Professor Iain McMenamin, Dublin City University

The Irish Times recently reported that Sinn Féin’s Northern Ireland branch received €41,000 from friends of Sinn Féin in the US.  It has also received large bequests from UK residents: 3.35m stg until the end of 2023.  Neither type of income would be legal in (southern) Ireland.  Other parties are worried that it is engaging in regulatory arbitrage.  Regulatory arbitrage is the practice of structuring a party’s activities and finances to exploit different political finance rules across jurisdictions to gain an advantage in political competition. The concept of arbitrage does not just assume that actors passively gain from being active in more than one jurisdiction, but rather that they organise activities and channel funds to profit from the different rules in different jurisdictions. 

The Electoral Reform Act of 2022 targeted Sinn Féin’s finances.  Although the references to subsidiaries and property correct an error made by Phil Hogan, a Fine Gael minister, in 2013 and bring Ireland in line with other reasonably robust political finance systems, the requirement to report on offices outside the state is very unusual (and perhaps unique to Ireland).  Disclosures in the UK and Ireland, including the first disclosures under the 2022 Act suggest that Sinn Féin is richer in the South than in the North and that therefore the most obvious regulatory risk is that it will transfer money northwards, not southwards.  Irish parties, including Sinn Féin, are overwhelmingly funded by the taxpayer, whereas British parties need to raise funds themselves. Sinn Féin is richer in the South because public funding is generous there and miserly in the UK.  This is true even when we correct for the larger population of the South: income per voter in the South was greater even during the years when Sinn Féin received mega bequests in the UK. 

Parties have reported on the assets of their subsidiaries in the first disclosures under the Electoral Reform Act.  Sinn Féin reported twelve properties, fewer than mentioned by a party spokesperson in 2023. Sinn Féin is the most asset rich of Irish parties. Asset rich parties are in a better position to survive reductions in income and they can also supplement their income by selling or investing assets.  Sinn Féin’s (net) assets are a similar value to its income: the other parties’ assets are all much less than their annual income.  It is interesting to compare Irish finances to those of Spanish parties.  They are also overwhelmingly publicly funded and include nationalist parties that have been compared to Sinn Féin.  In Spain all major parties, except the relatively young, Vox, have income-to-asset ratios greater than one.  The most asset-rich parties are the Basque nationalist parties. 

Sinn Féin’s position as the only large party active in both the UK and Ireland potentially allows it to exploit the differences between the political finance regimes in the two countries: the UK’s more liberal approach to donations and Ireland’s more generous public funding.  Currently available information implies that the risk of regulatory arbitrage is the transfer of money northwards from the rich Southern branch to its poorer Northern counterpart.  In the future, the disclosure of more properties in either part of Ireland or further afield may change that interpretation.

This blog post draws on Iain’s recently published article in Irish Political Studies, ‘Sinn Féin and Ireland’s extra-territorial regulation of political finance’ (available here).