Review of the Amendments (29.12.2011) in the Organic Law of

Georgia on Political Unions of Citizens

Levan Izoria, Irakli Kobakhidze, Paata Turava

January 26, 2012

Tbilisi

Georgian Development Research Institute

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CONTENTS

I. Amendments in the Organic Law of Georgia on Political Unions of Citizens

and the Principle of Democracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

II. Amendments in the Organic Law of Georgia on Political Unions of Citizens

and Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

III. Amendments in the Organic Law of Georgia on Political Unions of Citizens

and Rule of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

IV. Review of the Legal Norms in the Amendments in the Organic Law of

Georgia on Political Unions of Citizens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

V. The Chamber of Control of Georgia as a Monitoring Body According to the

Amendments in the Organic Law of Georgia on Political Unions of Citizens . . . . . . . . . 12

VI. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Appendix (Amendments to the Organic Law of Georgia on Political

Unions of Citizens) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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I. Amendments in the Organic Law of Georgia on Political Unions of

Citizens and the Principle of Democracy

The aim of any legislation on political status and the activities of political parties should be

to facilitate the development of political pluralism and democracy within a country. Legislators

should establish such a law that will support competition and institutionalize a multi-party

system. Thus, strengthening pluralism on a legislative level is timely in Georgia. Thanks to a

political heritage of 70 years of totalitarian rule, Georgian society is not yet capable of

supporting a stable electoral environment. This hampers the current development of national

political parties and a functioning democratic system.

Unfortunately, Georgian legislation since 1995 has not facilitated the institutionalization of

parties in a pluralistic political system. Moreover, it has created extra barriers to that goal,

namely: a) In Georgia, established forms of governance have created a situation in which major

players become figurehead politicians rather than found sustainable political parties based on

ideas rather than personalities; b) The electoral system does not ensure proportional

representation of political parties in legislative and administrative institutions; c) The

significance of political movements is diminished by the excessive commercialization of the

political process; d) Current legislation does not provide substantive guarantees for securing

the objectivity of the mass-media, which has resulted in polarization and radicalization of

political processes; e) Legislation has not established effective guarantees to avoid the misuse of

administrative resources for partisan political interests.

As a result, a sustainable multi-party system was not established in Georgia. The above

legislative issues developed in an environment of weak socio-political dialogue and regular

political crises, impeding the emergence of healthy political parties, and contributing to the

political polarization of society (see the 2003 “Rose Revolution”, crises of 2007 and 2009).

Within this context, it has been incredibly difficult for Georgia to establish a pluralistic

political system, which would have promoted the appearance of a real political competitor for the

governing party. As such, ineffective legislation and a lack of standard political processes have

contributed to the already-daunting challenges faced by political movements. The sudden

appearance of Bidzina Ivanishvili into the political arena prompted many to suggest he holds a

unique potential for forceful and motivated pluralistic development. However, the recent

restructuring of the state electoral code, especially in the realm of campaign finance and non-

party political organization, has restricting the permissible political activity of Georgian society.

The purpose of the amendments to the Organic Law of Georgia on Political Unions of

Citizens is to improve the financing of political parties, prevent corruption, secure transparency

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and accountability, and to promote political competition. The authors of this paper share these

goals. However, our analysis of the amendments shows that methods used by legislators to

achieve the above-mentioned goals are inappropriate to Georgia’s democratic needs, as well as

being fundamentally unconstitutional. It is worth mentioning that the recommendations of the

Venice Commission and other international organizations were deliberately misinterpreted or

concealed in the drafting of the legislation. For instance, severe restrictions on article 261 were

not mentioned in draft versions submitted to the Commission. Article 261 was adopted

1 by the

Parliament of Georgia only after the Venice Commission published its report.

The amendments adopted do not match the fundamental constitutional principle of the

democratic state, particularly with regards to the concepts of self-expression and freedom of

association. The former can be implemented individually (through the right of freedom of

expression and electoral participation), as well as collectively (through participation in political

organizations). Such forms of individual expression secure competition between interests and

support the existence of a multi-party political system. This competitive environment is a

necessary pre-condition for the democratic development of society, and the creation of such an

environment is the responsibility of any democratic state.

Yet the amendments made to the law do not promote the establishment of this necessary

political environment. On the contrary, certain articles of the adopted amendments hinder the

development of democratic processes, such as the imposition (in article 261) of excessive

restrictions on those non-party entities which may be generally related to the political process.

Active participants (whether they are private individuals or legal entities) now fall under the

special control of the state. The above-mentioned regulation has a purely punitive and repressive

character, intimidating the expression of political opinions and creating an atmosphere of state

control, limiting legitimate political activity.

1 Article 261 1. Restrictions provided by this chapter also apply to:

a) A judicial entity if it directly or indirectly is related to a political party, otherwise is under the control of a

political party, or openly states its political objectives and goals;

b) A judicial entity, which through its representatives or other person encourages voters to support a particular

political party or refrain from supporting a particular political party;

c) A person, who openly states political and electoral objectives and goals, or a person who is related to the above-

mentioned person, and also to the person who has a business relationship with the person who has political and

electoral goals or who carries out such activity that influences the will of those Georgian citizens who participate in

elections, plebiscites and referenda, and those actions are carried out to avoid the regulations provided by this law.

2. A judicial entity, which directly or indirectly is related to a political party, with expenses directly or indirectly

connected to the activities and goals of the party.

3. Restrictions established by this article should not be applied to restrict freedom of expression and civil activity.

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II. Amendments in the Organic Law of Georgia on Political Unions of Citizens

and Human Rights

These amendments not only violate the principle of democracy, but also allow state bodies

to legally violate fundamental human rights – such as the right to free development of his/her

personality (article 16 of the Georgian Constitution); right to private life (article 20); right to

property (article 21); freedom of expression (article 24); right to form and join public

associations (article 26); right to free entrepreneurship (article 30); and right to confidentiality of

information (article 41). Georgian citizens, entitled to the above-mentioned constitutional rights,

are potentially victims of the vague regulations found in the amendments, as the legislation does

not precisely define who falls under the scope of the new law. Such legal norms deprive citizens

of the legal certainty that is the essential pre-condition for personal freedom and safety.

The amendments also violate guarantees of informative self-determination and the

confidentiality of personal data. These rights are essential for an unencumbered development of

self; therefore the protections of those rights require a subtle approach. Information about the

private life of an individual should be accessible to government officials only in exceptional

cases. Even in such circumstances, this information should not be widely available and should be

accessed with discretion and security in mind. The amendments to the political union law grant

government officials practically unlimited rights to obtain personal data – in particular,

information regarding bank transactions.

This clearly contradicts the rights to free development, private life, freedom of expression

and the right to form or join associations, all of which are guaranteed by the Universal

Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the

European Convention on Human Rights.

III. Amendments in the Organic Law of Georgia on Political Unions of

Citizens and the Rule of Law

The changes made to the political union law contradict the rule of law as a fundamental

principle of the Constitution. According to this principle, each legal norm should clearly and

exactly define its subjects. Those requirements specially apply to legislative norms capable of

restricting civil rights. Legislators must accurately determine the circumstances and criteria

which could become the basis for the restriction of rights, ideally before a law is passed. Vague

legal norms could be applied randomly in practice, and violate constitutional rights.

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IV. Review of the Legal Norms in the Amendments in the Organic Law of

Georgia on Political Unions of Citizens

The restrictions enacted by article 261 apply to both individuals and legal entities; however,

the amendments do not define who exactly falls under its scope, leaving it open to an

unnecessarily wide interpretation. Potentially, restrictions pertaining to the functioning of a

political party could also be applied to a legal entity which directly or indirectly is related to the

party, or is otherwise under the control of the party – or openly declares political goals and

objectives. Such a legal entity could be a non-governmental organization, commercial

organization, mass-media outlet, or similar civil society group, as the law merely defines the

entity as “having [an] indirect relationship with the political party”. Similarly, the meaning of

“under the control of the political party” is unspecified, as it is not clear what is meant by a

“statement of political goals and objectives”.

This raises innumerable questions. How can one identify the indirect relation of a legal

entity to a political party? Does a scope “under the control of the political party” mean that a

legal entity is under the institutional subordination to the political party, or also commercial or

familial association? What is “the statement of political goals and objectives” for a legal entity

that is not a political party? The goal of any political party is to gain enough electoral power to

form a government. Are activities associated only with parties (such as control of political

processes, participation in democratic elections etc.) the same as a declaration of political goals

and objectives, and participation in a nation’s political life? Is there a civil (rather than explicitly

political) method of making such a statement? How does one differentiate between political and

civil activities, so as to prevent regulations intended for parties from being applied to any civil

society organization?

It should be noted that phrases similar to the one in article 261 can also be found in the

recommendations of international organizations, which are generally based on common practice

in Europe. According to these norms, restrictions on political parties can be applied to a “legal

entity if it is directly or indirectly related to a political party.” However, these recommendations

do not also apply the litmus test of a “statement of political goals and objectives”, as in the

Georgian legislation. Those organizations generally accepted as being subject to similar laws are

foundations that engage in fundraising for a political party, and often receive regular subsidies

from the state budget (as in Germany2). Accordingly, the same restrictions are applied to these

funds as those imposed upon political parties. Such legislation is vital to the enforcement of a

fair and open political system (one free from corruption), and it operates in concord with

2 Adenauer Foundation, Ebert Foundation, Naumann Foundation, Boell Foundation etc.

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established legal certainty principles. Although accepting legal recommendations from

international organizations does not require the drafting of identical legislation, the spirit of the

text provides an excellent guideline for those transformative societies such as Georgia.

Article 261 contains more vague language in its second paragraph. It reads, “[a] legal entity

is directly or indirectly related to the political party when its expenses directly or indirectly are

connected to the activities and goals of the political party.” This note allows multiple

interpretations, some of which may contradict constitutional principles.

It should be mentioned that in many traditionally democratic countries, numerous

influential groups have close relationships with political parties. In Germany for instance, trade

unions support and provide funding for left-wing parties, while employers unions assist right-

wing parties. The ties between these unions and political parties are so tight that they are placed

under consideration when the government establishes monitoring bodies or similar institutions.

For example, during the distribution of seats on the Board of Trustees for Public Broadcasters in

Germany, parity between political parties and their foundations was addressed. A similar

practice is exercised in most democratic states that have a history of influential cooperation

between political and social organizations. However, legislators do not expose non-party

organizations to the same financial restrictions in place for parties, as they remain entirely

different political beasts.

Together with legal entities, restrictions on political parties could also be applied to

individuals – Georgian citizens or foreigners. Legislators distinguish three categories of relevant

individuals: first, a person who has openly stated his/her political and electoral goals and

objectives; second, one who is related to the above-mentioned person, and third, anyone who

engages in commercial activity with that particular person, expresses political goals or

objectives, or who carries out activities that have an impact on the political will of those

Georgian citizens participating in elections, plebiscites, and referenda.

It is difficult to define what is precisely meant by “political goals and objectives” with

regards to an individual. Unambiguously, it does not merely refer to a willingness to seek formal

political power as, according to established legislation, only Georgian citizens are eligible to be

elected to higher office, whereas the above-mentioned regulation is also applied to citizens of

other countries. Therefore, the regulation creates a basis for broader interpretation. It may apply

to the expression of personal political views, as well as public participation in political

discussion, both of which are necessary for personal engagement in civil society and the political

process. The notion of “electoral goals” appears in the same regulation. Any Georgian citizen

who practices his/her right to vote can be said to have electoral goals, even if they are not

members of a political party. The circle is further enlarged by the inclusion of a “person who is

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related to the above-mentioned person,” capturing an indefinite and undefined number of

people3.

Thus, our analysis reveals that article 261 contradicts articles 16, 26 and 30 of the

Constitution, and their commitment to the principles of democratic legal certainty and

proportionality.

The Chamber of Control of Georgia is the body authorized to define which legal entity is

related to a political party, controlled by that party, or has openly stated its political goals and

objectives. It also identifies any individuals who have openly stated his/her political and electoral

goals and objectives, as well as their relations to relevant political figures and parties. According

to sub-paragraph “g” of the second paragraph of article 341, the Chamber of Control is

authorized to demand information regarding the origin of property given or received from the

persons defined according to article 261. Therefore, identification of the persons already vaguely

enlisted by legislators is carried out by a government-appointed body, which can, according to its

own bias, establish the precise limitations for all involved parties.

It is unclear how an individual can be subject to the same financial restrictions as political

parties. The law as written leads us to believe that, for example, a party member or his/her family

can receive income only from sources allowed by law for political parties. This may complicate

the acquisition of personal funds through salaries, entrepreneurial activities, or gifts (especially

from foreign citizens). This suggests negligence in the formulation of this legislation.

The first paragraph of article 251 is a confirmation of the absurd vagueness of these

regulations. According to that paragraph, the total amount of the state finances, donations and

other type of income received by a political party or related individuals and legal entities should

not exceed 0. 2% of the previous year’s GDP of Georgia. Therefore, an individual that conducts

commercial activities and is somehow connected (either as a relative, or an associate, or a

donator) to a political party is limited in the total amount of income earned from his/her own

commercial activities. Even more absurd is that fiscal restriction on legal entities, such as

corporations, which cannot make political contributions but could be assessed as “related” to a

political party thanks to commercial or familial ties.

An attempt to enforce this law as written could raise serious concerns. We can illustrate the

problem with one simple example: Imagine two political parties have separately mobilized

0.15% of GDP each before the September of an election year. In September, they create a

political bloc and in November they submit a financial declaration stating that the total income of

the members of the bloc exceed 0.3% of GDP. In this case, the majority of the declared income

3 Those individuals could be family members, relatives, friends, neighbors etc.

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mobilized by the parties would be considered illegal. Hence, article 25 1 contradict article 30 of

the Constitution.

Paragraph six of article 27 is also vague, stating, “Donations on behalf of the other person

or by the evasions of restrictions of the law will result in transferring those donations to the state

budget. The violator will be charged according to the Georgian legislation.” For instance, if

several members of one family contribute donations to a political party, officials can consider

these donations as on behalf of a third person, or an attempt to evade the established restrictions

of the law. The law should not allow such vague interpretations.

According to paragraph seven of the same article, “If donators receive income wholly or

partially from one source (individuals/ legal entities or from the persons affiliated with them),

then the total annual amount of those transactions to one electoral subject should not exceed

500 000 GEL.” It is impossible for a political party to control whether their donators share the

same source of income or not. Similarly, it is impossible for a donator to determine whether

he/she violates the established margins of the law or not. Considering the fact that there are very

strict sanctions imposed for contributions which breach the law, the above-mentioned legal norm

should be severely criticized. Paragraphs six and seven of article 27 contradict the principle of

legal certainty.

According to article 32, political parties are obliged to provide in their financial declaration

the expenses of those legal entities which are directly or indirectly under the control of the party.

As mentioned above, the phrase “legal entities which are directly or indirectly under control of

those political parties” can be interpreted arbitrarily by the government. It is unreasonable to ask

parties to provide a list of expenses of those legal entities not subordinated to them. Doing so

would contradict the principle of legal certainty and the freedom of public association guaranteed

by article 26 of the Constitution.

According to article 51 of the new law, political parties are prohibited from providing

finances (directly or indirectly) to a citizen of Georgia. It is not clear from the law whether a

political party can pay for services provided by Georgian citizens. This leaves a gap for the

government to use multiple interpretations, benefiting one party while impairing another.

According to the same article, political parties are prohibited from buying goods or services

at higher than market price. This regulation also gives the government room for arbitrary

interpretation. At the very least, there should not be a radical difference between the market price

of goods and services and their agreed-upon price, but there is no mention of acceptable price

gaps in the law.

According to paragraph two of article 51, political parties have the right to operate on

political and electoral “promise,” meaning a pledge given to the electorate which is related to the

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future distribution of budgetary means. The above-mentioned rule does not provide effective

guarantees to avoid the use of administrative resources for subjective political gain.

Unfortunately, the law does not impose limits on such corrupt practices, and so it may be

necessary to ban such explicit political promises that are related to budgetary expenses. This also

contradicts the principle of legal certainty.

According to article 33, a political party is obliged to carry out a financial audit of its

activities. Moreover, the political party should apply only to those independent auditors who

satisfy the established standards approved by the Chamber of Control. This regulation may give

the Chamber unencumbered power for manipulation, such as the use of biased auditors. Article

33, therefore, also contradicts the principle of legal certainty.

According to article 341, the Chamber of Control is authorized to obtain information related

to the finances of political parties through commercial banks. In addition, the Chamber is

authorized to receive information about the origin of property transferred or received by both

parties and any entities directly or indirectly related to them. These regulations provide the

government with total access, and thus total control, over the finances of parties and, potentially,

those organizations and individuals associated with them. Therefore, the law gravely violates the

rights of free development of individuals, informative self-expression and right to secure

personal data, contradicting articles 16 and 20 of the Constitution.

Furthermore, that same article is authorized to establish strict sanctions for violating the

requirements of law. Three of these sanctions are worth deeper analysis:

a) “Receiving or concealing prohibited financial or in kind donations determined by

Georgian legislation will cause a seizure of illegal donations and their transfer to the state

budget, and the political party will pay a fine of ten times the received financial and in kind

donations. “A party may be unaware of a donation or service received, based on the wide-

ranging definition of their “relationship” to individuals or legal entities. Parties may accidentally

conceal this financial information because they were unaware of its relevance.

b) A transaction of financial and material donations prohibited by Georgian legislation,

from physical and legal entities for a political party’s benefit, will cause a fine of ten times the

amount of received financial and material donations. The meaning of the term “donations for

political party’s benefit” is not defined in the text, leaving it open for misuse.

c) ”The Chamber of Control of Georgia sequestrates property of physical or legal entities

(including bank accounts). This can be appealed to the court together with the resolution of an

offence. The appeal does not suspend the sequestration. “The law does not identify in which

cases the Chamber may sequestrate the property of a party, or natural (individual) and legal

entities. The seizure may be a disproportionate interference, violating the fundamental

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constitutional principle of proportionality (article 21). In fact, article 342 clearly contradicts the

principles of legal certainty and proportionality as well as article 21 of the Constitution.

These sanctions contradict the principle of proportionality as they seek to gather ten times

the amount of the offending financial or material donations as a fine for poorly-defined illegal

actions. What is of special concern is that these sanctions are imposed by the Chamber of

Control rather than by a court. The harshness of the sanctions suggests that the law is based on

repressive rather than preventive norms, potentially having a negative impact on the political

process.

As illustrated below, the recent amendments to the Criminal Code of Georgia gravely

violate the principles of proportionality and legal certainty. They do so by leaving a possibility

for a broad interpretation of the legal norm, and, though vague and poorly-drafted language,

potentially criminalize the financial relationship between political parties and citizens. In

addition to a fine, in some circumstances three years in prison is mentioned as a possible penalty

(article 1641 of the Criminal Code).

Bribing the voter (article 1641 of the CCG)

Offer, promise, transaction, service, with intentional knowledge to request and receive

and/or by evading the established requirements of law to deal ostentatious, hypocritical or

other type agreements is penalized up to 3 years imprisonment or administrative fine.

Notice:

1. Property such as small value of accessories, shirts, caps, flags and other items for the

electoral campaign of political parties do not fall under the scope of this article;

2. Persons will not be charged for a political and electoral promise related to the future

distribution of the budgetary means and future implementation of the state policy;

3. Legal entities (except political party which will not be penalized) committing criminal act

envisaged in the article 1641 of the CCG will be liquidated, deprived from the right to conduct

activities and/or will be charged to pay fine.

Special attention should also be paid to a sanction envisaged by article 1641 of the Criminal

Code of Georgia – liquidation of a legal entity, which is applicable to both civil and political

associations. This sanction unequivocally contradicts article 26 of the Constitution, which clearly

defines a basis for suspension and prohibition of such groups. (They themselves do not include a

basis determined by the Criminal Code of Georgia). Implementation should be in accordance

with the strictly determined circumstances of law; yet the Criminal Code of Georgia is an

organic law.

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V. The Chamber of Control of Georgia as a Monitoring Body According

to the Amendments in the Organic Law of Georgia on Political

Unions of Citizens

The amendments made to the law governing political unions establish the Chamber of

Control of Georgia as a controlling body, which contradicts the Constitution.

The need to establish an independent mechanism4 for monitoring the finances of political

parties and electoral campaigns was identified by both the Venice Commission and the Group of

States against the Corruption (GRECO) in their recommendations to the Georgian government.

The Chamber of Control was selected as the monitoring body. Doubtless there is a need for an

effective monitoring system; however, the selection of the Chamber of Control by Georgian

legislators did not meet the requirements of the Constitution.

The legal and constitutional status of the Chamber is determined by article 97 of the

Constitution. This norm establishes following essential requirements:

1. The Chamber of Control as an independent body is removed from the system of the

legislative, executive and judicial branches of the government, and operating separately.

2. It supervises state expenses, and the usage and expenditure of other materials.

3. The authority, organization, procedure activity, and guarantee of the independence of the

Chamber of Control shall be determined by law.

The establishment of legal norms for the Chamber, determined within the scope of the

Constitution, exists within article 1 of the Law of Georgia on the Chamber of Control of

Georgia.

It should be noted that other controlling bodies have been established according to this law,

which determines that if the necessity of state control overlaps the authority envisaged by the

Constitution, control should be exercised by some other body. Article 3 of the Law of Georgia

on the Chamber of Control of Georgia accords this status, naming it as the highest body capable

of carrying out state financial audits.

Auditing power is granted in article 6, in a form envisioned by the Constitution.

Article 17 of the Law on the Chamber of Control of Georgia defines the scope of its

auditing powers; according to paragraph 21, “The Chamber of Control monitors financial

activities of the political unions of citizens based on the Election Code of Georgia and the

Organic Law of Georgia on Political Unions of Citizens.”

The compliance of the new amendments to the latter legislation must be compared with

article 97 of the Constitution. In particular:

4 See the explanatory comments to the above-mentioned amendments.

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1. What does “monitoring” mean?

The monitoring institution determined in paragraph 21 of article 17 of Law on the Chamber

of Control of Georgia should not be understood as a new institution. On the contrary, the above-

mentioned monitoring institution is identical to the institutions of “Supervision” (article 97 of the

Constitution) and “financial economic control” (article 3 of the Law of Georgia on the Chamber

of Control). Such an approach corresponds to the system determined by the Law of Georgia on

the Chamber of Control. The goal of article 17 is identification of those who fall under the scope

of Chamber powers, rather than determining the content of those powers.

2. What can be regulated by the Election Code of Georgia and the Organic Law of Georgia

on Political Unions of Citizens?

It should be determined what rights and powers are delegated by the Organic Law of

Georgia on Political Unions of Citizens and whether the scope of these rights is protected by this

law.

If paragraph 21 of article 17 of the Law on the Chamber of Control of Georgia would have

been understood as a norm for determining the rights of the Chamber of Control it would have

contradicted the above-mentioned law as well as article 97 of the Constitution. Once again, it

should be mentioned that according to article 17 of the Law, its objectives are not determining

the rights of the Chamber of Control, but rather exercising these powers over the political unions

of citizens.

It could be concluded that paragraph 21 of article 17 of the Law on the Chamber of Control

of Georgia would have not contradicted article 97 of the Constitution had it been understood that

the Chamber of Control would monitor the financial activities of political unions covering the

usage, expenditure of the administrative resources and other material values of the state.

It should be checked whether the amendments of the Organic Law of Georgia on Political

Unions of Citizens correlate with paragraph 21 of the article 17 of Law on the Chamber of

Control of Georgia and article 97 of the Constitution.

According to the Organic Law of Georgia on Political Unions of Citizens, a new power has

been established – there are new rules for the Chamber of Control to monitor the financial

activities of political parties. These new responsibilities should be compared to paragraph 21 of

article 17 of the Law on the Chamber of Control of Georgia and article 97 of the Constitution.

According to the updated Organic Law of Georgia on Political Unions of Citizens, what

does “financial monitoring” mean? Article 341 of the Organic Law of Georgia on Political

Unions of Citizens defines the authority to monitor the legality and transparency of the political

parties’ financial activities, and interprets “monitoring” more broadly than in previous

legislation. It means not only “supervision” (article 97 of the Constitution of Georgia) but also

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management functions (“consulting interested persons about the finances of political parties”)

and audit powers – financial audit, conformity audit and effective audit. The usage and

expenditure of state funds and other state material values are identified in article 6 of the Law on

Chamber of Control of Georgia.

The law does not provide any other legal tools. Additional instruments provided by the

Organic Law of Georgia on Political Unions of Citizens contradict the Law on the Chamber of

Control of Georgia. According to paragraph 2 of article 1, the authority, rules and organization

of activities have to be specified. It is inadmissible to form the framework of one law by another,

as each bill has its own objectives, principles and interests. Article 1 of the Law on the Chamber

of Control guarantees that that law can not become a “victim” to the objectives and interests of

any other law. So the amendments also contradict article 97 of the Constitution.

What authorities have been delegated to the Organic Law of Georgia on Political Unions of

Citizens? Is their scope protected by this law? As discussed above, delegation of authority was

drafted incorrectly in the Organic Law of Georgia on Political Unions of Citizens, granting the

Chamber of Control new powers which differ from those provided by article 97 of the

Constitution of Georgia.

How justified is omitting the words “and the political unions of citizens” from the sub-

paragraph “g”, paragraph 2 of article 17 on the Organic Law of Georgia on Political Unions of

Citizens? And is it proper to identify the authority to conduct audit activities according to the

article 341 (sub-paragraph “d”, paragraph 1) of the Organic Law of Georgia on Political Unions

of Citizens?

A financial audit of a political party should be divided into two parts:

1. An audit of the usage and expenditure of state funds and other state material at a party’s

disposal.

2. An audit of other funds and materials belonging to a party.

The old version of sub-paragraph “g” of paragraph 2 of article 17 of the Law on the

Chamber of Control of Georgia did not allow an audit on the usage and expenditure of state

funds and other state materials at the disposal of political parties. Why was that? This restriction

emerged because the legal nature of an audit (meaning a financial, conformity, and effectiveness

audit) means the monitoring of expenditures according to legal necessity. In the case of funds

transferred between the government and a party, the latter has broad discretion and the Chamber

of Control could not have managed to monitor all such transactions.

Distribution of the authority for conducting financial audits on political parties, according

to the Organic Law of Georgia on Political Unions of Citizens, contradicts the Law on the

Chamber of Control of Georgia and article 97 of the Constitution of Georgia. Similarly, the

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extension of financial auditing rights to other property held by a political party as stipulated by

the Organic Law of Georgia on Political Unions of Citizens, contradicts the Law on the Chamber

of Control and article 97 of the Constitution.

Furthermore, article 261 of the Organic Law of Georgia on Political Unions of Citizens

grants authority over property held by individuals and legal entities indirectly related to political

parties to the Chamber of Control. Having “direct or indirect” and “business” relations with

political parties are such general concepts that this could lead to an unreasonable violation of the

constitutional rights of the above-mentioned entities.

The Organic Law of Georgia on Political Unions of Citizens also expands the authority of

the Chamber of Control and grants it administrative functions apart from mere supervision

functions, which contradicts the Law on the Chamber of Control of Georgia and article 97 of the

Constitution. Paragraph 2 of article 341 of the law on political union refers to the right to

conducting monitoring activities. Most of those rights are represented not only by supervision

powers, but administrative functions (sub-paragraphs “b”, “c”, “h”, and “i” of the above-

mentioned law). It should also be noted that a special department of financial monitoring for

political parties was established within the Chamber of Control, with specific administrative

functions. That does not correspond neither to the functions envisaged by the Constitution nor to

the supervisory functions stipulated by the law. The functions of the Chamber are identified in

various articles of the law:

- According to article 271, political parties should provide information about donations to

the Chamber of Control of Georgia within three days of their receipt;

- According to article 30, written consent on receiving state monies should be submitted to

the Chamber;

- According to article 32, a political party should submit a financial declaration for the

previous year together with an auditor’s report to the Chamber;

- According to article 322, the Chamber establishes rules for the transparency of financial

data for political parties.

These authorities are limited by article 17 (sub-paragraph “k”, paragraph 2) of the Law on

Chamber of Control of Georgia. According to that law, the Chamber should monitor the legality

of the utilization of funds granted for elections according to the Election Code of Georgia.

VI. Conclusion

The authors of the amendments in the Organic Law of Georgia on Political Unions of

Citizens aimed to improve the system of financing for political parties, prevent political

16

corruption, secure transparency and accountability, and promote political competition. Although

we share those goals, our analysis clearly reveals that the methods used by legislators to achieve

the above-mentioned goals were disproportionate, vague, poorly-drafted and in contradiction to

Georgia’s Constitution. The recommendations of the Venice Commission and other international

organizations were interpreted arbitrarily, with some of their suggestions excluded from the

legislation entirely. Of particular concern were the restrictions found in article 261, which were

adopted after the Venice Commission published its final report.

The adopted amendments also radically complicate the development of a pluralistic and

competitive political environment in this country. The law not only limits the freedom of the

party system, but also the political and civil activity of individuals and society.

Furthermore, the amendments lack certainty in their definitions, and contain the threat that

their legal norms may be arbitrarily and selectively implemented. All individual and legal

entities with tangential links to the political process are restricted by law in the same manner as

political parties, without nuance to protect them. Legal certainty is one of the basic requirements

for the rule of law; without which citizens may become victims of unpredictably repressive acts.

In addition, granting broad financial monitoring powers of political parties and those

arbitrarily linked to them to the Chamber of Control of Georgia contradicts the Constitution and

the Law of Georgia on the Chamber of Control. The Chamber of Control is authorized only to

supervise the usage and expenditure of state funds and other state resources, not the private

financial records of any political association. Due to a conflict between the new amendments and

established law, the powers granted to the Chamber can give it grounds to act subjectively.

Moreover, the amendments establish disproportionate sanctions that express a repressive

spirit of the law, rather than one of preventive goodwill. Especially alarming is the fact that such

sanctions are imposed by the Chamber itself, and not by the court system.

Finally, the majority of the population is now subject to greater government control thanks

to vague interpretations possible from the new law. The amendments clearly contradict the rights

to free development, private life, freedom of expression and the right to form or join

associations, as guaranteed by the Universal Declaration of Human Rights of the United Nations,

the International Covenant on Civil and Political Rights, and the European Convention on

Human Rights – as well as human rights explicitly named in the Constitution of Georgia. A

legitimate reason for such restriction is not conceivable in a free and open democratic state.

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Appendix5

Amendments to the Organic Law of Georgia on Political Unions of Citizens

Article 5

1

1. It is prohibited for a political party (for its candidate, representative or any other person) to

give money, gifts and other material or immaterial values (except low cost accessories – shirts,

caps, hats, flags and other similar items), to sell or provide any goods or services with discount;

to buy goods or service at higher than its market price; to give or distribute goods or service

gratis (besides exceptions ruled by this law) to citizens of Georgia. Additionally, attracting a

citizen of Georgia to provide and promise money, securities, material and immaterial values or

services (including establishment of fictional employment or other type of relations).

2. The rule determined in the first paragraph of this article (prohibition of the promise) does not

operate on political and electoral promise, which is related to the future distribution of budgetary

means and future state policy implementation.

Chapter III

Property and Finances of Political Party, Financial Monitoring of Political Party

Article 25

1. The property of a political party includes:

a) Membership fees;

b) Donations;

c) In certain cases established by legislation - amounts allotted by the state;

d) Amounts received by the purveyance and distribution of a political party’s symbols,

organizing lectures, exhibitions and other similar events; additionally, sums received from

editorial and other activities, which do not change the status of a political party as a non-profit

judicial entity, its character and donations received by public events/activities. According to this

sub-paragraph, the total amount of the income of a political party should not exceed 60,000 GEL

per annum.

2. A donation is a transaction of money by citizens of Georgia to a political party’s bank

account; also in kind values and services received with discount/favorable terms or gratis by a

political party (except a job done by a volunteer) and a bank loan taken with favorable terms.

3. A political party is not allowed to take a loan/credit from a physical or judicial entity. A

political party or political bloc may take a loan from a commercial bank, but for not more than 1

million GEL after being registered as electoral subject according to paragraph “g” of article 2 of

the Organic Law on Georgian National Bank.

Article 251

1. The total amount of state finances, donations and other type of income received by a political

party or a physical and judicial entity connected with this party, should not exceed 0.2% of the

previous year’s GDP of Georgia; the total amount of expenses of a political party should not

exceed 0.2 % of the previous year’s GDP.

2. According to the first paragraph of this article, a political party is obliged to transfer the total

amount of money (which exceeds the threshold) to the donators’ bank account within three days

of receiving those sums. In case of non-compliance with these commitments, the above-

mentioned amounts will be transferred to the state budget.

5 The amendments are highlighted in the law.

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3. Expenses for a political party’s expert and/or consulting services should not exceed 10% of

the threshold established in the first paragraph of this article.

4. A political party is allowed to distribute, during celebration events, items as gifts with a total

cost of 5000 GEL.

5. The total amount of expenses and income of political parties enlisted in a political bloc should

not exceed the thresholds established in the first paragraph of this article.

6. Unless it is not defined differently by this law, “year” means the period from 1 November to 1

November of the following year.

Article 26

1. It is prohibited to receive financial or in kind donations from:

a) Physical and legal entities of foreign countries, international organizations and movements,

except organizing lectures, seminars or other similar public events;

a1) Legal entities, their unions and other organizational entities;

b) State bodies, state organizations, public law legal entities, or from an organization established with state share (except the cases foreseen by this law);

c) Non-profit organizations and religious organizations, except organizing lectures, seminars

and other similar public events;

d) An individual having no citizenship;

e) In anonymous form.

2. During the donation, a person should identify their name, surname, address, ID number (or

passport number) and personal number.

3. Money donated without providing the information determined in paragraph 2 of this article is

considered anonymous. Anonymous donations should be immediately transferred to the state

budget by the authorized person of the political party who is responsible for its financial activity.

4. Requirements provided in paragraphs 2 and 3 of this article do not apply to the donations

received via public events. The amount received during public events should not exceed 30,000

GEL per annum.

5. The authorized person responsible for a party’s financial activity is obliged to transfer money

received by public event donations to the party’s bank account within seven days.

6. Information about donations to a political party, including the information defined by

paragraph 2 of this article, is publicly available. The availability of this information is provided

by the Chamber of Control of Georgia according to the established rules.

Article 261

1. Restrictions provided by this chapter also apply to:

a) A judicial entity if it directly or indirectly is related to a political party, otherwise is under

the control of a political party, or openly states its political objectives and goals;

b) A judicial entity, which through its representatives or other person encourages voters to

support a particular political party or refrain from supporting a particular political party;

c) A person, who openly states political and electoral objectives and goals, or a person who is

related to the above-mentioned person, and also to the person who has a business relationship

with the person who has political and electoral goals or who carries out such activity that

influences the will of those Georgian citizens who participate in elections, plebiscites and

referenda, and those actions are carried out to avoid the regulations provided by this law.

2. A judicial entity, which directly or indirectly is related to a political party, with expenses

directly or indirectly connected to the activities and goals of the party.

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3. Restrictions established by this article should not be applied to restrict freedom of expression

and civil activity.

Article 27

1. The total amount of the financial and in kind donations received by a political party from any

citizen of Georgia should not exceed 60,000 GEL per annum. The annual membership fee for

one member should not exceed 1,200 GEL.

2. The donator cannot be a citizen of Georgia with 15% of his/her annual income received by

him/her or received in favor of the company created by his/her participation with the simplified

government procurement.

3. A citizen may donate to different political parties throughout the year; however the total

amount of those donations should not exceed the established threshold - 60,000 GEL according

to this law.

4. The restriction established in paragraph 1 of this article applies to all donations, including for

a party’s goals and services performed on behalf of it.

5. Membership fees and financial donations for political parties should be received through bank

transfers from the citizens. Donations should be made only via Georgian licensed commercial

banks or via the donator’s or member’s own bank account.

6. Donations on behalf of another person or by evasion of restrictions of the law will result in a

transfer of those donations to the state budget. The violator will be charged according to

Georgian legislation.

7. If donators (physical entities) receive income wholly or partially from one source (physical/

legal entities or from the persons affiliated to them), then the total annual amount of those

donation transactions to one electoral subject should not exceed 500,000 GEL. However, the

total amount of a single donation should not exceed 60,000 GEL.

Article 271

1. A political party should provide information about donations to the Chamber of Control of

Georgia within three days of their receipt.

2. In a case of receipt of donations in violation of the requirements of this law, a political party is

liable to return the received amount to the donor within three days of the date of the donation. In

case of a violation of this obligation, the money will be transferred to the state budget.

3. If an authorized person of the political party will not comply with these obligations, this

person will be accountable to Georgian legislation.

Article 28

1. This paragraph has been removed.

2. If the total amount of the annual financial and in kind donations received by the political party

through breaching the law is:

a) From 2,000 GEL up to 15,000 GEL, the political party will lose state financing for one

year;

b) From 15,000 to 50,000 GEL, the political party will lose state financing for two years;

c) More than 50,000 GEL, the political party will lose state financing for four years;

3. If political parties have no right of state financing, the sanctions envisaged by paragraph 2 of

this article will be applied after obtaining such a right.

Article 30

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1. This article defines the rule for direct distribution of sources from the state budget to political

parties.

2. The amounts to be distributed directly from the state budget are received by those political

parties that received more than 4% of the vote in the last parliamentary election, or received

more than 3% of the vote in the last local self-governance election.

3. The amount earmarked in the state budget for financing political parties is determined by an

equation, calculated per parliament member elected through the proportional system and the

respective components of received votes.

4. The state budgetary finances are calculated according to the following formula:

Z= B+ (M*600*12) = (L*100*12) + (V*1, 5) + (W*1)

Z is the amount of state budgetary finances for a political party; B is the amount of basic

finances; M refers to 30 or up to 30 members of parliament elected by proportional system; L is

the number of more than 30 parliament members elected by the proportional system; V is the

amount of votes received up to 200,000 voters; W is the number of votes of more than 200,000

voters.

5. The amount of basic financing is 1,500 GEL annually.

6. If an electoral subject (political party/electoral bloc) receives more than 8% of the vote in the

last parliamentary election or more than 6% of the vote in the last local self-governance election,

the amount of basic financing will be 300,000 GEL. According to the Law on State Budget of

the current year, the amount of basic financing from the state budget may be increased.

7. According to the formula determined in this article, M and L are equal to 0, if the authority of

members of parliament elected by the proportional system has been suspended according to the

rule established by Georgian legislation. M and L also may change (decrease or increase) to an

appropriate amount if within three months members of parliament elected by the proportional

system, after receiving authorization, leave or join another political party which is also financed

from the state budget according to the rule established by this article.

71. The electoral subject receiving finances according to this article will receive an addition 10%

if the political party is represented with a gender diversity of at least 20% out of 10 candidates on

the party list (in all party lists during the local self-governance elections).

8. In order to calculate the formula detailed by this article, the overall results of the last

parliamentary and last local self-governance elections will be used according to the political

party’s compliance with the conditions of this article.

9. If the results shown by the electoral bloc of the appropriate elections are applied to the letter of

this article, the total numbers of received votes are divided on the number of parties forming the

electoral bloc.

10. Basic financing is equally divided among political parties forming an electoral bloc.

11. A political party will receive state budget finances based only on preliminary written

consent. The latter should be submitted to the Chamber of Control of Georgia no later than the

25th November of each year. If written consent on receiving state budget finances for the next

year is not submitted by a political party by this date, the Chamber of Control of Georgia will

notify them in writing the day after the deadline. Within three days of receiving a written

notification from the Chamber of Control of Georgia, a political party has to send the consent to

receive state funds. If a political party will not submit a written consent in due time, it looses the

right to receive financing from the upcoming year’s state budget. The Chamber of Control of

Georgia will notify the political party of this in writing. The Chamber of Control of Georgia is

obliged to transfer the money to the state budget within five days of the party’s loss of a right to

state funds.

21

Article 301

1. With the exception of budgetary financing determined in article 30 of this law, money is

transferred from the Georgian state budget into a Fund which aims to facilitate the creation of a

healthy every year, compatible political system for the development of the political parties and

the NGO sector.

2. Financing of the political parties and non-governmental organizations from the Fund is

regulated by the rules of this article.

3. The function of the Fund determined by this article is performed by a Center for electoral

system development, reforms and training.

4. According to article 30 of this law, money transacted into the Fund from the Georgian state

budget should be half of the amount directly distributed to political parties.

5. Amounts should be transferred quarterly into the Fund from the Georgian state budget.

6. Amounts to the Fund may be attracted from the other sources as well.

7. 50% of the amount transferred into the Fund should be distributed to political parties and 50%

to the NGO sector.

8. The assets of the Fund are distributed proportionally according to the received basic finances

for political parties.

9. Assets of the Fund will be distributed to finance only research, studies, conferences, business

trips, regional projects and for financing civil and electoral educational projects.

10. Grants for non-governmental organizations should be distributed only on the basis of

submitting appropriate projects in order to facilitate the development of political parties and

improving civil education of the electorate. The amount granted for one non-governmental

organization should not exceed 10 % of the grants distributed for the NGO sector. While

discussing the distribution of grants from the Centre, a minimum of three representatives with a

right of advisory vote should participate from the NGO sector, or an appropriately experienced

representative of a foreign Fund.

11. A political party should submit an annual report to the Fund about the reasonable expenditure

of the received amounts. Financing of a political party will be suspended for one year if the party

fails to submit the report or does not use funds according to the goals determined by this law.

12. If political parties and the NGO sector will not utilize the assets of the Fund provided to

them, this amount will be transferred back to the Fund for distribution the next year.

Article 32

1. A political party should submit an annual financial declaration together with an auditor’s (or

auditing company) concluding report to the Chamber of Control of Georgia by February 1 of

each year. Copies of the declaration together with the auditor’s report should be sent to the

appropriate local taxation office. The financial declaration must contain information on a

political party’s annual income (amount of membership fees and donations, names of citizens

who donated, data about citizens who donated, funding from the state budget, also amounts

received from the publishing activities of political parties and amounts received as a result of

various events), expenses (elections, financing events, salaries, business trips and other

expenditures), and property (information about owned real estate and cars, including makes and

models, total cost and amount of bank deposits).

2. Income and expenses of political parties used for elections must be listed separately in the

financial declaration.

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3. The Chamber of Control of Georgia is obliged to provide information about the financial

declaration of a political party to all interested persons and also guarantee that financial

declarations will be published on its website within five days of receiving them.

4. A political party is obliged to provide in its financial declaration information about the

expenses of legal entities which are directly or indirectly under the control of those political

parties.

5. The Chamber of Control of Georgia must design a form for financial declaration as well as

financial audit standards for political parties.

6. A political party is obliged to keep financial declarations and all related documents for six

years, and to follow the duties established by tax law, which are related to the production and

storage of tax documents.

Article 321

Once every three weeks after an election date is set, all political parties that intend to participate

in the election either independently or within a political bloc should submit a financial

declaration to the Chamber of Control of Georgia in an appropriate form established by the

Chamber of Control of Georgia.

Article 322

The Chamber of Control of Georgia in accordance with this law sets rules related to transparency

of party finances and data related to donations.

Article 331

Any deal which aims to avoid the rules and limits established by the chapter (Chapter III

Property and Finances of Political Party, Financial Monitoring of Political Party) of this law is

void. The property distributed and received on the basis of such a deal will be transferred to state

ownership.

Article 34

If a political party will not submit a financial declaration to the Chamber of Control of Georgia

before the deadline, the Chamber of Control of Georgia will notify in writing a five-day window

to submit the declaration. If a political party will not submit a financial declaration to the

Chamber of Control of Georgia after five days, according to article 30 of this law the political

party loses the right to receive financial support from the state budget for the next year.

Article 341

1. The Chamber of Control of Georgia monitors the legality and transparency of a political

party’s financial activities.

2. The Chamber of Control of Georgia is authorized to:

a) Develop an annual financial declaration form for the political parties;

b) Establish standards for audits of political parties;

c) Verify completeness, accuracy and legality of the financial declarations of political parties

and the report of their election campaign’s fund;

d) Conduct auditing of financial activities of political parties;

e) Ensure transparency in the financing of political parties;

f) In case of need, request information related to the finances of political parties from their

administrative authorities and commercial banks.

23

g) If necessary, request information about the origin of transferred and received property

belonging to political parties from the persons determined in article 261.

h) Consult interested persons about the finances of political parties;

i) Respond to violations of the law regarding the finances of political parties and apply

appropriate sanctions according to the law.

j) Appeal to the Office of the Prosecutor if criminal activity is suspected.

3. If state authorities have reasonable ground to believe that the requirements of this law have

been violated, they may inform the Chamber of Control of Georgia.

Article 342

1. Receiving or concealing prohibited financial or in kind donations determined by Georgian

legislation will cause a seizure of illegal donations and their transfer to the state budget, and the

political party will pay a fine of ten times the received financial and in kind donations.

2. A transaction of financial and material donations prohibited by Georgian legislation, from

physical and legal entities for a political party’s benefit, will cause a fine of ten times the amount

of received financial and material donations.

3. Receiving and concealing information about financial and material donations prohibited by

Georgian law for a political party’s benefit will penalize those persons to pay ten times the

amount of the fine.

4. Avoiding liability determined by the law will result in a fine of 5,000 GEL for the political

party.

5. Avoiding liability determined by Georgian legislation on providing information requested by

the Chamber of Control of Georgia will result in a fine of 5,000 GEL for the political party.

6. Accountability determined by this law may be applicable for six years after committing the

offence.

7. In case of repeated violations of the rules determined by this article, or deliberate failure to

comply with a legal request of the Chamber of Control of Georgia, or an offence causing serious

damage, the Central Election Committee upon a recommendation of the Chamber of Control of

Georgia is empowered to suspend registration of the electoral subject if the violation involves an

offence committed during a one-year period prior to an election.

8. The Chamber of Control of Georgia sequestrates property of physical or legal entities

(including bank accounts). This can be appealed to the court together with the resolution of an

offence. The appeal does not suspend the sequestration.

9. The Chamber of Control of Georgia compiles a report about the offence determined by this

article and takes a decision on imposing an appropriate penalty. For such a case, litigation rules

determined by the Georgian Code on Administrative Offences are applied.