Political parties in need of new, clean funding

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“Why hasn’t the EFF got any money?” A good question, posed by one of my students in an LLM class on the topic of the right of access to information, and one I will come back to. But first, the backstory. 

To begin at the end of the tale, with the punchline, so to speak, my student was looking at party funding reports on the website of the Independent Electoral Commission (IEC). This is where you can see how much has been donated, by who, when and to which political party. 

You can see that in the first quarter of this year, for instance, a total of R27-million was donated, according to the declarations of the parties. R25-million of it was to the ANC and the Democratic Alliance (DA). 

“What is Fynbos Ekwiteit (Pty) Ltd?” asked another student, noting the company’s R15-million donation to the DA. “No idea,” I replied. “You’ll have to do some research.”

A Google search reveals Capitec Bank founder Michiel le Roux is a director of Fynbos Ekwiteit and apparently his enthusiasm for the biggest opposition party lies behind the donation. The R10-million donation to the ANC by Botho Botho Commercial Enterprises turns out to be a front for billionaire businessman Patrice Motsepe, a long-time supporter of the ANC.  

ActionSA got R600 000 from Style Eyes of California, whoever they are. 

All of this is the granular — and rather interesting and certainly useful — outcome of a long fight for transparency in political party funding. 

The short version is this. Despite the decision of political parties to grant themselves a nice annual wodge of cash from the public fiscus, via the Public Funding of Represented Political Parties Act 1997, for a long time there was a united front against transparency in relation to parties’ private donations. 

Activism against this wall of secrecy grew as revelations about dodgy donations made to lubricate the infamous “arms deal” of the turn of the century emerged. 

The now-closed democracy think-tank Idasa, for which I worked at the time, led the campaign and ended up litigating against the five biggest political parties. This was after  its requests for access to records of private donations made up the provisions of the Promotion of Access to Information Act 2000 (PAIA) — which gives effect to section 32 of the Constitution —were denied by four of the five parties (the ACDP folded, and voluntarily disclosed a rather modest budget). 

We lost. The ANC, DA, Inkatha Freedom Party and the New National Party won, thanks to a narrowly drawn, and technically conservative, judgment in the Western Cape high court by Judge J Griesel. I will spare you the details but the court held, first, that political parties were not “public bodies” because, strictly speaking, they were not exercising any statutory function as required by the definition in PAIA. 

That was not the end of it however since, second, section 32, and therefore PAIA, provides for a right of access to information to privately held information where access is “required for the exercise or protection of any right”. 

Griesel asked himself, “How will disclosure of the respondents’ fundraising records for the period January 2003 to May 2004 (the precise request Idasa had made) assist the applicants in exercising or protecting their voting rights in terms of section 19 of the Constitution?” 

He took the view that, since no one was arguing the elections that had been held in South Africa since 1994 had been anything other than free and fair, there had been no threat to the right to vote and that, therefore, there was no need to access the records of private donations in order to protect or exercise that right. 

Of course, elections are a process and not an event. Part of a free and fair process is to know about the private donations to those parties contesting the election since “he who pays the piper plays the tune” — Idasa’s soundbite at the time. 

We chose not to appeal. Why? Because the ANC had promised the court it would bring in legislation in parliament. And, in fairness, it did. But only a long decade later, during which millions and millions of extremely dodgy cash flowed into the Jacob Zuma-led ANC. 

Indeed, it was a concern about “party capture” that led reform-minded people in the broader ANC leadership to finally agree to legislate transparency — as well as a shift in the balance of forces ahead of Nasrec and the end of Zuma, and the public interest litigation of My Vote Counts, a new organisation that had stepped into the campaigning vanguard after Idasa’s demise. 

The Party Funding Act of 2017 was the outcome — a fine piece of law-making — but which is now coming under attack by political parties, who claim it is the cause of the shortage of cash they say is undermining their ability to run effective organisations. 

The fiscal travails of the ANC, for instance, are well known — often it is unable to pay its staff’s salaries. 

But is this the fault of the transparency legislation? I will come back to this in a moment. 

A brief digression. Last week, the constitutional court added a new piece to the regulatory jigsaw puzzle by declaring the principle of transparency should apply to internal campaign finance — that is, the funding of campaigns for leadership positions in parties, such as the famous CR17 campaign which brought Cyril Ramaphosa to power. 

The challenge from investigative journalist group AmaBhungane claimed an unconstitutional lacuna in the Executive Ethics Code which, among other things, governs the disclosure of all the financial interests of a member of the executive (government) when assuming office. 

The court agreed and has given the president a year to fix the gap in the code meaning, in future, Ramaphosa — if he gets a second term — as well as the leader of any other party that wins executive office, will have to disclose the details of their campaign finance. 

This will not, therefore, have any bearing on Ramaphosa’s chances at December’s ANC conference. This will disappoint his opponents inside and outside the party, whose main attack line, building on Phala Phala, is the insinuation that he is dripping in dollars. #Ramadollar is the latest line of attack. 

On the possibility of a retreat from the 2017 transparency law, there have been calls to reform it to allow for a higher disclosure threshold. At the moment, any donation above R100 000 must be disclosed. The ANC  suggests it be raised to R15-million. 

What is the justification for this? Is it that a potential donor who wants to give R14-million is too publicity-shy to do so? What does he or she have to hide? Do the interests of the voter, and the need for public accountability in political finance, not outweigh the interests of the donor (and the donee)?

They do. Secrecy masks the venal intent of many donors. Wealthy people and companies rarely donate unless they have skin in the game. They want something back. We need to be able to join the dots and ask the same questions as my students. Otherwise, South Africa’s democracy will not mature and will continue to be vulnerable to the corrosive influence of the rich and powerful. 

But, on the other hand, democracy depends on functioning political parties. They need enough money to compete in a tough electoral landscape. South African politics is expensive, not least because it is a geographically big country. 

How to square this circle and resolve the dilemma? One simple answer is to increase the allocation from the public fiscus so parties have more money but depend less on private donations. 

Another would be to persuade corporate South Africa to use the mechanism created by the 2017 Act — the multiparty democracy fund — into which donors who don’t wish to have a direct, and potentially problematic relationship with the beneficiary party, which might involve reputational risks, but who do wish to support a competitive multiparty democracy, can donate. The funds are distributed proportionally to the parties’ support at the last election. 

Very few corporate donors have taken up this opportunity, which is disappointing. Either they are unaware of it or they prefer to donate directly — presumably because they do want the direct connection (and potential undue influence) or don’t want their money distributed across the board. Or they’ve just given up on politics because they think parties don’t deserve their largesse. 

What explains the lack of significant private donations to the Economic Freedom Fighters? Maybe they are not an attractive proposition; maybe rich and powerful actors are not drawn to their agenda. 

The transparency regime has driven out the dodgy donors. Good. But, unfortunately, it seems it has failed to attract new, clean money, and some legitimate corporate donors have opted to depart the scene. As the constitutional court said in the opening line of its recent judgment: “Politics and money make disquieting bedfellows.”

They certainly do. But something needs to be done to fix the funding problem facing political parties before the regulatory regime unravels. 

Richard Calland is an associate professor in public law at the University of Cape Town. His book The Presidents: From Mandela to Ramaphosa, Leadership in the Age of Crisis is co-authored with Mabel Sithole and is out soon from Penguin Random House. The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.

“Why hasn’t the EFF got any money?”. A good question, posed to me recently by one of my students in an LLM class on the topic of the right of access to information, and one that I will come back to. But first, the backstory. 

And to begin at the end of the tale, with the punchline, so to speak, my student was looking at the party funding reports on the website of the Independent Electoral Commission (IEC). 

This is where you can see how much has been donated, by who, when and to which political party. You can see that in the first quarter of this year, for instance, a total of R27-million was donated, according to the declarations of the political parties. R25-million of it was to the ANC and the Democratic Alliance (DA). 

“What is Fynbos Ekwiteit (PTY) Ltd?” asked another student, noting the company’s R15-million donation to the DA. No idea, I replied, you’ll have to do some research (not too difficult, since a quick google search reveals that Capitec Bank founder, Michiel le Roux, is a director of Fynbos Ekwiteit and, apparently, it’s his enthusiasm for the biggest opposition party that lies behind the donation. 

Similarly the R10-million donation to the ANC by Botho Botho Commercial Enterprise, which turns out to be the front for billionaire businessman Patrice Motsepe – a long-time supporter of the ANC.  

While ActionSA got R600 000 from Style Eyes of California (PTY) Ltd, whoever they are. 

All of this is the granular – and rather interesting – and certainly very useful – outcome of a very long fight for transparency in political party funding in South Africa. 

The short version is this. Despite the decision of political parties to grant themselves a nice annual wodge of cash from the public fiscus, via the Public Funding of Represented Political Parties Act 1997, there was for a long time the same united front against transparency in relation to the parties’ private donations. 

Activism against this wall of secrecy grew as revelations about dodgy donations made to lubricate the infamous “arms deal” of the turn of the century emerged. The now-closed democracy think-tank Idasa, for whom I worked at the time, led the campaign and ended up litigating against the five biggest political parties at the time after their requests for access to records of private donations made up the provisions of the Promotion of Access to Information Act 2000 (PAIA) – which gives effect to section 32 of the Constitution – were denied by four of the five parties (the ACDP folded, and voluntarily disclosed a rather modest budget). 

We lost. The ANC, DA, IFP and the New National Party won, thanks to a rather narrowly drawn, and technically conservative, judgement in the Western Cape High Court by Judge J Griesel. I will spare you the details, but the court held, first, that political parties were not “public bodies” because strictly speaking they were not exercising any statutory function as required by the definition in PAIA. 

That was not quite the end of it, however, since, secondly, section 32, and therefore PAIA, provides for a right of access to information to privately-held information where access is “necessary for the protection or exercise of any right”. On this, Grisel asked himself “how will disclosure of the respondents’ fundraising records for the period January 2003 to May 2004 (the precise request that Idasa had made) assist the applicants in exercising or protecting their voting rights in terms of section 19 of the Constitution?” He took the view that since no one was arguing that the elections that had been held in South Africa since 1994 had been anything other than free and fair, there had been no threat to the right to vote and that, therefore, there was no necessity to access the records of private donations in order to protect or exercise that right. 

Of course, elections are a process and not an event. Part of a free and fair process is to know about the private donations to those parties contesting the election since “he who pays the piper plays the tune” – Idasa’s soundbite at the time. 

We chose not to appeal. Why? Because the ANC had promised the court that it would bring in legislation in parliament. And, in fairness, it did. But only a long decade later, during which millions and millions of extremely dodgy cash flowed into the Jacob Zuma-led ANC, further encouraging the party’s degradation. 

Indeed, it was a concern about “party capture” that led certain reform-minded people within the broader ANC leadership to agree to finally legislate transparency – as well as a shift in the balance of forces ahead of Nasrec and the end of Zuma, and the public interest litigation of My Vote Counts, a new organisation that had stepped into the campaigning vanguard following Idasa’s demise. 

The Party Funding Act of 2017 was the outcome – a fine piece of law-making that is as good as any equivalent piece of legislation, but which is now coming under attack by political parties, who claim that it is the cause of the chronic shortage of cash that they say is undermining their ability to run effective party organisations. 

The fiscal travails of the ANC, for instance, are well known: often it is unable to pay its staff’s salaries at month end. 

But is this the fault of the transparency legislation? I will come back to this in a moment. 

A brief digression: last week the constitutional court added a new piece to the regulatory jigsaw puzzle by declaring that the principle of transparency should apply to internal campaign finance – ie the funding of campaigns for leadership positions in parties, such as the famous CR17 campaign that brought Cyril Ramaphosa to power. 

The challenge from investigative journalist group, Amabhungane, was that there is an unconstitutional lacuna in the Executive Ethics Code, which amongst other things governs the disclosure of all the financial interests of a member of the executive (government) when assuming office. The court agreed and has given the president a year to fix the gap in the Code, meaning that in future, President Cyril Ramaphosa – if he gets a second term – as well as the leader of any other party that wins executive office, will have to disclose the details of their campaign finance.This will not, therefore, have any bearing on Ramaphosa’s chances in this December’s ANC conference – which will disappoint his opponents inside and outside the organisation, whose main attack line, building on Phala Phala, is the dollar sign insinuation that Ramaphosa is the front for white monopoly capital. 

On the possibility of a retreat from the 2017 transparency law, there have been calls to reform the law to allow for a much higher disclosure threshold. At the moment, any donation above R100 000 must be disclosed. The ANC has suggested that it be raised to R15-million. What is the justification for this? Is it that a potential donor who wants to give R14-million is too publicity-shy to do so? What does he or she have to hide? Do the interest of the voter, and the need for public accountability in political finance, not outweigh the interests of the donor (and the donnee)?

They do. Secrecy masks the venal intent of many donors. Rich people or wealthy companies rarely donate unless they have skin in the game. They want something back. We need to be able to join the dots and ask the same questions as my students. Otherwise, South Africa’s democracy will not mature, and continue to be vulnerable to the corrosive influence of the rich and powerful. 

But, on the other hand, democracy depends on functioning political parties. They need enough money to compete in a tough electoral landscape. South African politics is expensive, not least because it is a geographically big country. 

How to square this circle and resolve the dilemma? One simple answer is to increase the allocation from the public fiscus so that parties have more money but depend less on private donations. 

Another would be to persuade corporate South Africa to use the very deliberate and important mechanism created by the 2017 Act – the multiparty democracy fund, into which donors who don’t wish to have a direct, and potentially problematic relationship with the beneficiary party, but who do wish to support a competitive multiparty democracy, can donate (and then the fund is distributed proportionally to the parties electoral support at the last election – which is essentially the public funding formula). 

Very few corporate donors have taken up this opportunity, which is very disappointing. Either they are unaware of it, or they prefer to donate directly – presumably because they do want the direct connection (and potential undue influence) or don’t want their money distributed across the political board. Or, they’ve just given up on politics because they think the parties don’t deserve their largesse. 

What explains the lack of significant private donations to the Economic Freedom Fighters (EFF)? Maybe they are not an attractive proposition; maybe rich and powerful actors are not drawn to their agenda. 

The transparency regime has driven out the dodgy donors. Good. But, unfortunately, it seems that it has failed to attract new clean money, and some legitimate corporate donors have opted to depart the scene, leaving the treasurers general of the parties fretfully scratching their heads. As the constitutional court said in the opening line of its recent judgement: “Politics and money make disquieting bedfellows.”

They certainly do. But something needs to be done to fix the funding problem facing political parties before the regulatory regime unravels. 

The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.