POLITICAL PARTY FUNDING I - HISTORY AND THE CURRENT POSITION IN SOUTH AFRICA

This is the first brief of a six part series. It provides a background to the current debate on political party funding. The second brief deals with the legal position, and the third suggests a framework within which law might develop. The fourth deals with international experience. The fifth will deal with submissions made to Parliament by political parties and the sixth with submissions made by civil society organisations.

Introduction

Recently the issue of political party funding has re-emerged on the South African political landscape. Up to now, it has been a relatively minor issue in South African politics, despite its major impact on political accountability and democracy. The issue is complex with no universally accepted model for political party funding that ensures accountability and transparency while maintaining the ability of political parties to carry out their function. There have been a number of legal efforts in South Africa to compel political parties to disclose their sources of private funding, although they have so far been unsuccessful. But with a parliamentary commission having now been set up, calls from within the ruling African National Congress to amend the law and a crucial court case on the topic coming up the issue is now salient. This brief aims to provide an analysis of what has led to this point. 

South African developments

In order to effectively inform and represent their constituents political parties require sizeable financial resources. In order to do this certain parties receive public funds and all parties are allowed to raise funds privately. Public funding stems from Section 236 of the South African Constitution which requires legislation that allocates funds on a proportional and equitable basis. This exists in the form of the Public Funding of Represented Political Parties Act of 1997 (PFRPA). The Act regulates how public money is allocated to political parties and the requirements associated with this money. Money is only allocated to political parties which are represented in the National Assembly or a Provincial Legislature. The Act dictates how the money may be utilised and who receives it. Parties may use this money for “any purposes compatible with (their) functioning as a political party in a modern democracy”. They must then account for how this money is spent to the IEC. Parties may not use these funds to pay any elected representative. They must keep these funds in a separate account which must be audited annually. The Chief Electoral Officer is responsible for the management and administration of these funds.

The Act allocates money according to a formula where 10% is shared equally between the parties and 90% is proportionally allocated according to the party’s share of seats in the National Assembly and Provincial Legislatures. Being the largest party, the African National Congress (ANC) was the greatest beneficiary receiving R75.5 million in 2016, while the Democratic Alliance was second with R27.5 million and the Economic Freedom Fighters third with R10.5 million. The smallest parties to receive any funding, the Pan African Congress and the African People’s Convention, received R138 138. They each have a single member of parliament.

While there are some issues around the public funding of political parties, the main area for concern has been private funding. With limited public resources available, all political parties must rely on raising some money from private donors. There are obvious concerns about the influence that donors to political parties can have on eventual government policies. Internationally, there are a number of mechanisms that have aimed to regulate private funding. However, there are no regulations relating to private funding of political parties in South Africa, and this has led to a number of attempts to compel political parties to disclose their private donors.

The first of these attempts was made by the Institute for Democracy in South Africa (IDASA). IDASA launched a case in 2004 in an attempt to compel the four main political parties, the ANC, the Democratic Party (now the DA), the African Christian Democratic Party (ACDP) and the Inkatha Freedom Party (IFP) to disclose their funding sources. The parties responded with concerns that they would lose donors if they did this as donors would not want their donations to be public information. This was especially important for opposition parties who claimed that their donors feared losing out on government business and relationships if they were found to be funding opposition parties. The Western Cape High Court found that political parties were private entities and therefore did not need to disclose their sources of funding. The case was not appealed.  There was a commitment from political parties to make legislative changes, although this is yet to occur.

A second case was launched by the Cape Town civil society organisation, My Vote Counts (MVC). The core constitutional issue in the My Vote Counts case centred on the intersection between the right to vote (Section 19(3)) and the right to access information (Section 32). Section 32 grants everyone the right to access information held by the state that is required for the exercise and protection of rights. MVC had hoped that the court would rule that parliament had failed in its constitutional obligation and compel it to remedy this by legislation compelling political parties to disclose the sources of their private funding. The majority judgment dismissed the case on the basis that the Promotion of Access to Information Act (PAIA) was the appropriate legislation and that MVC should have challenged the constitutional shortcomings of PAIA in the High Court given the circumstances. There was however a minority judgment that held that the combination of those two rights required regular, compulsory disclosure of parties’ sources of private political funding. This minority judgment held that this information was essential for the exercise and protection of the right to vote. MVC subsequently made a request under PAIA in the lead-up to the 2016 Local Government Elections that requested that parties disclose their funding sources, but all parties refused to do so.  The organisation has now taken the case to the High Court in order to challenge the validity and constitutionality of PAIA.

Recently, ANC chief whip in Parliament, Jackson Mthembu, announced that it is necessary to re-examine the legislation surrounding the funding of political parties. The move had been endorsed by resolutions, calling for greater transparency in party funding, at both the ANC’s 2007 and 2012 elective conferences and Mthembu said that it was “better late than never” to begin to tackle the issue in earnest. The party’s Treasurer General, Zweli Mkhize, later penned an opinion piece in which he acknowledged that there could be concerns that private funders utilised their donations to exercise undue influence on political parties. Specifically linking this to the notion of state capture. Parliament has now set up an ad hoc committee on political party funding. The period for public comment closed on 21 July, despite a request for an extension by MVC and Corruption Watch, and the committee is expected to conclude its work by 30 November.

Conclusion
The topic of regulation of political party funding has finally emerged as a serious issue in terms of accountability and transparency. The way in which these issues are managed will have an impact on the trust that South Africans have in political parties and their faith in the political process. The results of a parliamentary commission and an upcoming court case will therefore have important consequences for the quality of democracy in South Africa.

Rafael Friedman
Researcher

Sources:

1. https://eisa.org.za/wep/souparties2.htm
2. http://www.elections.org.za/content/Parties/Party-funding/
3. http://www.hsrc.ac.za/en/review/hsrc-review-jan-march-2016/reforming-party-finance-in-sa
4. http://www.hsrc.ac.za/en/review/hsrc-review-march-2013/in-search-of-a-newparty-funding-model
5. http://www.gov.za/sites/www.gov.za/files/40781_gen290.pdf
6. Daily Maverick
7. http://www.corruptionwatch.org.za/how-campaign-funds-are-regulated/
8. Huffington Post
9. https://mg.co.za/article/2013-01-31-new-age-zille-regulate-private-funding-for-parties-da
10. http://ewn.co.za/2017/05/19/anc-calls-for-donor-funding-to-political-parties-to-be-regulated
11. GroundUp
12. My Vote Counts
13. RPPF%20Annual%20Report%202016%20IEC.pdf
14. My Vote Counts
15. http://www.saflii.org/za/cases/ZACC/2015/31media.pdf

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POLITICAL PARTY FUNDING II -THE LEGAL BACKGROUND

This is the second brief of a six part series. The first part provides a background to the current debate on political party funding. This brief deals with the legal position, and the third suggests a framework within which law might develop. The fourth deals with international experience. The fifth will deal with submissions made to Parliament by political parties and the sixth with submissions made by civil society organisations.

Introduction

The issues surrounding transparency and regulation of political party funding have a long and complex history globally. South Africa is no exception. This article aims to provide an overview of the most prominent legal verdicts our courts have provided on these disputes in the democratic era since they have been re-assessed against a new Constitutional legal framework and its value-scheme. 

The Public Funding of Represented Political Parties Act of 1997 was enacted to provide a regulatory scheme for distributing public funds to political parties as per the requirements of section 236 of the Constitution. But, given that several institutions estimate that this source makes up (at best) approximately a fifth of any party’s funding, a far more contentious matter has proved to be seeking the disclosure of private sources of party funding.

As far back as 1910, the United States began its long legal tussle with this issue. Later, in Buckley, the United States Supreme Court articulated several reasons why it might be desirable to subject to scrutinize the financial donors of parties who might influence them to various degrees on particular matters. Firstly, “it allows the voters to place each candidate in the political spectrum more precisely than is often possible solely than on the basis of party labels and campaign speeches”. Secondly, it can be a deterrent against corruption. Substantial or irregular contributions are often provided in anticipation of reciprocated benefits once the party secures political influence.

In line with the general position our courts have adopted, I suggest that this matter should be addressed urgently by Parliament; preferably in the form of comprehensive legislation which is precisely constructed to address a narrow range of chosen issues. This is preferred since the judiciary is poorly placed in terms of institutional capacities and training to make ad-hoc and potentially overly-broad rulings on a matter which is politically sensitive and critical. This approach best accords to the legal structure of the Constitution and established legal principles, thereby enhancing democracy and the rule of law.

Overview of the Institute for Democracy in South Africa case

In 2005 the Western Cape High Court dismissed an application for an order compelling the political parties represented in Parliament to, upon request, disclose all documents concerning donations they had received during specified periods. The application was made in terms of sections 11 and 50 of the Promotion of Access to Information Act 2 of 2000 (PAIA) as well as section 32 of the Constitution.

Section 32 of the Constitution provides:

“1. Everyone has the right of access to—

a. any information held by the state; and

b. any information that is held by another person and that is required for the exercise or protection of any rights.

2. National legislation must be enacted to give effect to this right, and may provide for reasonable measures to alleviate the administrative and financial burden on the state.”

Enacted in terms of section 32(2) of the Constitution, PAIA seeks to elaborate on and give meaningful force and effect to section 32. Within PAIA, section 11 regulates access for records for “public bodies”; while “private bodies” are covered by section 50.

As Griesel J expressed, in accordance with ‘the principle of subsidiarity’, section 32 of the Constitution could not be directly relied on in the application. First recourse must be to the detailed and comprehensive legislation which more fully fleshes-out section 32’s guiding legal framework. A two-fold role remains for section 32: first, “to 'inform' the interpretation of PAIA”; second, “to serve as a basis for a possible challenge to the constitutionality of PAIA for being either under-inclusive or over-restrictive.” Notably, in Griesel’s view, PAIA was intended to be the sole and entire legislative scheme giving effect to section 32.

A crucial question became whether political parties fell under ‘public’ or ‘private’ bodies in terms of the Act; the latter having significantly higher thresholds for disclosure. Griesel J held that, considering the Act’s wording as a whole, political parties best fitted within the ‘private’ category. They are voluntary associations regulated by their own constitutions rather than legislation.Being publicly pre-eminent does not equate to “exercising a public power”.He admitted, however, that when subjected to scrutiny, it appeared they could not fit cleanly into either category. Nonetheless, since there was no challenge to PAIA’s constitutional validity, he could not rule on potential inadequacies.

The result was the applicants had to prove how the information they requested was reasonably required to exercise or protect any rights. Griesel chiefly measured whether the rights “to make political choices” and to “fair and regular elections” required this, the interpretation being coloured by Constitutional values requiring “accountability, responsiveness and openness” in government; as well as similar constitutional obligations placed on government. Also considered were the rights to freedom of expression and of association.

Griesel J found that the obligations were placed on specific levels of government and were not justiciable rights per se. Also, the arguments regarding freedom of expression and association were wholly unsubstantiated. Furthermore he deemed it insufficient to rely on political science which indicates that fair elections require informed choices between political parties and that certain degrees of transparency regarding private financing was internationally quite common. The courts did not compel general access to this information in any of these jurisdictions. Furthermore, the right to fair elections is a distinct concept from voting rights in the Constitutional structure.  Significantly, the scheme of the Act envisages granting a far more discrete right of access to information based on a factual enquiry and to address information concealed in specific instances; not a general right to open-up private parties’ information.

Preliminary observations

Although legally valid, Griesel J’s judgment is particularly narrow in its interpretations. There is some scope to argue that political bodies might fall under the ‘public’ category. A more generous reading would be that parties, at least when represented in Parliament by their representative Members of Parliament, “exercise a public power and perform a public function”. Furthermore, contrary to Griesel’s reading, the Act seems to specifically contemplate that bodies and hence particular documents may at different times take on either public or private form, determined contextually by whether the body was in that instance performing a public function. So a body does not necessarily have to fit under one of the two categories permanently.

However, two considerations follow. Firstly, even if Griesel’s reading is sound it would, each time, require an application in relation to specific “records” within specific time periods to gain some insight into donations. Secondly, it seems irrational to work within the limitations of legislation which, it has been suggested, might be inconsistent with the Constitution. A better approach would be to challenge its Constitutional validity to give fuller effect to the right in line with the wording in section 32.

Overview of the My Vote Counts case

In 2014 My Vote Counts took a different tack, alleging that private funding disclosure was necessary to give full meaning to the right to vote; and therefore requested directly from the Constitutional Court an order that Parliament had not fully complied with its obligation in section 32(2) of the Constitution to enact legislation giving effect to section 32(1)(b).

The Minority judgment

Cameron J maintained that his verdict’s divergence from the majority’s turned on his privileging substance over form in his appraisal of PAIA. His route to addressing the issue was to assess whether to grant an order in terms of section 167(4)(e) of the Constitution - that Parliament had failed to fulfil an explicitly delineated Constitutional obligation - which required an examination of the extent to which this duty had been fulfilled. 

Cameron J held that information concerning private funding is required to properly exercise the right to vote. He highlighted that South Africa had ratified both the United Nations Convention against Corruption and the African Union Convention on Preventing and Combating Corruption; the latter incorporating even more specific, imperative wording “separately and expressly addressing the funding of political parties”. His central point was to highlight the unique and prominent role demarcated for political parties in our Constitutional scheme. Multiple parties are explicitly identified as the vehicles for governance. There are Constitutional protections for the right to join and participate in a political party. Particular to systems of proportional representation such as ours, parties are the exclusive “keys to legislative and executive authority.” Members of the national and provincial assemblies are not elected directly - parties advance candidates as determined by internal mechanisms. These legislatures subsequently elect the executives. Furthermore, the implication of Ramakatsa is that it is also the private funds that parties receive which are directed towards a public purpose and effect – by enhancing and facilitating national democratic processes.  He re-affirmed M&G Media Ltd that effective exercise of the right to vote requires access to information in order to make informed and responsible political choices. Political parties experience financial strain, coupled with income which is intermittent and often provided on a short-term basis. Contributions are often made on at least the implicit understanding that if existing policies are abandoned or interests ignored; the financing might well not be repeated. It is unwise to suggest that likely party behaviour might not be inferred from the apparently most pertinent reciprocal relationships.

Cameron J maintained that the principle of subsidiarity did not apply based on the critical understanding that the constitutional compliance of PAIA was not at issue. The issue was the distinct notion of a failure to fulfil a constitutional obligation. Contrary to Parliament’s assertions, Cameron J maintained that section 32 could not be given full effect solely by a single piece of legislation. The applicants made no challenge to PAIA itself; simply that there was currently an impermissible legislative gap where Parliament had failed to provide access to information regarding private funding of political parties to give effect to the right to vote.

Most importantly, the distinction between ‘public’ and ‘private’ does not follow the Constitutional demarcations. Indeed, Cameron held that political parties fit into neither the ‘public’ nor ‘private’ categories in terms of PAIA. They could not be private as (per Ramakatsa) rights to party participation oblige these ‘private bodies’ to not transgress national law nor their own constitutions. In fact, they sometimes clearly perform statutory duties. But neither do they fit definitions in the Constitution or PAIA of being ‘of the state’. Moreover, PAIA only covers ‘records’, not information more broadly; and providing ‘records’ only upon request could never give effect to broad-based, informed voting.

Hence, PAIA’s content shows Parliament had not fulfilled its section 32 obligation fully. But crucially, the order Cameron envisaged was a limited one: a general order directing Parliament to enact legislation to remedy potential shortfalls in the current statutory scheme to give effect to section 32(1)(b) read with s19(3) – it would be up to Parliament to meet this directive however it chose to.

The Majority judgment

There were two over-arching disagreements with the minority verdict. For one, the majority judgement held it cannot be said that the allegations made do not impugn PAIA’s constitutional validity. But primarily, the majority were concerned that the requested order would violate the separation of powers.

The Separation of Powers Doctrine

One of the most fundamental and most litigated aspects of constitutional law concerns the issue of separation of powers. The doctrine attempts to maintain the functional independence of the three branches of government and ensures governance performed by those best-suited to exercising the powers exceptional to their institution. It is an especially important principle in dispensations where the courts are constitutionally allocated powers of judicial review over the actions of the other branches. It guards against the potential abuse of power by a judiciary not democratically elected, and which cannot be held easily accountable.

The majority believed that the requested order would amount to requiring the courts to instruct Parliament to legislate in a manner perceived ‘more appropriate’. Parliament need only make legislative choices which are rational and accord to constitutional law. They believed the minority judgement directed the legislature to enact additional legislation; and furthermore, that the legislation should take a certain form – expanding the types of information accessible, and not simply ‘upon request’. This is a constitutionally impermissible instruction absent a declaration that PAIA is constitutionally invalid. 

Subsidiarity and PAIA’s role

Contrary to the minority view, it was held that the constitutional obligations to enact legislation envisaged a single, comprehensive document addressing the matter. Indeed, both the explicit linguistic construction of PAIA’s purport, title and provisions as well as Parliament’s contentions, indicate PAIA was intended to entirely cover the section 32 obligation.  In fact, according to Schedule 6 of the Constitution, section 32 would have lapsed had legislation had not been enacted, which is plainly not the case.

Accordingly, following the line in South African National Defence Union, it was contended that if legislation is considered wanting it should be challenged for constitutional inconsistency; since it is absurd to propose that the principle of subsidiarity applies only where legislation follows exactly what is constitutionally required. The deficiencies of PAIA in rights protection, should amount to an application for an order in terms of section 172(1)(a) of the Constitution - that PAIA is invalid to the extent of its inconsistency. This involves a special procedure, including, especially, an analysis using section 36 of the Constitution to weigh whether the limitation of a right is constitutionally reasonable and justifiable. Furthermore it would allow Parliament to defend its legislative decisions. Finally, this process would allow the court to fully assess the extent of its constitutional invalidity and direct a precise remedy; rather than merely identifying immediate gaps in the legislative scheme on an ad-hoc basis.

Since the applicants explicitly disavowed contesting PAIA in favour of relying on the section 32(2) obligation, the application was dismissed in line with the principle of subsidiarity.

Ryan Holtes
Research Associate

Sources:

[1] Constitution of the Republic of South Africa, 1996.

[1] Previously named: The Promotion of Multi-Party Democracy Act, 1997.

[1] Preamble of the Public Funding of Represented Political Parties Act of 1997.

[1] Clarence Tshitereke ‘Securing democracy: Party finance and party donations – the South African challenge’ (2002) 63 Institute for Security Studies at 5.

[1] Buckley v Valeo 424 US 1 (1976) at 67-68.

[1] Ibid.

[1] Ibid

[1] Supra note 4 at 1-2.

[1] Institute for Democracy in South Africa and Others v African National Congress And Others 2005 (5) SA 39 (C).

[1] Ibid at 44-45.

[1] Ibid at 49-50.

[1] Ibid para 17.

[1] Ibid at 48.

[1] Ibid at 51.

[1] Ibid at 54.

[1] Ibid at 52.

[1] Ibid at 52.

[1] Ibid at 54.

[1] Section 19(1) of the Constitution.

[1] Section 19(2) of the Constitution

[1] Section 1(d) of the Constitution.

[1] In terms of sections 41(c); 15; 195(1)(a); 195(1)(f); and 195(1)(g) of the Constitution.

[1] Section 16 of the Constitution.

[1] Section 19 of the Constitution.

[1] Supra note 9 at 56.

[1] Ibid.

[1] Ibid at 56-57.

[1] Ibid at 57.

[1] Ibid at 58.

[1] Ibid.

[1] Section 1(d) of the Promotion of Access to Information Act.

[1] Section 8 of the Promotion of Access to Information Act.

[1] My Vote Counts NPC v Speaker of The National Assembly and Others 2016 (1) SA 132 (CC).    

[1] Section 19(3)(a) of the Constitution.

[1] Supra note 33 at 138.

[1] Ibid at 139.

[1] Ibid at 140.

[1] Ibid at 153-154.

[1] Ibid at 143.

[1] Section 1(d) of the Constitution.

[1] Section 19(1) of the Constitution. 

[1] Supra note 33 at 149.

[1] Ramakatsa and Others v Magashule and Others 2013 (2) BCLR 202 (CC).

[1] Supra note 33 at 151.

[1] President of the Republic of South Africa and Others v M & G Media Ltd 2012 (2) SA 50 (CC) at para 10.

[1] Supra note 33 at 152.

[1] Ibid at 153

[1] Ibid at 153.

[1] Supra note 4 at 1.

[1] Supra note 33 at 163.

[1] Ibid at 166.

[1] Ibid at 169.

[1] Ibid at 168.

[1] Ibid at 171. 

[1] Ibid at 174-176. 

[1] Ibid at 176.

[1] Ibid at 179.

[1] Ibid. 

[1] Ibid.

[1] Ibid at 171-172.

[1] Ibid at 180.

[1] Ibid at 170; 181.

[1] Ibid at 182.

[1] Ibid.

[1] Ex parte Chairperson of the Constitutional Assembly: In re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) at para 109.

[1] Section 172 of the Constitution.

[1] Government of the RSA v Grootboom 2001 (1) SA 46 (CC) at para 32-33.

[1] Supra note 33 at 190.

[1] Ibid. 

[1] Ibid.

[1] Ibid at 190.

[1] Ibid at 185-186; 199.

[1] Ibid at 188.

[1] South African National Defence Union v Minister of Defence and Others 2007 (5) SA 400 (CC)

[1] Supra note 33 at 192.

[1] Ibid at 195.

[1] Ibid at m 196.

[1] Ibid at 197.

[1] Ibid at 198.

[1] Ibid at 201. 

These articles first appeared as HSF Briefs.