1. AUDITING AND CONTROL OF POLITICAL PARTY RESOURCES THE MEXICAN CASE

2. CONTENTS I. REASONS FOR AUDITING II. ELEMENTS TO BE REGULATED III. DEVELOPMENT OF THE MEXICAN AUDITING SYSTEM IV. CONCLUSIONS 2

3. I. REASONS FOR AUDITING TRANSPARENCY Trust and certainty of clean elections EQUITY To avoid the undue influence of money or diverse powers in parties and electoral competitions 3

4. II. ELEMENTS TO REGULATE Financing origins and amounts –Public –Private –Other prerogatives (free time on radio and TV) Amount and destination of expenditures Political party obligations –Reports –Sanctions Authorities in auditing matters –Review –Investigation 4

5. III. DEVELOPMENT OF THE MEXICAN AUDITING SYSTEM 1977-1993. Hegemonic party. 1993-1996. Dominant party. 1996-2007. Alternance. 2007-2008. Open competition. 5

6. MEXICAN DEVELOPMENT 1977-1993. Hegemonic Party ESTABLISHMENT OF PUBLIC FINANCING FREE RADIO AND TELEVISION PROGRAMS (15 minutes monthly) –Positive effects on the plurality of the party system 6

7. MEXICAN DEVELOPMENT 1993-1996. Dominant Party. Mantainence of public financing. Distribution criteria. Increase of free radio and television time for campaigns (some spots). Regulating private financing. –Methods of payment (political affiliation; supporters; self-financing; financial yields, funds and trusts). –Limits to private contributions. –Prohibited individuals (government, firms, churches, foreigners). –No anonymous contributions or stock exchange activities. 7

8. MEXICAN DEVELOPMENT 1993-1996. Dominant Party Campaign spending limits. –Representatives. Senators. President. IFE as an auditing authority. Proceeding with the right to correct errors or omissions. Electoral Tribunal as the reviewer in case of appeal. Annual and campaign reports. –1 annual report per party. –300 Representative reports. –32 Senator reports. –1 Presidential report. Sanctions regime. 8

9. MEXICAN DEVELOPMENT 1996-2007. Alternance Substantial increase in public financing and better distribution. –350% more (350 mdd). –70% proportional. 30% egalitarian. Reduction of private financing. –Never greater than public financing. –More strict limit to individual contributions ($100,000 USD). 9

10. MEXICAN DEVELOPMENT 1996-2007. Alternance Reduced campaign expenditure limits. Greater requirements for party obligations on income, expenditure, and reporting. –Income only in candidate bank accounts. –Contributions through checks (more than $1000 USD). –In-kind contributions through contracts and asset identification. –Limited credits within private financing limits. –Supplier identification. –Travel expense logs. –Expenditures with receipts and contracts. 10

11. MEXICAN DEVELOPMENT 1996-2007. Alternance Greater powers for the electoral authority (IFE) –Auditing, investigation, and attention to irregularity complaints. –Commercial radio and television monintoring, advertising in foreign press and publicity. –Registration of politically risky people (money washing). –Precampaign reports. –Reports anticipated during campaigns. –Public transparency of reports. 11

12. MEXICAN DEVELOPMENT 2007-2008. FULL COMPETITION Creation of the Auditing Unit within IFE. Breaking with banking, fiduciary, and fiscal secrecy. Reduction of campaigns. Prohibition of purchasing commercial spots on radio and television. Free promotional time on radio and television (between 22 and 23 million spots for the 2009 campaigns). 12

13. MEXICAN DEVELOPMENT 2007-2008. FULL COMPETITION Reduction of public financing (to 300 mdd). Additional limits to private financing. (To the methods of payment). Reduced campaign limits. (from 50 to 20 mdd President). 13

14. MEXICAN DEVELOPMENT 2007-2008. FULL COMPETITION Precampaign, quarterly, pre-campaign and campaign reports. Multiple rules for presentation of income and expenditures in reports (200 rules). Auditing, investigation, and resolution of irregularity complaints for party income and expenditures. Public transparency of reports. 14

15. IV. CONCLUSIONS ADVANCES Solid legal framework -Constitution. -Federal Code of Electoral Institutions and Procedures. -Auditing Regulation. -Auditing Complaint Regulation. (Complaints and Investigation). -Official Auditing Procedures Regulation. Greater plurality and equity in the party system. Greater transparency on the origin of resources and expenditure destination. Greater control and financial discipline for political parties. 15

16. V. CONCLUSIONS CHALLENGES Avoiding excessive bureaucracy. –333 campaign reports per party. –Nearly 1000 pre-campaign reports per party. –High volume of audits, documentation, and investigations. Being efficient and expeditious in reviews and public transparency. Improving registration and reporting technology. Avoiding money from illicit sources (narcotrafficking and organized crime). Studying the effects of high public financing, restricted private financing, and low campaign expenditure limits on transparency and equity. 16