Political party funding: Why SA deserves to see every cent

JOHANNESBURG — There was some celebration recently about the signing of the Political Party Funding Bill by President Cyril Ramaphosa. But as legal expert Pierre de Vos explains in the article below, there are still a lot of questions around the potency of the Bill. Furthermore, Ramaphosa hasn’t indicated yet as to when or even if the Bill will be enacted in law, casting doubt over the government’s seriousness in tackling this issue. In the meantime, an election is coming up. Party funding is a gaping hole in our democracy and needs to be closed as soon as possible to prevent the rise of more Bosasa-Watsons and Guptas in future. This article below first appeared in the Daily Maverick and is republished here with permission. – Gareth van Zyl

By Pierre de Vos*

Towards the end of January this year, President Cyril Ramaphosa announced that he had signed into law the Political Party Funding Bill. What he did not say, was that he had not gazetted the proclamation that would bring the Act into operation as required by section 26 of that Act. (A search on Sabinet reveals that on 8 February 2019 the commencement date for the Act had still not yet been proclaimed.)

Pierre de Vos
Pierre de Vos

The signing of the Act was, therefore, an empty public relations exercise, creating the impression that transparency is on the way, without actually doing anything to ensure that the Act comes into operation. When the President will bring the Act into operation (if at all) is anyone’s guess. It could be next month, it could be in five years, or it could be never.

Recalling a recent example might help us to understand why it important for the Act to be brought into operation as soon as possible (despite its flaws), and why voters can only make informed decisions on who to vote for if they know who donate to political parties.

We know that the Economic Freedom Fighters (EFF) and its leader Julius Malema received “donations” from cigarette smuggler and alleged underworld figure Adriano Mazzotti, or from somebody or some company associated with him or his cigarette company Carnilinx. This company allegedly smuggles cigarettes and therefore evades paying taxes imposed on cigarettes – which has made it a champion of former SARS Commissioner Tom Moyane and of the narrative that the SARS investigative unit was unlawfully established.

It so happens that the EFF leadership has also been batting for Tom Moyane in various direct and indirect ways, and as late as last week its deputy leader promoted the myth that the establishment of the SARS investigative unit was unlawful – despite the fact that this myth had been thoroughly debunked by the Commission of Inquiry chaired by retired Supreme Court of Appeal judge Robert Nugent. In fact, Nugent recommended in his final report that SARS re-establish the capacity to investigate illicit trades, such as those conducted by cigarette smugglers.

Most informed voters will assume that Mr Mazzotti and his associates had donated money to the EFF and Malema to “buy” their support in the company’s fight with SARS. (Money flowing directly or indirectly from the corrupt VBS Bank to the EFF and its leaders may similarly have been aimed at buying “protection” from the EFF – although not enough is yet known about this to know for certain why a corrupt entity directly or indirectly channelled money to the political party and its leaders.)

These facts came out because of good investigative reporting, but most donations to political parties remain secret, making it impossible for voters – no matter how informed they are – to judge whether a party has been bought by special interest.

Yes, we know Bosasa donated money to all and sundry and probably tried to buy both Nkosazana Dlamini-Zuma and Cyril Ramaphosa, but we have almost no idea who else is donating money to the African National Congress (ANC) and some of its leaders and what favours these donors expect in return. Neither do we know, for example, whether the many decisions taken to advance the interests of property developers in Cape Town can be linked to donations made by these developers to the Democratic Alliance (DA).

If brought into operation, the Political Party Funding Act would address some (but not all), of the problems that arise when corrupt individuals or businesses “buy” influence from political parties. When they do this, they further weaken the democratic process and those with money to donate obtain a disproportionate impact on the policies adopted by political parties and the actions taken by such parties and their leaders.

The Act would give enormous powers to the Electoral Commission to dish out taxpayer’s money (as well as money received from private donors) to political parties and to monitor donations made to political parties and its members. This is to be done according to a formula that would ensure that parties with more electoral support would continue to get more funding, advantaging the ANC and to a lesser extent the DA vis-à-vis other parties.

But for present purposes let us look at the provisions in the Act regulating donations made directly to political parties. These donations include not only money, but also the provision of loans. It also includes assets, services or facilities for the use or benefit of a political party other than on commercial terms. So, if you provide a marquee for an election rally or office space for election volunteers to work in, this would count as a “donation” in terms of the Act.

Section 8(1) of the Act prohibits political parties from accepting a donation from foreign governments or foreign government agencies. It also prohibits, with some exceptions, foreign persons or entities to donate. Importantly organs of state or state-owned enterprise are also prohibited from donating to political parties. Section 8(2) further prohibits a political party from accepting a donation from a person or entity in excess of R15m per financial year.

This threshold is far too high, as it is obvious that any institution that donates R15m a year to a political party will have bought influence over that party and its representatives to a degree that is likely to distort democracy even further.

Section 8(3) prohibits a political party from accepting a donation that it knows or ought reasonably to have known, or suspected, originates from the proceeds of crime and must report that knowledge or suspicion to the Commission. This means that donations from Bosasa or from Mr Mazzotti, his company, or his associates, would probably also become illegal when the Act comes into operation.

Section 10 of the Act might worry the truly corrupt. It prohibits any person or entity from delivering a donation to a member of a political party other than for party political purposes. A member of a political party may only receive such a donation on behalf of the party and may thus not keep a donation for his or her own benefit.

Cases where a corrupt individual or company, therefore, makes a “donation” to an individual party member (say, by installing private security at their home, or paying off the bond on their house) would become a criminal offence. This is because anyone who contravenes section 8 or 10 is guilty of a criminal offence and can be jailed for up to a period of 5 years. This section may be over-broad, as it applies not only to party leaders or elected representatives, but to any member of a political party.

Section 9 of the Act requires a political party (and any juristic person – like a company – who makes the donation) to disclose to the Electoral Commission all donations received above R100,000 within a financial year. The Electoral Commission has a duty to publish the donations disclosed to it on a quarterly basis. As I read it, this means that political parties must reveal donations to the Commission on a quarterly basis – although the first disclosure only needs to occur within 6 months from the date on which the Act comes into effect. Failure to comply with this section similarly constitutes a criminal offence attracting a prison term of up to 5 years.

The fact that donations below R100,000 do not have to be disclosed and that the Act is silent on what happens when donations from one person or company are channelled through various sources could be a problem. This is because the corrupt will probably create several entities through which it will then channel “donations” (most of us will sommer call them bribes) of just below R100,000 to a political party whose favour or influence it wants to buy or from whom it wishes to score tenders.

For example, say a corrupt bank wants to bribe a political party to buy its protection, it may channel money via various individuals or through various entities to that political party, always making sure that no one single amount coming from an individual or entity will breach the R100,000 threshold. While the bank may be “donating” R1m to the political party this might not have to be disclosed as the actual donations would have been channelled through 11 different individuals or entities, each donating less than R100,000.

One of the most potent provisions in the Act (and one that could be abused in the event of the Electoral Commission being captured) is contained in section 16 of the Act. This section allows the Electoral Commission to suspend the payment of money allocated to political parties (mostly from the budget) “if it is satisfied on reasonable grounds that the represented political party has failed to comply” with provisions of the Act. This means a party who fails to disclose private funding as required may be deprived of funding allocated from the budget.

Despite the many good provisions contained in the Act, it is not clear to what extent it will address the corruption that is built into our political system. Apart from the fact that we do not yet know when (if at all) the Act will come into operation, it is also unclear whether the Electoral Commission will have the resources and political will to enforce the provisions of the Act properly. Even then, it is likely that corrupt individuals and businesses who wish to buy influence from political parties will try to find ways to circumvent the Act so that their influence over the policies of political party and over the actions taken by party leaders, may remain unknown to voters who may continue to vote for a party despite the fact that it had been bought by some or other (white or black) capitalist.

  • Pierre de Vos teaches Constitutional law at the University of Cape Town Law Faculty, where he serves as deputy dean and as the Claude Leon Foundation Chair in Constitutional Governance. He writes a regular blog, entitled ‘Constitutionally Speaking‘, in which he attempts to mix one part righteous anger, one part cold legal reasoning and one part irreverence to help keep South Africans informed about Constitutional and other legal developments related to the democracy.