Investigative storiesPolitical parties

Election Gambling: Pink and Happy Wrote Off Serbian Radical Party’s Multi-Million Debt

23 Apr 2024
Illustration: CINS/Zoran Miodrag
TV stations Pink and Happy wrote off a debt of around 100 million RSD, owed by the Serbian Radical Party. CINS’s investigation reveals that while it is not uncommon for parties to become indebted during election campaigns, the current financial system fails to prevent potential abuses.

Year and a half after his return from The Hague, Serbian Radical Party (SRS) leader Vojislav Šešelj was spearheading his party into yet another parliamentary election. It was 2016, and Šešelj was vying for the position of prime minister. Pink and Happy aired the party’s campaign ad that urged people to “vote for Šešelj and put Serbia back in safe hands”.

The total bill for advertising on these two TV stations exceeded 62 million RSD. The Serbian Radical Party hardly paid any of it.

In addition, they did not pay for advertisements on Pink during the 2017 presidential elections and 2018 Belgrade elections, meaning that their debt went up to roughly 100 million RSD.

The Center for Investigative Journalism of Serbia (CINS) can reveal that this debt was never paid. Instead, Pink and Happy wrote it off, effectively donating money to the radicals. The Anti-Corruption Agency subsequently initiated proceedings against the two TV stations.

Over the past eight years, the radicals have “spent” 173 million RSD more than they actually had by using this method during parliamentary, presidential, and Belgrade electoral campaigns.

Vojislav Šešelj tells CINS that when there is money in their account, they pay their debts.

“Since we had nothing to pay back with, maybe God will repay them someday.”

CINS’s investigation reveals that the current system of financing political activities leads to a lack of transparency, secret donations, and favoritism toward certain parties. The changes proposed by the government could worsen the situation even further and cause millions in damages to the budget.

Nemanja Nenadić from Transparency Serbia says that the proposed changes do not address some of the more significant problems in party financing.

“Not only do these amendments not tackle the issue of financial inequality among electoral campaign participants, but they also pave the way for damaging the budget.”

Election Gambling

All parties participating in the elections receive funds from the budget to finance their campaigns. First, they deposit a security or guarantee, and then receive just 40% of the total amount after the Republic Electoral Commission declares their list valid. If they exceed the electoral threshold, they receive the remaining funds based on the number of seats won. If they do not win at least 1% of the votes (0.2% for minority lists), they must pay back the initial 40% they received.

According to lawyer Vladimir Tupanjac, this forces most election participants to “gamble” every election cycle because they are unsure of how much money they will ultimately receive.

“That is a real problem here, it’s a real gamble.”

Judging by the debts they leave behind, some parties exceed their spending potential because the consequences of such behavior are practically non-existent.

TV advertising debts, for example, are not uncommon.

For instance, the coalition gathered around Boris Tadić ended up owing Pink nearly 9 million RSD in 2022, and 4.5 million RSD to Happy. They also had unpaid debts to Nina Media Clipping, to whom the party owed around 100,000 RSD.

The Social Democratic Party told CINS that there are still certain debts outstanding and that they will be settled “as soon as possible.”

On the other hand, Vojislav Šešelj says that they all share the risk that the party may not exceed the electoral threshold.

“When we made the contract with them [TV stations], our calculation was that we would definitely pass the threshold. However, when we didn’t pass the threshold – how could we pay them? It’s impossible.”

Another issue arises when the debt incurred for financing a campaign can only be paid back from a dedicated account, which becomes inactive after the election. In such situations, the service provider attempts to forcibly collect the debt from the election participant, and then deducts these funds from the party’s regular operating account, if it has one.

For example, the coalition Marinika Tepić – United for Serbia’s Victory incurred a debt to the company Pramac Advertising in the amount of about 4.7 million RSD for purchased advertising space in 2022. The company informed us that they forcibly collected this debt.

However, Pink and Happy did not initiate forced collection proceedings in relation to the Serbian Radical Party’s debts, but rather wrote them off, prompting the Anti-Corruption Agency to file misdemeanor charges against them – against Happy because of an unauthorized donation, and against Pink because they didn’t provide evidence of the debt write-off at all.

Happy defended themselves by saying their logic was that they wouldn’t be able to collect the debt, and that initiating legal proceedings would only mean additional costs involving court fees, lawyers, and enforced collection services.

Pink and Happy did not respond to CINS’s question regarding the write-off of these debts.

Despite the debts that the radicals accumulated for years, both Pink and Happy provided advertising space to this party in subsequent campaigns, where the debts just increased. For instance, during the December 2023 elections, Happy granted the radicals advertising space worth nearly 500,000 RSD, yet they failed to pay for it.

Vladimir Tupanjac says such relationships reveal a lack of market logic.

“Why would a media outlet that is already owed money by a party, having previously written off their debts, constantly get itself into the same situation, unless there is some agreement behind it all or some benefit it gains through different channels?”

Professor Smiljana Milinkov, Head of the Department of Media Studies at the Novi Sad Faculty of Philosophy, is in agreement. She told CINS that this shows favoritism towards certain political parties.

“It’s an abuse in the sense that this payment is not even expected.”

Nemanja Nenadić from Transparency Serbia believes that it would be against the law for a media outlet to refuse advertising because of previously unpaid debts, as the media must provide completely equal advertising conditions to all political entities.

“Under existing legal norms, the only certain way for the media to collect their debts against parties is through advance payment.”

Potential for Abuse

This system enables election participants to make arrangements for the provision of services for free or in the form of a donation, but to record it on paper as debt. The public has no insight into whether these debts are ultimately paid or in what manner, and this information is only revealed if the Agency decides to subsequently investigate them.

Such debts not only remain non-transparent, but also enable favoritism towards certain election participants, Nenadić explains.

“What’s contentious is that some election participants have their debts collected immediately, while others can do so at a later date.”

Further complicating matters are citizen groups that do not have legal entity status. For instance, in 2018, a citizen group gathered around Dragan Đilas ended up owing Pramac Advertising over 20 million RSD.

Pramac Advertising stated that they couldn’t collect this debt because the account was opened under an individual’s name, making it difficult to enforce.

The proposed amendments to the Law on Financing Political Activities, however, threaten to exacerbate this issue. They will enable citizen groups to not provide the currently required deposit for receiving campaign funds from the budget.

The amendments were proposed by the Government’s Working Group for Cooperation with the OSCE, based on ODIHR’s recommendations for improving electoral conditions.

In this way, citizen groups or smaller parties could apply for elections solely to receive budget funds, rather than genuinely participate in the electoral race. Not having to provide a security deposit would ease their path, but if they fail to reach the electoral threshold, collecting what they owe would be difficult.

According to Transparency Serbia, the damage to the budget could exceed 1 million EUR per election, or over 200,000 EUR per citizen group, coalition, or party that fails to cross the threshold and lacks assets with which they could compensate for that money.

“The nature of newly formed citizen groups and many political parties is that they do not possess assets that would allow for enforced collection.”

Vladimir Tupanjac asserts that further restrictive regulations won’t solve the issue because they will only drive money into the gray economy or illegal channels.

“It’s very difficult to prevent money from entering the campaign; even much more developed countries have failed to do so. It’s not a matter of regulating it; it’s a matter of political culture.”

When considering the debt problem through legislative changes, Nenadić believes the solution is two-fold. Firstly, ensure that all campaign expenses are paid for or recorded as free services until the final report is submitted.

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