Political Party Funding V - Political Party Submissions

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

Introduction

The Ad Hoc Committee on Political Party Funding has begun its work and has received input from the major political parties. All parties have supported the establishment of the Committee and the general need to review political party funding regulations in South Africa. However, there have been lively debates about how to reform the system to best serve the interests of transparency and accountability in a multiparty democracy. The points of contention have centred on: possible increases in public funding, the proposals for a disclosure requirement for private donations, other regulation of private funding and the creation and management of a multiparty democracy fund (MPDF). 

Public funding increases

The idea that there needs to be an increase in public funding for political parties is often justified as a means to lessen the propensity for corruption by alleviating dependence on private sources, while building South Africa’s democratic capabilities. The African National Congress (ANC) has said that it would only support this if it is preceded by an increase in regulation of private funding. The party also acknowledges that any money allocated to an increase in public funding would have to be found from taxation, cuts in other government expenditure programmes or increased public debt and that a strong case would be needed. However, they argue that increased funding could be allocated to activities that support democracy and enhance citizen participation in politics, such as party operational and administrative costs and policy development. The Democratic Alliance (DA) oppose any increases in public funding, which they see as a possible strategy on the part of the ANC to plug funding gaps that have been created by funders refusing to be associated with the party due to its performance in government and protection of corruption.

Private disclosure

The issue of whether parties should be obliged to disclose their funding sources, and how this should be done, is central to the current debate around the regulation of political party funding. The ANC supports the disclosure of private sources of funding when the amounts are above a certain threshold. The party has had a number of policy conference resolutions on this topic and have stated that they believe the current lack of disclosure undermines the South African Constitution and dilutes citizens’ voices. The Economic Freedom Fighters (EFF) have supported this position stating that they believe it is necessary in order to avoid “political coup d’etats”. Conversely, the DA have raised concerns about mandatory disclosure laws, saying that it could pose a threat to multiparty democracy in South Africa. The Party argues that there is no credible link between non-disclosure and corruption. Additionally, they fear that it will weaken the ability of opposition parties to raise funds, as companies and individuals who choose to fund opposition parties rather than the ruling party will be at risk of victimisation. The DA has therefore argued that, in order to better regulate the system of private donations, parties should report to the Independent Electoral Commission (IEC) who only need to act if there was evidence of wrongdoing. This would protect donors’ rights to privacy and is similar to the way in which personal financial disclosures are made in Parliament.

Other regulations

One of the most contentious issues in terms of regulations to limit private donations is whether, and to what extent, private funding from foreign sources should be allowed. The main point of contention was whether foreign individuals or companies should be allowed to donate to South African political parties. The ANC is against any foreign funding, stating that they fear it could be used to exert undue influence on South African politics. The DA has labelled this as an isolationist view and has said that they believe that South Africa can benefit from foreign ties. They have also agreed with the EFF, who have argued for a practical and implementable system, pointing to numerous grey areas, such as the large number of South Africans with dual citizenship – many of whom live abroad – and the high number of foreign companies with South African connections.

There is general agreement amongst the parties that government departments and state owned enterprises (SOE) should be banned from contributing to political parties. However, the DA has raised concerns about how SOEs are defined in the legislation to ensure that there are not loopholes allowing companies who are largely state owned to be exempt. The EFF has also pushed back on the idea, proposed by some civil society organisations, that there should be a ban on donations from companies who do business with the state. Giving the reason that many of these companies are small and black owned and would therefore be unfairly excluded, despite not having major influence. The DA have also raised the lack of regulation around the use of state resources for political party purposes as very problematic.

The Multi-Party Democracy Fund

While all parties were in favour of the idea behind the creation of a MPDF, there is disagreement around how it is to be managed. The EFF argue that there should be a single fund for political party funding and that existing legislation made it clear that private donations could be made to the Represented Political Parties Fund. This would avoid the extra administration of managing two funds and potentially reporting to multiple bodies. The ANC however argues that two funds are needed in order to make a clear distinction between public and private funds. The DA also support having two funds but have raised concerns about the IEC’s ability to manage both. Rather advocating for a different body to manage the private funds. At present, the committee has decided to have two funds and have the IEC manage both in the interim. But this is subject to consultation with the IEC, who have raised concerns about their capacity to do this, as well as with the public. It has also been agreed by all parties that SOEs, government departments, proceeds from the lottery, proceeds from crime, foreign governments and any entity funded by the South African taxpayer should not be allowed to donate to the fund.

Conclusion

The main issues of debate between political parties have been whether there should be increase in public funding for political parties, the extent of the need for disclosure in private funding and proposed other regulations, whether foreign funding in any form should be allowed, and about the creation and management of a Multiparty Democracy Fund.

Sources

- Council for the Advancement of the South African Constituion. Submission on Public Funding of Represented Political Parties Act and Regulation of Private Funding of Parties. Cape Town: Council for the Advancement of the South African Constitution, 2017.

- Parliamanetary Monitoring Group. Political Discussion on Regulatory Framework (Continued). Cape Town: Parliamanetary Monitoring Group, 2017.

- Parliamanetary Monitoring Group. Political Discussion on Regulatory Framework. Cape Town: Parliamanetary Monitoring Group, 2017.

- Maimane, Mmusi. South Africa is on the cusp of a new beginning. Johannesburg: Democratic Alliance, 2017.

- Mkhize, Zwelini. Funding and Regulation of Political Parties to Deepen Democracy in South Africa. Johannesburg: African National Congress, 2017.

- ANA Reporter. "Party Funding: Disclosure Could Pose a Threat to Democracy." IOL Online, July 29, 2017.

Political Party Funding VI - Civil Society Submissions

This is the final brief of a six part series. The first provided a background to the current debate on political party funding. The second brief dealt with the legal position, and the third suggested a framework within which law might develop. The fourth dealt with international experience. This brief deals with submissions made to Parliament by civil society organisations, following on from the fifth brief which looked at political parties’ submissions.

Introduction

Parliament’s Ad Hoc Committee on the Funding of Political Parties placed a call for public comment before it began its work in July. A total of 16 organisations, individuals and political parties made submissions to the committee. These submissions focussed on the two questions that the committee has been set up to explore; namely the model of private and public funding in South Africa and the desirability and possible methods for regulating private funding and party investment vehicles.

The submissions were largely around four key areas:

- the formula for distributing public funding;

- the need for disclosure for private funding;

- other measures to regulate private funding; and

- the creation of a multi-party democracy fund.

The submissions contained similar suggestions and stances.

Public funding

There is a general agreement that public funding is crucial to the effectiveness of political parties and to enabling them to effectively represent the electorate. A number of submissions made a case for increasing the amount that is distributed annually, as it would play a role in increasing the capabilities of political parties. However, as will be discussed later, all organisations agreed that this would have to be dependent on greater public funding disclosure requirements. Many submissions, including those from Black First Land First (BLF), The Council for the Advancement of the South African Constitution (CASAC), the Human Sciences Research Council (HSRC) and Right to Know (R2K) called for the formula by which public funds are allocated to be reformed. The idea behind this is that the current breakdown for distributing public funds, where 90% is allocated proportionally and 10% equitably, is unfair and in against the spirit of the Constitution. This is in relation to Section 236 which provides for the public funding of political parties as well as Section 1(d) which calls for a “multi-party system of democratic government, to ensure accountability, responsiveness and openness”. Suggestions include changing the formula to either a 60-40 split, in favour of proportional funding, or an equal 50-50 division.

Private Funding

There was unanimous agreement amongst the civil society organisations who made submissions that greater transparency in terms of private funding was needed, with a number of organisations explicitly stating that this should be a condition of any increase in the allocation of public funding. The general agreement is that political parties should disclose the details of donations from private donors. Many submissions suggested that full disclosure, including the name of the donor and the amount, only be required above a certain threshold to allow for small anonymous donations and limit the scale of information that has to be reported. However, due to the lack of any historical information about the nature or scale of political party funding in South Africa, it is difficult to suggest an appropriate limit. R2K have suggested that any amounts above the average monthly household income be disclosed, while most other organisations have stated that they believe that more research is needed to understand what an appropriate limit would be. There have also been a number of suggestions that this apply only to private individuals and that all donations from companies or other organisations be disclosed, regardless of the amount. There was agreement that a total amount collected should be released and that there should be regular disclosure, on at least an annual basis, with increased disclosure in the lead-up to elections. These disclosures would be made public in a timeous and easily accessible fashion. Submissions also dealt with concerns around possible loopholes in disclosure laws, with recommendations that the amounts be measured cumulatively, to avoid multiple donations below the disclosure limit evading disclosure requirements.

Other forms of regulation

Foreign funding. Some submissions, including those from R2K, the Public Affairs Research Institute (PARI) and MVC have argued that there is a need to curtail funding from foreign sources. While, as PARI argues, developing countries may benefit from some foreign funding to aid the operations of their political parties, there is also a severe risk of illicit influence. There are a range of proposals on this front. The first is to ban donations from foreign governments, while there have also been suggestions that direct foreign donations should be banned (more on this later in relation to the proposed Central Democracy Fund). However there have been proposals that foreign companies with a clear vested interest in South Africa be allowed to continue their donations as long as disclosure requirements are brought in. There have also been multiple suggestions that State Owned Enterprises be banned from making any donations to political parties, and that there be strict regulations around this in order to stop clandestine funding.

Use of state resources, financial and non-financial . Concerns have been raised around the way in which South African law regulates the use of state resources for party activities. This is a controversial issue around the world, given the complicated line between party and state, particularly in the lead up to an election. Neither the Electoral Act nor the Electoral Code explicitly prohibit the use of state resources for political party benefit. The Public Service Act does prohibit partisan behaviour from public servants, however the Public Service Commission’s ability to enforce this is limited. A 2016 report from the Public Protector required the minister of Social Development to develop a clear policy setting out the separation between state and party activities. PARI and the HSRC believe that a clear prohibition should be put in place as an amendment to the Electoral Act.

Multi-party Democracy Fund

Most organisations who have made submissions have also suggested the creation of some form of central democracy fund. It would receive donations from companies and individual, and these could be made anonymously, since donors would not be donating to a particular party and therefore could not exert undue influence.

The fund would be independently administered and would disburse money to all represented political parties using a pre-agreed formula. The fund has been suggested as a way to accept foreign donations, enabling foreign entities to contribute to building democratic capacity. It could also be used by organisations who did not wish to remain anonymous, but wished to donate to every party proportionally, as some South African corporates already do.

Implementation and Capacity

The final key issue that was raised by a number of the submissions is that of capacity. With an increase in regulation, there will also need to be an increase in capacity to ensure that the regulations are adhered to. Capacity constraints and a lack of effective implementation are a global cause of weak political party finance laws, and if South Africa is to increase the regulations surrounding the funding of political parties then it is crucial that there is a clear plan to ensure adherence. Most submissions argued that there should be an increase in resources to enable this, however there was a disagreement around which body was best able to carry out this mandate. Some organisations argue that the Independent Electoral Commission (IEC) should do this, given their knowledge of the area and the high regard in which they are already held. Others argued for an independent body to be set up, so as not to place any extra political pressure on the IEC that may interfere with its independence. There were also suggestions of expanded assistance being offered by the Public Service Commission and the Office of the Auditor General.

Conclusion

Civil Society organisations found a great deal of common ground in their submissions to Parliament’s Ad Hoc Committee on the Funding of Political Parties. While there were points of disagreement, the key points of agreement were: that increased public funding should be dependent on increased regulation of private funding; the need for disclosure of the sources of private funding; the need for other regulations to control illicit attempts to influence political parties and concerns about capacity building and the implementation of any new regulations.

Rafael Friedman is a Researcher at the Helen Suzman Foundation. These two articles first appeared as HSF Briefs.

Sources

- Bohler-Muller, Narnia. Written Research by the HSRC's Democracy, Governance and Service Delivery Research Programme (DGSD) to the Ad Hoc Committee on the Funding of Political Parties. Pretoria: Human Sciences Research Council, 2017.

- Right to Know Campaign. Political Party Financing: The Public's Right to Know. Cape Town: Right to Know Campaign, 2017.

- Chipkin, Ivor. Political Party Funding and the South African State. Johannesburg: Public Affairs Research Institute, 2017.

- Conference, Southern African Catholic Bishops'. Submission to the Ad Hoc Committee on the Funding of Political Parties regarding the Review of the Public Funding of Represented Political Parties Act. Cape Town: SACBC Parliamentary Liasion Office, 2017.

- Council for the Advancement of the South African Constitution. Submission on Public Funding of Represented Political Parties Act and Regulation of Private Funding of Parties. Cape Town: Council for the Advancement of the South African Constitution, 2017.

- COSATU. Review of the Public Funding of Represented Political Parties Act. Johannesburg: Congress of South African Trade Unions, 2017.

- Black First Land First. BLF's Submissions to Parliament on the Funding of Represented Political Parties. Johannesburg: Black Opinion, 2017.

- Mkhize, Zwelini. Funding and Regulation of Political Parties to Deepen Democracy in South Africa. Johannesburg: African National Congress, 2017.

- Ogle, Janine. Submission to the Ad Hoc Committee on Funding of Political Parties. Cape Town: My Vote Counts, 2017.