Electoral Commission issues 2022-23 first quarter disclosure report in terms of the Political Party Funding Act and Regulations

: Aug 30, 2022

Introduction

The first year of implementation of the Political Party Funding Act has been concluded and we have now entered the second year of implementation. While a lot more is yet to be written and debated about the first year of implementation when the Electoral Commission publishes the first Party Funding Annual Report later in the year, we can preliminarily draw a conclusion that the first year of implementation was a success, albeit with a number of challenges that often characteristic of any new system or programme that is implemented for the first time.
Overall, the Commission has been successful in putting in place systems, procedures and structures that would make it possible for registered political parties to declare direct donations for the purposes of publication as required by the legislation. 

Furthermore, the Commission has dedicated reasonable resources to handle most of the queries that relate to the implementation of this Act, thus ensuring that political parties and all other stakeholders are always provided with the necessary support and answers whenever the Commission is called upon to provide such.

Over the next few months, the Commission will be dedicating more effort and resources to ensure timeous publication of the Party Funding Annual Report, which will incorporate audited Annual Financial Statements (AFS) of registered political parties. It must be indicated at this point that the Act requires of all political parties, regardless of their financial position, to appoint independent external auditors for the purposes of auditing their books. 
Independent auditors must express an opinion on matters related to compliance with the provisions of the Party Funding Act. Parties have to submit financial statements and the audit opinion to the Commission by end of September. After these submissions by political parties, a composite party funding report will be prepared by the Commission. This report will form the basis upon which the Auditor-General of South Africa (AGSA) will audit the Commission on the funding of registered political parties.  

First quarter 2022-23 declarations

During this quarter, a total of four political parties made donation disclosures as follows:

• ActionSA – R 750 000.00
• African National Congress (ANC) – R 10 000 000.00
• Democratic Alliance (DA) – R 15 977 687.13
• Patriotic Alliance (PA) – R 310 000.0

The four parties made a total disclosure amount of R 27 037 687.13 (twenty-seven million thirty-seven thousand six hundred and eighty-seven rand and thirteen cents).  Some of the disclosures were made late and as they should have been made during the fourth quarter of the 2021/22 financial year.
The Democratic Alliance (DA) made the highest disclosure of almost R16 million. From this amount, the single largest donation amount of R15 million was made by Fynbos Ekwiteit (Pty) Ltd. This entity made some significant donations to the same party in the previous financial year.
The African National Congress (ANC) made the second highest disclosure of R 10 million. The donor is an entity known as Botho-Botho Commercial Enterprise. This entity should not to be confused with Batho-Batho Trust, which made a significant donation to the ANC in the previous year. 
ActionSA disclosed the third largest cumulative donations this quarter. These donations were received from Style Eyes of California (Pty) Ltd and Shave & Gibson Group (Pty) Ltd. The former made a monetary donation of R 600 000 and the latter a donation of R 150 000. Both these donors have also previously donated to the same party in the last financial year.

For the PA, the total donation value of R 310 000, comprising two separate amounts of R 150 000 and R 160 000, was received from the party’s leader, Mr Gayton McKenzie.

In-kind donations

The total value of in-kind donations declared during the first quarter was R 723 493.56, particularly declared by the DA. This amount was donated by the DA’s previous donor, Friedrich Naumann Foundation (FNF), a German Foundation which made a total aggregate donations of R 3 100 044.85 in the previous financial year.

Foreign donations

The only party to receive foreign donations in the reporting quarter is the DA. The total value of such donations is R 977 687.13. Seventy-four per cent amounting to R 723 493.56 was donated by the FNF. The balance of R 254 193.57 was received from Volkspartj voor Vrijheid en Democratie (VVD). 
In compliance with the legislative prescripts on the conditions for foreign donations, these donations were used for the purposes of training or skills development. These included training workshops for the DA’s elected officials serving in a number of municipal councils. 
Non-Compliance with the Act: Late disclosure and late submission 
Two of the four donations declared during this quarter were made later than the regulated timeframe. First, the Patriotic Alliance’s (PA) donation of R 310 000, comprising R 150 000 and R 160 000, were made on 07 March and 31 March 2022, respectively. This was in breach of the legislation in that the donation was declared a quarter late. 

The Commission has already dealt with this breach in accordance with section 15 of the Act, which empowers it to issue directions in case of a breach or contravention. In this regard, the Commission issued the PA with a direction, requiring the party to make a representations explaining the contravention. The party has fully complied with the Commission’s direction and the necessary action has already been taken in accordance with the law. This involved subjecting the party’s accounting officer to a thorough training on the Act, with the intention to obviate any future breaches because of a lack of, or inadequate, understanding of the Act. 

Secondly, the ANC’s R10 million donation was submitted a month later than the regulated time. Put differently, while the donation was made within the reporting quarter, it was declared to the Commission almost a month after the submission deadline of 31 July 2021. 
The Commission has issued a directive to the ANC in terms of section 15 of the Act, requesting the party to provide an explanation for the late submission. The party was given 7 calendar days to submit such a representation. At the time of finalising this publication, the 7-day period had not lapsed

Multi-Party Democracy Fund (MPDF)

No contributions were made to the MPDF during the reporting quarter.  

Key observations 

As was observed in the previous quarter, there appears to be a very close relationship between the number and extent of donations and the election period. While the current total donations declaration amount of R 27 million is more than twice the amount declared in quarter 4 of the previous financial year, it is still relatively low compared to the amounts declared in previous other quarters when parties were preparing for elections. 

Forthcoming events

With the end of September drawing close, the Commission is readying itself to receive, analyse and publish the audited financial statements of registered political parties. This will be the biggest task yet to be carried out by the Commission since the coming into effect of the Party Funding Act in April 2021. 

In order to ensure that the Commission is prepared for any eventuality that may require more capacity than the Commission currently has, especially as it regards complaints and allegations of contravention of the Act that may require investigation in terms of section 14(4), the Commission is currently finalising the appointment of a panel of investigators, comprising auditing professionals and firms, forensic investigators, legal firms, and so forth, who would serve on the preapproved panel that would be utilised on a needs basis. Section 14(4) of the Act provides that any complaint that is lodged with the Commission must be investigated if the CEO is of the view that there is prima facie substance to the complaint.

PUBLISHED DECLARATIONS REPORT

Report Details as at: Tuesday, 30 August 2022 10:08:37

Financial Year:2022/2023

Quarter: QUARTER 1

Party: ALL PARTIES

Donor:  ALL DONORS    

Declaration Type: ALL TYPES

LIST OF DONATIONS AND CONTRIBUTIONS FOR QUARTER 1

DONATIONS DECLARED AS CONTEMPLATED IN SECTION 9(1)

(In terms of the Political Party Funding Act, 6 of 2018 as read with Regulation 7(1))

Statement issued by the IEC, 30 August 2022