Party and campaign financing is a controversial topic in South Korea. Due to the low rate of fee-paying membership in political parties (on average less than 0.1% of party members), candidates in elections have to spend huge amounts of money to hire supporters and place advertisements. Parties receive public subsidies according to their share of the vote in the most recent elections. However, a larger share of campaign financing comes from private donations. Nowadays some election candidates raise funds under a special investment (not donation) account, which has emerged as a new popular trend.
Although election laws strictly regulate political contributions, efforts to make the political funding process more transparent have had only limited success. Many violations of the political funds law are revealed after almost every election and many elected officials or parliamentarians have lost their office or seats due to violations. The heavy penalties associated with breaking the political funds law have only had limited effect on the actual behavior of politicians and breaking the election law carries little stigma.
Legislation on campaign financing is addressed in the Political Fund Act 1965 (as amended by Act N°11376 of 29 February 2012), and the Public Official Election Act of 1994 (19 January 2012 version).
The law on election financing in 1965 was revised in 2000 to prevent the illegal financing of political activities and to create a legal and transparent basis for political financing. In 1999, a President with no ties to the business sector was elected and an anticorruption program launched. As a result, there are stricter rules in place to regulate donations and contributions from corporations and individuals.
In 1994, a law was adopted on the election of public officials and preventing malpractice in Electoral Matters (1994, revised 2000)
The NEC oversees issues of campaign financing. It is also responsible for providing subsidies to political parties, controlling the establishment and activities of associations of supporters, collecting and distributing political funds and monitoring their use under the conditions prescribed by law on financing policy. The NEC also has a regulatory authority for the implementation of the legislation on the financing of election campaigns, including the application of certain provisions of the law on election financing.
Every political party may collect membership fees from its members. The person in charge of the accounting of a party should deliver a receipt of such membership fee to the relevant party member within 30 days from the date of receiving the fee.
The Political Fund Act defines foreign nationals, corporations, and organizations both foreign and domestic as those who are ineligible to make political donations. The corporations and organizations are also not allowed to use their employees, constituents, or family members to make the donations expediently.
Any person, who is not restricted to contribute the money, should deposit the political funds within the limitation in person with this real name to the Election Commission. Anonymous donation is not permitted. However, anonymous donations below 100,000 won at a time or 1.2 million won annually are allowed.
There is no limit of contribution to political parties, however, there is regulation that an individual may not contribute more than a total of 20 million Won a year to a Political Fundraising Association. There are also limits of 10 million Won/ year to candidates and reserve candidates for Presidential Elections and candidates for the intra-party competitive election for Presidential Elections. No more than 5 million Won/year may be donated to National Assembly Members, candidates and reserve candidates for the National Assembly election for a local constituency, candidates for the Party Leadership Elections, candidates for the Election of Governors and Mayors of the Special City and Metropolitan Cities.
The law limits the amount of cash contributions for elections to an amount that cannot exceed 10% of the election expenses (Political Fund Act, art. 2).
Public campaign financing
A system of public funding is provided for election activities. Two main types of grants are available: ordinary subsidies, paid quarterly each year for the financing of political parties; and election subsidies, paid two days before the deadline for nominations for presidential, legislative and local elections. Public grants are distributed according to the number of seats in the National Assembly by the NEC, which publishes a quarterly report of public subsidies. The budget for public subsidies is based on the number of voters on the electoral roll (multiplied by 100).
Public grants are also expected to encourage political parties to put forward female candidates or people with disabilities according to criteria defined by law. In addition, the law restricts the use of public subsidies by prohibiting the use of funds collected for other uses than financing of political activities. Fraudulent use of these subsidies causes the reduction or elimination of these subsidies by the NEC.
Limits on campaign fund expenditures
The provision that regulates how the party should spend the subsidies is National subsidies are for the operation of political parties, and must not be used for causes other than: a) personnel cost, b) administrative furnishings and consumable, c) setting up and maintenance of offices, d) public utility charges, e) policy development expenses, f) training of party members, g) organizational activity expenses, h) advertising costs, i) election-related costs. The political parties that have received general subsidies must distribute and disburse not less than 30% and 10/% of the subsidies to the policy research center and Si/Do parties respectively, and also must use at least 10% for the political development of women, promoting women’s political participation.
Reporting of fund
An accounting report is established by the Treasurer and must contain various forms of information, such as details of expenditure and revenue (Political Fund Act, art. 37). The accounting report must be filed with the Commission in charge of the election, such as the NEC for presidential or legislative elections (Political Fund Act, art. 40).
Provisions for free or subsidized access to Media
Political parties could have their policies broadcast in the form of party’s representative speech twice a month during about 4 months before the election period and the cost of the broadcasting is borne by the political parties. When a political party having negotiating group in the National Assembly has its policies broadcast using public broadcasters during the period, it bears the cost only half of the broadcasting times. Political parties are reimbursed campaign expense including the cost of broadcast and print advertisements according to their candidates’ performance in the presidential election: reimbursed 100% of campaign expense when obtaining 15% or more of valid votes, 50% of campaign expense when obtaining more than 10% to less than 15% of valid votes.
Other form of indirect public funding
The State or local governments will bare these following expenses for the candidates a) Expenses for pasting and removing campaign posters, b) Expenses for preparing braille-type campaign booklets, and the expenses for sending and postage of campaign booklets (including braille-type campaign booklets and the open data on candidates and campaign leaflet, c) Expenses for making braille-type campaign and Allowances and actual expenses for disabled candidates’ assistants, d) Expenses for holding the interviews or debates (including a joint broadcast speech), e)Expenses for holding the policy debates, f) Allowances and food expenses to the voting observers and to the absentee voting observers, and g) Allowances and food expenses to the ballot counting observers
A political party may use citizen hall, gymnasium, or cultural center which is owned or managed by the State or local governments for party member rally. In such cases, when any property damages have occurred, such as the damage of installations or use of power, etc., the relevant political party shall make the compensations therefor.
Penalties of up to $10,000 and five years’ imprisonment can be issued for breaching the political financing laws
A Comparative Study of Electoral Process Issues in France, Korea, the Philippines, and Indonesia, Research Paper, the Senate Commission 2 on Economy, Finance, Banking and Audit, Parliamentary Institute of Cambodia, 2014