Communicated on 15 September 2014
SECOND SECTION
Application no. 19920/13
CUMHURİYET HALK PARTİSİ against Turkey
lodged on 16 March 2013
STATEMENT OF FACTS
The applicant, Cumhuriyet Halk Partisi (the Republican People’s Party, hereinafter referred to as “CHP”), is a Turkish political party. It is represented before the Court by Mr B. Tezcan, a lawyer practising in Ankara.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
1. Preliminary information
Supervision of the finances of political parties in Turkey is entrusted to the Constitutional Court in accordance with Article 69 of the Constitution and Sections 74-77 of Law no. 2820 on Political Parties. Accordingly, all political parties are obliged to submit their consolidated final accounts annually to the Constitutional Court, which verifies whether their revenues and expenditure are in compliance with the law. Various administrative and criminal sanctions are envisaged for failure to comply with the requirements set out in Law no. 2820 regarding the financial activities of political parties. The decisions delivered by the Constitutional Court in this regard are final.
2. Auditing of the applicant’s 2007-2009 final accounts
On various dates in 2011 and 2012 the Constitutional Court sent the CHP Headquarters three separate questionnaires requesting explanations regarding some of its expenses for the years 2007 to 2009, respectively, and also requested information as to why certain expenses had not been supported with original invoices. It appears that the applicant responded to these questionnaires within fifteen to thirty days of their receipt, as requested. The copies of those responses were not submitted to the Court; however, the applicant’s responses to some of the questions were incorporated in the text of the Constitutional Court’s ensuing decisions.
On 7 March 2012 the Constitutional Court issued its decision on the final accounts of the CHP and its local branches for the year 2007. This decision was published in the Official Gazette on 5 April 2012. Subsequently, on 11 July 2012 it issued two more decisions regarding the CHP’s consolidated finances for the years 2008 and 2009, both of which were published in the Official Gazette on 20 September 2012. In all three decisions, the Constitutional Court stated at the outset that the amendments to Section 74 of Law no. 2820, which came into force on 13 February 2011, would not be taken into consideration as the financial activities under review predated the relevant amendments (see the section on “Relevant domestic law” below for further details on the amendments in question).
The Constitutional Court held in its respective decisions that the CHP’s revenues for the years 2007-2009 were mostly in compliance with the general rules of funding established in Law no. 2820. A certain amount of its expenditure, however, was found to be in contravention of the relevant law, either because it had “not been consistent with the objectives of the party” and/or had not been made “in the name of the legal personality of the party”, as required under Section 70 of Law no. 2820, or because it had not been properly supported with original invoices in accordance with Section 76. The Constitutional Court also found that some expenses fell outside the scope of the applicant’s “political activities”. The Constitutional Court accordingly ordered the confiscation of the party’s assets in the amounts corresponding to its unlawful and undocumented expenditure for each respective year under review, as per Sections 75 and 76 of Law no. 2820.
The details of the Constitutional Court’s findings are presented in the table below (the amounts indicated are in Turkish liras (TRY)):
Year
Revenues
Expenditure
Expenditure confiscated by the State
State funding
Other sources
Unlawful expenses (i.e. expenses not made in pursuance of the party’s purposes and/or in the party’s name)
Undocumented expenses
2007
79,859,379
53,675,876
127,470,011
2,679,610
691,636
2008
20,471,032
50,088,000
49,227,119
1,349,305
82,953
2009
49,860,840
78,385,330
125,443,105
943,031
314,000
(a) Unlawful expenses
The expenditure that was found “not to have been consistent with the party’s objectives” and/or not to have been made “in the name of the legal personality of the party” covered a wide array of financial activities.
This included food, pharmaceutical and accommodation expenses, including of employees of the party headquarters or its youth branches (“employees”). Although the applicant argued that these expenses had been incurred by the employees while on duty, the Constitutional Court did not accept them as lawful expenses since the invoices had been drawn up in the employees’ names rather than that of the party, and the applicant had not submitted any other tangible evidence to demonstrate the professional nature of those expenses.
The Constitutional Court also refused to accept a great number of travel expenses as lawful, because the relevant bus and plane tickets had been prepared in the name of the travelling individuals rather than in the party’s name, and the official decisions of the relevant party organs authorising travel had not been submitted. In addition, reimbursement of passport fees to various employees was not considered relevant to the party’s objectives, even when the passports had been obtained for travel in connection with party work, as passports could be used for personal travel as well. The Constitutional Court also deemed costs for publication of business cards for a number of employees to be unlawful, without any further explanation.
Reimbursement of food and travel expenses of persons not on the party’s pay roll, such as freelance consultants, was not considered to be in keeping with the “party’s objectives”. Similarly, the meals offered to persons who provided various services to the CHP, but who were legally employed by other public or private bodies, such as police officers, municipality employees, journalists or gardeners, could not qualify as lawful expenses under Law no. 2820 because any meal costs had to be met by the relevant persons’ respective employees and not by the CHP. Some meals hosted for the CHP’s guests or personnel for special occasions were also considered as personal expenditure not related to the party’s legal personality.
Payments made to employees apart from the entitlements specifically indicated in the collective labour agreement, including New Year bonuses (35 euros (EUR) per person in 2008) or bonuses to reward extra work during the general elections period were also deemed outside the scope of the lawful expenditure envisaged in Law no. 2820. In addition, payments made to security and cleaning personnel in excess of the amounts specifically indicated in the service agreements, where such excess amounts, no matter how meagre, could not be explained by increases in social security contributions or taxes, were considered unjustified and thus unlawful. Similarly, some payments made to other service providers were deemed unlawful where the applicant could not dispel the Constitutional Court’s doubts regarding the proper delivery of service or products in accordance with the terms of the relevant service agreements.
The review of the financial accounts for years 2007-2009 also revealed that the CHP had paid the court fees in various legal proceedings in which members of the party’s senior management and/or its Members of Parliament, including its leader, had been involved. Although the applicant stated that the legal proceedings in question concerned the party’s political activities, and not personal disputes, the Constitutional Court nevertheless decided that the litigation expenses had to be met by the persons in question, regardless of their role or status in the party, as the political party itself was not a party to any of the relevant proceedings. In the decision dated 11 July 2012 concerning the review of the 2009 accounts, one of the judges dissented from the majority’s approach to this matter, and claimed that demanding that such costs be met by the individual members of the party involved directly in the litigation, regardless of the effects of that litigation on the political party, would unduly curtail the scope of political activities in an unconstitutional manner.
Fuel and other expenses for the vehicles owned or leased by the party and its local branches were only accepted to have been made in the party’s name and for its purposes where the vehicle registration certificates or lease agreements were submitted to the Constitutional Court along with the invoices. As for fuel and other expenses for vehicles allocated to the party’s use by volunteers during the election campaigns, they were deemed unlawful outright.
The Constitutional Court declared that gold coins given as wedding gifts in wedding ceremonies attended by the CHP’s leader on behalf of the party could not be considered to have been made in the name of the party or in pursuance of its objectives. Similarly, costs of flowers sent for special events could not be classified as lawful expenses where the invoice had not been drawn in the party’s name.
The Constitutional Court also held that fines for traffic violations by the party’s vehicles, as well as fines or interest on late payment of obligations, such as social security contributions, court orders, rents or motor vehicle taxes for the party’s vehicles could not be lawfully covered from the party’s budget, and had to be met by the individuals who held the responsibility for defaulting on such payments.
(b) Undocumented expenses
The Constitutional Court considered all expenses that were not supported by original invoices as undocumented, referring to the strict requirements of documentation set out under the Law on Tax Procedure. It did not accept as proof of payment receipts, payment orders or even notary-certified copies of invoices.
These undocumented expenses mostly consisted of telephone and electricity bills and travel expenses. The Constitutional Court similarly refused to accept consultancy agreements as justification of the payments made to various consultants, in the absence of freelance invoices issued by the consultants.
(c) Warnings
The Constitutional Court also issued warnings on two occasions in its decision concerning the applicant’s final accounts of 2008.
The first of those warnings concerned the payment of the employees’ salaries. Although the applicant had submitted the relevant payment orders, it had not provided the bank account extracts demonstrating that the ordered amounts had actually been paid. The applicant was ordered to make such information available in the future.
The second warning concerned the payment made to a private company in return for the construction of an election campaign bus. When CHP failed to prove that it had received the bus in question within the time-limit agreed in the contract, the Constitutional Court issued a warning for the submission of complete information in similar cases in the future.
3. Payments made by the applicant to the State Treasury
(a) Payments in relation to the 2007 final accounts
On 11 May 2012 the applicant received a letter from the Governorship of Ankara, ordering the payment of the amounts indicated in the Constitutional Court decision concerning the review of the 2007 final accounts, which totalled TRY 3,372,446 (approximately EUR 1,435,000 on 7 March 2012, the date of the delivery of the decision), within thirty days of the receipt of that letter.
On 23 May 2012 the applicant sent a letter to the Governorship of Ankara, requesting the postponement of the payment to January 2013, in view of the financial difficulties it would suffer for the rest of 2012 in the event of immediate payment of the sanction.
On 12 March 2013 the applicant was informed by the Ministry of Finance that the payments due in relation to the 2007 final accounts had been deducted from the State funding allocated to the CHP on 10 January 2013 for the year 2013, together with interest of TRY 176,211 running from the date the payment had become due (i.e. 12 June 2012). The amount deducted thus totalled approximately TRY 3,549,000 (approximately EUR 1,527,000 on 10 January 2013).
(b) Payments in relation to the 2008 and 2009 accounts
On 30 October 2012 the applicant received a letter from the Governorship of Ankara, ordering the payment of the amounts indicated in the Constitutional Court decisions concerning the review of the 2008 and 2009 final accounts, plus interest, which totalled TRY 3,740,484 (approximately EUR 1,600,000 on 30 October 2012), within ten days of the receipt of that letter. The date from which the interest was calculated was not indicated in the Governorship’s letter.
On 6 November 2012 the applicant sent a letter to the Governorship of Ankara, requesting once again the postponement of the sanction in relation to its 2008 and 2009 accounts to January 2013.
On 15 January 2013 the applicant paid TRY 1,434,042 to the State Treasury in compliance with the Constitutional Court’s review decision for the year 2008, and TRY 1,257,031 for the decision regarding the accounts of the year 2009. It refused to pay the interest, which it contested before the relevant authorities. At the time of the lodging of the application, the applicant’s objection regarding the interest accrued was still under consideration by the State authorities.
4. Subsequent developments
It appears that the financial burden inflicted by the Constitutional Court’s decisions compelled the applicant to cut back on its expenses envisaged for the year 2013 and even to postpone or cease some of its activities. For instance, funding of the women’s and youth branches and the training programmes were drastically cut back. Similarly, the funds allocated to local branches were reduced by TRY 2,434,000, which caused some local branches to close down altogether. The headquarters also faced difficulties in bearing its administrative costs, as the forfeited amount swept away approximately 43% of the funds allocated for the administrative budget, which roughly corresponded to 158 days’ administrative costs.
B. Relevant domestic law
Article 69 of the Turkish Constitution, concerning the principles to be observed by political parties, reads as follows:
“The income and expenditure of political parties shall be consistent with their objectives. The application of this rule is regulated by law. The auditing of the income, expenditure and acquisitions of political parties as well as the establishment of the conformity to law of their revenue and expenses, methods of auditing and sanctions to be applied in the event of non-conformity shall also be regulated by law. The Constitutional Court shall be assisted in performing its task of auditing by the Court of Accounts. The judgments rendered by the Constitutional Court as a result of the auditing shall be final. ”
The relevant sections of Law no. 2820 on Political Parties, which entered into force on 24 April 1983, provided as follows at the material time:
Section 70
“The expenditures of political parties may not be inconsistent with their objectives.
All expenditures of a political party shall be made on behalf of the legal personality of the political party.
There is no obligation to substantiate expenditures lower than five million liras [amount updated annually] with a document such as a receipt or invoice. However, all expenditures should be based on the decision of the competent organ or body [of the party]. No decision has to be taken insofar as expenditures not exceeding five million liras [amount updated annually] and general rate-based charges are concerned, provided that such expenditures were foreseen in the budget authorised by the relevant organ [of the party].”
Section 74
“The audit of [financial accounts] of political parties shall be carried out by the Constitutional Court. The Constitutional Court shall inspect the conformity of the political parties’ acquisitions, revenues and expenditures with the law.
...”
Section 75
“...
At the end of its inspection, the Constitutional Court shall determine the accuracy and lawfulness of the political party’s revenues and expenditures, and shall order the registration of unlawful revenues and expenditures as revenue with the State Treasury.
...”
Section 76
“...
Party’s assets in the amount of the [its] undocumented expenditures shall be registered as revenue with the State Treasury.”
Additional Section 1
“... [The financial] assistance [received from the State] shall only be used for the party’s needs or in relation to the party work.”
On 13 February 2011 the following paragraphs were added to Section 74 of Law no. 2820:
“... However, the lawfulness review may not be conducted in a manner that restricts the activities that are deemed necessary for the fulfilment of the objectives of the political parties or that rules on their appropriateness. The review shall focus on the essence of the expenditures. Deficiencies regarding the form and procedure do not require the refusal of expenditures.
...
Political parties may incur all expenses within the scope of the political activities that they deem necessary for the fulfilment of their objectives.
...
Political parties shall substantiate their expenditures with invoices, [with] documents that serve as invoices, [or] in cases where the submission of such documents is not possible, with other documents the contents of which may verify the veracity of [their] expenditures. However, in circumstances where [the] originals may not be procured due to force majeure ..., approved copies obtained from the issuer may be used instead of the original invoices or [other] documents that serve as invoices.
Political parties may register as expenses the health and social assistance benefits they pay in kind and in money to persons they employ temporarily or permanently, against payment, [as well as] the accommodation, transport and other necessary expenses incurred during domestic or international travels by persons assigned to fulfil the [party’s] objectives.”
COMPLAINTS
The applicant complains under Article 6 of the Convention about the unfairness of the proceedings before the Constitutional Court, which were not conducted publicly and which did not comply with the principles of adversarial procedure and equality of arms. The applicant also complains that the relevant proceedings were not concluded within a reasonable time and there was no possibility to object to the decisions of the Constitutional Court.
The applicant contends that the confiscation orders issued by the Constitutional Court on account of the alleged irregularities in its expenditure between the years 2007 to 2009, which put a substantial financial strain on the party, violated its right to freedom of association under Article 11 of the Convention.
The applicant further alleges that the confiscation of its assets by the orders of the Constitutional Court amounted to a violation of its rights under Article 1 of Protocol No. 1 to the Convention.
QUESTIONS TO THE PARTIES
1. Did the applicant party comply with the six-month time-limit laid down in Article 35 § 1 of the Convention insofar as its complaints regarding the Constitutional Court’s decision of 7 March 2012 were concerned? If not, can the financial consequences of that decision still be taken into account in examining the applicant’s various complaints under the Convention?
The applicant party is requested to provide an explanation as to why the application could not be submitted to the Court within six months from the date on which the relevant decision of the Constitutional Court was published in the Official Gazette (5 April 2012).
2. Did the decisions of the Constitutional Court regarding the applicant party’s final accounts for the years 2007, 2008 and 2009, and the sanctions imposed therein, amount to an interference with its right to freedom of association within the meaning of Article 11 § 1 of the Convention, interpreted in the light of the principles enshrined in Article 3 of Protocol No. 1 to the Convention? If so, (i) was this interference prescribed by law; (ii) did it pursue one of the legitimate aims indicated in Article 11 § 2; and (iii) was it necessary in a democratic society? In particular:
(a) Were the relevant provisions of the Law no. 2820 on which the sanctions against the applicant were based formulated with sufficient precision? Was sufficient guidance provided in the relevant domestic law or in the jurisprudence of the Constitutional Court to enable the applicant to foresee, to a reasonable degree, the type of activities or expenses that would fall outside the scope of the “objectives of a political party” or that would not be considered to have been made “in the name of the legal personality of the party” within the meaning of Section 70 of Law no. 2820? Have the relevant provisions of Law no. 2820 on the monitoring of political party expenditure been applied consistently by the Constitutional Court over the years?
(b) Is there separate legislation that governs the monitoring of electoral campaign expenses, or are those expenses also covered under the standard review procedure provided in Law no. 2820?
(c) Are there any regulations on hospitality expenses of political parties, including the offering of gifts?
(d) What are the sanctions available under Law no. 2820 for unlawful or improperly documented expenses of political parties? In what circumstances can warnings be issued? Were the sanctions imposed against the applicant proportionate to the legitimate aim(s) pursued?
(e) Is it justified to hold the political parties to the strict standards of tax law as regards the documentation of their expenses, having regard to the distinct purpose of the financial review conducted under Law no. 2820?
3. Was Article 6 of the Convention applicable to the impugned review procedure before the Constitutional Court? Was there a “contestation” (dispute) in the instant case that concerned the determination of the applicant party’s civil rights and obligations? If so, did the applicant have a fair trial within the meaning of Article 6 § 1 of the Convention and, in particular, did it have the opportunity to duly participate in the proceedings before the Constitutional Court? Were the proceedings in question completed within a reasonable time?
4. Did the decisions of the Constitutional Court regarding the applicant party’s final accounts for the years 2007, 2008 and 2009, and the sanctions imposed therein, violate the applicant party’s rights under Article 1 of Protocol No. 1 to the Convention?
The Government are requested to provide official translations of the Constitutional Court judgments dated 7 March and 11 July 2012 concerning the review of the applicant party’s 2007, 2008 and 2009 final accounts, and an official translation of the relevant provisions of Law no. 2820 concerning the supervision of the political parties’ finances by the Constitutional Court, as well as of any other relevant legislation.
The parties are requested to indicate whether the applicant party paid interest on the sanctions imposed in relation to the 2008 and 2009 financial accounts, and if so, submit proof of payment showing the amount paid.
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