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Safety and Security

Introduction of the Political Donations Act

The Political Donations Act was passed by Parliament in May 2000. The Political Donations Act seeks to prevent foreign groups from interfering in domestic politics through donations to political associations, parliamentary election candidates and presidential election candidates. The Act prohibits political parties, organizations gazetted as political associations under the Act and candidates of parliamentary or presidential elections from accepting donations from persons or bodies that are not permissible donors. It also requires political parties, organizations gazetted as political associations under the Act and election candidates to report large donations that they have received. The Act and its subsidiary legislation came into operation on 15 Feb 2001.

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2nd Reading Speech by Minister for Home Affairs Mr Wong Kan Seng
Date of Parliament Sitting: 22 May 2000

Political Donations Bill

Mr Speaker, Sir, I beg to move that the Bill be now read a second time.

Introduction

2. The Political Donations Bill seeks to prohibit donations to political parties, political associations, and candidates in parliamentary election or presidential elections by persons and bodies who are not permissible donors. It also requires political parties, associations and candidates to report large donations that they have received.

3. Mr Speaker, Sir, Singapore is an independent and sovereign country. Foreigners should not be allowed to interfere in our domestic politics. It is no more legitimate for foreigners to pay money to support a political association or candidate than it is for them to have the right to support the associations' cause, or to vote for the candidate. Any Singaporean or organisation that allows himself or itself to be used by foreign elements, or collaborates or colludes with them to interfere in our internal affairs, is subverting the independence, integrity and sovereignty of the country. We must not allow this to happen. Politics in Singapore should be for Singaporeans only.

4. But Singapore is not immune to foreign interference. We have had to deal with interference in our domestic politics. In 1959, a Government Commission of Inquiry revealed that two sums of money totalling $700,000 were transferred from New York to Mr Chew Swee Kee, then Education Minister from the Singapore People's Alliance, the ruling party led by Mr Lim Yew Hock, then Chief Minister. I think many young Singaporeans do not even know about this. The Inquiry revealed that the money was meant as a political gift to the Labour Front (and I quote the report) "for the purposes of fighting subversion in the colony" and "strengthening" the Labour Front "as an effective party and bulwark against communism." Then in 1976, the Secretary-General of the People's Front, Mr Leong Mun Kwai, who is still around today, revealed during Police's investigations on the misappropriation of the People's Front's funds, that he was given financial assistance and made use of by a neighbouring intelligence service in a "black operation" against the interests of Singapore. A more recent case was in 1988, when a US diplomat interfered in Singapore's domestic politics. The diplomat actively cultivated Mr Francis Seow. Mr Francis Seow was advised by the diplomat how to establish a more effective opposition in Parliament and to set about seriously to recruit more young professionals into the opposition. This is gross interference in Singapore's domestic politics.

5. We should not condone such activities. Currently, we have no law prohibiting foreign funding of political parties, political associations and candidates of parliamentary or presidential elections. This Bill seeks to put in place a legislative framework to prohibit such foreign funding.

6. Sir, Singapore is not the first country to introduce such legislation. Many countries, such as the United States, Canada, India, France, Japan, Germany, already have laws either prohibiting or regulating foreign political donations. Hong Kong and Taiwan also have similar laws. In South Korea, under their Political Fund Act, foreigners and foreign corporations, except foreign corporations and organisations under the control of nationals of the Republic of Korea, are not allowed to contribute political funds to any party. The UK also has recently introduced a "Political Parties, Elections and Referendums Bill", which amongst others, aims to regulate political donations. It is therefore timely for Singapore to introduce controls against foreign funding. We have studied the various examples in other countries and generally adapted the UK Bill to suit our local context.

Overview

7. Let me now give an overview of what our Political Donations Bill would cover, before highlighting the main clauses of the Bill.

8. The Bill aims to prohibit political parties, political associations and candidates from accepting donations from foreign sources by treating these as impermissible. Political parties, political associations and candidates are allowed to accept donations, so long as these come from permissible sources. Similar to the approach taken in the UK Bill, we have chosen to define who is a permissible source or who the permissible donors are because it is easier to define who is permissible rather than who is impermissible. Any donations other than those from the defined permissible sources would constitute impermissible donations. If political parties, associations or candidates receive any donations from impermissible sources, they would have to return the donation to the donor. If they are unable to do so, they would have to surrender the donation to the Government's Consolidated Fund. Political parties and associations and candidates would also be required to report large donations, to ensure that they keep proper records of these donations.

Who does the prohibition cover?

9. There are three groups of people who will be covered by the prohibition against foreign funding. Firstly, all political parties, such as the People's Action Party, the Singapore People's Party, the Workers' Party, and other political parties registered with the Registry of Societies will be covered by the definition of "political association" in clause 2 of the Bill. They would not be allowed to accept foreign donations.

10. Secondly, candidates of any parliamentary or presidential elections and their election agents would also be covered by the prohibition. The prohibition would apply to both candidates fielded by political parties as well as independent candidates. The prohibition against foreign funding applies whether or not the candidates are successfully returned.

11. It is clear why registered political parties and candidates should be covered by the prohibition - they contest in elections, and if elected, can influence the policies and political process in Parliament. They can even form the government if they have the majority in Parliament. The election agent is responsible for all campaign funds (under the Parliamentary and Presidential Elections Acts) of the candidate. It is therefore logical that the election agent is also covered by the prohibition on foreign donations.

12. The third group covers any organisation, regardless of whether the organisation is registered as a society, a business or a company, so long as its objects relate wholly or mainly to politics in Singapore, and it is gazetted as a political association under the Bill. To leave out such organisations from the Bill would present a loophole for foreign interests to interfere in our domestic politics. Although the organisation's activities or objects may not be directed at procuring a candidate for election into Parliament or as President, it can accept foreign donations, promote a particular political platform and influence the political process, but in the interest of its foreign donor. This should not be allowed. The Straits Times, in a recent article on 13th May, "Regulating the flow of money in politics" highlighted an example where a political party in a foreign country is under investigation for allegedly "setting up non-profit organisations that channelled large contributions from foreign donors". Also, in Business Times, on 10th May, and in fact, in today's Straits Times, in reports focusing on the political donations laws in the US and other countries, highlighted the controversy on the use of "soft money" for purposes like "party-building" and "discussion of national policy issues", which are not directly for election purposes. Indeed, to confine politics to just contesting in elections and electioneering for candidates would leave out organisations who accept or make use of money from foreign sources to seek to change our laws or policies, or decisions of the Government. We have little control over activities and spending by organisations unconnected with candidates or parties during an election. Foreign groups can, through such unconnected organisations, influence local politics. Surely, this cannot be allowed. Such organisations should therefore be subject to the prohibition from accepting foreign donations.

13. The expression "relates wholly or mainly to politics in Singapore" in the Bill is not new. This is adapted from our Films Act. Further, a similar expression - "wholly or mainly of a political nature", can be found in the UK Broadcasting Act 1990, and has already been subject to interpretation by the UK Courts. As regards political activity, we would be taking into account whether:
(a) the activity is intended or would likely to affect voting in any election or national referendum in Singapore; or
(b) the activity is, for example:

  1. an election or a national referendum in Singapore;
  2. a candidate or group of candidates in election;
  3. an issue submitted or otherwise before electors in an election or national referendum in Singapore;
  4. the government or a previous government or the opposition to a Member of Parliament;
  5. the current policy of the Government or an issue of public controversy in Singapore;
  6. or a political party in Singapore or any body whose objects relate wholly or mainly to politics in Singapore, or any such branch of such party or body.

To define "politics" and "relate wholly or mainly to politics" as referring to "elections or electioneering activities" only as proposed by some civil society groups is therefore too narrow. All we need to do is to read the Washington Post article as reported in the Straits Times of 18th May this year and in it, there are details on certain groups, although they claim that they are not electioneering, not campaigning for political party or activity or candidate, who are actually influencing the cause of the activities of the candidates or parties.

14. To ensure transparency, the Bill empowers the Minister to gazette such an organisation as a political association for the purpose of the new law and be subject to the prohibition against foreign funding. Such an approach ensures that organisations would be fully aware that, if they are gazetted as a political association, they are prohibited from accepting donations from impermissible sources. If they are not gazetted, then they are not required to follow the requirements of this Bill.

15. In deciding whether to gazette any organisation as a political association, the Minister would have to consider carefully all relevant factors, such as its objects and activities, its links with foreign organisations, and the support it receives from such foreign organisations.

Permissible donors

16. Under clauses 8 and 14 of the Bill, political associations and candidates are only allowed to accept donations from permissible sources.

17. All Singapore citizens, who are at least 21 years old, and all Singapore-controlled companies, are considered permissible donors. A Singapore-controlled company refers to a company registered with the Registrar of Companies, and the majority of its directors and members are citizens. All other sources would be considered foreign in nature and deemed impermissible.

18. Naturally, Singaporeans, who have attained the age of maturity of 21 years old and above, should be permissible donors. Singapore companies are allowed to make political donations, as they are our corporate citizens, and should have an interest in Singapore's well being. After all, political stability is a key fundamental for economic growth, and provides the environment for businesses to flourish.

19. Unincorporated organisations are not permissible donors. Political associations and candidates therefore cannot accept donations from these organisations. Unincorporated associations include trade unions, societies, charities, mutual benefit organisations, businesses, professional firms and so on. Trade unions, societies, charities, mutual benefit organisations are set up for specific purposes. As it is now, most if not all of these associations are already prohibited from making political donations under their respective Acts or constitutions. Sole proprietors, partnerships and professional firms have no separate legal identities from their owners. That is to say, the profits and losses of the business are the profits and losses of the individual owners. Hence, if they wish to make donations, they should do so as individuals, as long as they are Singaporeans and are 21 years old and above.

Anonymous donations

20. The Bill allows a political association to accept anonymous donations of less than $5,000 in any one financial year of the association. Candidates can also accept up to a similar amount of anonymous donations during the period of 12 months prior to his declaration made before nomination day. This is to take into account that some well-wishers may wish to remain anonymous in making donations to political associations or candidates. We have chosen a reasonable limit of $5,000 to strike a balance between allowing well-wishers to make small anonymous donations and not opening up a loophole for significant foreign donations to slip through as anonymous donations.

What is a donation?

21. Clauses 3, 4 and 5 of the Bill deal with the definition of donations and how the donations are valued. These provisions are adapted from the UK Political Parties, Elections and Referendums Bill. Donations are defined broadly to include all goods or services, such as any gifts of money or property, subscription and affiliation fees, loans, property, services and other facilities provided to the candidate or political association that are not on commercial terms. For example, if the goods or services are rendered to a political association at less than commercial rates, the value of the donation would be the difference between the actual cost to the association and the cost which the association would have incurred if it had been provided on commercial terms.

22. Donations would not include any notional benefits of airtime during lawful party political broadcasts, or any postage-free elections communications authorized by written law. These benefits are granted by or pursuant to our written laws, and would not be considered as donations.

23. Like the UK Bill, donations would also not include any voluntary services by an individual. It is neither practical nor feasible to put a value to voluntary services. For example, if an individual contributes, in his own time, professional services within his own sphere of expertise, such as accounting expertise, to a political party, this service would not be regarded as a donation. He could be self-employed, or he could take leave from his employer to provide his service to the political party. As long as he volunteers his services in his own time, it would not be regarded as a donation. However, if the individual is paid by his employer while providing services to a political party, the services would count as a donation by the employer to the political party. The value of the donation is the commercial rate of providing the services.

What should a political party or a candidate do upon receiving a donation?

24. Clauses 9 and 15 of the Bill require every political association or candidate or his election agent to take all reasonable steps to identify the donor and to determine whether the donor is a permissible donor before accepting any donation received.

25. If the donation is from an impermissible source, the political association, candidate or his election agent must return the donation to the foreign source. If that cannot be done, the donation must be returned to the person who transmitted the donation or to the bank, if the money was drawn from a bank. If that is also not possible, the donation must be surrendered to the Registrar of Political Donations.

26. If a political association receives an anonymous donation, it must ensure that it has not accepted $5,000 or more of such donations in the year in question. Any anonymous donations above the allowed limit must be returned either to the person who transmitted it or the bank, or in the last resort, surrender it to the Registrar. Similar provisions operate with regard to candidates and election agents receiving anonymous donations.

Reporting of Donations

27. Sir, the Bill provides for political associations and candidates of parliamentary or presidential elections to submit a donation report and a declaration on political donations to the Registrar of Political Donations.

28. By requiring a declaration to be submitted with a donation report, it would obviate the need for the political associations to list all donations, which would be administratively tedious. The declaration would state that the political association or candidate did not accept any foreign donations as well as anonymous donations beyond the permissible limit, ie, less than $5,000. Political associations and candidates need to list only large donations of $10,000 or above in the donation report. This reporting requirement ensures that political associations and candidates keep proper records of the donations which they receive.

29. Let me elaborate on the reporting requirements.

Political Associations

30. Sir, clauses 12 and 13 of the Bill require political associations to submit a donation report and a declaration to the Registrar within 31 days from the close of its financial year. This is similar to current practice whereby political parties are already required under the Societies Act to submit their annual returns and statement of accounts to the Registrar of Societies within 31 days from the close of their financial year or the Annual General Meeting, if there is one.

31. The political association should list in the donation report all donations of $10,000 or more, whether it is a single donation, or a series of donations from the same source, which adds up to $10,000 or more during that financial year. For example, if the political association accepts three donations from the same individual donor, and the three donations add up to more than $10,000 in the financial year, the political association should also record this series of donations in the donation report.

32. The political association would also have to submit a declaration with the donation report that it has not received any donations from impermissible sources, as well as anonymous donations beyond the permissible limit of $5,000.

33. The president, the secretary and the treasurer are responsible for the preparation and accuracy of the report. The president, the secretary and the treasurer are the key officers of a political association, and should therefore be responsible for the political donations. They have to ensure that the donation report and the declaration are submitted on time, and declare that the donation report is complete and accurate.

Candidates

34. Sir, clause 18 of the Bill requires every person who intends to take part in any parliamentary or Presidential election to submit to the Registrar a similar donation report and declaration. The donation report and declaration are to be made after the issue of the writ of election, and sent to the Registrar of Political Donations at least two clear days before Nomination Day.

35. The donation report and declaration by a prospective candidate are similar to those by a political association. That is, the prospective candidate must list in the donation report all single donations of $10,000 or more, and any series of donations from the same permissible source which adds up to $10,000 or more, for the year prior to his declaration. He would state in the accompanying declaration that the donation report is accurate and complete, and that he has not accepted donations from impermissible sources as well as anonymous donations beyond the permissible limit of $5,000. Thereafter, the Registrar would issue a political donation certificate to the candidate.

36. The candidate is then required to submit the political donation certificate, together with his other papers required for nomination purposes, to the Returning Officer on Nomination Day. The nomination of his candidacy would only be accepted if he can present the political donation certificate together with his nomination papers and other legal requirements.

37. After the election, the candidate and his election agent would be required to submit to the Registrar within 31 days of the declaration of election results, a second donation report and declaration. This second report and declaration are similar to the first declaration and donation report, except that it covers the period from the time of the first report to the time of the second report. This second report is necessary, as in practice the candidate is likely to receive donations during this second period, when he is campaigning for the elections.

Donors

38. Clause 21 of the Bill requires donors of "multiple small donations" to political associations, which add up to $10,000 or more in a calendar year, to report to the Registrar. This is a counter-evasion measure. It helps the Registrar to keep track of small multiple donations that add up to a significant amount of $10,000 within a short period of one year. The reporting requirement will also lessen the tedious task of verifying such donations. A donor would not need to declare if the total donation is less than $10,000 in a calendar year. He also would not need to declare if he made a single donation, or a few donations, each of which is $10,000 or more. In this case, the political association should have captured these donations in the donation report. A similar requirement can also be found in the UK Bill.

Reports Not Open to Public Inspection

39. The donation reports submitted to the Registrar of Political Donations would not be open to the public. Allowing public inspection of the donation reports could inhibit permissible donors from donating to political associations or candidates.

40. As it is now, political parties, like all other registered societies, are required to submit annual returns and statement of accounts to the Registrar of Societies and these annual returns and statement of accounts are also not available for public inspection.

Offences

41. Let me now turn to the offences under the Bill.

42. Sir, under this Bill, accepting foreign donations per se would not be an offence. Instead, the foreign donations would just be forfeited if they are not or cannot be returned to the donor. Clauses 11 and 17 of the Bill enable the Public Prosecutor to apply to a District Court to order the forfeiture of a donation from an impermissible source which a political association or a candidate or his election agent has accepted. Clauses 11 and 17 also provide for appeals to the High Court against the decision of the District Court.

43. Each of the responsible officers of a political association or a candidate or his election agent would commit an offence if any of them makes a false declaration in relation to political donations. For example, if a political association accepts a foreign donation but the declaration accompanying the donation report declares otherwise, each of the responsible officers would have committed an offence of false declaration, unless he can show that he did not know and could not reasonably have known that the declaration was false. This is reasonable since the political association is in the best position to know the circumstances under which the donations were received.

44. If convicted of false declaration, then each of the responsible officers of the political association would be liable to a fine of not exceeding $5,000 or an imprisonment not exceeding 6 months, or to both. Repeat offenders would face higher penalties - a fine not exceeding $20,000 or an imprisonment not exceeding 3 years, or to both.

45. Under the Bill, it would be an offence if political associations and candidates and their election agents do not submit the donation reports and declaration within the stipulated time, for example, for the political association, it would be within 31 days from the close of the association's financial year. If convicted, each of the responsible officers of the political association would be liable to a fine of up to $2,000.

46. Clause 23 of the Bill makes it an offence for a person to facilitate the evasion of the restrictions on impermissible donations. For example, if an individual, who is a permissible donor, accepts money from an impermissible donor and donates the money to a political association to circumvent the prohibition, the person would have committed an offence. He would be liable upon conviction to a fine of not more than $3,000, or to imprisonment for not more than 12 months, or to both.

47. Clause 30 of the Bill makes it an offence to alter, suppress or destroy any document he is required to produce to the Registrar, with a view to evade the provisions of the Bill.

48. Clause 27 of the Bill empowers the Registrar to compound any offence under the Act. This provides the flexibility for the Registrar to offer composition of not more than $500 for the less serious offences. Offences which carry a mental element, such as false declaration of donations, facilitating in the evasion of the restrictions on impermissible donations, would not be made compoundable. As per normal practice, the compoundable offences would be prescribed by regulations.

Consequential Amendments

49. Finally, clauses 36 and 37 of the Bill make related amendments to the Parliamentary Elections Act and the Presidential Elections Act. A prospective candidate would have to deliver to the Returning Officer, together with his nomination papers on nomination day, a political donation certificate issued by the Registrar of Political Donations. If he fails to do so, his nomination would be rendered void and may be rejected.

Conclusion

50. Sir, this Bill aims to keep foreign interference out of our domestic political process. It does not prevent political associations and candidates from accepting donations, so long as the donations are from Singaporeans or Singapore-controlled companies.

51. In drafting the Bill, we have kept the framework as simple as possible. No doubt, the associations would have to put in some effort to account for the donations that they receive. But this small effort would go a long way in upholding the independence and integrity of our political process. I have made such a long speech to explain this because I think it is necessary for Members to have a clear understanding of the Bill.

52. Sir, I beg to move.

Last updated on 16 Jun 2007
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