Article by Hugh O’Connell and Barry J. Whyte in the Sunday Business Post on 4 March 2018

 

Towards the end of the last century, a series of political corruption scandals evoked the prescient remarks of Fianna Fáil’s George Colley in 1967 about “low standards in high places” in Irish public life. The state appeared ill-equipped to deal with revelations of some politicians evading tax and taking corrupt payments.

So the Fianna Fáil government set up Sipo, the Standards in Public Office Commission. It would be the state’s ethics in public office watchdog, responsible for keeping our politicians honest, enforcing campaign finance laws and regulating spending by political parties.

Barely 20 years later, Sipo is in its last days, with the government promising to replace it with a new Public Sector Standards Commissioner later this year. Over the last two decades, the commission has struggled to police several cumbersome laws which it has implored successive administrations to change – requests which have been emphatically ignored.

But in the last two years, non-governmental organisations (NGOs) have claimed that Sipo has been more actively pursuing them over the source of their funding by using electoral laws that Sipo itself wants changed. Last year, a bitter row broke out over a €130,000 donation from billionaire George Soros to Amnesty Ireland, which is campaigning for changes to the abortion law. Sipo said the money should be paid back, despite previously saying the donation was in order. Amnesty is refusing to pay back the money, and has launched a High Court action.

Now Sipo has been asked to investigate if the government’s 2040 publicity campaign breached rules that bar civil servants from carrying out political work.

 

Why has the so-called toothless watchdog suddenly decided to bare its teeth? Why is the government moving to shut it down, in favour of what it promises will be a more powerful regulator? And what impact might this have ahead of the Eighth Amendment referendum this coming summer?

Sipo is a six-member commission currently chaired by former High Court judge Daniel O’Keeffe. It meets monthly and, bar its chair and the former Fine Gael TD Jim O’Keeffe, its membership all have significant other public service roles, including the state’s auditor Seamus McCarthy, the clerks of the Dáil and Seanad, and the Ombudsman Peter Tyndall.

It is supported by a small secretariat of around 18 staff who run its day-to-day business. The majority of these staff work on investigations and enforcement under several different laws including the Local Government Act, the Ethics Act and the Electoral Act.

It is, in theory, the body which regulates political donations, election spending, politicians’ disclosures of interests and the spending of public money by political parties. As part of its role, it can receive complaints and initiate investigations under suspected breaches of the Ethics Act. But, crucially, it cannot initiate its own investigations.

It is reactive and not proactive, as former commission secretary Paddy Walsh acknowledged in 2015. “If the commission was given more powers to be proactive, it would be proactive,” he told the Irish Times. “If the commission was given powers to carry out audits, it would do so.”

Occasionally, a major scandal will highlight this significant deficiency. In 2015, a Prime Time Investigates programme uncovered evidence of councillors allegedly agreeing to help fake investors in return for financial inducement, as well as instances of national politicians allegedly failing to declare their business interests.

In the fallout, it became apparent that Sipo was incapable of examining the issue until complaints were made through an unwieldy process involving a local authority ethics registrar. The matter may eventually find its way to Sipo but, even then, it could prove to be a futile and costly exercise.

The case of Fianna Fáil senator Brian Ó Domhnaill is a perfect example of this. To date, Sipo has spent over €360,000 on an investigation into his alleged duplication of around €2,000-worth of expenses when he was a Donegal county councillor over a decade ago.

Sipo found that Ó Domhnaill breached ethics law. He denies wrongdoing, and intends to challenge the findings in the High Court.

David Waddell spent ten years as a senior investigator at Sipo. “You see some of the investigations in the ethics area involving county councillors which cost a hell of a lot to do. There are faster, cheaper and neater ways of doing that,” he said.

Waddell said the commission was under-resourced. During an election campaign, it cannot carry out audits, actively inquire into spending or investigate suspected irregularities in campaign financing.

If a candidate is concerned their rival is spending more than they should, there is no practical way of getting Sipo on the case. “What’s needed is some kind of real-time expenditure reporting system,” Waddell said. “An adequately resourced commission should also have the power to conduct targeted investigations on its own initiative. It might also have people out on the ground looking at the marginal constituencies where cash and influence make a difference.”

 

“If there is a suspicion, it shouldn’t be down to political opponents to raise it, there should be on-the-spot checks,” says Catherine Murphy TD

 

It’s a view echoed by Social Democrat TD Catherine Murphy, a persistent advocate of political transparency, who believes Sipo is a watchdog with no teeth. “If there is a suspicion, it shouldn’t be down to political opponents to raise it, there should be on-the-spot checks,” she said.

The Harvard-based Electoral Integrity Project surveyed some 40 academics with expertise in Irish elections after the 2011 and 2016 polls. While there was strong support for the overall integrity of Irish elections, the majority of experts indicated their belief that there is not effective monitoring of political parties’ finances.

“The consensus is that an electoral commission is needed, and Sipo would be a core component of that commission. It should get much stronger powers in relation to monitoring party and candidate finances, and also the finances of campaign groups at referendums and elections,” said UCC political scientist Theresa Reidy, who was involved in the project.

For the past decade, Sipo has been asking the government to give it more powers. In its latest annual report, the commission sought the right to initiate its own inquiries, called for politicians’ liabilities to be disclosed in the same way their interests are, and for more transparency around spending by political parties prior to an election being called. These are not new requests: they’ve featured in most Sipo annual reports going back to the late 2000s.

Much of what the commission is looking for would be satisfied by a new bill setting up a Public Sector Standards Commissioner, which would effectively abolish Sipo and set up a new body with powers analogous to those of the Ombudsman. “These investigations are much easier and cheaper to do than public hearings which are legally represented,” Waddell said.

The bill was introduced by former Labour minister Brendan Howlin in 2015. He said it would provide a “robust and effective framework for oversight, investigation and enforcement; and, importantly, cut down on bureaucracy”. But the bill has been stuck in the legislative logjam for over two years. “It is anticipated that the bill will be enacted this year,” said a spokesman for Howlin’s successor in the Department of Public Expenditure, Paschal Donohoe.

With Sipo, any changes have come slowly. The commission had to wait two years until after legislation was passed to force parties to publish audited accounts, not just of party HQ, but all entities, including local branches, that hold significant amounts of cash. This followed a row, which later became public, in which the former environment minister Phil Hogan accused the commission of acting beyond its legal authority.

Around the same time that happened, Sipo found itself unable to meet, because of two vacancies and legal requirement to have six members in order to reach a quorum. A commission request to reduce the quorum from six to three has been ignored by the government.

Given that four of the six members of the commission have considerably important public service day jobs as it is, it’s not hard to see why organising meetings can be a challenge. Sources familiar with the commission’s inner workings say that its membership is engaged with people who “devote extensive time to it”. This has not always been the case with previous members of the commission, they add.

Furthermore, the fact it is a six-member body with no casting for the chair means there can be and has been deadlock in the past. “In a case under the Ethics Act, the chair does not have a casting vote . . . that would lead to deadlock and nothing [would happen],” said one well-placed source. “Sipo hasn’t made this point, but a six-member commission is designed for deadlock.”

Another source said that the commission secretariat is reliant on a group of people “who rarely ever meet to make decisions for them”. They added: “You’ve no one there to offer a real vision as to how it should work. To speak up and demand more resources and to call for clarification from the minister.”

Another perennial problem facing Sipo since the early 2000s has been regulating the funding of organisations involved in referendum or political campaigning. These organisations are known as third parties, which are required to register as such with Sipo if in receipt of a donation over €100 for political purposes. But the test of ‘political purposes’ is based on the intent of the donor, not the recipient.

After Libertas’s prominent involvement in the defeat of the first Lisbon Treaty referendum in 2008, Sipo examined how the Declan Ganley-led campaign was funded. Its report drew a blank on uncovering the source of some of Libertas’s funding. Sipo’s report in 2009 stated clearly: “The 2008 referendum highlighted significant weaknesses in the provisions of the [1997 Electoral] Act concerning third parties.”

 

The Lisbon Treaty campaign highlighted serious legislative deficiencies that haven’t been addressed subsequently

 

The commission said legislative changes should require any organisation spending over €5,000 in a referendum campaign to register as a third party, disclose sources of funding and outline how it was spent. Sipo has more or less made the same recommendation in every report going back to 2004. For Waddell, Sipo’s senior investigator at the time, the Lisbon Treaty campaign highlighted serious legislative deficiencies that haven’t been addressed subsequently. “Nothing has happened in relation to those recommendations,” he said.

This effectively means there is no regulation of expenditure by many organisations that have an involvement in referendum campaigns, he suggested. “It’s bizarre, and increasingly so given the impact of social media. The absence of regulation of expenditure at referendums, which after all involve changes to our fundamental law, is a spectacular defect in our laws and exposes our democracy to serious threat,” Waddell said.

Such a stark warning comes ahead of the contentious Eighth Amendment referendum due this summer. Last November, this newspaper reported how pro-choice and pro-life groups are availing of the aforementioned legislative lacuna to accept unlimited foreign and domestic donations by stating they are not for political purposes, thus not having to register as third parties. Amnesty was among these groups.

Last December, Sipo’s head of lobbying Sherry Perreault, who is also responsible for ensuring compliance with ethics and electoral law, told Amnesty it had broken the law and was required to register as a third party, and ordered that it repay a €130,000 donation from billionaire George Soros.

Amnesty had already spent the money campaigning for changes to Irish abortion law. The Sunday Business Post reported last January that Perreault had reversed a Sipo decision made in October 2016 that Amnesty was “not currently required to register with the Commission as a third party”. Amnesty is now challenging Sipo’s decision in the High Court with the case due to be heard in April.

 

“Activities previously deemed acceptable are being queried.”

 

But what’s happened with Amnesty is happening with other organisations not involved in political campaigns, according to Irish Council for Civil Liberties executive director Liam Herrick. Organisations he engages with have been reporting a higher level of enforcement by Sipo in recent years. “Activities previously deemed acceptable are being queried. For example, there are very invasive inquiries about people’s previous financial records. It would have gone beyond what is previously the case,” he said.

Last August, the ICCL, Transparency International Ireland (TII) and Amnesty complained to to Sipo that the legal definition of “political purposes” was so broad it was bringing in a wide range of organisations under strict rules, despite their activities not relating to any election or referendum campaign. TII chief executive John Devitt said Sipo has changed tack when it comes to its interpretation of the law.

“The literal definition of ‘political purposes’ is so broad that it potentially captures the work of hundreds of charities campaigning around human rights, healthcare, education or climate change,” he said. “It seems to have been interpreting the legislation so broadly that everything from public information to curriculum development could be perceived as having a ‘political purpose’.”

Ironically, Sipo highlighted the same concerns about the “extremely broad” definition of “political purposes” in electoral law in a report 14 years ago.

“Despite its best efforts to explain the legal position, it is quite obvious to the Standards Commission, based on correspondence and discussions it has had with a wide range of civil society groups, including prominent NGOs, that there is great confusion and uncertainty as to how, and why, the legislative provisions in question would apply to them,” the commission stated in its 2004 annual report.

In its 2009 report on the Lisbon Treaty referendum, Sipo said: “A balance needs to be found to ensure the funding of political campaigns is sufficiently transparent, while at the same time ensuring that the capacity of NGOs legitimately to raise funds in support of their activities is not hampered.”

Devitt said that requiring NGOs to register as third parties would mean, for example, that a cancer charity could not receive more than €2,500 from any one source or any overseas funding for a campaign.

“Meanwhile, drinks and tobacco companies are free to spend as much money as they like lobbying to protect below-cost-selling of alcohol or oppose plain-packaging of cigarettes,” he said.

Sipo has denied it has changed its interpretation of the law, insisting in the case of Amnesty that new information had come its way. Perreault would not comment on that case, but said: “The commission administers the legislation and where it has information that it was given for political purposes, the commission will follow up with a third party in terms of donation limits and prohibitions on foreign donations.”

She said that the commission administers the legislation as it is drafted and the Oireachtas determines if the law should be amended. “The commission has called for changes, but it has never once said third parties shouldn’t register,” she said.

In a letter to the government last year ICCL, TII and Amnesty suggested there was an increased volume of complaints to Sipo “by those opposed to specific issues upon which some organisations work, including abortion law reform”.

The ICCL’s Liam Herrick told this newspaper: “There has been an increasingly concerted campaign of complaints against some organisations, some funders, some campaigns, and Sipo seems to respond to that. They have denied it. But you end up with Sipo dancing to the tune of cranks or competitors or those with a particular agenda.”

 

All of this is having something of a chilling effect on donors both domestic and international who are increasingly concerned, he said. “Any negative publicity, even if baseless or ultimately unfounded, about a community and voluntary organisation in the marketplace trying to raise funds is devastating and potentially catastrophic. It doesn’t matter if you’re proved right in the end.”

On the abortion issue, Perreault said there had been complaints on both sides and she expected this to increase as the referendum draws closer, as it would with any referendum. “I wouldn’t say there was a spike. We get a pretty steady volume on a regular basis, at least in my time,” she said.

The bill to bring in the new Public Sector Standards Commissioner will not address any of the issues around third-party registration.

The Department of Housing and Local Government met ICCL, TII and Amnesty last December to hear their concerns. It said these concerns are “being further examined and considered within the department having regard to experience, including previous reports from Sipo, with the implementation of [the Act]”.

But there are no proposals to amend the law in relation to foreign donations, and government sources have signalled to this newspaper that legislative changes are not a high priority for this administration. Perreault would not be drawn on whether there was frustration within Sipo at the lack of political will to change electoral laws. “The commission is doing what it can within its remit,” she said.

But Waddell said that in his ten years at the commission, serial recommendations to the department were ignored.

“There was very little response,” he said. “The commission was restrained and stoic in its reaction to this indifference. But it persisted. There is a dire need for reform of our electoral laws, and I think the current situation perfectly illustrates this.”