Does party financing oversight affect corruption? Evidence from the European Union

Two decades ago, Michael Pinto-Duschinsky (2002) complained about “too much law and too little enforcement”. This diagnosis is even more topical nowadays, given the international efforts to set common standards and norms regulating political financing (Council of Europe, 2003; OSCE/ODIHR and Venice Commission, 2020; Transparency International, 2009a, 2009b). Yet, notwithstanding the shift towards more regulated party finances due to policy diffusion, party competition, international pressure or corruption scandals, oversight and enforcement remain the “Achilles heel” of the political financing regime and a largely underexplored topic. Despite the critical role of the control mechanism in ensuring political actors’ compliance with party and campaign funding regulations, there is still limited understanding of factors affecting the scope and depth of the control mechanisms in constraining party financial flows and behaviour. Likewise, there is little research on the potential effects of the oversight and sanctions on governance outcomes, such as trust in parties or party corruption. This paper partially fills this gap by linking the robustness of party funding supervision to the degree of political corruption. Using Eurobarometer data on citizens’ and business attitudes towards corruption and employing mixed-effects logistic models, it finds that a weak party funding oversight correlates with more corruption. More specifically, insufficiently supervised party finances are associated with the perception that bribe-giving and taking, as well as the abuse of power for personal gain, are widespread among political parties. Likewise, the business community believes that weak oversight is associated with more widespread practices of party funding in exchange for public contracts and influence over policymaking.