The Court of Justice of the European Union upheld the European Commission's action against the Hungarian law on the transparency of foreign-funded NGOs (non-governmental organizations), according to which Hungarian law violates EU law. The declared goal of the Act of 2017 on the Transparency of Civil Organizations, challenged by the European Court of Justice, is to fully apply publicity and transparency to non-governmental organizations supported with a significant (defined) amount from abroad.

Recently these foreign-funded institutions have been shaping Hungarian domestic political processes with open power politics tools, which is underpinned by the 2018 Yearbook of the US Central Intelligence, calling several such NGOs political pressure groups. Moreover, one of the campaign faces of the Hungarian Helsinki Committee, a former judge, marked the overthrow of the government as a goal in one of her statements. Thus, it is not an exaggeration to state that these entities can and should be classified as political actors, and their activity disguised as legal protection or social, cultural and other public participation as a campaign activity. In the light of the fact that since the law in force since 1989 prohibits foreign party funding, the same restriction on resources did not apply to “civilians”.

Based on international factual literature, legislation in developed democracies worldwide points in the direction of streamlining domestic political campaigns outside the election period. From the outset, the British have sought to provide transparent campaign finance, because their basic principle is that different financial groups must not influence democratic electoral competition in such a way as to distort the chances of those running in the elections.

In Britain, The Political Parties, Elections and Referendums Act 2000, Part 5, providing for the control of campaign expenditure, defines the term “campaign expenditure” as “so incurred for election purposes”. In this context, the effort of the Hungarian legislature to identify the domestic political actions of foreign agent organizations using power political instruments by means of law and make it transparent is legitimate.

More specifically, the Civil Transparency Act also promotes this by reducing the risk of covert campaign funding and corruption. NGOs acting as political pressure groups, but especially left-wing parties closely bound to them, should not become beholden to global businesses. and the legislation condemned by the European Court of Justice seeks to eliminate this risk of corruption. The regulation makes it clear which foreign (non-EU) interest groups want to influence Hungarian public life through their non-governmental organizations.

In many countries, it has been recognized that, regarding the political and social role of the various foreign-funded organizations, there is a strong public interest in their transparency. The American FARA Act, originally passed in 1938, frequently mentioned as a model, was directed primarily against Nazi networks engaged in propaganda in America, and is still very strict today: In addition to the regular financial reports, the activities of the (political or close-to-politics) lobbying organizations concerned are reviewed each year by the Attorney General subordinated to the US Government, and he either authorizes their operation or he does not.

U.S. sanctions include fines and imprisonment from six months to five years, and even expulsion for violating regulations. According to the FARA Act, “foreign agent organizations” may be commissioned by a foreign government or a foreign political party, a person who may not be a U.S. citizen or have a domicile, an established business in the United States, or organizations established under foreign law or headquartered abroad.

The transparent management of the organizations covered by the Civil Transparency Act is important to make Hungary and its citizens aware of which supporting interest groups are trying to assert their interests in Hungary. Everybody needs to take into account the risk that money flows of non-transparent origin pose in terrorist financing and money laundering. Such a norm, regardless of its compliance with EU law, serves the interests of Hungary's national security, and thus the interests of all of us.

Author: Zoltán Lomnici Jr., lawyer of constitutional law, legal expert of Századvég