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ARTICLE: POLITICAL FINANCE - WHAT MATTERS

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The Ad Hoc Committee on the Funding of Political Parties recently held public hearings on the Draft Political Party Funding Bill of 2017 (Draft Bill). The Draft Bill seeks to regulate the public and private funding of political parties. The underlying premise of the Draft Bill is that the contestation of electoral politics should be fought on an equal and fair basis, with the citizen as core consideration.

The reality however, is not the case as the increasing influence of money in politics appears to dominate electoral discourse, as opposed to an interrogation of positions, policies and principles.

South Africa is no stranger to the transactional nature of politics and in recent times #GuptaLeaks has exposed the invidious underbelly of politics in the country. This series of leaks has hastened the calls for greater commitment to transparency and accountability and for disclosure to become norm in political life and practice.

Mandatory disclosure of funding to political parties in South Africa has been an issue that has proved vexing. In a 2005 case brought by the Institute for Democracy in Africa (IDASA), to test the usability of the Promotion of Access to Information Act (PAIA) to force political parties to disclose substantial donations received, the judge ruled against the NGO. This legal setback slowed the pace of advocacy for disclosure of political party funding. In 2015, non-profit My Vote Counts (MVC) argued in front of the Constitutional Court that Parliament did not provide sufficient access to information by failing to require private political financing disclosure. MVC argued that passing the PAIA - which allows citizens to petition public and private bodies for information - only partially met the section 32 constitutional obligation. The Constitutional Court chose not to order Parliament to pass legislation, at which point MVC brought its case to the High Court in Cape Town. Here the Western Cape High Court ruled that information about private funding for political parties and independent ward candidates is required for the reasonable exercise of the right to vote. The High Court further declared that the PAIA was inconsistent with the Constitution insofar as it did not allow for the recording and disclosure of private funding information.

However, in September 2017, the Ad Hoc Committee on the Funding of Political Parties released a Draft Political Party Funding Bill for public comment. The timing of the Draft Bill, hot on the heels of the Western Cape High Court judgment, as well as the context within the fetid background of state capture and corruption, is apt.

The FW de Klerk Foundation takes a considered view of the provisions of the Draft Bill and advocates the promotion of a culture of transparency and disclosure of private sources of political party funding within a framework whose efficacy can stand the test of time (irrespective of who occupies political power). Private funding to political parties is a much-needed supplement to the current financial support to parties from the IEC-managed Multi-Party Democracy Fund, which awards funding to political parties on a proportional basis.      

Within its principled position of advocating for transparency, the Foundation urges the Ad-Hoc Committee to engage more comprehensively with several concerns including the following:

  1. The ambit of the Bill must be expanded to go beyond national and provincial levels and include the regulation of contributions to political parties at local government level too. The power and effect of local politics, through branches and other representation, is a sphere that must be regulated too.
  2. A realistic cap on sources of private funding must be identified for several reasons, including to enable ease of administrative monitoring by the proposed establishment of the Represented Political Party Fund and or the IEC. The Foundation deems an amount of R1 million as a realistic cap for disclosure of private funding. This cap is motivated by the imperative to set realistic targets for political parties to source funding to enable their campaigns and day-to-day work. The cap identified above takes into account a consideration of the equitable balance between funding from both private and public sources. The public purse in SA is overstretched and unable to increase support for political parties from its current allocation of R1.2 billion for the 2016/17 financial year.
  1. The Bill defines a larger role for the Independent Electoral Commission (IEC), in addition to managing the Multi-Party Democracy Fund, and the Foundation posits the view that the IEC is maximally engaged in its core purpose and additional responsibilities will test its capacity to the limit.

A remaining concern for the Foundation is that the Draft Bill does not adequately protect the right to privacy of donors, and this could have a chilling effect on funding of political parties.  South Africa may do well to look to international examples of political financing regulation. Moderate regulation of private funding is in line with international best practice.

India and Canada both require disclosure to their respective electoral bodies for donations above a certain threshold. However, both India and Canadas’ thresholds are lower than the R10 000 threshold proposed by the Committee, at 20 000 rupees (approximately R4 000) and 200 Canadian dollars (approximately R2 100), respectively. India and Canada also limit cash contributions, to Rs2 000 and $200, respectively. In 2015, Canada limited contributions to $1 500 in total in any calendar year, to be increased by $25 per year. Kenya requires full disclosure of all donations to its electoral body. Of the three countries, Kenya’s constitution most resembles South Africa’s in terms of rights to association and privacy, yet Kenya requires the most transparency.

India has recently undergone political financing reform in which it eliminated cash donations from corporations altogether, and introduced an “electoral bond” system in which corporations can purchase time-limited bearer bonds from scheduled banks and transfer them to registered party accounts. Use of these bonds does not require donor disclosure.  Additionally, most Indian political financing legislation is enforced through tax incentives, rather than punitive measures. As such, the FW de Klerk Foundation suggests that a similar system could be instituted in South Africa as a compromise between rights to privacy and transparency - donor identity is protected while making it difficult for party funds to be corrupted.

Ultimately, the Constitution underpins transparency, openness and accountability as the nation’s foundational values. It is thus vital for the Draft Bill to mirror these constitutional values, with due regard to other constitutionally-enshrined rights, particularly the right to privacy, as well as the right to access information.

Issued by the FW de Klerk Foundation
17 November 2017


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