Can Europe Make It?

Getting to Denmark: how hidden money corrupts Danish politics

It is high time to wake up to the reality that Denmark is the only remaining country in the Nordics, and virtually all of Europe, with hardly any laws to ban the crippling influence of money on politics.

Sam Van der Staak Yves Leterme
21 June 2016
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The Danish parliament. Wikimedia. PD.Five years ago, the famous American political scientist Francis Fukuyama introduced the catchphrase ‘Getting to Denmark’. He described how less developed countries can become like Danish society “that’s prosperous, democratic, secure and well-governed, and experiences low levels of corruption”.

This Danish political fairytale was tarnished last week by the book Skjulte Penge, or Hidden Money, which revealed how business clubs have for years fundraised for parties across Denmark’s political landscape, abusing loopholes in Denmark’s political finance laws. It is high time to wake up to the reality that Denmark is the only remaining country in the Nordics, and virtually all of Europe, with hardly any laws to ban the crippling influence of money on politics. 

In Skjulte Penge, journalists Carl Emil Arnfred and Chris Kjær Jessen describe how fundraising clubs have supposedly bought influence in politics by funneling business money into politics. The resemblance to the so-called Super PACs, the American fundraising machines that pump billions of dollars in American election campaigns, is striking.

But Denmark goes much further: where Super PACs were invented to circumvent stringent American laws, Denmark lacks almost any law to curb the use of money in politics. In short, Denmark’s broken political finance legislation is the real problem that has made business clubs possible.

When it comes to the role of money in politics, Denmark is by far the most unregulated country in Europe. It lacks what is often considered the most basic rule, a ban on anonymous donations. In this, it is only joined by some tax havens such as Liechtenstein, Monaco and Switzerland. Swedish parties may accept anonymous donations but are then automatically banned from receiving state funding. 

Similarly, as in only one in five countries in Europe, Denmark does not ban donations coming from corporations with government contracts. There is very little to prevent the entanglement between those companies that receive big government contracts and the business club donations that Skjulte Penge describes.

Nor is there a ceiling to the size of donations. Although a 20 000 kronor ceiling exists above which parties have to report the donation, since those donations can be anonymous, such reports often reveal very little about the interests behind the money.

In some cases, the identity of the donor but not the amount must be made public when donating above 20,000 kronor. This way, there is no way of knowing if someone has donated just slightly or many millions above the threshold.

Although parties have to report their incomes, they do so only to parliament and the interior ministry, both of whom are controlled by those same parties. What is worse, no one is given the authority to examine party reports, which again only Liechtenstein, Malta and Switzerland in Europe also fail to do. 

And although there is hardly anything that keeps Danish parties from fundraising heavily among private donors, Denmark has one of Europe’s most lavish and undemanding systems for state funding. International IDEA’s research shows that Danish parties rely for almost 75 percent of their income on tax payers’ money, which is well above the European average of 67 percent.

Parties can, moreover, spend public money however they like. As in only three other European countries, there are no requirements for what democratic functions they should spend it on, such as youth or women’s wings, or policy research.

This combination between almost zero control and high tax payer subsidies used to be explained by the high level of public trust in political parties, as well as the importance of donors’ privacy. A similar tradition once permeated all Nordic countries, the Netherlands and the UK.

In many of these countries, scandals have in recent years thwarted the illusion that politics and big money have no dependency. Sweden, Norway, Finland, and The Netherlands – countries that once also defended their lack of rules with a supposedly high trust or privacy system – have since 2009 all introduced stricter legislation. 

That Denmark needed some sort of scandal to effect change was perhaps only a matter of time. If Danish lawmakers want to maintain the trust of their citizens, they can no longer avoid regulating themselves. Only their self-sacrificing response can prevent that ‘Getting to Denmark’ goes from a catchphrase to becoming a hollow phrase.

This article is published in association with the Westminster Foundation for Democracy, which is seeking to contribute to public knowledge about effective democracy-strengthening by leading a discussion on openDemocracy about what approaches work best. Views expressed herein do not necessarily reflect those of WFD. WFD’s programmes bring together parliamentary and political party expertise to help developing countries and countries transitioning to democracy.

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