You're reading: Expensive elections in a poor nation

As the famous Beatles song goes, money can’t buy love. But it may buy votes.

At least that’s what candidates in the upcoming Oct. 28 parliamentary election seem to be banking on.

With the election just a little more than five weeks away, the parties and candidates have spent hundreds of thousands of dollars officially. But many think the actual spending is much higher, just off the books, like much of Ukraine’s economy.

Where the money is coming from is a tightly kept secret by political parties and leaders.  “We are a poor country with very expensive elections,” joked political analyst Volodymyr Fesenko.

Four out of the top parties leading in opinion polls, including the pro-presidential Party of Regions, United Opposition, Communists and Natalia Korolevska’s Ukraine-Forward refused to provide any official information about their campaign budget and financing sources.

“Go to a bank and try asking about their money. Would they tell you any numbers?” asked Communist Party Spokesman Petro Shelest, oblivious to the notion that the people who will elect or not elect communists have a legitimate interest in knowing who is backing them.

His boss, Communist Party leader Petro Symonenko, promised to reveal the financial information in a formal report filed with the Central Election Commission (CEC) after the vote, an election law requirement that experts say offers little real oversight and controls. Other top parties are making the same promise, saying that the info will be released within 15 days after election.

Denys Kovrizhenko, a legal counselor at the International Foundation for Electoral Systems in Ukraine, expects the official numbers to be much more modest than the actual spending.

“In reality, parties spend on campaigns 10 times more than they report to the CEC,” Kovrizhenko said. “Plus there is no liability for failing to file the declaration or declaring fake numbers. So, it’s all up to the party.”

Kovrizhenko said that Ukraine lags in transparency. In the U.S. and in many European nations, candidates and parties are required to report their finances before the election to show voters who backs them. In Ukraine, no agency has the power to check up on party finances. The election commission is only able to investigate reported violations.

In Ukraine, he says, no one really has power to check party finances. “And since everyone violates the rules, no one reports violations. It is a kind of mutual responsibility. Parties cover up for one another,” Kovrizhenko added.

Party of Regions: The rich daddy

Experts estimate that the incumbent party of power, President Viktor Yanukovych’s Party of the Regions, is running the most expensive campaign. Their spending will be in the order of $200 million, according to political consultant Taras Berezovets. Experts say the money goes to outdoor, TV and radio advertising, paying for news coverage in the press, services for political consultants and unofficial payments to the local election commission members representing the Regions.

The Party of Regions said it will only report their budget after election.

Political analyst Volodymyr Fesenko says the party has traditionally been funded by its rich oligarchs, including the nation’s richest billionaire Rinat Akhmetov, who has a fortune recently estimated at more than $16 billion by Forbes.

Akhmetov’s spokeswoman Elena Dovzhenko denied he sponsors any party.

“He supports Party of Regions politics, but has never financed it,” she said.

United Opposition: Yatseniuk as rainmaker

The United Opposition is comprised of the second-largest bloc in parliament, led by imprisoned ex-Prime Minister Yulia Tymoshenko and former parliament speaker Arseniy Yatseniuk.

It also may be getting covert money from big business. At least that’s Fesenko’s assertion:  “United Opposition gets secret support from businessmen, who don’t want to have problems with authorities, the opposition’s rivals.”

Yatseniuk, according to Fesenko, has “a good relationship with many oligarchs,” particularly with steel pipe tycoon Viktor Pinchuk and Vitaliy Haiduk.

“Huge money was given to Yatseniuk for this campaign,” said Berezovets, who estimates the United Opposition will spend some $130 million.

Yatseniuk denies oligarch backing.

“The problem with oligarchs is solved now because the oligarchs are financing all the other campaigns but ours,” Yatseniuk told the Kyiv Post.

Korolevska: Hey big spender

Former Tymoshenko ally Natalia Korolevska started her election campaign early and is likely to be one of the top spenders. Berezovets says her Ukraine-Forward Party may spend $150 million. “Her budget is proof that she has top sponsors. Akhmetov and his partner [in the steel business, Vadim] Novinsky, I assume,” added Fesenko.

Akhmetov’s spokeswoman said he is not funding Korolevska’s party. In a Kyiv Post interview last month, Korolevska said her party’s campaign is primarily being funded by members, including footballer Andriy Shevchenko.

He told France Press agency recently that he donated Hr 10 million of his own money to the campaign. Korolevska, a multimillionaire, could finance the campaign out of her own pocket.

Klitschko: Paying his own way?

Vitali Klitschko’s UDAR party shifted its advertising campaign into higher gear in July, later than other others.  “Our campaign is the most economical,” said lawmaker Iryna Gerashchenko. “It is worth millions of hryvnias.”

Berezovets says UDAR’s campaign is nonetheless spending more than it admits. His estimate is more than $30 million. Earlier, Klitschko stated that UDAR’s campaign will cost no more than $11 million. He also said that he personally covers the lions’ share of costs associated with running the party, and stressed that UDAR “doesn’t have oligarchs behind it.”

Berezovets doesn’t believe it. “Klitschko never spent any of his money on elections,” Berezovets said.
Fesenko says that a closer look at the Klitschko party ticket reveals that billionaire Dmitry Firtash, a longtime backer of Yanukovych, has friends on the UDAR party ticket.

“There are no more Firtash confidants atop the Party of Regions list in this election. They are being replaced by people from Donetsk,” Fesenko said, referring to Yanukovych’s hometown. “So, Firtash has found a new door to the Rada, through single-mandate candidates and UDAR.”

Ukrainska Pravda news portal also made this connection, pointing to the inclusion into UDAR of Maria Matios, a writer with allegedly close ties to the so-called “gas lobby” with which Firtash is linked.  The connection, according to the report, is her brother. He is a deputy to Anatoliy Baliuk, head of the Presidential Administration’s Control Department. The chief of staff of the Presidential Administration is Firtash friend Serhiy Lyovochkin.

Firtash’s press service did not respond to Kyiv Post inquiries for this story by the time the Kyiv Post went to press.

Matios rejected the connection, saying she never met Firtash or Lyovochkin.

“My brother has nothing to do with my decision to go for politics,” she said in a written commentary. “It is true that Anatoliy [Matios] didn’t appreciate my decision, because he knows that I never do anything half-heartedly.”

Communists: Finding Customs Service friends

While officially modest, the Communist Party’s budget is somehow able to pay for a massive advertising blitz.

“They mostly do outdoor advertising, so their budget is $25-$35 million,” says Berezovets. “They can spend about $4 million per month on outdoor ads. Campaigners cost them little, since a big part of job is done by common party members, not so pampered with money.”

Political analysts name the Communist’s main alleged sponsor without hesitation.  Both Fesenko and Berezovets say it’s none other than the affluent head of Ukraine’s Customs Service, Igor Kaletnik, a party member. His father, Hryhoriy Kaletnik, is a Party of Regions’ lawmaker. Earlier this year, a disgruntled former Communists Party member Leonid Grach called Igor Kaletnik “the main shadow sponsor” of “the current regime” and election campaigns of both Communists and the Party of Regions.
In a comment published by Kommersant Ukraine newspaper, Communist party chief Symonenko said that he can promise that “Kaletnik will work as head of Customs Service after elections.”

Despite being allied with the oligarch-backed Party of Regions, the Communists are campaigning with anti-oligarch slogans and claim they will nationalize blue-chip companies.

Selling of seats in parliament

No one admits it, but it’s widely believed that the rich can buy their way into parliament directly by getting choice spots on party tickets for a hefty price. According to Fesenko, seats can go for $5 million per candidate. There are even supermarket-style deals like “buy two, get one seat for free,” Fesenko said.

Ukrainian parties have always fiercely denied selling hot spots on their tickets, but they all allege their opponents do it.

One Party of Regions member told the Kyiv Post that he donated $3 million in the last election, but is running in a majority constituency this time. He didn’t want his name published out of fear of retribution from party leadership.

With the mixed system of single mandate constituencies and party lists at play in the upcoming election, new financing opportunities have arisen.

“Being endorsed as a party candidate can be useful. In some constituencies, it is easier to win elections if you’re a Party of Regions candidate, because in that case you will be supported by local authorities. But in western Ukraine, it’s the opposite; you get benefits from being a candidate of the United Opposition,” Fesenko says.

“Of course, there is a risk that after coming to the Verkhovna Rada as an opposition party member, those [who paid for endorsements] will leave the party and turn to the ruling party to protect their business interests,” Fesenko added.

Kyiv Post staff writer Olga Rudenko can be reached at [email protected].