Georgian Young Lawyers Association

International Society for Fair Elections and Democracy

Transparency International Georgia

Recommendations about Amendments to the Organic Law of Georgia on

Political Unions of Citizens
(DRAFT)

Vote Buying
Financing of Political Unions of Citizens and Election Subjects

Tbilisi
2013

The present document outlines joint opinion of non-governmental organizations about

proposed amendments to Organic Law of Georgia about Political Unions of Citizens.
Notably, the proposed draft is reflective of some of the NGOs recommendations, which we
welcome. However, it modifies the notion of a donation, repealing prima Article 26 and
related provisions, which may pose a certain risk of illegal flow of money in politics. Further,
the proposed draft fails to address issues related to vote buying and neutrality of the State
Audit Office, which is rather important for promoting transparency of political financing. The
draft has not been enclosed with an explanatory note, which would have further substantiated
the necessity to adopt these changes.
I. Comments about proposed formulations
Notion of a donation
a) The proposed draft modifies the notion of a donation (para.2c, Article 25); in particular,
material and non-material values and service received at discounted price/on concessionary
terms would no longer be considered as a donation. Words at discounted price/on
concessionary terms have been deleted in the Article and replaced with symbolic price.
Receiving of material or non-material value at a symbolic price may entail only a few
cases, whereas discounted price/concessionary terms is a broader notion and receiving of
material or non-material values at a discounted price or on concessionary terms may entail far
more cases that must be regulated by the law. As to the symbolic price it may remain in the
definition of donation in addition to discounted price/concessionary terms. If the latter is
removed completely, the norm would no longer regulate a number of agreements made at a
discounted price/on concessionary terms, which would promote receiving of material values
by circumventing the law.
Further, we realize that evaluation of receiving material or non-material values and service at
a discounted price or on concessionary terms may be associated with certain challenges,
including standards of evaluation, competence and objectivity of respective authorities. We
believe that the issue must be tacked by regulating it with applicable norm rather than
completely removing it from the law.
Proposed formulation of applicable provision:
Para.2, Article 25 shall be formulated as follows:
2. The following shall be qualified as a donation:
a) Financial resources deposited by a citizen of Georgia on the account of a party;
b) Financial resources deposited on the account of a party by a legal entity registered
on the territory of Georgia and whose partners and beneficiaries are citizens of Georgia
only;
c) Material or non-material values (including a credit on concessionary terms) or
service received by a party from natural or legal persons free of charge or at discounted
price/on concessionary terms, except for a voluntary work performed by a volunteer.
b) Under the proposed draft, financial resources provided in support of or against
supporting a political party would no longer be considered as a donation and would remain
outside the scope of regulation. 1 We believe that the notion of a donation should entail not
only the financial or material resources received directly by a political party but also cases
where an individual utilizes these resources in support of an individual political party in any
1

Paragraphs 21 and 22, Article 25 of the Law of Georgia on Political Unions of Citizens

other form. Despite the form of a donation made, both cases making of a donation
received directly by a party and spending financial resources in support of a party, should be
considered as a donation for purposes of the law and should be subject to the same
regulation, including deeming of spending outside the limits as illegal and application of
subsequent sanctions. Thus, under the May 8, 2012 amendments, cases where an individual
(legal or natural) has no political or election goals but spends certain finances/gives material
value/service in support of or against supporting a political subject also fall under the notion
of a donation.
We believe that by deleting the foregoing paragraphs, similar cases would remain
outside the scope of the regulation, which would pose certain problems with regards to
unlimited spending of finances by means of a third party, promoting unequal election
environment.
Proposed formulation of applicable provision:
Paragraphs 21 and 22 in Article 25 shall be formulated as follows:
21 . Regulations that apply to donations shall also apply to spending of financial resources,
providing material or non-material values or service free of charge or at a discounted
price/on concessionary terms (except voluntary work performed by a volunteer) in favor of
a party or a person envisaged by Article 261 of the present law, irrespective of whether the
addressee of these resources is identifiable.
22 . Prohibitions and regulations that apply to donations shall also apply to spending of
financial resources, providing material or non-material values or service free of charge or at a
discounted price/on concessionary terms (except voluntary work performed by a volunteer)
against a party or a person envisaged by Article 261 of the present law, irrespective of
whether the addressee of these resources is identifiable.

Partys sources of income

The proposed draft increases annual income of a party received from public events 2 and its
maximum amount may not exceed two times the amount of base funding, which may be as
high as GEL 600 000. Notably, this is the highest amount allowed by current legislation to
be received from public events. According to current formulation, annual income of a party
received from public events may not exceed GEL 60 000, while under the provision that
applied prior to December 2011, the maximum amount was GEL 30 000.
We believe that the amount of income should be reflective of adequate amount received
from public events. The law should expressly define the amount of funds that a party is
allowed to attract from public events. Increasing the maximum amount requires more
substantiation as to why it is allowed to be as much as two times the maximum amount of
base funding. Further, we believe that proposed formulation makes it clearer and easier to
understand the kind of symbols concerned. The phrase by partys... of partys shall be
inserted in subparagraph d in Article 25, as it is now.

Scope of regulation of Article 261 and other related provisions

Subparagraph d, Article 25 of the Law

The proposed life abolishes Article 261 and related provisions. Abolishment of noted Article
would leave outside the scope of regulation activities of persons with declared election goals,
who are spending material or financial resources to achieve these goals; as well as activities
of a person with declared election goals, who are spending financial resources to achieve
these goals prior to their registration as an election subject.
Notably, the May 2012 amendments significantly narrowed down the formulation of Article
261 of the Law of Georgia on Political Union of Citizens, in a way that the scope of the
regulation covered individuals that are subject to prohibitions that apply to political parties
individuals with election goals, who are spending certain resources to achieve these goals; as
well as individuals who have no declared election goals but who have made certain illegal
donations throughout the year. We believe that repealing these provisions may promote
spending of significant amount of finances, which would have an adverse impact on political
and election processes. On the other hand, if paragraphs 21 and 22 are reinstated in Article 25
of the law, it will turn out that persons who decide to spend resources for the benefit of their
election goals will be subject to a single prohibition maximum amount of donations.
Therefore, without Article 261 persons with election goals will be subject to excessive
limitations on spending but will not be subjected to the requirements of transparency and
accountability.
Proposed formulation of applicable provision
Article 261 shall be formulated as follows:
Article 261
1. Restrictions on a party prescribed by this chapter apply to a person, who has declared
electoral goals and which uses related financial and material resources to achieve this goal;
2. A person, who has been held liable for repeated violation of donation regulations
envisaged by the present law or norms regulating vote buying, or the violation involves a sum
exceeding 30 000 GEL, the rule of financial transparency prescribed by the present chapter
shall apply.
3. A natural person, who has declared electoral goals and uses related resources to achieve
these goals, shall establish a special fund. Restrictions for an independent candidate
envisaged by the Organic Law of Georgia Election Code of Georgia shall apply to this
person.
4. Goal of the prohibition is to regulate and ensure transparency of income and expenditures
of a party and a person with declared election goals, related to political and election goals.
Prohibitions that apply to persons envisaged by the present Article shall apply only to
activities related to use of financial or other material or non-materials resources for political
and election goals. Prohibitions shall not apply to economical/entrepreneurial activities, the
right to property, other private legal rights and freedoms, if they are not related to election
goals and/or are not carried out by circumventing prohibitions stipulated by the Georgian
legislation.
5. Prohibitions envisaged by the present law shall not apply to international organizations and
legal entities with the aim of developing institutes of political unions, not in support of or
against any political force.

6. Prohibitions envisaged by the present law may not be applied against freedom of
expression, civil activities and pre-election agitation.
7. Prohibitions envisaged by the present article shall be abolished on the day of tabulation of
election results;
8. In case, where circumstances prescribed by this Article are no longer present, the State
Audit Office, by its own initiative or on the basis of a statement from a person under the
restrictions prescribed by this Article, through a simple administrative procedure considers
the issue of abolishment of the restrictions.
The following Article 71shall be inserted in the Code:
Article 71.
Declared election goal when an individuals desire to participate in and win elections, and
come into power is evident. The statement shall be public, directed at formation of public
opinions, which can be achieved by means of print or electronic means of mass
communication, including Internet as well as public events organized to gain individual
support.

The right of a party to receive a loan

Current provisions that apply to a partys right to receive a loan will be amended. 3 Under the
proposed draft, a party will be able to receive a loan/credit during non-election period, which
we welcome. However, receiving a loan from institutions other than a bank, any natural or
legal person may pose certain risks. These risks are further intensified by the fact that the
draft allows receiving of a significant portion of a loan/credit on concessionary terms, which
will no longer be viewed as a donation. In this light, a number of deals can be made,
including deceitful deals, which may in fact constitute circumvention of prohibitions that
apply to donations, which will promote uncontrolled flow of money in politics.

Prohibitions that apply to making of donations4

When delegating legal entities with the right to make a donation, a number of prohibitions
must be established in order to avoid any risks of corruptive deals and influencing of political
processes in Georgia by foreign money.
Proposed formulation:
The following paragraphs 21 and 22 shall be inserted in Article 27:
21. Receiving of a donation from an enterprise shall be prohibited if
a) its beneficiary is registered in off-shore zone;
b) it is registered in off-shore zone;
c) owner of shares or beneficiary is a foreign citizen;
d) state holds more than 10% of shares.
22. Prohibitions envisaged by para. 21a and b of the present Article shall not apply to cases
when a political union submits complete information about person registered in off-shore
3
4

Para.3, Article 25
Paras. 2 and 3, Article 27

zone, confirming that founders/share holders/beneficiaries are citizens of Georgia. The

information shall be public and shall be published on the official website of the State Audit
Office together with declarations of political unions.
The term beneficiary shall be defined in a foreseeable manner for the purposes of this law.

Authority of the State Audit Office

We welcome that the draft is reflective of our recommendations and stipulates that
information from commercial banks must be requested by the SAO based on court warrant;
however, we believe that as an alternative the law should also envisage the possibility of
requesting the information from natural or legal person concerned. 5 Otherwise, it may be
difficult to examine the issue comprehensively during administrative proceedings, which will
hinder detection and prevention of the violation. Inability of the SAO to request information
from person concerned may have adverse impact on administrative proceedings (as it may get
in the way of obtaining complete information), as well as natural or legal person as it may
promote making of wrongful decision for the lack of information. Therefore, the SAO should
have the right to request information from a commercial bank about financial status of an
individual through court, as well as from natural or legal person concerned. The SAO should
decide on a case by case basis which of these two ways is more suitable for receiving
information. Therefore, we believe that para.2g should remain in Article 341 and
subparagraph f1 as well as para.4 proposed by NGOs should be inserted.
Proposed formulation of applicable provision:
The following subparagraph f1 shall be inserted in Article 341
f1) request information about finances of a natural or legal person from commercial
banks based on court warrant, when needed.
The following para.4 shall be inserted in Article 341
4. When applied by the SAO pursuant to subparagraph f1, para.2 of the present
Article, court shall render subsequent decision within 48 hours after application. In its
application the SAO shall substantiate and indicate grounds for requesting access to
information, goals, period and volume of information requested. If the application is
granted, courts decision shall indicate grounds for requesting the information, goals, period
and volume of information requested and the term of validity of the decision.

Sanctions for violating political financing rules

The proposed draft abolishes a number of sanctions e.g. para. 2, 3 and 4 in Article 342,
while receiving of prohibited donation/membership fee by a party will result in imposition
of fine only when committed repeatedly.
We believe that receiving of prohibited donation/membership fee by a party (para.1, Article
342) shall result in imposition of fine when committed for the first time. Further, liability for
a natural or legal person for making a prohibited donation in favor of a political party shall
remain in force.6 We believe that abolishment of applicable sanction for may promote
5
6

Para.2g, Article 341

Para.2, Article 342

making of illegal donations, which will have an adverse impact on political and election
environment.
Therefore, we support formulations proposed by us, envisioning two times the amount
concerned for violation of financing rules.7
Notably, the law envisages sanctions even if a party is unaware of illegal nature of
donations. E.g. the draft law stipulates that donation from persons who have received 15%
of income through state procurement is prohibited. Subsequent sanctions should apply to
donor; in all other cases when a party is or should be aware of illegal nature of donations
made (as under reasonable circumstances an objective person would have been aware), it
should return the donation to avoid liability.
Proposed formulation of applicable provision:
Paras. 2 and 3 of Article 342 shall be formulated as follows:
1. Receiving or hiding of a donation/membership fee prohibited under the Georgian law by a
party or a person envisaged by Article 261 of this law
shall result in transfer of the donation/membership fee to the state budget and imposition of
fine two times the amount of the donation/membership fee received.
2. Making of a donation/paying membership fee prohibited under the Georgian law by a
natural or legal person, their union or any other type of organizational unit in favor of a
person envisaged by para.1, Article 261of the present law, shall result in imposition of fine on the person who made the prohibited donation/paid
prohibited membership fee or on a person who made a donation through a third party (if any)
twice the amount of donation/membership fee concerned.
3. Receiving or withholding information about a donation/membership fee prohibited under
the Georgian law in favor of a person envisaged by para.1, Article 261 of this law
shall result in imposition of fine two times the amount of the donation/membership fee.
Further, para.4 should remain in Article 342of the law.

II. Issues not addressed by the Proposed Draft

a) Vote Buying
About the Problem

See formulations in recommendations submitted by NGOs to inter-factional groups of the parliament of

Georgia

Regulation of vote buying is rather ambiguous and unforeseeable; further, definitions and
applicable sanctions are stipulated by three different legislative acts, which necessitate
harmonization of the existing regulations with one another.
We believe that harmonization of the noted definitions and removal of ambiguities allowing
for broad and unsubstantiated interpretation of vote buying is necessary.

Recommendation
Below are general guidelines for the regulation of vote buying:
notions of vote buying stipulated by various different legislative acts must be
harmonized;
vote buying, as an administrative violations stipulated by the law on Political Unions
of Citizens shall apply throughout the election year; however, special regulation
stipulated by the Election Code envisaging different sanctions should apply to preelection period;
Regulation provided by the Law on Political Unions of Citizens, similar to the
regulation provided by the Election Code shall apply without any pecuniary
limitations;
The Criminal Code should criminalize vote buying with the value of more than GEL
300 and for election purposes (maximum amount will only be stipulated by the
Criminal Code);
Stipulation of the criminal norm about liability for making ostentatious, malicious or
any other agreement for the purpose of averting legal prohibitions should be
removed.
The norm in the Criminal Code that applies to vote buying should allow to
differentiate between types of vote buying according to their gravity, which will also
be reflected on applicable liability measures
Ordinary citizens should not be subject to either criminal or administrative liability for
vote buying;
The law also needs to regulate charity by politicians and high-ranking officials in particular,
in order for everyone to clearly see where the line between charity and vote buying is drawn.

b) Institutional Independence of the Audit Office

About the Problem
Under the applicable law, monitoring of financing of political parties and election subjects is
carried out by the State Audit Office (SAO). We welcome that there is an agency that
8

supervises party financing; however, practice has demonstrated the necessity of certain
changes to ensure more independence and maximum impartiality of the SAO. NGOs reports
have note that the SAO was partial and selective in its work. The problem has also been
highlighted by the OSCE/ODIHR final report for the 2012 parliamentary elections. 8
Recommendation
In order to ensure high degree of independence of the State Audit Office and to shield it from
political influence, certain prohibitions must be placed on political/party activities of the
Auditor General and his/her deputies, not only during their term of office but also during
certain period before they assume their office at the SAO and after their official authority is
terminated; in particular, four years before appointment to the office and three years after
termination of their official authority, these individuals should be prohibited from being
named as a candidate for membership of any elected office, from being a party member or
political office holder. Such prohibition would rule out any ties of the SAO officials with a
political party and any political influence on their activities. Further, it will also ensure that
the SAOs work is impartial.
Subsequently, para. 21 should be inserted in Article 9 of the Law of Georgia on the State
Audit Office, which would also apply to Deputy General Auditors pursuant to para.2 of
Article 12 of the Law.
c) Regulations that apply to transparency of political party financing9
Under regulations that apply to transparency of political party financing issues like form of
reporting and frequency of publishing reports need to be addressed.
a) Reporting
About the Problem
We welcome the fact that current forms of party asset declaration are rather sophisticated and
comprehensive. Only soft copies of asset declarations are available, which hinders their
analysis. On the other hand, it is virtually impossible to access the data.
Recommendation
Party asset declarations must be filled out electronically and be always available for public on
the website of an agency that supervises political party financing, similar to officials asset
declarations (see www.declaration.ge). However, financial reports of political parties must
also be maintained in a database that allows for simplified search, categorization and analysis
of necessary information. Further, the law already envisages the possibility of electronic
signature, which could become obligatory for political parties in order for declarations to be
filled out electronically. When designing a template for electronic declaration, the SAO
should incorporate mechanisms for simplifying data processing to make it easier to perceive
and identify information, making it machine readable.

http://www.osce.org/ka/odihr/elections/98585 p.30
See formulations in recommendations submitted by NGOs to inter-factional groups of the parliament of
Georgia
9

b) Frequency of Publishing Reports

About the Problem
Voters are interested in not only funds attached by political subjects but also expanses made
during pre-election period, in order to make an informed choice. Even though applicable law
requires frequent reporting (three times a week after scheduling of elections), it is
insufficient.
Recommendation
Law should require that final financial report that should entail expanses made in addition to
income received must be published shortly (5-10 days) before the elections.

10