Sinn Féin loophole could lead to Irish PAC funds

An edited version of this article first appeared in Village magazine.

A loophole in a poorly drafted law allows a coach and four to be driven through the regulation of party political donations. Gerard Cunningham reports.

With calls to review their policy on TDs and senators only taking the average industrial wage in Dublin because of higher living costs in the capital, Sinn Féin’s financing arrangements are again in the news.

Sinn Féin’s other fundraising effort.
Image by permission of Cian Ginty

It’s difficult to pinpoint when exactly Sinn Féin began limiting their public representatives’ incomes to the average industrial wage (AIW). It was already an established part of political discourse during the last Presidential election campaign in 2010, when Martin McGuinness promised to draw down only the average industrial wage if elected. A Google search reveals a 2002 article highlighting the policy. Nor is the policy exclusive to Sinn Féin; a 2002 Socialist Workers manifesto also mentions the practice (in the case of the SWP/PBP and the Socialist Party, it appears funds are distributed to various charitable and community groups within their constituencies).

A 2005 post to the bulletin board, specifics that Sinn Féin TD’s excess incomes pay for a local “office and a full time member of staff”. According to the same poster, councillors “give up their standard expenses to fund offices”.

Party stalwarts justify the practice on several grounds. Firstly, it discourages “career” politicians by limiting the financial benefits of elected office. Secondly, it ensures representatives don’t lose touch with their constituents as their pay packets increase, and of course, the money goes back to the party and helps it grow.

The first of these may be somewhat mistaken. The average is not necessarily the typical income for a voter, particularly a Sinn Féin voter, in an economy where one in three workers annually earn the minimum wage (or less, due to part time hours).

The often-cited practice of Sinn Féin TDs and senators who only take an Average Industrial Wage, with the rest spent for the benefit of the party, remains curiously unclear. The Sunday Independent recently reported that the excess over the Average Industrial Wage amounts to some €47,000 a year, which can then be used to pay for a constituency worker or office rentals.

On the face of it, a donation of €47,000 to a political party by a TD should be illegal. No more than €2500 in donations can be accepted by “a political party, accounting unit of a political party, or a third party from an individual or a registered corporate donor in any calendar year”, according to the guidelines published by the Standards in Public Office Commission.

SIPO addressed the question of donations by Sinn Féin TDs and Senators in its 2012 annual report, on foot of media reports relating to then-TD Sandra McLellan and inquiries from members of the public. (In the interests of full disclosure, I began blogging on the topic of political donations and the average industrial wage in 2011, and so may have been one of the “members of the public” mentioned in the 2012 annual report).

In relation to McLellan, SIPO reported that both she and Sinn Féin “emphasised that elected Members’ salaries and expenses are paid directly into the Members’ own bank accounts and after awarding themselves the average industrial wage the Members use the remaining funds to expand and develop their constituency service… As the Commission did not uncover any evidence of a breach of the Act through any transfer of funds from the Deputy’s bank accounts to the Sinn Féin party it decided that its enquiries into this matter should be closed.”

This 2012 investigation appears to be the first time SIPO looked at the question of Sinn Féin TDs spending, as a previous inquiry in February 2011 showed that SIPO had no record at that time of any advice sought by or given to Sinn Féin on the legality of donations made by its TDs to party and constituency organisations.

SIPO has further stated in correspondence to the author that “a constituency office/service could not be regarded as a subsidiary organisation within the meaning of the act.”

A subsidiary organisation is defined by the Electoral Act 1997 as “a body or association which:
(a) forms part of such political party, or (b) is established by or under the constitution of the political party, or (c) is effectively controlled by the political party or the officers thereof, or (d) has functions conferred on it by or under the constitution of the party.”

Put simply, if a TD gave money to Sinn Féin, and Sinn Féin hired an worker for a constituency office with that money, then it would constitute a donation to the party. But if the TD hires a worker herself, and the worker’s wages never pass through a Sinn Féin account, the same expenditure is not a donation. And if that’s not enough, a constituency office is not part of the party.

Given the differing legal requirements surrounding the reporting of donations in the two jurisdictions, Sinn Féin’s northern counterparts appear to operate a different policy, going by public comments by Martin McGuinness, who said during a presidential election radio debate that as deputy first minister he earned £112,000 annually “but I don’t see it. It goes straight into a Sinn Fein account and I’m paid a subsistence out of it.”

Contacted about the details of its donations policy, the party was content with a statement which simply said “Sinn Féin are fully compliant with the Standards in Public Office Commission. Your questions would be better put to them in this regard.”

UCD Sutherland School of Law legal lecturer John O’Dowd points out that, while the policy may seem to fly in the face of the spirit of the law, the party is entitled to the benefit of the doubt.

“There is a general legal principle that if two interpretations are possible, and one leads to no law being broken, you give the benefit of the doubt,” he said. “They’ve accepted Sinn Féin’s account of how things are actually managed.”

“If Sinn Féin say, only keep the average industrial wage for your own personal benefit and spend the rest in your constituency, I don’t think that’s giving the party enough control over how the money is spent.”

Whether Sinn Féin is exploiting an unintended loophole in the law, or is simply obeying the law as it currently stands, depends to some extent on the political eye of the beholder, but it does raise some intriguing questions.

“If some millionaire wants to benefit Sinn Féin by spending money, say by buying newspaper ads saying how wonderful Sinn Féin is, as long as he doesn’t coordinate that with Sinn Féin, it’s not a donation to Sinn Féin. And the provisions on Third Partys only apply if you spend someone else’s money. If you just spend your own money, the Act doesn’t reach you.”

“So, for example, if Denis O’Brien wants to write cheques to buy advertising to retain water charges, that might benefit specific parties, but because he’s not giving the money to the party, it doesn’t fall under the legislation.

“It’s a question of degree. If Sinn Fein sends around a directive to do something in every constituency, and every Sinn Féin TD should use this person they employ to do it, and the TD does it, then I think that’s probably a donation of the value of the services of that person to Sinn Féin. But if it’s just a question of the general good impression of Sinn Féin that’s created by the fact that there’s an office, and people come in with their problems with social welfare, or potholes, it probably comes down to the degree of control of the specific work that the person does, and the value of that work.

“It seems SIPO are saying you must have something that is analagous to money going into a Sinn Féin bank account, that the TD is paying money over to.

“The principle remains that you can spend your own money to the benefit of a political party without that being a donation, so there’s a line somewhere you’ve got to cross. It kind of parallels some of the debates in America. For example, you cannot give $1million to Ted Cruz for his campaign, but you can donate $1million to a political action committee (PAC) which is set up to try and elect Ted Cruz, as long as the PAC doesn’t coordinate with Ted Cruz or his people. So as long as it’s independent expenditure on his behalf, you can spend as much as you like.”

“The mere fact that the party benefits isn’t enough to make it a donation.”