Spain "failing" to cleanse party funding of corruption

European experts feel that Spain has not made enough progress toward transparency when it comes to the financing of political parties. In an April 1 report, the Group of States Against Corruption (GRECO), an organ of the Council of Europe, gives Spain a fail grade for not complying with any of the six recommendations it made two years ago, including more transparency at the local level and in the issuing of bank loans to parties.

Spanish party funding legislation had been the target of a GRECO investigation in 2009, but little seems to have changed since then.

GRECO notes the risk of bad practices at the local level, especially in towns of more than 20,000 inhabitants, "where risks of corruption are particularly high given the important volume of economic operations performed at local level, e.g. procurement and licensing procedures, and urban planning."

According to the Spanish Court of Audit, 25 percent of a party's income comes from its local organizations.

The European report is also very critical of bank loans to parties and party indebtedness vis-à-vis the same. In 2005, such debt represented 144 million euros in credit. In Spain, "loans are an important source of political financing, which do not fall under the thresholds on contributions from individual donors. In this connection, GRECO has repeatedly stressed [...] that loans granted under particularly advantageous or preferential terms deviating from general market conditions, as well as written-off loans which are not reimbursed, do in fact amount to donations."

The report also noted that its previous recommendation to establish a common accounting format for parties at all levels, to make their financial reports comparable, had only been partially heeded with a draft accounting framework still at the preparatory stage. Negotiations between Spain's leading parties on funding reform have consistently led nowhere.