Political finance

General

How are political parties and politicians funded in your jurisdiction?

The Federal Law on Political Parties allows for the formation of parties’ budgets for joining and membership fees, donations, income from events and from entrepreneurial activities, and receipts from civil transactions.

State financing of political parties is also provided for: all parties with presidential candidates or candidates on a federal list for election to the State Duma that gain over 3 per cent in the election are eligible to receive financing from the federal budget.

The amount of funds received by the party depends on the number of electors who voted for the candidates on the federal list or the presidential candidate. Before the last election to the State Duma, the share of state support in the budgets of the largest parties ranged from 68 per cent to 99 per cent. Currently, only four parties that are represented in the State Duma receive state funding.

Thus, large parties get an advantage over small parties because of additional financing from the budget, which reduces the possibility of small parties competing in elections. As a result, only the above-mentioned group of four large parties that are loyal to the President receives state support.

Financing of politicians is only possible during election campaigns.

Registration of interests

Must parties and politicians register or otherwise declare their interests? What interests, other than travel, hospitality and gifts, must be declared?

Russian legislation does not regulate conflicts of interest for politicians and political parties.

However, the issue of conflict of interest is applicable to state employees. A conflict of interest is defined in Russian law as a situation in which the personal interest of a public officer affects or could affect the proper, objective and impartial performance of his or her official duties.

Personal interest is defined as income in the form of money, property, non-property rights, property-related services, work deliverables or any benefits received by a public officer or his or her close relatives (or both), citizens or organisations to which a public officer is connected by a familial, property, corporate or similarly close relationship.

Public officers must take measures to prevent any possibility of a conflict of interest. Such measures include warning his or her employer about a potential conflict of interest.

If a state employee holds securities or any other rights for equity participation in any organisation, he or she must transfer these rights to a trustee who will be responsible for their management (trust management) in order to avoid a conflict of interest.

The same requirements apply to municipal officers, employees of the Central Bank, employees in state corporations, the Pension Fund, etc.

The need to report about the conflict of interest is also formally applied to individuals occupying public office, including the President, the Chair of the Government, his or her deputies, federal ministers, State Duma members, Federation Council members, and judges of the Supreme Court and Constitutional Court.

These individuals are also subject to the requirement to transfer the rights to shares in various organisations to trust management.

The campaign on deoffshorisation of the economy has been actively promoted recently. Thus, a law was passed in 2013 to prohibit the use of foreign financial instruments by individuals holding public office and other high-level positions related to the state. It is also forbidden to use trust management for such instruments.

In practice, compliance with the requirements for registering a conflict of interest is not adhered to strictly. In particular, the practice of registering shares in businesses for adult children or the practice of fictitious divorces is widespread in order to preserve business management within the family. Many government officials actually own accounts and property abroad.

In addition to the registration of a conflict of interest, a number of other requirements for public officers is established by law. Thus, public officers and individuals holding public office are required to submit information on their income, property and property-related obligations on an annual basis. This information must also be provided with regard to his or her spouse and minor children.

For individuals holding public office, more severe restrictions are put in place. In addition to the declaration of income and expenses, it is established that they are not entitled to engage in entrepreneurial activities or other paid activities, except for, among others, teaching, creative activities and scientific work, and receiving speech fees.

Owing to the fact that Russia has not still ratified article 20 of the United Nations Convention against Corruption - which provides for punishment in the event of a significant increase in the assets of a public official that he or she cannot reasonably explain, in relation to his or her lawful income - unfortunately, public officials are still able to capitalise on conflicts of interest.

Contributions to political parties and officials

Are political contributions or other disbursements to parties and political officials limited or regulated? How?

According to the law, donations are not allowed from, among others: foreign individuals and legal entities; foreign citizens; Russian legal entities with foreign equity over 30 per cent; legal entities registered less than one year before the donation; and non-profit organisations receiving financing from abroad (foreign agents).

The maximum amount for annual donations is limited for different types of donors. The total maximum amount of annual donations is also limited.

Unofficial political organisations operate in Russia, despite the fact that unapproved financing by the private sector of political and electoral campaigns is prohibited.

Sources of funding for political campaigns

Describe how political campaigns for legislative positions and executive offices are financed.

Electoral campaigns of candidates for elective offices are financed through election funds. These funds are generated after the nomination of a candidate or a list of candidates by a party, or after individual nomination of candidates. The law establishes that the maximum amount of election funds must be directly proportional to the level of the elections (ie, regional or federal).

Electoral funds can be generated from:

  • candidates’ or electoral associations’ own funds;
  • funds allocated to a candidate by the electoral association that nominated him or her; and
  • voluntary donations from citizens and legal entities.

In this case, restrictions can be established with regard to the maximum amount of money in the election fund obtained from various sources.

The following are prohibited from making electoral donations:

  • foreign states, organisations and citizens;
  • state authorities;
  • Russian legal entities with foreign equity exceeding 30 per cent;
  • Russian legal entities with state participation exceeding 30 per cent;
  • anonymous benefactors;
  • legal entities registered less than a year before giving the donation; and
  • non-profit organisations receiving financing from abroad (foreign agents).

All activities related to the organisation of electoral campaigns must be financed from electoral funds. In practice, candidates form ‘black cash funds’, which are unregistered electoral funds through which the activities of employees, work, goods and services are traditionally paid for, the illegality of which can be hard to prove. In recent years, the formation of black cash funds has resulted in a number of criminal cases, mostly against opposition politicians.

At most levels of the elections, the Central Election Commission must publish information on the internet about major financial transactions of candidates or parties, legal entities that have given large donations and the number of citizens who have given large donations to the electoral fund. In practice, opportunities for obtaining legitimate and substantial donations for political campaigns are limited. Major financial channels are controlled by the ruling elite, which reduces the chances for the opposition to compete in equal conditions.

Lobbyist participation in fundraising and electioneering

Describe whether registration as a lobbyist triggers any special restrictions or disclosure requirements with respect to candidate fundraising.

There is no separate regulation for lobbyists. A unified procedure of disclosing information about the activities of legal entities exists, including information about the financing of political campaigns.

Independent expenditure and coordination

How is parallel political campaigning independent of a candidate or party regulated?

The Federal Law on Basic Guarantees of Electoral Rights declares that candidates and electoral associations independently determine the contents, forms and methods of their campaigning, independently hold the campaign and have the right to involve other persons in it.

The same law says that citizens and public associations ‘have the right to hold election campaigning in the forms permitted by law and by lawful methods’.

Thus, the law does not prohibit public organisations and individuals not affiliated with candidates and political parties to hold an independent campaign for or against a candidate or party. Restrictions are applied to the form and methods of campaigning, which are established by the Federal Law on Guarantees of Electoral Rights.

Payment for election campaigning is possible only through a candidate’s electoral fund. This means that campaign materials must be produced free of charge. Representatives of the media are prohibited from engaging in campaigning.

The law does not regulate the coordination of parallel campaigning by representatives of candidates; however, because there is a ban on bribing voters, this activity must be carried out for free. In practice, an independent parallel campaign (ie, carried out by non-affiliated organisations or individuals) can be considered as bribery of voters, especially if evidence is found that this parallel campaign was deliberately orchestrated by the candidate’s representatives.

In general, the state has a negative attitude to public manifestation of support of certain candidates. This mostly concerns the support of opposition candidates and campaigning held outside the candidates’ headquarters.