19.08.20

Making Campaign Contributions - The Law has Changed!

Antwan Cotterell
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Making Campaign Contributions - The Law has Changed!

The 3rd of September will be Jamaica’s first general election since the National Election Campaign Fund was established. It is also the first time that the strict requirements for reporting contributions made to political parties or candidates will come into play.

On March 1, 2018, the Representation of the People (Amendment) Act (the “Act”) came into force and established the National Election Campaign Fund (the “Fund”). Persons, companies and entities who do not want to contribute directly to a political party can now make their contribution to the Fund instead. The monies from the Fund are only disbursed to candidates 180 days after the election is held and is to reimburse a portion of the expenses incurred during their campaign. The amount a candidate can receive is directly proportional to the number of votes that candidate received and is only disbursed if the candidate is compliant with the Act and the Political Code of Conduct. Making contributions to the Fund instead of a political party or candidate ought to promote better campaigning and cleaner elections and might be easier for a corporate body to get involved with the electoral process, whether publicly or privately.

Reporting Contributions to Political Parties and Candidates

The Act imposes strict reporting requirements on persons, companies, and entities who have made or are desirous of making contributions to political parties or candidates during the campaign period. The “campaign period” commences on either the day Prime Minister announces the election date or 6 months before elections are constitutionally due, whichever is earlier, and ends 24 hours before the polls open on election day. The reporting period starts at the same time as the campaign period but ends 181 days after the campaign period ends.

A person, company or entity that contributes $250,000.00 or more in cash or kind during the campaign period to or for the benefit of a political party or candidate must supply the party or the candidate with a declaration in a specified form under the Act. A false declaration can result in a fine of up to $3 million or imprisonment for up to a year. If the contributor benefitted from a government contract valued at $500,000 or more within the last 2 years, then they must report that contribution to the Electoral Commission within 14 days of making the contribution. Similarly, if the contributor enters into a contract with the government for that value or more within 2 years of the contribution, they must report the contribution within 14 days of entering into the contract.

These campaign finance laws are likely to influence when a company decides to contribute to a political party with many contributors aiming to show their support in private and before the election date is announced and the reporting period begins. Prime Minister Andrew Holness’ announcement of the election date last week Tuesday started a short sprint to decide Jamaica’s political future. If a company with a government contract of $500,000 or more has made a contribution since August 11, 2020, they only have a few more days to make their report or be faced with the penalty.

The Act also allows contributions made to a political party or candidate during the reporting period to be regarded as a tax-deductible expense under the Income Tax Act once certain requirements are met.

What Counts as a Contribution?

Under the Act, a contribution is a gift of money or any loan of funds or non-monetary gifts (goods, services, providing equipment or facilities) given to a political party or candidate for supporting or opposing the candidature of another person in order to influence an election. So far, the short sprint to election day has seen a bout of campaign material, advertisements, social media marketing and dubplates. These activities aimed at promoting parties and candidates, in the hopes of getting votes, undoubtedly are costly. Since contributions do not have to be money, do these types of contributions, a dubplate by a popular artiste for example, count as a contribution that must be declared? The Act says contributions having a market value of $250,000.00 made in the reporting period should be accompanied by a declaration. Therefore, if a popular artiste contributes a dubplate to a candidate (and there is no agreement for the artiste to be paid for it), the artiste may be required to make a declaration.

Ineligible Contributors

Under the Act, during the reporting period, the following persons must not knowingly make a contribution to a political party or candidate, and a political party or candidate should not knowingly accept contributions from them:

  1. Foreign or Commonwealth governments or their agents;
  2. Public bodies, that is, a body or authority created by statute or any government company;
  3. An entity whose existence is, or activities are, illegal under any law;
  4. A person or an entity whose identity is not disclosed to the recipient of the contribution;
  5. A person or an entity who makes the contribution through an intermediary; and
  6. A person who, or an entity which, uses a false identity in making the contribution.

Politicians are subject to immense scrutiny, but so are corporate entities. Recent headlines have shown how a company’s connections with political parties and/or candidates can become a legal and marketing nightmare if those connections and contributions, whether in cash, or “kind”, are not meticulously reported.

Antwan Cotterell is an Associate at Myers, Fletcher & Gordon in the Property Department. He can be contacted via antwan.cotterell@mfg.com.jm or myersfletcher.com . This article is for informational purposes only and does not constitute legal advice.