC. In 2010, out of 195 donors that supported the AKR, 31 of them were named Pacolli, 6 were Makolli, 2 were Vitia, and 2 others were Gërbeshi.

In 2011, out of 41 donors, 4 were named Pacolli and 2 were Makolli. This year, the AKR received a note from the auditor for receiving funds from abroad, an action that is against the law.

In 2012, the AKR was supported by 300 donors, 37 of whom were named Pacolli, 4 were Makolli, 5 were Vitia, and 1 was Gërbeshi.

Donations for this party came from abroad and reached amounts that are not allowed under the law. As a result of this, the AKR in CEC audit reports turned out to be the party with the most violations of the law.

AKR donors did not receive many tenders in public institutions.

Six companies that funded the AKR got 42 tenders from public institutions. The amount of these tenders is 3,089,817 Euros.

During four years, the AKR received 128,328 Euros from physical and legal entities in the form of donations.

Violations of law and small penalties

Until mid-2013, the legislation that regulates the funding of political parties did not contain any disposition that regulated the funding of political parties by businesses, which at the same time provide services or goods for public institutions. Although amended several times, the Law on Financing Political Parties still does not clearly address the relationship between the funding of political parties and the businesses that at the same time provide goods or services for public institutions. Political parties are required by law to draft a special list of all donors that provide goods or services for public institutions, but according to audit reports, parties do not comply with such a requirement.

Even though some work has been done to complete the legal framework for the funding of political parties, the law and CEC regulations fail to address a number of issues that are related to transparency of finances of political parties. The Law, among other things, in no article addresses declaratively the issue of transparency of donations or other contributions received by individuals who run for deputy or assembly member during electoral campaigns. The Law obliges only political parties to declare received contributions, but does not address such a request also for candidates who run for deputy. Also, the Law sets out very mild penalties for political parties if they do not comply with legal requirements. These mild measures in fact, have allowed political parties to continuously violate legal norms that are in force.

For violations of dispositions of the Law the fines are not high: political parties are fined between 3,000 and 10,000 Euros, while candidates for deputy and assembly member are fined between 500 and 3,000 Euros.

The Law on the financing of political parties specifies in Article 5 that physical entities may donate to political parties no more than 2,000 Euros per calendar year, while legal entities may donate no more than 10,000 Euros.

Audit reports show that political parties violate the law mostly in this point. The fines for this violation are not high. Based on Article 25, point 1 of the Law on the Prevention of Money Laundering and Terrorist Financing, stating that political parties shall not receive monetary contributions that exceed one thousand (1.000) Euros from a sole source within one day, and based on Article 17.7 and 17.8 of the Regulation 01/2008 for the Registration and Activity of Political Parties, that in case of receiving unpermitted contributions, the president of the party returns the contribution to the donor.  Parties are therefore obliged to return unpermitted contributions to the donors.

Preportr has secured a list of donors to whom political parties were obliged to return money. The PDK is on the top of this list, but there are also other parties like Vetëvendosje! for which donors gave much more means than the law permits.

Political parties violated the Law when they received money from abroad which is against the Law on Financing Political Parties, Article 11, point 1.1 which says: “Ban on financial and material assistance shall apply to: 1.1.  government and non government foreign institutions, and foreign natural and legal persons.”

Behgjet Pacolli’s party and Lëvizja për Bashkim in 2010 received money from aboard.

Political parties almost never declare the purpose or the destination of the means they receive from the fund for support of political parties. However, besides covering some of the activities of political parties, almost all fines that the CEC imposes on political parties are drawn from this fund. The first amendment and addition that was made to the Law on Financing Political Parties favored political parties by increasing the amount of this fund from 0.17 % to 0.34 % of the budget.

The means that are returned to donors, who donated more than the Law allows it, are usually withdrawn from this fund. The administrator of the PDK, Halil Selimi, had told Preportr that all means that were to be returned to donors were withdrawn from this fund.

Hiding contributions

It may happen that those businesses or their owners who give donations for political parties in cash or other contributions in goods and services during elections, see this form of support as an opportunity to be compensated by favors in the long run. This research cannot tell if different businesses or individuals who own businesses might have been obliged to provide donations for political parties in one way or another, especially during electoral campaigns, nor if the same donors would have benefited to those amounts from public tenders had they not funded political parties.

In fact, the law does not oblige the Office for Registration and Certification of Political Parties at the CEC to undertake full verifications related to the accuracy of expenses that political parties incur during electoral campaigns and their declaration.

Nonetheless, this research speaks only of the benefits realized by different donors who, in audited financial reports (2009-2012) submitted to the CEC, are represented as supporters of political parties. It should be noticed that a vast number of companies and individuals who support political parties and their candidates do not appear in financial reports audited by the CEC.

A past research of ÇOHU! demonstrates how companies that deal with the organization of electoral campaigns provided services for big political parties, receiving compensations that do not exceed 5,000-6,000 Euros, while enormous amounts of cash were given by the very political party officials. Another method used by political parties to avoid official declarations of expenses during elections is the realization of payments using third companies – a marketing company issues a regular receipt to a certain company pretending to have provided services, while those services were either provided for a political party, or for individuals who ran for a political position.