Review of Public Funding of Represented Political Parties Act: public hearings day 1

Ad Hoc Committee on the Funding of Political Parties

15 August 2017
Chairperson: Mr V Smith (ANC)
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Meeting Summary

The Chairperson explained that the Committee would receive oral submissions from those who had made written submissions on the funding of political parties. He explained that the mandate of the Committee was to look at the current legislation and after the inputs and deliberations, the Committee would have to decide whether the current legislation would suffice as it stood, whether the legislation needed amendment or whether it needed repeal and new legislation to be drafted. The Committee was to report to the National Assembly on 30 November 2017.

Key issues raised at the hearing included the validity of the 90/10 split of public funding and whether it was in line with the intention of the Constitution to provide for both proportionality and equity. In particular, the fact that the proportionality funding was split between all parties represented in the National Assembly as well as the provincial legislatures but the equity portion was split only amongst parties represented in the provincial legislatures was a concern. There was disagreement as to whether the 90/10 formula was equitable. Certain presenters suggested that a 50/50 split would be more equitable. The use of state resources during periods of campaigning by the governing party was hotly contested. The capacity and the resources of the IEC seemed inadequate to properly manage both private and public funding for political parties. Several presenters suggested a multi-party democracy fund be set up for donations that were above a certain cap or came from particular donors. Foreign donations and the role of the investment arms of political parties were vigorously debated. The high cost of registering for elections was presented as a barrier to new and smaller parties and to multi-party democracy. The paucity of information about current funding of political parties on which to make concrete suggestions, was strongly emphasised and a common thread in the submissions.

The Human Sciences Research Council (HSRC) was of the view that political parties needed to be accountable to the electorate and therefore a complete right to privacy could not be upheld. Constitutional values should guide any decision as to how regulation took place and what ought to be regulated. Although there was no single simple solution for how to regulate political party funding, one factor which did assist in the process was to put a cap on funding. The 90/10 formula made the proportional factor far more important than equity whereas the Constitution suggested that it should be the other way around. The HSRC recommended a formula of 50/50 as more appropriate and because the Constitution did not suggest that proportionality should be favoured over equity.

The Public Affairs Research Institute (PARI) recommended an annually adjusted cap be applied to donations from corporations, a ban on anonymous donations and restrictions on foreign contributions. The definition of political funding needed to be defined to include third party funding agencies. Only China and South Africa did not have to report on private funding of political parties. Enforcement was a global problem but necessary. PARI recommended a separate independent body to uphold the recommendations. PARI supported the automatic publishing of party financing data, as well as its auditing by the Auditor-General.

My Vote Counts proposed that there should be frequent and periodic disclosure of donations received by political parties and that a threshold for disclosure should be set with aggregated disclosure for an amount below the threshold and disaggregated for those above. Private funding should be permitted but regulations should discourage corruption and undue influence on political parties.

In terms of best practice guidelines, Corruption Watch supported disclosure of all political party funding and that reporting should be detailed and specific. Foreign funding and funding by companies that did business with the State should be banned. As well as the IEC and the Auditor-General, Parliament should have a role in the oversight of political party funding. Enforceable sanctions were critical. Corruption Watch had deliberately given broader input as the first questions that needed to be answered were the broader policy decisions. The guidelines were intended to support the Committee in making policy decisions.

The South African History Archive (SAHA) was concerned about the lack of record keeping and record maintaining processes as well as the absence of full disclosure of information about party funding.

Right2Know made proposals on private and public funding of political parties and steps or regulations to take the reform process forward. The lack of information had created a climate of secrecy and had allowed corruption to thrive and had undermined the Constitution. Right2Know supported a threshold for private donations as well as a complete ban of funding from companies doing business with the state or intending to do business with the state. Consultations had shown that the public felt very strongly that the 90/10 split was unfair.

The ANC suggested that the inputs should have gone deeper and provided a more scientific contribution to the Committee, especially on what was happening at national provincial and local level as the Committee required specifics for the review document to be prepared. As the Committee regulated, it would require a roadmap on how to do it. There was also concern about the integrity and motive of some NGOs making submissions. There was a concern that changing the 90/10 formula for the distribution of public funding would unfairly advantage smaller parties. The ANC queried recommendations to restrict funds available for campaign purposes.

The DA suggested there was little evidence of a direct causal link between greater transparency of private funding and heightened public confidence in government. If the purpose of transparency was to stop corruption, South Africa had adequate legislation that dealt with corruption. The DA queried the reason for suggesting a ban of donations from South Africans who resided in foreign countries. The concept of economic intimidation was also relevant to donors to opposition parties who feared losing government business.

The EFF expressed concern about the role played by the investment arms of political parties through which funding could be channelled. The EFF queried a proposed increase in public funding to political parties considering the current state of the economy and the amount of money unaccounted for.

The IFP was concerned about the use of state resources by governing parties. The lack of funding to new and smaller political parties was a concern, compounded by the illicit use of state resources.

The FF+ noted that the problem of funding was not only the 90/10 formula itself in terms of equitable fairness, but more so in the way that the equity funding was distributed. The FF+ supported the notion of a democracy fund concept.

The NFP was concerned about how the Committee could regulate against the abuse of state resources. Investment arms were problematic. It also expressed concern that the inputs were not sufficiently specific for the Committee to use in drawing up regulations.

Meeting report

The Chairperson explained that the mandate of the Committee was to look at the current legislation and, after the inputs and deliberations, the Committee would have to decide whether the current legislation would suffice as it stood, whether the legislation needed amendment or whether it needed repeal and new legislation to be drafted. The Committee had to report to the National Assembly on 30 November 2017. If the decision was to amend the legislation or to draft new legislation, the South African public would be given an opportunity to give input so that everyone would have a second bite at making recommendations, suggestions and even oral submissions, if necessary, before a report was taken to Parliament.

He said the programme for the day was to receive oral submissions from those who had made written submissions. All those that had submitted, had been afforded the opportunity to make an oral submission. Submissions would continue the following day. Thirty minutes had been allocated per submission but the Committee had agreed to be flexible in respect of the time available for submissions. After the submission, the Chairperson would open it up to members for interaction with the submissions. Thereafter all the submissions and the interaction would inform the Committee’s deliberations. Any information provided in addition to what was contained in the submissions, should be submitted in writing to the Committee.

Human Sciences Research Council (HSRC) submission
Adv Gary Pienaar, Senior Research Manager at the HSRC made the submission on behalf of Professor Bohler-Muller, Executive Director for Democracy, Governance and Service Delivery Research Programme, HSRC. The HSRC wanted to commend Parliament on holding hearings on a matter which he believed was long overdue. The role of money in politics was a concern in democracies globally and South Africa was no different. In South Africa, there were clear policy reasons and a legal basis for regulating private funding of political parties. Especially in South Africa with its profound socio-economic disparities and demographic differences, money in politics had the very real respect of compromising the priorities of the public agenda. Corruption could have a distorting effect on the functioning of government, skewing socio-economic development and increasing poverty and inequality. Even human rights were marginalised by private financial interests. Legislation that might have an effect on private funding included Section 12(2) of the Prevention and Combating of Corrupt Activities Act. There were also a number of Codes of Ethics in Parliament and in the Public Service which required the disclosure of financial interests to manage and mitigate conflict of interests. The Western Cape High Court had recommended regulation in this regard.

Political parties needed to be accountable to the electorate and therefore a complete right to privacy could not be upheld. Only if information was freely imparted to the public was the right to vote meaningful. But the ordinary vote was easily drowned out by the voice of money, particularly when the voice was unseen. The sources of a candidate’s support would indicate the candidate’s interests. Adv Pienaar made several references to court judgements that supported his arguments.

The HSRC also wanted to flag international obligations that South Africa had to act against corruption, obligations in respect of civil and political rights and freedom of expression. Constitutional values should guide any decision as to how regulation took place and what ought to be regulated. Comprehensive regulations were necessary in order to meet a political party’s legitimate need for funds while ensuring that ethics and accountability as contained in the Constitution. There were four principles contained in the preamble to the Constitution that ought to guide the Committee’s decision on political party funding: democratic accountability, fiscal transparency, open competition, and inclusive participation. Political party funding should enable a wide range of voices to enter the debate and compete for public office.

The HSRC asserted that there was no single simple solution for the regulation of political party funding. One factor which did assist in the process was to put a cap on funding. The issue of third parties was also an important factor to take into consideration. Third parties would include the investment vehicle of a political party and interest groups such as labour federations. Consideration could also be given to equitable and reasonable access to public broadcast media. It was also necessary to revisit the formula for political party funding which affected new entrants. Affirmative discrimination should be recognised. Tax deductions could also be considered to promote donations for political parties

Mr J Selfe (DA) asked whether there was a difference between funding for government parties and opposition parties. Should the same rules apply to everyone? What form of enforcement of the rules did the HSRC have in mind? What were his views about expenditure caps and the difference between campaigning in Gauteng and Northern Cape, for example, where topography, distance and population scarcity and so on drove up the costs of campaigning. Was it appropriate to have a single cap in a country as diverse as South Africa? He referred to legislation passed in Northern Ireland where, because people felt threatened or that they would be discriminated against, the United Kingdom Parliament had allowed for confidential funding. Research suggested that there seemed to be little evidence of a direct causal link between reforms and heightened public confidence in government, so what was the real purpose in enforcing a greater degree of transparency? If the purpose was confidence, research showed that reform did not affect confidence. If its purpose was to stop corruption, it seemed to him that South Africa had adequate legislation on the statute books that dealt with corruption.

Adv Pienaar suggested that there was no difference between ruling and opposition parties when it comes to funding as all had a role to play and a duty to perform. There was a certain kind of activity in which they all engaged. The Public Funding Act had a formula for funding, but 90/10 was unjust. Provincial legislation also provided public funding for political parties which the HSRC believed was unconstitutional and unlawful. A couple of provinces had adopted other formulae which suggested that there was no real need for the requirements of the 90/10 formula. The 90/10 formula made the proportional factor far more important than equity whereas the Constitution suggested that it should be the other way around. The HSRC recommended a formula of 50/50 as more appropriate because the Constitution did not suggest that proportionality should be favoured over equity. As far as enforcement was concerned, effective regulation relied on effective monitoring and oversight. Without that, even ideal forms of regulation were really a waste of effort. There was a need to monitor everything that was regarded as significant and to enforce compliance. Without enforcement, levels of distrust increased and led to disengagement with the democratic process. The capacity to enforce was important. An institution was required that could monitor everything that was regarded as significant and to report to the public on that, but also had the ability to determine sanctions and to enforce those sanctions.

On expenditure caps, the HSRC recognised different terrains but caps could be overall caps per party and the party could determine how to divide it across the provinces. An overall cap could allow for flexibility in practice. The fear experienced in Ireland was a rational fear and, likewise in South Africa, there was a real fear of losing government contracts as the country had a politicised public service and did not have effective measures against corruption, nor was there an effective ethical framework. The HSRC believed that the fear of losing the government contract was a real fear. The institution therefore understood the desire of donors to retain anonymity. Therefore HSRC’s proposal allowed for anonymous donations but with regulations via a democracy fund so that undue influence or improper influence was not exercised. In such a case, the fact of the donation might be disclosed but not the donor, even if it were earmarked.

If there were no causal link between better regulation and better trust, what would be the point of regulation? Research indicated that the effect emerged over time when there were regulations that were enforced. Compliance with the regulations over time would lead to the development of a new culture and confidence could be based on the fact of experience. The practice in some countries, such as Sweden, without regulations, had been of a high standard and so there had been no need for regulation as trust was high. But when scandals and questions emerged, trust was eroded and so in 2014 regulation was thought appropriate. The key was consistent and proper monitoring and enforcement to build an open, ethical and accountable democracy in the country.

Mr Selfe amended the understanding of his comments about parties in opposition. He believed that it was easier for private donors to give funding to political parties that were governing than to the opposition, especially where the political differences were stark and where democracy was still evolving so he was asking whether the requirement to disclose should have different thresholds between governing and opposition parties.

There was no research in that regard according to Adv Pienaar but he acknowledged that it was easier to donate to ruling parties and that it may be worth having discussion in that regard.

Mr N Singh (IFP) did not see any reference to the use of state resources for election purposes. The research had focused more on donor funding. He asked if the research had shown that governing parties, including those in South Africa, had used state resources. He had been witness to the food parcel issue where days before a by-election truckloads of food parcels had been given to people which had tried to entice them to vote for that party. So what influence did state resources have in election campaigning given that in some countries, political office bearers ceased to function some months before a general election and the administration took over? The HSRC had shown in its research that annually millions of Rand from public resources and private donors flowed into the coffers of South Africa’s larger political parties. He wanted to know whether that was factual or whether it was an assumption. He queried the threshold for donations as that aspect would interest the Committee. What was the actual threshold being suggested? In the same way that Members of Parliament had to disclose their finances above a certain threshold. It was his view that to allow anonymous private donations was a contradiction. On the one hand was the matter of transparency and yet on the other hand, it was said that anonymity was necessary. It contradicted the transparency principle.

Adv Pienaar noted that the research showed that the use of state resources was widespread and it was a sore point in Africa. He noted that the country studies had been undertaken by other researchers so his evidence was based on the reports of other researchers. Government transport was the primary use of government resources in election campaigns. There was difficulty in determining who should be legitimately entitled to government transport as it was necessary in certain instances. For example, he knew that members of Cabinet were entitled to protection and therefore had to travel in a convoy but there were questions as to whether they were entitled to such protection in an election campaign. There were certain unavoidable benefits to political incumbents that could not be ruled out but clear guidelines were required. That needed to be discussed and resolved. The requirements in the Public Services Regulations were very vague and the use of state resources was unfair. There needed to be a limit but there was very little desire to scrutinise the matter and to draw a line. A blanket ban was wrong but a line had to be drawn. The question was where to draw the line. It was bone of contention in most of the countries researched. The HSRC believed that the use of state resources was unfair and that needed to be a limit. On the other hand, there were certain state resources that could be easily shared, such as public broadcasters and there were regulations in the country to allow that.

The research that indicated that millions of Rand were donated, was based on research by the Open Society Foundation and was a little outdated but had been used by the HSRC to understand how much money was involved. The Open Society Foundation had looked at the Top 40 companies listed on the Johannesburg Stock Exchange (JSE), bearing in mind that there are many other companies apart from those, listed and unlisted, that did not disclose donations. There were no JSE requirements to list political donations. Some countries did require such disclosure and this disclosure would be required by multinational companies who operated in countries where political donations had to be listed. Some examples had been found where companies declared how much had been donated and to which parties. Disclosures had, in recent years, become far fewer. Companies that had previously disclosed political donations had ceased listing those donations. Some companies stated explicitly that they had decided not to donate, some donated to a range of political parties and some made donations to just one party. The millions therefore referred to what the Foundation had been able to find through public disclosure.

In African countries, the thresholds had sometimes been unrealistic and had not met the purpose and so were ignored. The question was what met the purpose in a particular country. If the threshold was too low or too high, it served no purpose. Inflation alone would make a low threshold irrelevant. There was a need to build in a review process to adjust the threshold on a regular basis to ensure it met with the standard of living and the economic realities of society. Making the threshold too high would be incorrect because South Africans have the right to express their political support financially. Ordinary South Africans should be encouraged to participate in the political process and freedom of expression should be encouraged. There needed to be a consideration of the kinds of donations that ordinary individual South Africans might make and a consideration of at what point a donation might have a negative impact. R50 000 might be very significant in one context whereas it might have no relevance at all in another context. Thresholds would be different in different scenarios. There was a need for research as it was very difficult to predict where that threshold might lie. It might be a process that would evolve over time. There were some guiding principles or ideas. The Committee would want to encourage people to participate and to exercise their right to freedom of association and expression through financial contributions, although it was important to bear in mind that there was an enormous amount of inequality in the country. It was also necessary to avoid the risks associated with undue influence.

Party funding regulations could not answer all the questions. The Ethics architecture and the Anti-Corruption architecture needed to play their role. There were other requirements for disclosure such as in the National Assembly and by public servants of their financial interests. There were many requirements for disclosure but these disclosures were not being managed to alleviate risk. There seemed to be little understanding of what to do about a conflict of interest that had been disclosed and which had given rise to a conflict of interest or even a risk or perception of conflict of interest. Transactional disclosure should also take place. It was either not taking place or not been scrutinised. People who had declared interests in companies which were tendering were not excused from the debate. There was little understanding about what to do if a risk were exposed and so it was not effectively managed. Anonymity was necessary as there were risks in the country and the HSRC suggested that donors were identified when donating to political parties but could retain anonymity by donating to the political fund. In any emerging democracy, donors would have a valid concern about making donations to an opposition party. When it came to larger donations the donor would have a choice of either making the donation known or donate to a multiparty democracy fund. That was the trade-off. It came back to the issue of what was a fair threshold. Considering a threshold that was fair to both governing and opposition parties was made more difficult where some parties were governing in the National Assembly and certain provinces and other parties, generally in opposition, were governing in a province. The way that political parties were funded in provinces needed to be revisited because what happened there was illegal. The local government domain should also not be ignored. The problem at local government level was enormous and the Auditor-General had identified significant risk of undue influence there. The Auditor-General continually reported on unauthorised expenditure and irregular expenditure and that was a red flag that needed to be managed effectively.

Mr Singh asked if the HSRC had found anything untoward about donations from state-owned enterprises as, from common knowledge, it was known that SOEs did buy tables for one million Rand at political dinners.

Adv Pienaar confirmed inappropriate donations, but that was already in the public domain, such as the Eskom donations. Everything uncovered through HSRC research was known in the public domain.The Public Protector had investigated a donation by Eskom, for example, to Chancellor House which was one of the kind of third parties that the HSRC believed needed to be regulated. State-owned Enterprises (SOEs) ought not to be allowed to donate to any political party. It was inappropriate ethically for money to move between government and private companies where a company had a real prospect of a contract, was in the process of preparing a bid for a tender, or which had recently completed work for the state. They should not be allowed to make donations to any political party. It was unethical for money to be moved seamlessly from the state through SOEs into political parties. That was known as the revolving door process. However, a donation to the democracy fund would not be inappropriate.

Prof N Khubisa (NFP) asked whether, if there were no legislation or regulation, political parties would always go and look for deals and investments. For instance, there was the much publicised one of 2004 involving Chancellor House and a donation of R11 million and there would be others that had not come to the fore. Campaigns were expensive and it was seen as more important to campaign than to serve the citizens on an ongoing basis. Parties believed that if they got money and resources, that would get voters to vote for them. He noted that there was a tendency by the ruling party, especially, to use state resources for campaigning. How could they curb that? Not only the ruling party but also other parties were said to be using state resources. How could the Committee prevent it? Was it only through legislation? Research showed that, internationally, 51 out of 154 countries, used state resources. Only Austria, Sweden and the United Kingdom (UK) did not. How should the Committee speak to those issues?

Adv Pienaar noted that experience around the world showed there was no simple resolution to political funding. The task was therefore to minimise the risk without creating a regulatory edifice that outweighed the cost. The Auditor-General reported on billions of Rand, so it was possible that funding was flowing to political parties. The HSRC believed that it was worth spending money on regulating the situation and to create an effective institution that could have oversight. The regulatory system should be as clear and simple as possible but one which recognised the problem of human nature around the world through procurement regulations, the ethics architecture in the public sector and the effective training, awareness and enforcement of the ethics code, making sure that everyone filed their disclosure forms and that people involved in procurement filed their transactional disclosure and were excluded from making decisions in those cases. Research noted that a range of mechanisms to manage corruption or conduct that misdirected state resources was needed. There would always be individuals who would find loopholes that would have to be closed so it was going to be an ongoing project to regulate against loopholes when they were exposed. It was impractical to say that state resources should never be used. For example, the use of state vehicles could be banned for political purposes. It would require a lot of human effort to check logbooks, etc but it was more feasible to manage state vehicles than other state resources. Was it realistic to say that the Minister of Housing could not launch a housing project in the six months prior to elections? It was impractical as it would stop service delivery but there needed to be active oversight. There were legitimate benefits of incumbency and so the process had to eliminate those uses of state resources that were not legitimate. There was a range of tools available in South Africa to manage and regulate this. It was important not to focus only on the regulation of funding. Prevention and minimising risk had to be the guiding principles.

Prof Khubisa asked whether the HSRC was suggesting a body that could recommend punitive measures.

Adv Pienaar agreed that there was a need for an oversight body which had powers to deal with transgressions itself. Too many levels of bureaucracy would be too slow and clumsy. The IEC had said that they did not feel that they were suitable or able to undertake those tasks, although it might be simple to have a specialised unit in the IEC. The IEC had asked what impact it would have on their ability to run free and fair elections. The IEC admitted that it was unable to undertake oversight and monitoring of those few political financial resources that lay within its ambit. They could not scrutinise the returns of the political parties. It was open for debate as to what would be most effective: the IEC or another body. The HSRC would have no preference, except to take seriously what the IEC says about its competency and the impact on its ability to run free and fair elections.

Mr S Bongo (ANC) stated, for record purposes, that Prof Khubisa was out of order to say that the governing party used state resources.

On a point of order, Prof Khubisa defended himself, stating that he had merely quoted from the document before him.

The Chairperson indicated that he would not allow Committee members to talk to each other.

Adv Bongo appreciated the report but suggested that more in-depth research was needed because it was common cause that parties had to be funded. He thought that the HSRC should have gone deeper and provided a more scientific contribution to the Committee, especially in respect of what was happening at national provincial and local level. At the local level there were parties, but also individuals who contested the elections as individuals. The Committee needed a more scientific approach, for example what to do where individuals wanted to contest the election. He asked about the issue of the size of the parties and the extent to which parties should be funded, i.e. the question of proportionality. Deep research was required to contribute to the question of how proportionality should be dealt with. How did political parties interface with those who did not want to declare their funding? And what would be the HSRC’s comment about foreign donations, especially foreign government funding? And how should the Committee deal with that as it goes on. He agreed with all the views raised about transparency and accountability but he wanted to get deep into those issues. What comments had the HSRC on the threshold of donations? The Committee had to be assisted with the possible levels of caps. Scientific research should be undertaken to assist the Committee.

Adv Pienaar suggested that it was very difficult for researchers to determine a figure as there was not sufficient information in the public domain as political parties would not disclose how much was donated. Since funding was not reported on, it was very difficult to know if the funding was used efficiently and effectively and for the purpose for which it was meant. He could not give a scientific figure as there were not enough facts on the table for anyone to speculate on a cap for receipt of funds and thresholds on donations. Political parties would need to commit to providing the necessary information. He suggested that the Committee should commission research. In 2005 IDASA had suggested R50 000 but it was probably not based on scientific evidence and it was some years ago and the value of money, as well as other variables, meant that that figure was no longer relevant, if it ever had been. A channel existed for larger donations, wishing for anonymity, through the proposed democracy fund. Proportionality and equity could apply to the democracy fund. The HSRC argued that 90/10 formula was not based on the Constitution or any other regulations, nor fairness or fact. It was unfair and needed to be amended. There did not seem to be any reason why 50-50 could not be applied both to the public funding and to the democracy fund. There was no information on which to base a proposed threshold but it seemed that R50 000 was a sensible place to start.

It was important to recognise that individuals could stand for election at local government level but disclosure was essential, as with political parties. Perhaps individuals could accept more or larger amounts anonymously because their resources would be different. The constitutional imperative was to encourage participation and multiparty democracy and so the entry of new participants should be encouraged. Individuals in political parties should never be permitted to accept donations. There ought to be no channels for donations to individuals in political parties. Adv Pienaar found it difficult to understand why a foreign government should give money to political parties and therefore foreign donations should go to the democracy fund. In Kazakhstan, a voluntary cap had been put on donations as the political parties had recognised the poverty in the country and the lack of private resources. There was a need to recognise poverty in South Africa and therefore there had to be a cap on public funding for political campaigning and thereby lower demand from the fiscus or from the private sector. The money spent on political parties played an important public function but it needed to be contextualised within the South African society which was very unequal and had an enormous amount of poverty. Were political parties the most important things to which the country should be giving public funds when some of those funds could be accessed from the private sector?

Mr Bongo noted that HSRC was a credible institution and therefore the HSRC should do further research and give specific suggestions and advice to the Committee so that when the Committee advised Parliament it would be on the basis of a scientific view and not based on the general view that they had.

Adv Pienaar agreed that the HSRC might be open to do research but the timeframe was too tight. It could be undertaken for future reference. Undertaking public opinion surveys required time, planning and resources. In principle, the HSRC CEO and Board would be open to the suggestion on research but they would have to engage in a conversation about how it could be done.

Ms L Maseko (ANC) agreed with Mr Bongo about the credibility of the HSRC. She wanted to know about the views of the HSRC on funding individuals within parties for individual campaigns for office within the party. What needed to be done and, how it would be done and implemented? What if parties had a constitution that allowed the funding of individuals? Would they have to reform or amend the constitution in relation to that? And who should monitor the use of funding? Did Adv Pienaar have a recommendation on which Parliamentary Committee should have oversight of political party funding? What about established business people who wanted to recognise the important role of a political party in capacitating them, empowering them and improving their lives? They would not want to put funds in a democracy account as they would want to support a specific party. What about those individuals that want to specifically fund a party at provincial level?

Adv Pienaar recalled research in Nepal that focused on the negative effect of allowing individual party members to raise their own funds, i.e. the negative effect on the party coherence and the broader negative effect on party discipline. There was a risk that individuals became unduly influential and party officials needed to be in a position to lead the party and should have the right to say that they believed in a particular candidate and that candidate should receive X amount of funding for purpose of the candidate’s campaign effort. Donating to individuals then prevented party officials from managing properly. He had found the research quite convincing on the negative effects of allowing funding to party individuals and promised to provide a copy of the research. It was difficult to determine a particular committee for oversight as there were currently discussions about having a particular committee to undertake oversight of Chapter 9 institutions and handle their reports. Specific skills were required to undertake oversight of political party funding. As it concerned both private and public funding, it would be difficult for Standing Committee on Public Accounts (SCOPA) to have oversight. It might be possible that the Auditor-General received a report on the funding and scrutinised the matter or that the Auditor-General audited the fund. The HSRC did not suggest that individuals should be prevented from supporting the party of their choice. It was legitimate for a person to fund a chosen political party but everyone needed to know who had donated to ensure integrity and faith in the Constitution and for creating a more equal society. The public had a right to know who the funders of political parties were and if there was a risk of any undue influence. Court cases and experiences around the world had shown that people needed to know who was calling the shots in a particular party. What was past was past and people might have quite legitimately benefited from black empowerment and, benefiting from that deliberate choice in the history of the nation, should not bar anyone from making a donation to political party.

Mr D Gumede (ANC) did not have a problem with the number of proposals that had been made on regulations. He asked about equal share funding because some parties had offices and constituencies across the country and in places with difficult and just demands and therefore he wanted to know if the HRSC would still recommend equal funding if a party put forward its legitimate requirements. He acknowledged the issue of affordability for the country to spend money on elections. What percentage of the fiscus would it be fair to spend on political parties in South Africa? How much should South Africa spend to ensure that there was full participation and good, stable democracy and a credible government? With his experience from other countries, what amount would Adv Pienaar recommend? He raised the issue of agencies of foreign governments. Should they fund political parties or not, and why? He was thinking of the EU and agencies of the United States of America, agencies of Britain, France Russia and China and so forth. As far as food parcels were concerned, it was his experience that food parcels were distributed all the time but it became more conspicuous during election times as there were cameras and reporters around. Cases of using food parcels in campaigning was an exception rather than the norm. He began complaining about the IFP’s behaviour around food parcels but the Chairperson reminded him of his time limit and the need to interrogate the presenter’s submission. Mr Gumede reiterated that the issue of food parcels was the exception rather than the norm. ANC voters could not be bought by something worth R50.

The Chairperson informed Committee Members that the purpose was to interrogate the submissions and that members who bought party political issues into the discussion would be asked to stop.

Adv Pienaar responded to the question as to what percentage of GDP should be spent on political parties saying that there was no research on the matter as parties had not revealed how much they currently receive. He also pointed out that he had not suggested a simplistic equitable sharing of public money for political parties. He referred to the Constitution and the principles contained therein, which suggested both equity and proportionality. The electoral success of a party would continue to determine the proportion of funding received by that party in respect to the proportionality aspect of the funding. The equity component of the funding would ensure that the ruling party could not rely on a seriously unfair share of the funds. On any agencies of foreign governments, Adv Pienaar felt that it was safest for the country’s sovereignty and the Constitution that any money from such sources, if such funding was agreed to, should go into the democracy fund. Malawi had a similar clause in the Constitution to allow for foreign funding. Most countries regulate foreign funding while many of them simply prohibit foreign funding. In the matter of food parcels, he suggested that there should be enhanced disclosure by government departments of the normal use of state resources. People could then check if it was a normal process.

Ms L Mathys (EFF) agreed that there was a need for regulations. She also agreed that there was a need not to stop the delivery of services but she referred to the Marikana housing project that had been opened just before the 2014 elections and which had given houses to ANC party members at the time, although there had subsequently been many problems because the allocation of houses had been irregular. It was for this reason that she believed there was a need for regulation. Did Adv Pienaar have any information about the investment arms such as Chancellor House and the Progressive Business Forum (PBF), the role that they played in political party funding and how much money was generated from doing business with the state?

The Chairperson requested that Members focus on the input by the presenters and to give due respect to those who had taken the time to forward submissions.

Ms Mathys asked Adv Pienaar if he could comment on the profit generated by those investment arms. She referred to the JSE companies that did not disclose political funding. What percentage had disclosed political donations? Did Adv Pienaar have any information about how the companies determined which party they should fund? She asked the question in the light of the fact that directors probably had different political affiliations. How would he advise that those companies should go about making donations to political parties?

Adv Pienaar suggested that the Marikana housing project could be dealt with under ordinary principles of transparency and good governance. If the public knew how housing lists were compiled and if there was any sequence or order on the list, those things could be managed through another process. There was a risk of including too many issues under the political party funding umbrella as it would become impossible to manage and enforce. The HRSC recommended that investment arms should undertake passive investment only and could never undertake any engagement with the state to keep a clear dividing line. The Open Society Foundation had done some investigation into a function at which funds were raised by selling tables and places at the tables, and it had been possible to get a general idea of how much had been raised, but not all events provided such information. There was also fundraising under other banners such as the ANN Breakfasts or Meet the Minister events. The Progressive Business Forum charged membership fees. There was no requirement for transparency in terms of what they did with the funds that they did raise. He would make the research on the JSE available, although a very small percentage of listed companies had disclosed political funding and very few of those had indicated the amount donated. The JSE gave companies a menu of matters from which they could choose to report on. It was also found that some companies were making donations in the name of directors or through other channels. Listed companies had to have a social and audit committee and that committee would have to advise on whether to or how to make political funding available. The information was probably available but not to the public. The information may be available in the public reports or perhaps it was made available to CIPRO. The HSRC had not undertaken research into that aspect of political funding because it was difficult to obtain the information.

In response to the question by Ms Matthys about investments and profits made by the investment arms of political parties, Adv Pienaar explained that those private associations were not obliged to reveal their investments or their profits. They enjoyed the same freedom as political parties not to make disclosures.

Dr P Mulder (FF+) supported the notion of a democracy fund concept. Current legislation indicated that public funds were administered by the IEC but that other donations could also be contributed via the IEC. No donations had ever been made to that fund. He believed that the 90/10 formula played a role in the fact that there had been no donations. He wondered if, through legislation, a framework for the democracy fund concept could be created but that the administration of the fund could be given to the private sector. Adv Pienaar suggested that it would be acceptable for an auditing firm, private audit or a group of auditors to manage such a fund as long as the fund was audited and detailed audit reports provided to the IEC. The Constitutional Court in the My Vote Counts case had strongly supported transparency around such funding. My Vote Counts could provide more information on the case as they were in court today and the following day with the application on access to information. The decision of that court case might have a bearing on how much information had to be disclosed. Whether the IEC or a private company became the right entity to do that, it might be a little too early to say. The public fund did allow private funding to be received and disbursed. The reason why it had not received private funding to date was open to speculation.

The Chairperson commented on the alignment between the Constitution and the 90/10 split. He noted that the Constitution was also built on transparency. Could Adv Pienaar think of any reason why anyone should not want to disclose donations to political parties or to the democracy fund? He assumed that the democracy fund could not receive anonymous donors so donors would have to at least disclose themselves to the democracy fund. He could not believe there was any reason why anyone who believed in what he or she was doing, would not want to disclose a donation. There were laws on the transparency of tenders. If there were problems with the tender process, it was not acceptable to use that as a reason for not recommending transparency. The tender process needed to be fixed but that argument should not be used as a reason for not declaring donations. It was about disclosure, accountability and transparency. The question was whether there was any compelling reason why people should not disclose.

Adv Pienaar noted that not even the Chief Procurement Office had been able to ensure clean tenders so it had to be recognised that the tender process was a problem. Therefore, some element of non-disclosure or anonymity was required, at least for a time until society was satisfied that the Auditor-General was getting assurance that tender processes were not open to abuse. Nobody was saying that the ruling party would penalise someone for making a donation but it would arise in the mind of individuals who had a misguided sense of duty or loyalty or had a private agenda. Agents acting irregularly was a reality and thus the risk was there that donors would be penalised.

A school group was welcomed to the hearing. The Chairperson explained what was happening and the learners were invited to share ideas about political party funding. The HSRC was welcome to provide any further information following the submission and when the committee document went out for public comment the Council was invited to make a further submission. The Chairperson noted the amount of time being taken by the process and suggested that members ask all questions before the presenters responded.  

Public Affairs Research Institute (PARI) submission

Dr Mbongiseni Buthelezi, PARI Head of Research, said that PARI was an academic institution attached to University of the Witwatersrand and the University of Cape Town. PARI undertook research and policy development on public administration and state institutions. PARI supported the process of engaging with political party funding and believed that it should be part of a greater process of reform of legislation in South Africa and, in particular, into how state institutions functioned.

Prof Crispian Olver, PARI lead researcher, noted that in the area of public funding South Africa stood head-to-head with its peers and had three funding mechanisms: the Represented Political Parties Fund (about R133 million in 2016/17) which allocated funds based on proportionality (90% of funds) and equity (10% of funds); Parliament’s Political Party Allowances (R395 million); provincial legislature allowances (R627 million). A total of R1.1 billion was paid out to support political parties.

Public funding lowered the level of influence that private companies could exert. However, private funding encouraged engagement with the democratic processes. Preventing party fundraising was not in the interest of good democracy but most countries internationally supported transparent public funding. PARI recommended that the country continued to build on the current system and increased the quantum of funds made available. PARI recommended an annually adjusted cap be applied to donations from corporations, including contributions in kind and loans; a ban on anonymous donations and restrictions on foreign contributions. The definition of political funding needed to be defined to include third party funding agencies.

The Public Service Act prohibited overtly partisan behaviour. National and provincial leaders had to adhere to the Code of Ethics but there were instances of abuse, including food parcels, denial of grants, access to public facilities, etc. Those practices were widespread internationally. Austria, UK and Sweden were the only countries that avoided it outright. PARI suggested the Electoral Act be amended to explicitly ban the use of state resources and accelerated roll-out of state projects.

Only China and South Africa did not have to report on private funding of political parties. Enforcement was a global problem but necessary. PARI recommended a separate independent body to uphold the recommendations. Factional behaviour was a widespread phenomenon fuelled by private money channelled into contests within political parties. The definition of political parties should be extended to include leaders and groups within a political party. PARI argued that state funding should be made available for policy input and research that would strengthen policy. PARI supported the automatic publishing of party financing data, as well as its auditing by the Auditor-General in terms of compliance with legislative requirements.

Mr Ryan Brunette, PARI researcher, made a suggestion for deepening democracy. Declining voter turnout, especially among young people, was widely feared as reflecting a democratic deficit and so the Ad Hoc Committee should consider exploring other innovative mechanisms for using party funding reform to deepen democratic participation. One example was a ‘democracy card’ system in which registered voters were issued with a token representative of a sum of money to be spent on the party or candidate of their choice.

Prof Khubisa asked if it was possible to deal with funds that came to individuals or parties clandestinely. He wanted to know if everything would be recorded or whether some people would not declare donations. It was a fact that campaigns superseded everything and if the money for campaigns was tampered with, would it not restrict democracy?

Ms C Ncube-Ndaba (ANC) asked what the presenters were referring to when they spoke of funding factions in political parties. What had that to do with political party funding? She had thought that the presenters would have been more interested in foreign governments supporting political parties in the country to destabilise government. That was her specific interest. Why should they not be regulated? She also expressed interest in “in kind” donations. Had the presenters recommended if the Committee should, or should not, regulate it. Could political parties do fundraising and, if so, how was that regulated? What about Foundations, such as the Helen Suzman Foundation? How should they be regulated?

Ms Mathys asked why state funding to political parties should be increased. And by how much? She was worried about the current state of the country, the looting that was going on and the amount of money that was going unaccounted for. What information did PARI have that suggested that the 90/10 proportionality versus equity formula was working? Did the researchers have any research to show how, or if, it was strengthening South Africa’s democracy. Could the Electoral Court be strengthened to become the regulating body? Did they have any information about the powers that the regulatory institution should have. There were too many institutions that did not have the powers to enforce compliance with their requirements. She was against the setting up of commissions to look into things. Giving poverty-stricken voters money to give to parties would be a slap in the face. It could probably work in a stable economy but not one with such dire levels of poverty as experienced in South Africa. Asking voters for increased funding when they could see the state of the country and how money allocated to provide them with basic services had not been used in that way, was a difficult task and could be perceived as a slap in the face for voters. How could voters be given say R200 and told to give it to the political party of their choice when they did not even have bread on the table?

Mr Selfe was intrigued by the concept of economic intimidation and the paper presented had dealt with several forms of it and how it impacted on voters. However, it could also be used to impact on donors. Companies feared losing government business as the civil service was characterised by cadre deployment. Who was one going to protect donors’ interests in circumstances like that? Companies would be disadvantaged if it was found that donors gave money to parties other than the governing party. On the concept of a new organisation to enforce the regulations on political party funding, such an organisation would require a great deal of resources to enforce regulations and the IEC did not have the resources or the expertise to do it. The IEC was possibly not able to manage but the Committee was now faced with the proposal of adding another Chapter 9 institution. How did one stop abuse of resources such as a “black ops” office to disseminate disinformation?

Mr Bongo asked what supported the recommendation to restrict funds available for campaign purposes. Campaigns gave more votes so what was the purpose of the restriction? What was PARI’s view of the regulatory body? In view of the fact that that the fiscus did not have sufficient funds, what was the intention in suggesting the creation of another body which would demand more resources? Why could the IEC not manage the fund? The submission, and particularly recommendation number five, seemed to be a reference to a particular party. If researchers made reference to one party, they had to make reference to all parties. Why suggest the increase in State resources if the formula should not be changed? Should the formula be changed or not? What were PARI’s suggestions on the threshold so that they could compare research from various institutions? He expected PARI to provide specific recommendations and not give generalisations as the Committee required specifics for the committee document to be prepared.

Mr Singh thanked the presenters for a very objective submission. He commented on loans as it was becoming very difficult for financial institutions to provide loans. One could not compel a financial institution to grant a loan because it was subject to a number of criteria such as affordability to be able to repay the loan, but what if a political party got a loan from company X which they cited as a loan payable over five years, how could they stop a company giving loans to political parties? Financial institutions would have to disclose a loan given to a political party but a private company would not have to do so. Mr Singh referred to an earlier discussion of the definition of political parties where it had been decided that in terms the Constitution the Committee was referring to political parties that were represented in the National Assembly or provincial legislature. However, there were a number of parties may be hundreds certainly five or six times as many as represented in Parliament that also contest elections. Where did the Committee see them fit into the picture of the party political fund? What was the view of PARI on the question of political parties that were not represented in Parliament but contested elections? How could the Committee deal with the source of funding? One who uses illicit sources of funds in another part of the world. How should the regulations deal with funding from drug sales etc? What was the justification for the politicians to ask for increased political party funding? Research and policy development was one reason for PARI suggesting additional funds. But could PARI talk to other reasons for an increase as it was very difficult for politicians to ask for additional funds for themselves.

Ms Maseko commented on the recommendation prohibiting the use of state resources which she thought was misplaced. Public funding given to political parties would also have to deal with the issue of the promotion of democracy. One way of promoting democracy was public education on the importance of voting. Was that not the responsibility of the IEC as an independent body to educate the public on the importance of voting? Parties would be seen to be campaigning when in fact they were trying to educate about registering and voting. She asked what informed loans. Parties had the right to undertake a loan to buy a building etc. If the political party did not comply with certain issues, the bank would not want to give the loan. What were PARI’s views on individual members within parties receiving private funding to campaign for a party position?

The Chairperson agreed with Ms Mathys that Parliament could not relate to the giving of R100 to people who were desperately poor and telling them to use it to fund political parties when they did not have food on the table. He accepted the intention of active involvement but the reality in South Africa would make it very difficult for the Committee to do that. PARI had indicated that R1.1 billion was given to various forms of political funding, of which more than 50% was allocated in terms of provincial representation. Other submissions had queried the constitutionality of that exercise. What was PARI’s view on the constitutionality aspect? Presenters were not assisting the Committee because they were not giving specific recommendations. What penalties would there be for those who broke the law? Should they be banned from participating in the next elections? Corporate organisations that did business with the state –what was PARI’s view on their right to fund a political party? Should they be regulated, and if so, how, because they could be used as a conduit.

Mr Gumede thought that proposals should indicate how power dynamics work in society, e.g. private contributions normally favoured middle class communities so should the government contribute for working class communities. How could that be regulated? Working class parties were not catered for in the submission and so perhaps the presenters could get into the dynamics thereof.

Prof Olver informed Mr Gumede that PARI’s objective was to reduce private funding and decrease the interests of corporate interests, thereby increasing the voice of the poor and working class and everyone outside of organised, monopoly capital. And to reduce the leveraging of state power to fund political parties. That was the primary thrust of the suggestions. Political campaigning was important for democracy. Campaigning should not be downplayed or restricted in any way. The aggregate quantum of money, public and private, funding should remain the same. Therefore, the mechanisms need to balance those factors and there was a need to draw up models. The researchers knew very specifically how much public money went into the system. The problem was that there was no information on private money that went into the system. No political party currently disclosed those sources of funding. An academic, Butler, had established that in 1999 there was R53 million in public money given to political parties and he estimated between R300 and R500 million in private money. In 2009, there was R80 million of public money and about R500 million in private funding. There was no estimate for the 2014 and 2016 elections. PARI would suppose R1 billion was available in each of the national and provincial campaigns, which meant that there was R2 billion going into political parties and campaigns, but it was a thumb suck estimate. The quantum should be kept the same because of the public benefits of campaigning which got the message and policies out to people and enabled them to make decisions about different parties and to elect a government that represented their interests. That was money well spent. PARI suggested that the public quantum should be increased and that the private side should be more regulated with more restrictions on amounts, reporting, disclosure etc. PARI suggested private funding be encouraged with a tax incentive.

In response to Prof Khubisa’s question about clandestine sources, PARI suggested that all donations would have to be disclosed and audited by the Auditor-General who would be able to find clandestine sources. It was not completely fool proof but it was a strong mechanism. PARI had not focused on the aggregate amount a party could spend, but on the source of funding, as it felt that spending did not warrant restriction. The amount spent on campaigns was not the problem, but the way funding was sourced.

Prof Olver explained to Ms Ncube-Ndaba that PARI had indicated that parties used state resources in a widespread manner. Observation showed that there were widespread pervasive phenomena and they were not indicating that it was the responsibility of any one party. PARI believed that individuals as well as parties needed to be regulated. Factionalism could be observed in all parties and the document stated that. If funding for parties were restricted and funding for individuals was not restricted, a huge loophole would be created which would give rise to a whole set of other problems. The interest was in the way that factional behaviour impacted on the state and state capacity. Donations from foreign governments should either be banned outright or be highly regulated. Prof Olver suggested that a maximum of R10 000 could be permitted from foreign donations, although no donations at all was preferable. Government should not allow any substantial foreign influence in the politics of the country. ”In-kind” donations of any kind should not be permitted. “In kind” donations could be the giving away of donated t-shirts at a political rally. Fundraising was to be encouraged as it was a healthy part of political activity. Foundations were a definitional issue in the legislation. Foundations were common in the American system to get around funding laws. These separate bodies raise money to campaign on behalf of a political party. The money raised was effectively the same as political party funding. Third parties that were raising money and actively campaigning for political parties needed to be treated in the same way as donors giving money to a party. PARI recommended that the definition of political parties should be expanded to include third-party agents campaigning on behalf of a political party.

He informed Ms Mathys that the proportional allocation was working because it was allocated on the basis of representation in the National Assembly which was easy to define and funds could be allocated fairly. The 10% equitable allocation was paid to political parties represented in provincial legislatures. The mechanism seemed to have been working. It was possible to provide a threshold and give a minimal amount to all parties but PARI was not a specialist. Equally, it would be ludicrous to give all parties, regardless of size, the same amount of money. PARI could only see that it was working.

Prof Olver addressed the powers of the electoral court, the concerns of Mr Selfe about creating a new Chapter 9 institution and the Chairperson’s question about enforceability. The core skill required was a financial oversight skill to apply a formula for disbursing funds and checking reports, and implementing penalties. The IEC had no real ability to interrogate reports. They were not interrogating the numbers, scrutinising reports and looking for discrepancies in problem areas but simply publishing the audited reports received from parties. The IEC had a different function and was therefore an imperfect institution to perform the task. PARI strongly recommended the setting up of a specialist institution to perform that function. The Chairperson’s questions around enforceability: PARI suggested that a body that made substantial allocations to parties had to have powerful financial mechanisms at their disposal. The body could suspend transfers of funds or disqualify transfers of funds. It would have to be a body independent of political influence and he was not sure that the Committee wanted to push the IEC into such a position, especially as it could take them into a conflict situation when they were running an election. Mr Selfe’s fear about economic intimidation of donors was a query about whether transparency always worked. There were concerns about disclosure but transparency was always best. Donors who did not want to be known usually had dubious reasons. Full disclosure was the surest bringer of justice. PARI believed that loans should be treated as any other donation as loans could be very soft.

Mr Brunette believed that people should not just be seen as hungry mouths to feed but should be seen as human beings who had rights and desires to participate in democracy. PARI did not envision cash but a piece of paper redeemable at the funding body.

Dr Buthelezi noted that people needed to look at the reform of political funding in relation to the reform of other state institutions that needed to work in tandem. Since 2000, much government work had been done by third parties in South Africa, which naturally created an incentive for people who wanted to ensure that money flowed back to the governing party. Cadre deployment was undertaken with very good intentions. A governing party did not want to be driving policies which were blocked by bureaucrats administering government departments, especially those from the Apartheid government. Initially, cadre deployments served that purpose but 15 years down the line it had created other problems and needed to be reviewed.

Dr Mulder noted that the problem was not the formula itself, although there were problems in that regard. On the proportional side, representatives in both the National Assembly and provincial legislatures were taken into account in the proportional part of the formula while the equity part of the formula applied only to provincial representatives. That meant that two parties in Parliament received nothing from the equitable part of the formula. Problems also lay in the 90/10 split.

The Chairperson pointed out that the current process was not the panacea for all the problems but it was a beginning. Considering the statement that agencies or third parties should be treated as political parties, he wondered how one dealt with musicians or taxi associations that openly supported political parties. He appreciated all the suggestions but presenters had to be aware that some of the suggestions might be thrown out of the window when the Committee sat down to draw up a document. The Chairperson rejected the argument that the suspending of funds by the regulatory bodies was a powerful mechanism. It was not a deterrent as the political party could simply go directly to the funder. The Chairperson said to the presenters that they needed to be able to defend their arguments otherwise the Committee would simply trash them.

Prof Olver suggested that the way in which the 10% in the 90/10 was distributed, was problematic. Perhaps the 10% could be distributed amongst the smaller parties. The 10% could therefore create a minimum threshold. On the classification of third parties as political parties, he alerted the Committee to the way in which third parties had been used in the USA to get around funding regulations. The Committee needed to be aware of unintended consequences of not regulating that sector.

The Chairperson determined that the process was going too slowly and requested that presenters pick out the key points of their input in 15 minutes, to be followed by questions from the Committee.

My Vote Counts (MVC) submission
Ms Janine Ogle, Coordinator at MVC, explained that her team and the board members of MVC were at the Cape High Court where the Court was also looking into the regulation of political party funding. MVC was a non-profit company that worked to advance the constitutional values of transparency, accountability and inclusivity in South Africa’s political and electoral system. The submission by MVC followed on several interactions with Parliament in the past five years. MVC had requested Parliament to regulate private political party funding in 2012. The matter was said to be on the agenda of the Chief Whip’s Forum for discussion. In 2014, MVC requested political parties represented in the National Assembly to disclose who they had received political funding from in the previous financial year in the interests of political party funding transparency. In 2014, MVC had launched a Constitutional Court application to compel Parliament to introduce legislation to regulate private political party funding. In 2015, the Constitutional Court ruled that MVC should challenge the constitutionality of the Promotion of Access to Information Act (PAIA) if MVC were unable to access the information of private funding from political parties. In court Parliament had argued that access to information about political party funding was done through the Promotion of Access to Information Act (PAIA). In 2016 PAIA requests were sent to all political parties in the National Assembly. Four responses were received but none of the parties provided the information requested. In 2016, MVC alleged in the Cape High Court that the lack of disclosure of private funding was unconstitutional. The case was being heard today. MVC therefore welcomed the process that the Committee had embarked upon.

MVC was concerned that the deadline of November 2017 did not give sufficient time to deal with the matter. MVC requested that the Committee hold a political discussion on political party funding as an understanding of policy was required to make informed decisions.

MVC proposed that there should be frequent and periodic disclosure of donations received by political parties and that a threshold for disclosure should be set with aggregated disclosure for an amount below the threshold and disaggregated for those above. Private funding should be permitted but regulations should discourage corruption and undue influence on political parties. Foreign funding directly to political party should not be permitted but foreign donations could be paid into a multiparty democracy fund. MVC did not object to increasing public funding but additional mechanisms should be put in place to manage the funds and ensure good oversight of the use of funds. Increased funding should be reciprocated by increased transparency. Public funding should be permissible at local government level and funding for use at a provincial level should be restricted to funding distributed from the national level. MVC proposed a separate fund for private political donations whilst donations from SOEs, dinners etc should be banned outright.

The Chairperson indicated that the deadline of 30 November 2017 was a reality and there was no purpose in debating the matter. He did not apologise for the reality. He reiterated that there would be a second opportunity for public input. He pointed out that the process was necessary and urgent and that there would, no doubt, be future processes.

Ms Ncube-Ndabe appreciated the submission. She asked about the points raised on disclosure and transparency requirements. What was meant by frequent and periodic disclosures? The Committee expected that when MVC came to make a submission, the proposals would be specific. Should a political party that received donations every day disclose them every single day? She stated that MVC had not given full and accurate information about what happens in other countries. They could not accept a generalisation such as “in other countries”. The proposal had to state exactly which countries otherwise they had to just assume that the submission was correct. The proposal should say “for example in such a country” and so on. The document did not assist the Committee on how political party funding should be regulated.

Ms Mathys asked MVC to clarify the comments about the capacity of the IEC. Was it talking about current capacity or future capacity to manage an increased function? The IEC seemed to do well in their oversight role. She asked if MVC had opinions on what political funding should be used for. Did she have an opinion on the amount that should be used by political parties for legal costs? Did she have any ideas about what the funds could be used on? Did the fact that funding was not allocated to local government, have an impact on the corruption at that level or was it just straight up looting that was going on?

Mr Selfe asked about the capacity of the IEC and if it was fulfilling its current role and if it could cope with an additional mandate. He was concerned that the IEC might not be able to fulfill an additional mandate properly. The presenter had spoken of perceptions on three separate occasions in the document. Did she have any empirical evidence on the perceptions that people in South Africa had on party political funding? The submission had indicated that people living abroad did not have the same rights and freedom of association but many South Africans did live abroad and they had political rights. Why could South Africans living abroad not be allowed to contribute to political parties of their choice if they were allowed to vote for them?

Ms Maseko asked about the proposal on private funding and if it should be allowed and whether disclosure requirements should differ depending on the amount donated. What amount was MVC proposing? Ms Maseko referred to the section dealing with transgression of the regulations. Were there any suggestions on appropriate penalties? What were MVC’s thoughts on funding going to individual party members instead of the money going to the party?

Mr Singh noted that MVC did not object to a consideration for an increase in political party funding. That was a welcome move from what they had always thought MVC stood for. But he understood that the concern of MVC was more on the capacity of IEC to manage funding. He recognised that MVC had the same concerns as the Committee about local government funding. Had MVC thought through the practicalities, beyond just a suggestion of providing funds at the local government level?

Mr Bongo noted that there was a view that there should be a separate party fund. What was meant by that? In his view the submission should have concentrated on the size of the party and how much the party should get on the basis of equity and proportionality. The protection of donors who did not want to be named was an issue. On the private or foreign funding, the Committee wanted to know what threshold MVC was recommending. What thresholds did MVC envisage for foreign funding ? How much was considered appropriate? He pointed out that MVC needed a scientific approach and scientific evidence. At the end of the day the Committee would have to make sense of the submissions and what stakeholders wanted. When MVC said parties had to get private funding, how much was meant? MVC had to scientifically assist the Committee to come to a conclusion. It was common cause that there should be an increase but as the Committee regulated they would require a roadmap on how to do it. The submission did not give the details of how to work out the proportionality. What was her comment on the 90/10 split? Only when the Committee received specific recommendations, would Members be able to take the views of MVC into consideration. The submission simply stated what was wanted and what was not wanted. There were no progressive suggestions as to what exactly MVC wanted the Committee to recommend to Parliament. He suggested that MVC needed to make specific recommendations and not just generic comments.

Mr Gumede thanked MVC for the submission. He noted that in the submission there was an allegation that political parties were captured. What exactly was meant and which parties? By whom was it captured? What informed the submission? Was it research or a mandate, and if a mandate, whose mandate?

In response Ms Ogle stated that there was currently discourse and reports about state capture. State capture involved the capturing of state institutions, structures and procedures to benefit particular people. Based on its understanding of the political and electoral systems, MVC alleged that in the light of the current discussion around state capture, it was not possible to exclude the possibility that political parties had been captured. The way in which the political parties could be captured was through secret donations. MVC was not singling out any one particular political party.

The Committee was informed that MVC was an NGO and not a research institute. Ms Ogle understood that it was not only research institutions that could make submissions to Parliament. MVC’s mandate and what it had been campaigning for since 2012 was that there had to be regulation of political party funding. There had been a request for transparency in political party funding. MVC’s mandate was not to determine the political funding but simply to advocate that the secrecy had to end. It was not for MVC to decide alone exactly what the regulations should look like. That was why there were so many organisations at the hearings. Each one had something to contribute. The submission was informed by the desire to see regulation of political party funding and thereby transparency.

“Frequent and periodic” disclosure was not quantified because MVC did not know when and how often political parties received funding. MVC did not know because political parties had not made the information public. The NGO had taken a policy position but had not prepared detailed regulations. As a policy position, MVC stated that disclosure should be frequent and, from a policy position, disclosure should be periodic. IEC had never audited political funding reports. They had never had the capacity or the funding to do so. As the IEC currently did not have the capacity, capacity needed to be built and resources made available and it could be through a partnership with the Auditor-General. MVC did not know what political parties used their funding for and the line items on which they reported. The presenter had information on public funding but, because of the secrecy, there was no information on additional funding which was why political parties should present at the hearing. She could not comment on the funding at local government level, nor could she say if there was a causal relationship between the lack of funding and corruption.

The mandate of the IEC did not need to be extended as the current mandate provided for the management of both public and private political party funding. In respect of perceptions, MVC had not consulted the South African public but there was evidence in the media and on social media such as Twitter that the levels of distrust were high. If the distrust grew, people would not even participate in elections in the coming years. One had to be concerned about perception, even if there was not evidence. She explained that foreign interests did not include South Africans who lived abroad. Foreign funders referred to non-South Africans who did have the right to become involved in South African politics. The organisation had not set a threshold for disclosure of private funding because it did not know the size of donor funding. If the information was available, MVC could make a recommendation. Recommendations had to be based on facts. Penalties against those who had transgressed was a diificult one. Positions could not be taken away as the voters had voted parties into Parliament. In looking at sanctions, it was important to look at ways that members of the public could report transgressions and know that sanctions would be taken against transgressors without members of the public needing to go to court. MVC did not have a firm proposal but on principle there needed to a be penalty that was known to all. MVC did not support funding of individuals in political parties, except where independents stood for election. Independent candidates should appear before the Committee to explain the context in which they operated. A separate fund should be set up for foreign donors. There should be a cap on how much a South African company could donate directly to a political party and thereafter donate to a multiparty democracy fund.

Adv Bongo complained that most of her answers were that she did not know. She had never worked for a political party etc. He asked where MVC had obtained its funding to push My Vote Counts and who were they representing. He was offended that MVC was working on perceptions as perceptions had caused trouble for the country. Government could not work based on perceptions. When one addressed Parliament, one had to have facts based on research.

Prof Khulisa agreed with Adv Bongo with regard to the authenticity of the information because the issue of relevant validity was important and Parliament could not work on perceptions. The validity of data was very important. Was MVC aware of any specific instances where a political party had received foreign funding that had not been declared? Was it something that she had retrieved from her research?

Ms Mathys noted that the presenter had not spoken to the proportional allocation in the current funding model. Did she have an opinion on that? She asked if MVC had contacted political parties to find out how they operated? That would have enabled her to present a more informed submission to Parliament and to have more concrete proposals that the Committee would appreciate.

Mr Gumede spoke of perceptions and suggested that his perception, based on her inability to answer some the questions, might be that MVC had been captured by whoever had given it the money to come and engage with the Committee. He assured the presenter that that comment had been on a lighter note.He did not understand the issue of foreign funding as foreign funds had to pass through specific systems and processes. Who was going to benefit from the separate funding that had been proposed? Who would benefit from that fund and how and what was it for? Political parties raised funds to run the organisation and to run specific prgrammes. When a political party requested funding, they requested for specific reasons and how was that going to be managed through a separate fund? Parties did not work on open-ended funding. He advised that MVC should do proper research. Members of the Committee were not interested in perceptions based on Twitter and Facebook. If there was no research, the Committee could not take it seriously.

Ms Ncube-Ndaba was worried about MVC. Who were their constituents and who was funding the organisation? An organisation could not to come to Parliament when it did not disclose itself and reveal who its funders were.She should front up and tell them exactly what she wanted because MVC had even been to the Constitutional Court about the matter. They had not won the case and they should have learned from that because now they thought that they could take the opportunity to come to Parliament and present to the Committee. Was she part of regime change?

Dr Mulder interjected stating that he did not believe that the Committee should interrogate and accuse organisations.

Mr Singh agreed with Dr Mulder that it was unfair to interrogate an organisation and asked from where they had got their funding. He requested that the Chairperson rule on that.

Ms Maseko stated that she was worried and that being an NGO was not an excuse for not doing research. MVC had gone to the Constitutional Court and had lost their case but they should have done their research. Most members of the Committee were concerned about the organisation. The organisation should go back and do research and come back and present a better proposal.

The Chairperson stated that the issue around the integrity of the information was valid but it was not the Committee’s position to question the presenter and to doubt their credibility. He did not want the Committee to create a hostile environment in Parliament for anyone. The credibility of information had to be examined but people would not come to Parliament if people were intimidated. He was not protecting either side but Parliament should not be a hostile environment.

Ms Ncube-Ndaba stated that the Committee would not keep quiet if the information was not credible. The Chairperson said he would allow Members to challenge submissions that did not contain credible data.

Adv Bongo said that if they came and said that political parties had to disclose, the Committee had to check in whose interest MVC was working? Where did they draw their authority? The political party had the support of millions of people and once she questioned them, they had every right to question her.

The Chairperson indicated that Ms Ogle was welcome to respond if she wished but should bear in mind that some of the issues needed further research and that she could come back for a second bite with answers then or if she felt strongly about something, she could write a letter to the Committee Secretary.

Ms Ogle stated that the NGO had been fighting for transparency in political party funding and regulations. That was the same reason for going to the Constitutional Court.When they had received an invitation to make a submission to the Committee, they had realised that it would require a great deal of research and had requested an extension of the deadline but that had not been possible. Information about private funding of political parties in South Africa did not exist in the public domain. MVC, nevertheiess, felt that it was important to submit and so they had focused on principles and and policy positions, not details of clauses in regulations. MVC funding came from a number of private philanthropic foundations, three of which were South African: the Raith Foundation, the Claude Leon Foundation, the Egg Trust, the Heinrich Boll Stiftung and the Open Society Initiative for Southern Africa. Their mandate was included in their Memoradum of Incorporation which was filed with the CIPC. MVC was concerned with transparency, accountability and inclusiveness in the political and electoral system. The Committee perception was that MVC had not tried to speak to political parties. They had tried. In May 2017 Ms Ogle had emailed political parties and in the middle of June they had met with Mr Jackson Mthembu (ANC). Mr Singh of the IFP had indicated that he would meet with MVC at a later time. The EFF had not responded to them. The UDM did not respond. The UDM had only responded to MVC the previous year after they had contacted them via Twitter. The meeting with the DA had been postponed. The perception, however, was that they had not even tried. If MVC had known what the annual budgets of political parties were, and if they knew the split between public and private funding, MVC could come up with a more accurate formula. The MVC did not have information about how parties spent their money. The same argument applied on the threshold. Without information, the Committee would be regulating in the dark. International data was not relevant to the South African environment. The separate fund that Mr Bongo had asked about was a fund set up to distribute funding to the political parties. It was not going elsewhere.

Corruption Watch submission
Ms Leeanne Govindsamy, Head of Legal Investigations at Corruption Watch, presented the background to the organisation. She was accompanied by her colleague, Mr Modupi Moloto. Ms Govindsamy presented the credentials of Corruption Watch. It was highlighted how corruption and the perception of corruption had caused the public to lose faith in the political system. That was the greatest risk where there was no transparency. She pointed out that there was no ultimate solution to the problem of political party funding but that transparency was key. Creating a level playing field had been one of the most critical factors in recent research and was an important factor to guide the Committee. Corruption Watch presented examples of best practice. The OECD document on Financing Democracy and Supporting Better Public Policies and Averting Policy Capture was presented as an important framework that could assist the Committee.

In terms of best practice guidelines, Corruption Watch supported disclosure of all political party funding and that reporting should be detailed and specific. Foreign funding and funding by companies that did business with the State should be banned. As well as the IEC and the Auditor-General, Parliament should have a role in the oversight of the political party funding. Enforceable sanctions were critical. Suggestions included confiscation of funds, fines, removal of rights. The paucity of information about current funding of political parties was strongly emphasised.

Many questions could not be answered before it could be determined which body could manage the funding. The increase in funds could not be decided upon until it was known how much was received from private funding. It was necessary to level the playing field but how that was done would be determined once there was transparency in respect of current funding. Corruption Watch would give input once there was a draft document available for public comment.

The Chairperson raised the issue of capping of expenditure as no one was talking about what expenditure should be capped. Was the capping for campaigning or was it in relation to the assets of political parties? Some political parties had real assets. Corruption Watch had raised the issue of refusing funding from a trade union. He wanted to know why Corruption Watch was averse to receiving money from trade unions. If there were a worker’s party in South Africa, would they not be permitted to support the workers in that party. It was not conceivable that there would, in the future, be a worker’s party in South Africa that was unashamedly set up to look after the interest of the workers. It was important that the Committee should be looking to the future.

Prof Khubisa noted that many of the regulations related to banning. What informed that approach? Could Corruption Watch advise whether there was any formula that could fund political parties equitably, in strict economic terms – not generalisations? How could they deal with dodgy agreements between the donor and the recipient where a different amount was declared from the real donation?

Mr A Lees (DA) noted the emphasis on a level playing field but it meant different things to different people. The voter determined which political party would be the majority and therefore the field was not level for others. Should funding be available for all 67 political parties in South Africa, of which 13 were represented in Parliament, as a lack of funding may be why they were not represented in Parliament. Should the funds go only to those parties which were represented in Parliament or should all parties be funded in order to give them an opportunity to access the playing field? There were stringent laws in South Africa to control the behaviour of individuals, particularly in relation to corruption and fraud, but those who were corrupt would not obey any laws. There was much discussion in South Africa about state capture by particular families but would disclosure of political funding make any difference to that scenario? By virtue of the fact that they were corrupt and fraudulent, such people would not declare funding. If Corruption Watch had evidence that some political party in Parliament was involved in corruption and fraud, that evidence would be most welcome as everyone in the room would like to have such evidence and would probably take it forward in some prosecutorial way.

Mr Selfe noted that Corruption Watch had considered the regulation of abuse of state resources but had not gone all the way. How would Corruption Watch propose regulating the abuse of state resources? The organisation had stated that democratic governance was fatally flawed when power and money came to bear on political choices. Was the any evidence to support this assertion?

Ms Maseko asked about the organisation’s success rate in dealing with corruption. She noted that the word “corruption” was abused. On the issue of a level playing field, she asked which playing field should be level. Was the quote by Kofi Annan in relation to the “first past the post” system or the proportional representation system as those two electoral systems were very different? What was meant by the capping of expenditure? She believed that donations could be capped but how could spending be capped? In other words, a party would not be allowed to use the money that it did have because expenditure was capped. Was that fair? Corruption Watch had stated that an increase in public funding should occur only when private funding was transparent and disclosed. Did it not support the increase of the public funding for political parties? Did they have studies of other countries where unions were banned from making donations? For example, in the United Kingdom, the Labour Party was supported by the subscriptions paid by labour. Why should it be a no-no in South Africa, even if the political party had a relationship with a trade union?

Mr Radebe noted that the quotes only referred to internal processes. Political parties account only to their own members. Reports on expenditure were supplied to all members of a political party as they were the ones that contributed towards that funding. The submission had not spoken to contributions by members. How was that facilitated? He did not know if they had undertaken proper research into the funding of political parties because, even as they spoke, the country did not have enough funds to run its own programmes but they expected an increase in political funding. How could the country increase political funding?

Mr Bongo pointed out that the presenters were assumed to represent the public. The submission was short and beautiful but they should not come again and just produce generic statements. He requested that Corruption Watch put the information into graph form and include their recommendations. Specific suggestions had to be made so that the Committee could see what the stakeholders wanted. Whatever decision the Committee took at the end of the day, would be partly informed by the submissions. Inclusive, informative suggestions had to be made. Corruption Watch wanted to wait until there was transparency in respect of private funding before public funds were increased. It would not work unless it was the other way around and they determined by how much to increase public funding. What was its comment? They want to ban so many donors. What about the many NGOs in South Africa? Should they be allowed to contribute to political parties? The organisation should come back with a more substantive proposal.

Ms Govindsamy responded to the capping of expenditure. She stressed that recommendations by Corruption Watch were based on guidelines for best practice, and, for South Africa, it would be a case of making the best contextual decision from best practice. Corruption Watch was referring to campaign expenditure and not operational costs and constituency costs, etc. It was necessary to determine what could cause abuse in the election period. What could lead to undue influence and how could it be managed by the capping process. The written submission contained a table showing what actual expenditure should look like. Trade union funding, third party funding and NGO funding was considered private funding as the organisations could be used as a vehicle for transmitting funds. If there was a transparent process, there would not need to be bans as risks would be mitigated. It could be a question of regulation or bans. On the formula, Corruption Watch did not believe that it was in a position to determine the formula except to say that the Constitution did not place proportionality above access. It was about the Committee examining the risks and the difficulties and making a decision. Level playing field meant a playing field for all parties and not just the ruling party and opposition parties because it was necessary to have as much participation as possible within the democratic process. It was about having access to the process which might mean providing an amount to smaller parties. Corruption Watch acknowledged that there would be majority and minority parties so it was not totally level but it was about large parties having an inordinate access to capital and fundraising, making it almost impossible for other parties to operate. That created a non-competitive situation. The private funding model would help the level playing field, depending whether there was a multiparty democracy fund and regulations around private funding. There were a number of sub guidelines in that regard.

There needed to be sanctions that could be imposed on people who engaged in corruption. Penalties would have to be meted out by a regulatory body. If there were a myriad of laws on corruption and holding people accountable, but which were not working, that regulation should address the problem. It was important to remember that the regulations would operate in the context of a number of other laws. The penalties would be imposed on political parties by a completely independent body. When looking at the abuse of state resources, such as vehicles and even state media, there was a need for complete transparency and voters needed to know how the resources would be used. One option was to allow access to certain state resources to all parties. Democracy was fatally threatened by a lack of transparency. The OECD report referred to Chile which had become disillusioned by the lack of response to requests for transparency. When the voting population became so disillusioned with the processes that they had taken matters into their own hands, even resorting to violence, then democracy was potentially fatally threatened. The quote from Kofi Annan was about all OECD countries. If the increase in public funding was considered, there would have to be transparency about private funding. Corruption Watch was therefore not saying if there should or should not be a funding increase. The question about donations by members to their own organisations was not a problem as long as there was transparency. Corruption Watch had deliberately given broader input as the first questions that needed to be answered were the broader policy decisions. The guidelines were intended to support the Committee when making policy decisions as there was a good deal to debate at policy level. Corruption Watch could elaborate once the first committee draft was completed.

Mr Lees said he had asked how the transparency of political party funding would assist in managing corruption when the laws relating to corruption had not managed to resolve the problem. He asked the question as Corruption Watch seemed to use the possibility of corruption as a reason for insisting on transparency.

Ms Mathys asked if Corruption Watch had an opinion on what would constitute operational funds in a political party. She had specifically asked about the use of funds to go to court when parties had to take Government and Parliament to court to force them to carry out their mandate. Where did the investment arms of the political parties fall in the Corruption Watch scenario? Was that considered private funding?

Mr Singh noted that in the written submission, Corruption Watch had indicated that funding from investment arms of political parties should be banned. However, the oral submission indicated that such funding should be banned or regulated. He asked if Corruption Watch had had a change of heart and if there were other areas where the organisation had since had a change of heart on how issues should be dealt with.

Mr Selfe informed Corruption Watch that Section 7 of the Corrupt Activities Act made it an offence for someone to get a politician to do what somebody else wanted the politician to do. Penalties ranged between life imprisonment and five years. To his knowledge, no politician had ever been prosecuted in terms of that Act. On the statute books was also the Financial Intelligence Centre Act which could track suspicious transfers of funds to political parties amongst others. So what in the armoury of legislation was going to make a difference if those two Acts could not achieve what they wanted to achieve?

Dr Khubisa reminded Corruption Watch about his question about what would happen if there were, at some point, a squabble between a funder and the fundee.

Mr Bongo had not understood clearly Corruption Watch’s comments around trade unions and NGOs.

Mr Radebe noted that, in their submission, Corruption Watch referred to the capping of expenditure. Did the organisation not mean capping of funding? For instance, in India one funding source could not donate more than 5% per annum. Was capping related to funding or expenditure?

The Chairperson appreciated that the organisation was looking at international best practices and that they were treading in the dark, as was everyone. However, he believed that the concept of levelling the playing field was simpler said than done. It was feasible in a country such as the USA with only two major parties or other countries with a limited number of parties. He wanted not only Corruption Watch but all presenters to apply their minds to the concept of levelling the playing field and determine what it was they wanted and how it could be done. There were 13 parties in Parliament and 67 parties in the country. Where did one stop the levelling? The Committee did not want slogans. It wanted suggestions.

In response, Corruption Watch suggested the issue of blackmail by funders would be resolved by correct auditing processes, and transparency. Certain categories of funders, such as NGOs and trade unions, were listed under private funding because funds did not come from a public source of funds and there was potential for abuse because they could hide assets or channel funds. There would be a need for heightened procedures to deal with that. There were various options as to how one could deal with it, such as banning, regulations, channelling to a multiparty democracy fund. Legal costs would probably be seen as operational expenses. The suggestion on a ban would depend on whether there was regulation or whether the money was channelled via a multiparty democracy fund. It was not that Corruption Watch had changed its mind but that there were a variety of options available. At the end of the day, transparency allowed better public and media scrutiny of the funding and that would enhance the fight against corruption. It was an additional item in the armoury that would heighten the fight against corruption and also maladministration and procurement issues. As regards the levelling of the playing field, there was a need to create an environment where all political parties could access resources and be able to participate. However, how one did it would be different from country to country, according to local context. That needed to be determined but Corruption Watch was raising it as a guiding principle. There was a lot of information around what it meant to level the playing field and how it operated in different countries.

South African History Archive (SAHA) submission
Ms Toerien van Wyk, SAHA Co-Director, explained that SAHA was an independent archive set up as a trust that focussed on making archived material available as access to material promoted human rights and good governance. SAHA’s expertise lay in the area of transparency and access to information and that was what had informed its submission.

SAHA saw a need for transparency in political party funding to avoid corruption, promote confidence in the political system and to ensure access to parliamentarians. SAHA also had an interest in the role of record creation and record keeping which was necessary for political party funding. International best practice suggested that gaps in legislation enabled corrupt practices and therefore SAHA called on the Committee to ensure that those gaps were closed by means of appropriate regulations. Regulations had to enable freedom of access to information about politicians and political parties so that voters could access the information and determine the conduct of their political representative and therefore in the political system. Regulations had to make provision for the recording of private funding to political parties and ensure that the public had access to such information. SAHA noted the lack of information available to the public about the funding of political parties which limited opportunities to make concrete suggestions.

Prof Khubisa wanted to know, because the organisation dealt with matters of openness and transparency and kept information which was made accessible, what information SAHA had about political party funding? Did they have information about whether the funding was global, national, local or regional? They were making recommendations about what ought to be, so what information did they have that informed the submission and that could be shared with the Committee.

Adv Bongo recommended that SAHA go back and write a document that was suitable for Parliament as the focus seemed to be on corruption. The submission talks about common cause and being clear about issues but that was not based on evidence. The Committee wanted a response to the 90/10 allocation, a recommendation as to whether there should be a threshold and if so, what was that threshold. That would make meaningful contribution, so SAHA had to go back and work on specific recommendations. The Committee could not use vague statements as presenters would come afterwards and say that they had not been consulted when it was not true.

Ms Mathys noted that SAHA had indicated that they had had insufficient time to respond fully. She welcomed the focus on corruption but noted that SAHA would need to present concrete proposals.

The Chairperson raised the point that the Committee had determined from the outset the need for transparency and accountability. The Committee was not able to really use the input as it was too general. Some inputs had suggested that everything had to be disclosed while other inputs had suggested there should be allowance for anonymous donors. SAHA could not come to Parliament to promote the institution.

In response, Ms van Wyk stated that SAHA wanted to be able to ask for information because it was not recorded. Therefore, there should be an obligation for information to be recorded and that certain information should automatically be disclosed and it was important that organisations such as SAHA could receive access to the information on request. She explained that she had not focused on corruption but she had mentioned it in relation to access to information. She noted that the size of a donation could allow an individual access to party members but, because she did not know how much money was involved in political party donations, she was unable to estimate what would be a significant amount of money to be able to obtain the ear of a politician. However, ordinary South Africans did not have access to politicians. The whole point was that SAHA did not have access to information.

Right2Know submission
Right2Know was represented by Mr Murray Hunter, Organiser: Secrecy and Securitisation, Ms Nomacebo Mbayo, activist with Right2Know, and Ms Karabo Rajuili of the National Working Group.

Three things were relevant: proposals on private funding of political parties; public funding of political parties and steps or regulations to take the reform process forward. Right2Know took the position that secrecy allowed for deals to be struck and policies to be influenced. The media had exposed scenarios such as the Arms Deal where secret funding had enabled the deal to go through. Such deals were not limited to the national level. The lack of information had created a climate of secrecy and had allowed corruption to thrive and that had undermined the Constitution. There was an undue emphasis on money. Lack of transparency led to a lack of confidence in the political process. Right2Know assumed that for every Rand received by political parties in respect of public funds, they received five to six Rand in private funding. Right2Know was calling for the enactment of amendments to the legislation to control private funding to political parties. The legislation should look at the classification of political parties as private bodies as that was problematic. There should be more reporting on the public fund for political party in the reconfiguring of how that funding worked. Information about the donations should include goods and services. All corporate donations should be disclosed. There should be a threshold for private donations. There should be a complete ban of funding from companies doing business with the state or intending to do business with the state.

Ms Nomacebo Mbayo made her submission in isiXhosa.

The Chairperson noted that there were no translators available owing to the lateness of the hour but that if the Committee agreed, he could allow the presenter to speak in Xhosa and make a brief summary in English at the end. The Committee agreed.

Mr Hunter spoke to the “Moment of Truth”, noting that it was difficult to move from secrecy to transparency. He noted that it was extremely difficult unless there was an opportunity for a once-off full disclosure.

Adv Bongo made his comment in Zulu.

Prof Khubisa wanted to know why investments should be banned because running campaigns was expensive. Transparency and openness was fine but… [he continued in his home language].

Ms Mathys asked for the rationale for political parties to report quarterly. To what extent did the IEC need to be capacitated and how did they think the Electoral Court would work? Right2Know stated that there was not much information about how public money was managed but access to political party funds from the public purse was available. She felt that those funds were tightly controlled.

Mr Lees spoke in isiXhosa.

Ms Maseko was concerned about the proposals for quarterly disclosures. She believed that it should be linked to the annual report. She was concerned about the point made about levels being set in relation to the average household income. She needed more information as to what had informed that proposal. She also wanted to know what had informed the proposal that political parties should be banned from having investment vehicles. What were they suggesting that the IEC required by way of additional support? What did they mean about equal share? Should a single member party get the same funding as a party with large numbers of members? Was it fair? Numbers were not even equal in Parliamentary Committees. Even there, there was proportional representation. She needed to get an understanding of what was meant.

Mr Singh would not like the public to have an impression that political parties received public money and spent it willy-nilly. There was a profound sense of accounting for the money and criteria according to which the money had to be spent. There were guidelines that were checked and there were consequences for not adhering to the guidelines. The IFP would not have a problem with making their audited statements available to the public. On the ban on companies doing business with the state, he noted that some companies might have a small contract with a school to supply books but would be banned from making donations. That was closed thinking. He informed the presenters that some political parties had had investments for many years and that the funds for investments had come from membership fees from its ordinary poor members. He suggested that only companies that did business only with the state should be banned from making donations to the state.

Mr Gumede asked what other great democracies had the model that demanded that political parties disclose every quarter. Perhaps Right2Know did not know that there was reporting to the IEC and to Parliament. Although that might not be enough. What the Committee needed from Right2K … [he continued in his mother tongue].

Mr Selfe wanted to extend the discussion around the IEC and its lack of capacity to deal with its current mandate. The second problem was about the IEC being the referee and the policeman simultaneously. Was there a better institution that could be mandated to take over instead of the IEC?

Ms Ncube-Ndaba said most of the issues around the IEC had been clarified but [she continued in her mother tongue]

The Chairperson asked if Right2Know had said that political parties ought to be registered as public institutions? There were certain consequences to being registered as a public institution. Currently, people applied to join a political party but the party was not obliged to accept everyone. As a public organisation, would a party be obliged to accept everyone who wished to join? Could people take a party to court for not allowing them to join? There were unintended consequences. It should be remembered that legislation was not being formulated for the current day but they were developing legislation that would be able to stand the test of time for many years to come. He asked that the presenters address his concern about political parties having to become public organisations.

Right2Know addressed the issue of investment vehicles as a number of parties had raised the issue. Mr Hunter pointed out that there was a certain degree of flexibility around the proposal. The organisation had wanted to address the problem of an investment arm of a political party operating outside the sphere of public oversight and public scrutiny. Investment arms could get insight into policy and procurement shifts through the political party that the investment arm supported, to their distinct advantage. Members of Parliament would be able to advance the interests of the business in many ways. If there was an investment vehicle, it should be a blind investment vehicle, which would take away that risk. The problem of companies making donations to political parties and doing work for the state at the same time could be resolved by the concept of a democracy fund which could receive donations from those companies that had received work from the state. Even 1% of their business could be equivalent to millions of Rand.

On the frequency of disclosure, Right2Know would respond to the question of frequency of disclosure when they had received the first committee draft. The organisation did not want to add more complexity to the role of the IEC but it would depend on the IEC and their capacity. Right2Know wanted to ensure that an independent body managed the process in a robust manner, especially in reporting requirements. However, Right2Know did not want to add more complexity to the legislation. The IEC, or any other body that was given the mandate to undertake the process, would have to ensure that there was a strong mechanism for making meaningful information available to the public.

On the question of private versus public companies, it was important to look at the case of SASSA where the Constitutional Court had stated that companies that functioned on behalf of government took on some of the responsibilities of the state and had to have a higher threshold of accountability and responsibility. What Right2Know wanted the Committee to remember was that political parties held a significant amount of power in determining policy and the organisation wanted to ensure the public’s right to know. Currently, political parties were private and thus withheld information and that needed to be looked at. Perhaps political parties would have to report on their finance as if they were private companies.

Right2Know stated that the public felt very strongly that the 90/10 was unfair but the organisations with which they had consulted, had had no firm recommendations. They would go back to the people who had attended the workshops and find out what they proposed. Ms Mbayo noted that political parties were not seen during the year but during the election period they came looking for votes.

Ms Mathys noted that the cost of registration by political parties to participate in the elections was a barrier to entry.

Mr Gumede asked which other democracies had the same disclosure procedures. [He continued in isiXhosa.

Mr Hunter responded that he was also concerned about the amount that it cost to register for elections. He suggested the IEC should be approached to reduce the cost significantly as it should be the voters who decided who should be elected and not finances.

Ms Karabo Rajuili noted that the legislation developed by the Committee spoke to the risks and to the long term. When they spoke about the ‘moment of truth’, Right2Know believed that there should be full disclosure of all public and private funding to political parties in order to understand the impact that funding had on the situation and to discuss the entire issue within context. Models could not be developed without information. The organisation had discussed the matter internally and believed that only when there was information on private funding could a model be developed but, until then, it was not possible to develop a model. The organisation’s position was that full disclosure be made of private funding so that the public could understand the situation and so that the process could be taken forward from that point.

The Chairperson announced that the Department of Justice would not be attending the hearing, but would make a submission.

Meeting adjourned.

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