Political discussion on regulatory framework (continued)

Ad Hoc Committee on the Funding of Political Parties

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

Documents handed out: Version 2 and 3 of the Working Document (not yet available to public; available later)

The Committee continued its political discussion on the regulatory framework on the funding of represented political parties, using Version 2 of its Working Document.

The previous day it had agreed that public funds and private donations at a central level had to be managed as separate funds. This meeting commenced with a debate on which body should manage the second fund which agreed would be called the Multi-Party Democracy Fund. Could the IEC manage both funds? Setting up a new agency would be a lengthy process fraught with difficulties. The sticking point was that the IEC was not prepared to be responsible for enforcing the regulations relating to party funding. The Committee determined that it would investigate whether the Electoral Court could take responsibility for any irregularities or abuses of funds by parties. It was agreed that, in the interim, the Committee would assume that the IEC would manage the private fund as well as the current public fund, subject to IEC and public consultation. There was a concern about a lack of input by corporate business. Business associations would, therefore, be invited to comment when the draft was made available for public comment.

In response to the question of additional activities for which the public funds could or could not be used, the EFF had requested that parties be permitted to pay for legal costs from the funds as the cost of taking the government or Parliament to court to ensure fulfilment of its mandate was extremely costly. The matter would be put before the IEC. In general, the Committee agreed that it should not over-regulate what additional activities funds should be used for.

The Committee discussed prohibitions on who could make donations to the Multi-Party Democracy Fund.

On the point of making public who donated to the direct private funding of a political party, the Committee engaged in an extended debate on the principles of accountability and transparency versus the right to privacy. Resolution could not be found and the matter was flagged for the next meeting. Those prohibited from contributing to political party funding included foreign governments, organs of state, government departments and criminals. An exhaustive debate ensued over the question of whether foreign agencies and foreign companies with South African interests could be permitted to donate. Some members believed that such donations would compromise the sovereignty of the country and even lead to regime change.

In the evening session, the Parliamentary Legal Adviser briefed the Committee on the options for the legislative process. It was agreed to repeal the current Act and present a new Bill rather than work on an Amendment Bill. The existing sections that the Committee wanted to retain would be included in the new Bill and new clauses added.

The Committee reviewed Version 3 of its Working Document. It went through the changes made to the sections dealing with public funding.

On the Multi-Party Democracy Fund, there was general agreement that state-owned enterprises, government departments, proceeds from crime, proceeds from the lottery, foreign government and anyone or any entity funded by the taxpayer money would be forbidden to donate to the MPDF. Discussion on whether foreign individuals could donate led to the suggestion to permit South African citizens to donate, but not non-citizens. The DA could not understand the restrictions nor see the harm in allowing anyone to donate to the pooled fund of the MPDF. Some ANC members believed in banning foreign donations, saying foreigners wanted to interfere and ultimately control the country and the sovereignty of South Africa had to be protected. The question of donations by the AU and EU to promote democracy was raised. It was finally agreed that the draft Bill would retain only foreign individuals and corporates with a valid footprint in South Africa to donate to the MPDF and the Committee would assess public comments on this concept.

It was agreed that all donations directly to political parties would have to be declared, except membership fees, levies and very small donations, but that threshold would be included in the Regulations, not the Bill. The DA was adamant that the right to privacy could not simply be trumped by accountability and transparency and proposed limited disclosure to the accounting body, the IEC, rather than full public disclosure. However, the majority view in the Committee was that South Africans had to know who was donating to political parties so that they could have confidence in the democratic process and not feel that their vote did not count because a “rich somebody” had diverted the policy. The DA was advised to write a submission on limited disclosure. The ANC was against any foreigners donating directly to political parties as there was no such a thing as a free lunch. The counter-argument was that this view was isolationist.

There was unanimity that the IEC should be the management agency for political party public funding and for the MPDF. The Electoral Court would be the sanctions body and final arbiter of any disputes or irregularities. The contested formula for splitting the funds was deferred to when the Committee got to the Regulations, as was the potentially divisive minimum threshold below which donations made directly to political parties would not have to be disclosed.

In response to a question about when the Committee would decide on the increased amount for public funding for political parties because “that is what this whole process had been about”, the Chairperson made it clear that the process had never been about money but about equity and fairness and regulating South Africa’s laissez-faire approach to funding of political parties.

A proposal was made that some of the Committee go on a study tour of two African countries during the public comment period. Some Members preferred desktop research. The secretariat alerted the Committee to the time period required to arrange a study tour. The Chairperson agreed to investigate further.

Meeting report

Opening remarks
The Chairperson noted that four Members had sent apologies and two Members would come after business in another Committee. However, there was a quorum and four political parties were represented. The IEC had done some calculations on the Constitution Section 236 funds currently disbursed to political parties. This would allow the Committee to understand the difference in rands and cents if the formula were changed from 90/10 to 80/20 etc. Where the sponsors of particular points were not in the meeting, those items would be held in abeyance until the next meeting. Provincially allocated funds would also be held over as the information about those funds had not been received.

Version 2 of the revised draft document: Discussion
The Chairperson referred to Version 2 of the Working Document which was still confidential as it was a draft. He would go through the document point by point. The Preamble would be addressed at the end.

Who would manage the democracy fund?
Recapping the decisions of the 22 August meeting, he noted that it had been decided that there would be two pots of money: the private funding and the proportional and equitable public fund. Who would manage the democracy fund? If it were the IEC, it would have to be capacitated to manage the additional work. Alternatively, the IEC could retain the current public fund and a new manager be found for the private fund. The Committee had agreed that the two funds would be separate so the question was who managed the private fund.

Mr B Bongo (ANC) recalled the previous discussion and noted that he agreed with the view that the IEC should manage both public and private funds, but in two separate accounts. The Committee should, therefore, agree on that position and move forward.

Mr J Selfe (DA) was concerned about the capacity requirements of whoever managed the fund and he believed that the IEC was currently stretched. He was concerned about the implementation of such additional capacity. It was one thing to agree in the Committee to provide additional resources but it was another for the IEC to actually get the extra resources. In addition, it was not the IEC’s core mandate and the IEC was currently stretched to fulfil that mandate.

Dr P Mulder (FF+) noted that the Committee had agreed that there would be two funds. The one would still be called the Represented Political Parties Fund, which was currently managed by the IEC. The second fund would be the Multi-Party Democracy Fund. He recalled the IEC saying that it could continue with the current fund but they would need funding for administering that account, and the current requirement for use of GAAP accounting principles needed to be amended. It needed additional resources but it was prepared to carry on with the current fund. The IEC had said that it would prefer not to deal with the second fund, especially as it would need to be both supporter of and the one to sanction political parties. Who else could manage the democracy fund? He could see a body with a multi-representative board. Who would appoint board members, Parliament or the President? But both bodies would need the same specialist skills and capacitation.

The Chairperson reminded the Committee that the EFF had been adamant that the Committee should not reinvent the wheel by creating a new body to manage the private fund. His personal view was that whatever body was given the private fund to manage, would require the skills and capacitation. Since appointing another board was so complex and it would take so long to finalise, he suggested that the IEC be asked what their challenges were. The Committee could then determine if it was possible to overcome those challenges.

Mr J Selfe (DA) agreed that it was sensible but asked how the IEC would enforce breaches of the funding. The IEC had said it was not terribly keen to play the role of policing political parties.

The Chairperson noted that the Committee had three questions that would be sent to the IEC: How were they going to police the fund? What additional resources were required? Could they have an additional unit?

The research team suggested that one way to resolve the enforcement aspect was to get the Electoral Court to confirm and impose sanctions. The IEC would formulate a case and prepare it for presentation to the Electoral Court. The Electoral Court could impose sanctions and should there be an appeal, it was already legislated that Electoral Court appeals go directly to the Constitutional Court. That would expedite the process for resolving the process.

Dr Mulder agreed that the Electoral Court would be a good solution to the problem but he was concerned that corporate South Africa would not feel comfortable about the fund being under IEC governance. Corporate South Africa would make or break a fund and yet the Committee had not had any input from them.

The Chairperson suggested that the Committee could include something in the first public document and put it out for debate. BUSA and other business bodies could be invited to comment or attend a hearing.

Mr Selfe agreed with the suggestion about the Electoral Court. There was already a unit in the IEC called the Office of Electoral Offences. The Committee could ask the IEC to explain the mandate of that unit. As they were talking about electoral offences, that unit could also manage disputes.

Mr Bongo noted that the Committee was changing legislation and they had to be careful. He thought that the IEC could manage both funds. It was already managing the Represented Political Parties Fund and, as far as he knew, there had been no problems to date. The second fund would need almost the same type of management because it was a central kitty. It would take at least two years to establish a new agent. The IEC had the expertise and there had been no cases of mismanagement of funds. It would be less work to capacitate the IEC than to capacitate a new body. He recommended that they accept that IEC be the manager of the second fund, subject to consultation with the IEC and subject to public comment on the public committee document. Corporate South Africa could be invited to comment when the document was made available to the public.

The Chairperson suggested that as National Treasury was scheduled to present to the Committee on 1 September, the IEC could be requested to attend on that date to inform the Committee if it could do it and, at the same time, the IEC could also indicate the shortfall for the costs of managing the current and proposed fund. It was agreed that, in the interim, the Committee would assume that the IEC would manage the private fund as well as the current public fund.

Formula for distribution of the private donation fund to the Committee
Dr Mulder noted that Members had agreed that the same formula would apply to both funds. However, the trouble with the formula was that it was included in Section 5 of the current Funding of Represented Political Parties Act which, in respect of the equity split, took into account only representatives in the provincial legislatures and not the National Assembly. That was a problem that he shared with Mr Godi of the African People's Convention (APC). In the Act, the section on the formula stated there should be a weighted scale and gave three options – (5(ii) (aaa), (bbb) and (ccc). The regulations were written in respect of 5(ii) (bbb). However, (ccc) would be a fairer allocation. Dr Mulder suggested that the Legal Services should check if the Act would suffice as it stood if the Committee amended the regulations to change 5(ii) (bbb) to (ccc).

Mr Bongo was not sure that (ccc) would meet the concerns of Mr Godi, who was not present. Mr Godi had not yet made a recommendation on how to resolve the problems that he had with 5(ii)(bbb) and he had to do so. If his party did not have a representative in the provincial legislature, how did it envisage that it would get the funding? However, Mr Bongo believed that there was no need to change the Act, but that the Regulations would have to be changed. He also suggested that the Act had to be amended so that the provincial legislatures used the same formula for funding. In Section 5, they would have to put in an umbrella framework to bring uniformity to the provincial funding.

The Chairperson confirmed that there had to be enabling legislation to ensure that political parties were given the same allocations in all legislatures. The other concern was that (ccc) could cause problems to arise where a party was represented in Parliament but not represented in a provincial legislature, especially as the equity funds were allocated at provincial level. The Committee had to think about that matter.

Mr Selfe noted Section 236 of the Constitution referred to “participating” parties and not to represented parties. He was of the opinion that something was fundamentally unfair where a party was represented but not included in the equity funding. It had to be wrong. Whether a party had representation in Parliament or a provincial legislature, it had to be entitled to a share of the money. Secondly, there was the question of “participating” parties. What did it mean? He did not know what that meant.

Dr Mulder suggested that Mr Bongo was thinking of the additional funding given out in the provincial legislature. The current legislation did not deal with those monies at all. The 13 parties in Parliament plus two additional parties in provincial legislatures meant that the proportional part of the caps Section 236 fund was divided amongst 15 parties as Section 5(ii)(ccc) allowed for legislature plus House of Assembly representatives to benefit.

The Chairperson explained that currently the equity 10% of the fund was sent directly to provinces and they would not split it with a party that was not there. The problem with Section 236 could be resolved but was there a need for legislative changes to manage the additional funds given out by provincial legislatures. A principled discussion would be about whether to allow provincial legislatures to continue to pay out additional funds or would it be regulated and managed by the IEC. He noted that the matter needed further consideration. Unrepresented political parties fell outside of the Committee’s ambit. The enhanced public funding was a matter for the National Treasury and would be discussed on 1 September 2017.

Dr Mulder pointed out that enhanced funding could be added to the Regulations with a reference to the fact that the state should provide sufficient funding.

Mr Bongo suggested that the spirit of the cost of managing democracy should be captured in the revised Act. The intention to enhance democracy came at a price.

The Chairperson indicated that someone should start thinking about the wording of such an inclusion.

Dr Mulder suggested something be added in Section 2(1) of the Act indicating the need to fund democracy. A word such as “adequately” could be added.

Additional activities for which the public funds could be used for
Dr Mulder noted the point raised by the EFF about whether legal costs could come out of the funds. He knew that Parliament was very strict about not using parliamentary funds to pay legal fees. He suggested that the IEC be asked if they would accept expenditure on legal fees.

Mr Bongo recalled that the Committee had decided that a decision had been made that the Act was too loose in terms of regulating spending. The spirit of the Act did not suggest that costs such as legal fees should be included. He did not believe that the fund should be used for litigation as a single case could deplete the entire fund. Parties went to court for trivial matters and they should not use taxpayers’ money for legal fees. The Committee should look at the funds at a technical level and determine exactly how they could be used to promote multiparty democracy.

The Chairperson summed up: the Act gave parties freedom to use the funds largely as they wished.

Mr Bongo wanted certain restrictions. The sponsoring party, the EFF, would be given the right to respond.

Dr Mulder believed that the fund should allow for parties to do whatever they wished in line with party activities. The Committee should remember that there would be two funds: one would be public money and the other private money. He suggested that the issue of funding legal fees should be put to the IEC.

The Chairperson agreed. He recalled that public submissions called for the funds to be used to promote gender equity, and other special interests. He asked if they should legislate exactly what the funds should be used for. His personal view was that legislation should be implementable and not idealistic. He did not think that they should over-regulate.

Mr Selfe believed that it was bad to be too specific in policies and therefore it should not be too specific. The voters would treat a party according to their policy issues. The Committee agreed not to over-regulate that aspect.

The Chairperson proposed that Multi-Party Democracy Fund should be the official name of the private fund.

Mr Bongo was comfortable as it was in line with the Constitution that speaks to multi-party democracy.

Dr Mulder agreed.

The Chairperson determined that the second fund would be called Multi-Party Democracy Fund and would be included in the Act. The split of the fund would be the same as for the IEC political party funding. That split still had to be agreed upon.

Disclosure of who donated to the Multi-Party Democracy Fund (MPDF)
The Chairperson asked if there would be total disclosure by everyone who donated into the MPDF. There was a feeling that there should be total disclosure but Mr Lees had had reservations in a previous meeting. The Committee had stated that it was necessary to have a register of every declaration. The question was about when the register would be published.

Mr Selfe noted that obviously one had to know the source of the funds. What was the harm in allowing a donation without declaration?

Mr Bongo asked why anyone would conceal a donation. There would be tax relief for donors. Democracy had to be seen to enhanced. It would be different when donating directly to a political party. The legislation had to enhance the purpose of promoting democracy and transparency and the IEC had to be able to show the list to the people. It would be different when someone wanted to donate directly to a political party. Then the list could be kept confidential unless there was cause for asking for it.

The Chairperson stated that his premise was that there had to be accountability. The Bill and South Africa, generally, was being built on transparency so if one did not know who had donated, where was the transparency? There needed to be transparency from the donor and accountability from the body that was managing it.

Mr Selfe said that he agreed that proceeds could not come from criminal activities but he wanted non-disclosure, unless disclosure was to the managing body only.

The Chairperson asked for clarity from Mr Selfe.

Mr Selfe agreed that it was a legal requirement to know from where the money was coming so someone had to know this. If the managing body knew where the money came from and was satisfied the fund was not been used for money laundering, there was no need to disclose the donor to the public.

The Chairperson felt that there was general agreement. The IEC had to know and keep a register but it did not have to be publicly disclosed. Most people would be pleased to disclose their donation.

Dr Mulder noted that the register would be open to the public.

The Chairperson explained that the IEC would determine how to manage disclosure. The legislation would simply state that a register had to be kept of everyone who donated to the fund.

Prohibitions on donations to the Multi-Party Democracy Fund (MPDF)
The Chairperson called for any additional prohibitions.

Dr Mulder added the National Lottery Fund.

Mr Selfe asked about donations in-kind. He asked where sponsorship would fit in. For example, someone might want to donate 100 000 T-shirts. Would the Act prohibit the investment arms of political parties?

That point was put aside for discussion on investment arms.

Mr D Gumede (ANC) proposed that foreign governments and foreign individuals be banned as they might want to interfere in the sovereignty of South Africa.

Ms N Mafu (ANC) agreed.

Mr Bongo stated that foreign individuals or corporates might also want to interfere in South Africa’s sovereignty.

The Chairperson remarked that AZAPO had asked that the sovereignty of South Africa be protected. He also noted that someone had suggested that all funds should be accepted for promoting democracy.

Mr Bongo did not want to allow donations from foreign governments and foreign individuals and corporates. There was a need to secure sovereignty. He believed that it was a matter of principle and the prohibition of all foreign donations should be included in the Act and the matter be finalised.

Dr Mulder agreed that foreign donors should be banned from funding parties. However, the multiparty democracy fund needed funds so why should they not accept all donations? For example, Coca Cola had its head office outside of SA so did that mean Coco Cola could not donate. It was not possible to undermine the Constitution by donating to the neutral Multi-Party Democracy Fund.

Mr Bongo asked why foreigners would want to fund a Multi-Party Democracy Fund? SA had to protect its sovereignty. The citizens needed to be their own liberators. People who benefitted from the country had to take responsibility for its own fund.

The Chairperson understood Mr Bongo’s position and would not want to see foreign governments donating but pointed out that it would also exclude, for example, a donation from the African Union or the European Union.

Mr Selfe pointed out that the Democracy Fund in the United Kingdom had been set up to promote democracy throughout the world and sometimes funded democracy promotion in other countries. He did not see how that impinged on South Africa’s democracy because it was a multi-party fund. He did not believe that the Committee should cut off its nose to spite its face. In any case, the donation would be publicly known. He could not see where the harm was.

Dr Mulder suggested that one had to be careful of perceptions of foreign donations. Perhaps a more nuanced approach could be found.

The Chairperson was concerned that perhaps there could be perceptions of colonialism.

Mr Gumede warned that a foreign government could donate with conditions attached.

The Chairperson noted a query on a prohibition of persons who did any business with the State. That prohibition could not be included because it might be that the business owner had a small tender with the state such as selling small items to schools, which accounted for only 5% of the business. The majority of companies in South Africa had some business with the state. Such exclusion was not fair or practical. There should be no cap on donations to the Multi-Party Democracy Fund.

The Chairperson raised the prohibition of donations from investment arms of political parties but said that an investment arm would have to declare anyway and why would an investment fund intended to sustain a particular party give to opposition parties?

The Committee agreed that it was not relevant and investment arms should be treated as any other corporate. That concluded the discussion on the MPDF.

Disclosure of private funding of political parties
The Chairperson noted that decisions had been taken on non-disclosure of membership fees, levies and donations below the threshold that was yet to be agreed upon. Other donations paid directly to political parties would have to be declared to the party and to the IEC. Were there any other points?

Mr Selfe noted that that it depended on what the IEC did with the disclosure. It was one thing for donations to be reported to the IEC, but another for the names of donors to be publicly disclosed. What was the harm that the Committee was trying to prevent by the disclosure? Disclosure was not automatically a mechanism for preventing corruption. He spoke to the rights of privacy. Surely what one did with one’s money was a person’s own business. He referred to Parliament’s disclosure procedure. Personal finance information was not disclosed publicly unless there was some wrongdoing.

The Chairperson personally felt strongly about three principles. The first was enhancing democracy which needed to be facilitated. Secondly, the principle of accountability was the bigger view and defending privacy was a narrow view. South Africans wanted to know who was donating to political parties. The issue of corruption was a narrow view. The third principle was transparency and it was necessary to tell citizens that their voices mattered so who was funding a party had to be open and transparent. Without transparency, one would never be able to account and one would never know if a donor was subverting policies in a party. The Constitution encompassed privacy and accountability but did privacy outweigh transparency? He did not think so. He, personally, believed in total disclosure. A decision had to be made and, unfortunately, there would be a loser.

Dr Mulder spoke to the need not to disclose. The constituency funds had to be excluded from disclosure.

Mr M Dlamini (EFF) said that disclosure had to be outright. If the donation was genuine, there was no reason not to say that one had donated to a political party. Large sums had to be disclosed. People who supported the EFF were challenged by not receiving tenders. Those who donated to the ANC were told that they were donating because they had received a tender. So, transparency was the only answer.

Mr Gumede added that there should be nothing to hide. Everyone had to be open, transparent and accountable to the voters and everyone.

Mr Bongo stated that except for Sections 57 and 116 of the Constitution and considering the donations the Committee had allowed, all donations from R10 000 upwards had to be disclosed by political parties. He sympathised with Mr Selfe’s concern about the right to privacy but, considering the intention of the Bill, there was a need to be transparent and that outweighed the right to privacy. Any peace-loving South African would not want to hide himself when making a donation to his political party. All should be disclosed.

There was a general consensus on disclosure above a bottom cap.

Dr Mulder said the Committee would have to check on the issue of right to privacy in the Constitution. He thought that R10,000 was too low but that matter would be discussed later.

Mr Dlamini asked what the right to privacy meant. Did it mean a person’s right to do or say something, but one could not use the opportunity to force someone else to lose their privacy? But, the point was that no one was forcing anyone to donate.

Dr Mulder noted that it was the Bill of Rights versus the Constitution. The Constitution referred to specific rights. The introduction to the Constitution stated that the country was built on transparency, accountability and so on.

Mr Selfe countered saying that the specific instances noted were included in the right to privacy. The rights to privacy were broad. Political rights and the right to freedom of association were being impinged upon. No one had explained why transparency should trump all those fundamental rights.

The Chairperson asked Mr Selfe how he saw accountability. How did he link accountability to secrecy? If everyone else had to be accountable so should political parties be accountable. He reminded the Committee of the example given in one of the submissions that prior to an election in the UK, someone had given a political party a large cheque but had signed it Sir so-and-so. That meant that if they had wanted to cash the cheque, they had to make him a Sir when they got into power. That was a subversive way of buying votes that could only be found out if there was transparency. He stated that if they could not resolve the issue, it would have to go to the vote and he would prefer not to have to do that as he would vote against Mr Selfe.

Mr Bongo asked Mr Selfe to explain his understanding of the right to privacy in the Constitution. The right to privacy was important when one was being arrested. He believed that Mr Selfe was only reading the first part of the Constitution. The last part spoke to accountability and transparency. He was looking forward to some superior legal argument.

The matter was flagged until the next meeting.

The Chairperson noted that it had been agreed that whatever the threshold was, it would apply to both individuals and corporates. He asked about how political parties recorded and reported on donors to ensure that everything was above board. Political parties were currently not obliged to give out their books which recorded income and expenditure but how did the IEC prevent political parties from hiding irregular donations from wrong sources. Did it fit in the Act or in the Regulations?

Dr Mulder recalled that the IEC had stated that some parties got in little funding they could not afford the audit. He worried about the number of accounts that would have to be audited, approximately five separate accounts, by each party and the cost of this.

Mr Gumede had no problems in principle.

The Chairperson pointed out that if they were going to cap funds, they would have to control it. He asked the research team to find out how other countries physically managed matters such as capping of funds. The matter that they would have to address was how political parties accounted for the funds that they received.

Prohibition on foreign and local government funding directly to political parties
The Chairperson asked if there should be any banning of funding to South African political parties. They had already agreed that there would be no foreign government funding to political parties in South Africa. It had also been agreed that state-owned enterprises and government departments, or organs of state, would be forbidden to make donations to a political party. If a SoE or a government department made a donation, they would open themselves up to sanction. No political party could request funds from the National Lottery. Proceeds of crime were forbidden.

Mr Dlamini asked what the Committee meant by receiving money derived from crime. What if it was later found that an individual who had donated had got the money by illicit means?

Mr Gumede agreed that proceeds of crime be forbidden.

Mr Bongo stated that it was already law in South Africa that one could not receive the proceeds of crime. If the money had come from a crime, the funds could not be claimed back, or the party charged, retrospectively. As far as he was concerned, that discussion was concluded.

Ms Mafu added that crime was crime.

The Chairperson talked about donations from foreign agencies, even in kind. Everyone had agreed to the banning of foreign governments, but what about agencies?

Mr Gumede stated that government agencies acting on behalf of a foreign government should be banned. Funds from Foundations should be examined but possibly be banned.

Mr Dlamini asked if foreign-owned corporates were banned. Foreign-owned agencies were forbidden. What about local companies, especially those that had large government shareholding?

The Chairperson reminded the Committee that South Africa had, in a research paper, been classified as a laissez-faire country with its lax regulations on donations to political parties. The research had shown that the USA, the UK and 80% of the countries in the survey had banned donations from foreign governments. The Committee had to take cognizance of the inputs of the public submissions, as they had been invited to present and had put a great deal of work into the inputs. The Committee also wanted to take cognizance of best practice. The submissions had to be taken into account. He said Mr Dlamini was addressing the issue raised the previous day about corporates in which government had shares. The prohibitions would be addressed in the next meeting.

Mr Selfe suggested that the term “organs of state” would be a better term. Perhaps they should forbid any institutions that were audited by the Auditor-General.

The Chairperson explained that the Auditor-General did not audit the books of all SoEs. The item on banning of businesses that did business with the state had been resolved by determining that a company with the majority of its business emanating from the state should declare its donation and the public would be alerted as to whether or not the company had received dubious contracts. The intention was to prevent the recycling of money.

Mr Dlamini noted that many black businesses did business with the state so it was a dicey issue to deal with and should not backfire on the legislators. Often the businesses were one-person businesses. The business people should not be prejudiced. They should not lose their right to political participation. The answer was transparency so that the relationship could be judged by the public.

Mr Gumede agreed with Mr Dlamini as business was dynamic and customers changed. He believed that an obligatory disclosure would resolve the matter.

Mr Selfe raised his concern about state organisations. Where did one draw the line to prevent recycling of tax money? SAA, for example, was 100% owned by the state.

The Chairperson suggested that the Committee think about how to classify state-owned enterprises. It was easy when the state owned 100% but what if an organisation was 40% state-owned? The question arose where the state had a significant stake in the ownership of the organisation.

Caps on donations to political parties
The Chairperson raised the question of caps. It had been agreed that there were no caps on donations to the MPDF.

Mr Selfe did not think that there should be a cap if donors were disclosed.

Mr Bongo agreed that there was no reason to cap donations.

Mr Dlamini and Ms Mafu agreed with the Committee’s position.

Foreign individual / corporate donations directly to political parties
Mr Bongo said that the principles had been set out – accountability, transparency and enhancing democracy and these were linked to the sovereignty of the country and the citizens. There should no reason for suspicion. No foreigner should have an interest in the sovereignty and democracy in the country. South Africans had to bear the burden of democracy. The whole story in the country about regime change created suspicion. Ideas about regime change were strong in the country. Foreigners must be totally forbidden. If democracy collapsed, it had to be because of South Africans and not foreigners.

Mr Gumede noted that some South African citizens had dual citizenship. Were they foreigners? How did one distinguish whether an international company had a genuine South African head office? Did the international head office not control the funds? Other mechanisms had to be put in place, but the principles of accountability and transparency were fundamental. The Committee had to ensure that the law was watertight and that there were no loopholes that would force them to backtrack because then one was vulnerable. Since there would be transparency, the public would be alerted to untoward donations.

Mr Selfe agreed with Mr Dlamini that it had to be made practical and implementable. What were the Guptas? Were they foreigners or South Africans? There were around 5 million South Africans in the diaspora, some of whom had taken dual citizenship, and they all had the right to vote in South Africa. Could they be forbidden from donating to the political party of their choice? There were South African companies that had business in foreign jurisdictions and sometimes even on foreign stock exchanges. Did that make them a foreign or a South African corporation? It became extremely complex. If the safeguard was transparency, then it ought not to matter from where the donation came as one knew exactly from where it came. It was certainly unhelpful to start talking about regime change as that was a completely different topic altogether, and illegal, apart from anything else. One wanted to know from whom parties had received donations because then one was able to question the party about those donations.

Mr N Singh (IFP) felt that if the Committee had to hang its coat on anything, it should be hanging it on the principles of transparency and accountability. Those principles should be a sine quo non. One could not go delving into the origins of companies and investigate who had interests in South Africa and who did not. People overseas could support a particular cause that a political party was addressing in South Africa, such as banning the shooting of canned lions. Banning donations from foreigners would simply be problematic. Donations would be transparent and therefore open to questions.

Ms L Maseko (ANC) aligned herself with the South Africans who were protecting the sovereignty of South Africa, and also on the principles of accountability, transparency and promoting democracy and good governance. The US and the UK had barred foreign funding.

Mr Gumede stated that it was not in the national interest to accept funding from foreign countries because some foreign countries were the enemies of South Africa and some countries were competitors of South Africa in trading. So, to assume that people from other countries would donate because they were kind or benevolent, was very difficult to accept. Foreign agencies were the agents of foreign governments and in that sense, may not coincide with South Africa’s national interests. The identity of who was making a contribution might be very difficult to establish. If it was a foreign government, there was a question as to who was behind an agency or a foundation, and if that country was an enemy of South Africa or a trading competitor.

The Chairperson summed up by looking at Mr Singh’s position. He suggested that if a country was banning the sale of rhino horn, the donation might be made to a party to ensure that the sale of rhino horn was not banned. He asked if someone from outside was able to give money to any of the political parties when he or she did not live in South Africa and was not affected by South African laws. It was an open discussion. At some point, South Africa had to be bigger than the political parties.

Dr Mulder noted that they should not assume it was only foreign companies that could have bad policies or ideas. It could just as easily be a South African company with bad policies and ideas. Members of the Committee were concerned about foreign donations and the impact thereof on the democracy of South Africa. He reminded them that foreign countries had been donating since 1994 and he had never heard any arguments about sovereignty then. Where had the concerns about protecting the sovereignty of South Africa come from? The particular problem was that it was no use to regulate things that could not be enforced. If there were too much detail in legislation, companies and individuals would find ways to circumvent that legislation. The Committee needed to address the consequences of its decisions.

The Chairperson said that he thus assumed that transparency and openness seemed to be the best that could be done.

Funding to individuals
The Chairperson noted that it had been agreed that there would be no funding to individuals within a party.

Mr Dlamini asked if it was enforceable. What were the parameters? He feared that individuals from parties would bring their party disputes into the arena of the fund. In some parties, there were enormous benefits from certain positions in the party. What about independents at local government level? The legislation was focussed on political parties. Funding to parties should be the norm as there would be no control over funding of individuals. A party could channel funds to an individual where it was party policy. He did not want to regulate the thinking of party individuals but someone who could buy the whole country should not be able to take control.

Ms Maseko noted that the Committee had to confine itself to national and provincial funding. As there was no control over funding individuals, she believed that the funds had to be paid to the party and the party could channel to individuals.

Dr Mulder stated that parties did not pay tax. If an individual got money, one would have to pay 45% donation tax. The mandate was to decide upon funding for political parties, not for individuals. Donations should be channelled through the party itself.

The Chairperson said that sanctions and powers of enforcement would be discussed with the IEC. The IEC would report annually to Parliament as they currently did, but include the new fund. In the evening session the research team would give a briefing on the proposed type of adjustment: a new Bill or Amendment Bill. The Short Title would be addressed when the Committee had finalised the draft.

Use of state resources
The use of state resources should be restricted, although certain things, such as the use of cars by Ministers could not be prevented.

Mr Selfe found the use of state resources a most grievous offence. There was a Code of Conduct in the Electoral Act but it had never been enforced. He suggested that it be discussed after discussions with the IEC. It was a kind of donation in-kind.

The Chairperson said there should be no abuse, but perhaps some things could be shared by all.

The last point was about the financial barrier to entering the electoral process. This might be within the mandate of the IEC and would not feature in the Act or Regulations, but it could be clarified with the IEC.

Evening session

Legislative process: way forward
Mr Michael Prince, Parliamentary Legal Advisor, explained that a decision had to be taken on the way in which the current Working Document was going to be presented. There were two options. Firstly, an Amendment Bill could be prepared by working on the current Act, making deletions and additions. The alternative option was to repeal and replace. This would mean repealing the Act and presenting a new Bill. The existing sections that the Committee wanted to retain would be transported to the new Bill and new clauses added. Whether drafting an Amendment Bill or drafting a new Bill, the same process was applicable. However, an Amendment Bill would be difficult for the public to read as it had to be read in conjunction with the old Act and there would be a lot of brackets and insertions which would increase the difficulty for a layperson and inhibit the public comment process. The Amendment Bill would contain only the amended clauses and members of the public would have to have the old Act to hand to understand the Bill. A new Bill would be a much cleaner process and all that it would contain would be the relevant sections from start to end. The new Bill would also contain transitional provisions which would explain which dispensations were being carried over.

Secondly, a name was required for the short title if a new Bill was drafted. Another question was when would the Act or Amended Act come into operation? The Committee should decide whether to implement it immediately or if different sections would be brought into operation at different times. The existing sections could be implemented immediately but the Committee could decide when to operationalise new sections. For example, the IEC might require time to prepare for its new role.

Mr Singh said that he preferred a new Bill. It was neater and cleaner but the Committee would have to get the timing right so that there was no lacuna.

Mr Bongo commented that there was current legislation. The only problem was that it was cumbersome to read, but it was not necessary to reinvent the wheel. Most of the provisions were there. He wondered if it was possible to have an addendum explaining the changes and additions. Only six or seven areas would be changed. Zooming into those areas would make the process much quicker. The Committee should not worry about when the Act would be implemented at this stage but just concentrate on the work at hand. It was much easier and quicker to repeal the Act. Ultimately, he suggested going with a new Bill but using old sections, where applicable.

Ms Mafu was encouraged by the presentation that even if a new Bill was written, the old one would not be lost because they would transfer sections.

Prof N Khubisa (NFP) agreed that repealing the Act and drafting a new Bill was preferable. The decision on timing could come later on.

Ms L Mathys (EFF) agreed about a new Bill but recommended that it commence at the start of the new financial year.

Dr Mulder stated an Amendment Bill would be complex and transition meant that the current Act stay in place until the new Bill was implemented. He preferred the drafting of a new Bill.

The Chairperson asked for input on the Short Title of new Bill.

Dr Mulder noted that the current name would be in conflict with some of the additions. The Act was about public funding but the new Bill was about both public and private funding. There was also the question of non-represented parties. The Committed needed to have made all the decisions before the short name could be finalised.

The Parliamentary Legal Advisor agreed that the decision did not have to be made immediately.

Political discussion on regulatory framework (continued)
The Committee was given Version 3 of the Working Document which was confidential and not made available to the public. The Chairperson indicated that he would go through all the changes and additions that the Committee had considered, even though discussions had been held on the items and consensus had been reached on some of them. Page 1 would be dealt with at the end of the process.

Mr N Godi (APC) understood that the Committee was not dealing with the Preamble at that stage but he wished to check one word.

The Chairperson explained that there be no discussion of Page 1 at that stage and so no decisions had been made. They would come back to the Preamble later. They would need to consult the original Public Funding of Represented Political Parties Act as part of the current Act would become the new Bill.

Public funding
The Committee went through the sections on the public funds given to the IEC to manage in terms of Section 236 of the Constitution:
• Sections 2(2)(a) and 2(2)(c) would be deleted and the rest of Section 2 would be retained.
• Section 3 would remain unchanged.
• Section 4 dealing with the GAAP accounting system would be changed to the relevant system.
• Section 5(1)(a) remained unchanged but was applicable to public funds only. Section 5(1)(b) referred to the IEC funds. Section 5(2)(b) would remain, although Legal Services might tighten it up a little.
• Sections 6, 7, 8 and 9 would remain, except all references to funds other than public funds would be removed.

Ms Mathys asked if the Bill was dealing with funding for both represented and unrepresented parties.

The Chairperson informed her that a decision had been taken the previous day that they were talking about represented parties only.

Dr Mulder agreed but the question was if unrepresented parties would have to declare private donor funding.

Mr Singh indicated that there might be a need for a definition of a represented party.

The Chairperson suggested that they not complicate it and deal only with represented parties. The generally accepted definition of a represented party, i.e. one that had won a seat in that the National Assembly or at the provincial legislature, would be the definition used.

Ms Mathys asked if the provincial legislature funds for political parties would be included in the IEC funding.

The Chairperson replied that it would be dealt with in the discussion on allocations.

Multi-Party Democracy Fund
The Chairperson noted that a decision had been taken to call the private fund the Multi-Party Democracy Fund. It would be established as statutory fund. Deposit, investments and management of the MPDF would be exactly the same as for the IEC public monies fund. The allocation formula to be agreed upon for the public fund would be applicable to the MPDF. Everyone who donated to the fund had to disclose one’s donations.

Mr A Lees (DA) asked what form the disclosure would take.

The Chairperson explained that there had been a debate about the form of disclosure. The IEC had to keep a register of everyone who donated which had to be given to people such as the Auditor-General if required.

Ms Mathys was concerned about the amount of administration to capture small donation amounts. She suggested that perhaps it may be better to have a cut-off below which donations were not disclosed.

The Chairperson determined that the IEC would suggest if it needed a cut-off for minor amounts.

The Chairperson noted that there had been general agreement that state-owned enterprises, government departments, proceeds from crime, proceeds from the lottery, foreign government and anyone or entity funded by taxpayer money would be forbidden to donate to the MPDF. Discussion was required on the notion “foreign”. The Chairperson’s view was that the term “foreign” was confusing. South Africans in the diaspora who could vote were citizens even if they lived abroad. He asked if it would not help to talk about “citizens” and “non-citizens”.

Mr Lees was confused as he had understood that everyone could donate.

Ms Mathys agreed that the term “citizen and non-citizen” was acceptable but asked if the donations were to the MPDF, why foreigners were prohibited from donating.

The Chairperson explained that they had been trying to understand why a foreign government would want to donate. The question was why a foreign government would want to donate to a South African democracy fund.

Mr Singh said that businesses in South Africa and listed overseas or overseas corporations with interests in South Africa should not be prevented from donating. He did not think that they could ban them. What would be the reason? He thought that the Committee should hang its coat on principles.

Mr M Figg (DA) asked what the Committee was trying to achieve. He believed that it could do no harm and so they should not even be mentioned in the legislation.

Prof Khubisa argued that corporate donors and multinationals could want to donate in good faith. The underlying principle should be whether they followed the criteria. Did they abide by the law?

Mr Bongo said that the premise for banning foreign donations was to enhance democracy by ensuring accountability. Someone could come in and offer R2 to R3 million and so on until they controlled everyone. They would offer money on condition that the country did certain things. Foreigners wanted to interfere and ultimately wanted to control. That needed to be stopped. He had thought that there was consensus in the morning and now he had to repeat himself.

The Chairperson understood his frustration but it was necessary to bring everyone on board.

Mr Godi asked about a cap to funding. He said that if foreign donors were going to donate to a pool, no one could be influenced. AZAPO had spoken of national sovereignty and independence. South Africa’s democracy was strong. Locals could pick and choose who they supported but when it came to foreign corporate donors, in a world where transnationals are everywhere, the legislation should not prevent a company when its local office wanted to donate. This was different to a foreign corporate donating directly to a political party.

The Chairperson noted that it had been agreed that there would be no cap. He personally agreed that if a multinational corporate had no footprint in SA, no donation should be allowed, but if the South African subsidiary of a multinational corporation wanted to donate, it was acceptable. To give an example, if Coca Cola SA wanted to donate, it should be acceptable. However, if Coca-Cola head office wanted to donate that would not be acceptable. The matter was linked to whether foreign individuals should be allowed to donate. Should wealthy non-citizens be allowed to donate? In a best practice study of 35 countries, many of them developed countries, only seven countries allowed foreign funding.

Dr Mulder stated that the Committee was dealing with the MPDF. He believed there should be no conditions attached to any donation to the MPDF. There could be no agenda because all parties would benefit. What if the AU, the EU or SADC agencies, that had been set up to promote democracy, wanted to contribute to the MPDF? As the South Africa government would be managing the whole process, he simply did not see a reason for not accepting foreigners’ money. They were not talking about direct donations to political parties. He agreed with Mr Bongo that foreign governments should not donate to individual political parties. Should they put a cap on funding? The cap had not been decided on.

Ms Mathys agreed that conditions could not be set by donors if South Africa was managing the fund. She referred to a previous discussion where the Committee had talked about two options for the MPDF. Either it could be distributed to political parties according to the same formula used to distribute the public funding or someone could donate through the MPDF to a specific party and ask the managers of the fund to distribute it. Was the Committee going to allow a donation to MPDF directed to a specific party? She was not sure if a decision had been made on that. If money was going to the MPDF, the donors could not dictate to which political party. She could not see how there could be state capture. Countries owed Africa for crimes committed in Africa. All donations should be allowed with no prohibitions or caps.

Mr Lees stated that it was important to remember that they were not talking about funding to political parties. He asked if the research mentioned was not referring to countries that banned donations directly to political parties. He recommended that they did not need more prohibitions than those currently agreed upon.

Ms Maseko said that she had no problem with the local Coca Cola company donating. Commonwealth parties, especially, offered help to Caribbean countries but truly they always had an agenda. She saw that countries that offered to help, always had an agenda. She did not want foreign governments controlling South Africa. She agreed with the distinction between citizens and non-citizens and so those that had not renounced their citizenship but were living overseas, would be all right.

The Chairperson said that the Committee should bear in mind that there would be a second opportunity once there had been input from the public. Members should also remember that the legislation that they were drafting would not be the panacea.

Mr Gumede believed that the Committee should be looking at what was in the national best interests of South Africa.

Prof Khubisa recognised that the Committee was trying to distil the matter but that they had to move forward. He believed that the distinction between citizens and non-citizens was a move in the right direction. That did not make it the perfect answer but, it was moving towards a reasonable solution. The African-American Renaissance was an example of benevolent group of foreigners who loved South African democracy and sometimes donated to South Africa.

Mr Bongo said the compelling point was that South Africans had to take responsibility for their own democracy and liberation. South Africans had to participate and take ownership. They had to want to contribute. If they failed, that was their problem. A foreign government could provide a company with the resources needed to interfere in a country. The public had to make submissions about the responsibilities of South Africans.

The Chairperson proposed that in the draft for the public, it would state that foreign governments could not donate. He suggested that foreign corporates could donate if they had a footprint in South Africa.

Dr Mulder suggested putting in alternatives but the legal team indicated that they could have not have options in a draft Bill.

Mr Godi noted that the draft Bill would have to go for public comment before it came back for a final decision. As the matter of excluding foreigners had been raised by the public, it should be left there in order to elicit comment from public. The public might reject it but their comments would inform the Committee.

Mr Bongo suggested that the draft Bill allow donations from corporates with a footprint in SA.

The Chairperson noted that one of the arguments during the morning session had been that corporates had not made any input. The particular clause under consideration directly affected corporates and he would assume that when it went for public comment, they would give some input. He moved for the last round of motivations – were foreign corporate donors in or out? For the sake of progress, they had to reach consensus.

Ms Maseko suggested that corporates with footprints be allowed to donate. Ms Mafu agreed.

Mr Bongo pointed out that he had motivated extensively so, unless a corporate had a footprint or relationship in South Africa, foreign companies could not as they tampered with decision-making. What interest could foreign corporates have in South Africa’s democracy? They would listen to the public comments. He had raised a lot of points, such as regime change and suspicion. The country needed to build its own democracy. South African national interests were of prime concern; therefore the corporate had to have a direct interest in South Africa before it was allowed to donate.

Mr Lees said that his party was really opposed to all the restrictions and so he would prefer that it be left out.

Mr Figg said that it was a sad day for democracy if South Africa rejected donations from foreigners.

Ms Mathys said that all references should be taken out as they could not easily backtrack. It was South Africans who voted and who would be responsible for regime change.

Dr Mulder’s view was to take it out. There would be too many questions around other bodies.

Prof Khubisa agreed with Dr Mulder.

Mr Singh said that if it was left out totally, the public would not comment and the Committee would be left to debate it endlessly.

Mr Godi said that it was an idea that had come from the public submissions. If it were such a bad idea, the Committee alone should not make the decision, it should be exposed to the people so that the Committee could become aware of the views out there. He noted that there were many foreign agencies that were funded by foreign governments who propagated the ideas of their government in foreign countries. When the Bill came back, they would have the benefit of the public input. The decision was to leave in the reference forbidding donations from foreign corporates without a valid footprint.

The Chairperson noted that Treasury and SARS could recommend what to do about tax incentives. The idea had been that the carrot should be tax benefits but that matter was the domain of National Treasury and SARS. The Chairperson suggested that Legal Advisor draft the Bill but after the meeting with National Treasury, he could include any input from National Treasury as approved by the Committee.

Ms Mathys was happy to wait for National Treasury.

Dr Mulder wanted to incentivise donations. The Social Responsibility Index had been replaced with the Responsible Investment Index. Such an incentive could be included after consultation with corporate South Africa.

Mr Godi said that his approach would be that public funding was at the centre of the framework and the MPDF was a secondary aspect simply for people who did not want to donate directly to parties. The MPDF was an avenue to donate, especially by those that had foreign head offices although the Committee should not make the two funds 50/50 in status. It should not be necessary to incentivise private companies. If they donated, it had to be because they chose to do so. The moment there were incentives, it allowed for questioning the motives of donors. Incentives had to be removed.

The Chairperson agreed that the Committee would discuss the matter with National Treasury, but for the moment it was to be removed. That concluded discussion about the MPDF.

Private funding directly to political parties
The Chairperson said the process was to include two chapters on funding: the first on private funding of political parties and the second on public funding of political parties. This would entail a repeat of Sections 4 – 9 of the current Act with suitable revisions.

In Chapter 4 of the new Act there would be an obligation to disclose and declare all donations by a particular date so that the Auditor-General could scrutinise the disclosures. There had been public input suggesting that declaration should be annual but more frequently during election years.

The Chairperson suggested that the legislation should state that all monetary donations as well as donations in kind had to be declared and submitted to the Auditor General or authorising agent. Was there a specific date?

Mr Godi said that timeframes should be established. He suggested when parties submitted their audited statements at the end of the financial year, they had to include disclosure of all donations except membership fees, levies and IEC regulated funds and those below a threshold to be determined. What was the threshold for not declaring donation?

Dr Mulder noted that the actual threshold amount went into the Regulations and not into the Bill. The Bill would contain a reference to the threshold but not the exact amount of the threshold.

Mr Lees suggested that the determination of the threshold in the Regulations had to be done by a person as determined in the Act and that any annual increase had to be approved by Parliament.

Dr Mulder suggested that, for guidance, they look at Section 10 in the current Act dealing with regulations.

The Chairperson noted that the Committee had to be involved with the Regulations. It could not outsource the writing of the Regulations because this was a “legislature” bill.

Ms Mathys asked if there would be separate thresholds for individuals and corporates. She suggested the Committee add that the IEC should publish the political party financial statements as the public had indicated at the public hearings that they did not have easy access to political party financial statements.

The Chairperson informed her that the IEC had to report to Parliament and the Annual Report to Parliament would become a public report.

Prof Khubisa noted that the financial statements of political parties had to be audited before they were submitted to the IEC. He suggested that the IEC had to specifically refer to donations in t Annual Report.

The Chairperson said that it would be discussed with the IEC when they met with the Committee.

Mr Lees stated that the Committee could not talk about full disclosure when there had been no decision on the right to privacy. The right to privacy could not simply be trumped by accountability. If the Bill was going to be drafted on the assumption that there would be disclosure, then he and his party had a problem with that.

The Chairperson noted that they had had a full debate on privacy versus transparency that morning when Mr Selfe was in the meeting. He repeated that the disclosure process was to enhance democracy so that the will of the people would be heard and not the voice of money. Other principles included accountability and transparency. He admitted that the right to privacy was an important principle but he, personally, could not understand how they could have accountability without transparency. The argument had always been that South Africans had to know who was donating to political parties so that they could have confidence in the democratic process and not feel that their vote did not count because a “rich somebody” had diverted the policy as in he who paid the piper called the tune. He personally felt extremely strongly about accountability and transparency. He was not talking about corruption, but accountability. When one donated, one donated voluntarily. No one was forcing anyone to donate to a political party. Transparency ensured that all votes counted, whether one was monied or not, and ensured accountability.

The Chairperson put the question to the Committee: full disclosure or not full disclosure?

Dr Mulder noted that it was very important to the Democratic Alliance and he wanted to know from that party about the difference between full and limited disclosure. Perhaps the DA could put something in writing to convince the Committee about limited disclosure. Looking at the current Act, he could not see what they did not want to disclose.

Mr Godi also wanted to understand what was meant by limited disclosure. What was wrong with disclosing the amount and the donor?

Mr Bongo thought that the superior motivation from the Chairperson should have convinced Mr Lees. He referred to the founding provisions in Chapter One of the Constitution, especially 1(d). He thought that those principles were the cornerstone of what they wanted to do in the legislation. Why was the right to privacy superior to the founding principles of the Constitution? Donating was a voluntary act. So what did they have to hide? The right to privacy was far outweighed by the other principles.

Mr Lees said that not publicly disclosing in full did not mean that one was not accountable. It was a question of full disclosure versus a private disclosure. The DA agreed with disclosure with certain limits and caps to a register held by the IEC. The example of Members of the Parliament disclosure of their interests to the National Assembly was recommended. By private disclosure they would be ensuring disclosure but they were encouraging the objectives of donations. He had been told by Mr Selfe that a final decision on disclosure had not been reached by the Committee. He found it offensive to reveal private information. They were trying to ensure that the funding of parties was not abused but the decision for full disclosure was an overreach. He was happy to draft a clause on it.

The Chairperson stated that the Committee did not want the DA to write a clause. All members of the Committee had agreed on full disclosure for the betterment of the country. There was no point in arguing, so the DA could write a submission about its point of view.

Mr Lees informed the Chairperson that that was a misrepresentation. They were talking about disclosure in the public domain.

The Chairperson said that DA should not try to bully him. By what date should DA submit the argument? He suggested that the Committee would make the final decision on 1 September.

Dr Mulder explained that Mr Lees had assisted him to understand what the DA was trying to say.

Mr Lees was saying that the DA did not object to full disclosure but it was public disclosure that they were concerned about. He agreed that it would be useful to receive a full motivation from the DA.

The Chairperson asked Mr Lees if he agreed that there would be disclosure.

Mr Lees agreed. He would write an explanation/motivation.

The Chairperson said that the Committee would await the submission but in the meantime, there would be no limits to disclosure in the Act.

On whether parties should be directed as to how they spend their money, the Chairperson said that the prevailing view was that the legislation did not need to babysit political parties on how to spend their money.

Mr Godi suggested that public funds should be included in financial statements but the funds received through the MPDF simply had to be disclosed. There were no further obligations. Political parties had to disclose income, once in normal year and twice in an election year.

Political parties were not permitted to accept donations in cash and kind directly from foreign governments, foreign enterprises, non-citizens, National Lottery, SoEs, government departments, the proceeds of crime. No funds could go directly to individuals for intra-party campaigns.

Mr Godi spoke against foreign agencies donating directly to political parties. He referred to a particular foundation that had offered to train parliamentarians but they had had an agenda. Any foreign donations that were allowed had to go to the MPDF and not to parties.

Mr Singh informed the Committee that the IFP had received support for training by local people from foreign donors such as foundations. Why should they not be accepted?

Prof Khubisa said that foundations had been donating for projects of political parties. It was okay as long as the political party determined what it was that they wanted.

Mr Bongo said that what he was trying to achieve was for the MPDF to be self-reliant. South Africans must carry the burden of funding democracy in South Africa. Foreign foundations always had a foreign interest and they should be discouraged. He recalled Gaddafi and the impact of foreign funds on him. A foundation started off with academic things and then moved on to bigger things. He accepted that in 1994, South African had accepted many foreign donations but the democracy was maturing and it was time not to use foreigners.

Mr Figg said it was a pity that the Committee did not want to accept foreign funding. He suggested that the Department of International Relations and Cooperation should be closed down if South Africa did not want to work with the rest of the world. He, however, believed that South Africa needed the rest of the world and that the rest of the world needed South Africa. The fear of receiving donations because the foreigners could influence South Africa was short-sighted. No harm could be done. South Africa could benefit in the same way as other countries would learn from South Africa. He encouraged the use of foreign funding.

The Chairperson, speaking in his personal capacity, did not believe that there was such a thing as a free lunch, especially in the political arena. He heard what Mr Singh had said about helping, but why should such donations go to parties and not to MPPDF? What was the motivation for assisting a party?

Mr Mulder spoke about foundations. He understood that political parties did not work in isolation but had connections with parties across the world. Why did Committee Members not want to work with people across the world? South Africans should not isolate themselves completely in terms of what was happening in the rest of the world.

Ms Maseko suggested that the matter be held over to the 1st September.

Mr Godi did not think the answer would suddenly come to people. It had to be determined. It was not an isolationist policy. The relationship that parties had with other organisations was not within the mandate of the donations in cash and kind. The Committee had to remember that they had a narrow focus on donations in cash and kind to political parties. The item was held in abeyance until 1st September when it would be discussed.

There was total agreement that the IEC would be the only management agency of political party funding.

The Chairperson asked what sanctions should there be for those who were suspected of breaking the law. Assuming that IEC was the managing body and received information about irregularities, the IEC would prepare the case for the Electoral Court to hear and to sanction the political body. That would separate the IEC from being both prosecutor and judge.

Mr Godi asked if they needed both “monitoring” and “inspection” in the legislation. Would the IEC do both or just monitor? One would have to consider a number of things about “inspection”.

The research team explained that to monitor was to analyse the material before one but to inspect was to go out and check the books, etc. to investigate a complaint. “Inspection” gave a power of calling for or subpoenaing financial books that did not come with the term “monitoring”. Without that power, the IEC could never formulate a case or recommend sanctions to the Court. Sanctions would be by the Electoral Court.

Mr Godi asked who would be doing the investigation if there was a complaint. If the IEC became an investigative agent, was what the Committee wanted?

The Chairperson suggested that the Committee would have to ask the IEC how it prepared a case if irregularity was suspected.

Prof Khubisa suggested that inspection by the IEC was required to prepare a case for the Electoral court. The Committee would need to know what the IEC did currently. The Electoral Court would require a case before it could take it on. In his experience, the Electoral Court really grilled the IEC.

The Chairperson said the IEC would account to Parliament, including on the MPDF. The Electoral Court would be the sanctions body and final arbiter of any disputes or irregularities. The three possible sanctions that the Electoral Court could impose were contained in the current Act.

Mr Godi asked if the sanctions had to be linked to specific contraventions so that there would be consistency in sentencing.

The Chairperson suggested that the Committee ask the IEC how they would ensure consistent sentencing.

Prof Khubisa suggested that it be left as it stood.

Mr Figg agreed that the Regulations needed to be more specific about the sanctions for specific actions but he agreed that the IEC could advise.

The Chairperson said the formula for splitting the funds would be dealt with when the Committee got to the Regulations.

The Chairperson asked if Section 10 in the current Act on regulations could be transported as is to the new legislation.

Dr Mulder agreed that they could do that, except that the reference to the “joint” Committee and “National Council of Provinces” in 10(1) had to be removed.

The Chairperson said the Committee had been unable to get information from the provinces about what was being paid to political parties by the provinces. The Chairperson had arranged for a letter to be written by the Speaker to the provinces and the replies should be received by 1 September. A more purposeful discussion on this would be achieved after receipt of the provincial budgets.

Dr Mulder agreed that it would be better to wait until the Committee had the full picture, especially in view of the lateness of the hour and how busy people had been all day.

Mr Godi suggested that two items could be agreed upon immediately. Firstly, to agree in principle to review the 90/10 formula and secondly, to agree that, in terms of Section 236, both equitable and proportional funds were to be divided between representatives at both national and provincial level. The Committee could come to an agreement about the substance when they were somewhat fresher.

Mr Bongo suggested that no decisions should be taken so late at night and that the matter be flagged. There had been a lot of discussions and the matter of the 90/10 had now been raised again after the ANC had agreed with Dr Mulder that it was not going to fight about the issue of 90/10. The Committee should get the full picture, including information about funds paid out by provincial legislatures and the implications of changing the formula, before the Members could even discuss the formula. Mr Bongo suggested that the matter be flagged.

Ms Maseko agreed that in the absence of the required information, and because it was so late, that the matter be shifted to 1 September.

The Chairperson agreed but asked that the question be discussed with an open mind. Nobody could come to the meeting and say that it was not negotiable. A meeting would be held as soon as the information was received.

The next item was the minimum threshold below which donations directly to political parties would not have to be disclosed. The intention of suggesting a minimum threshold was that an amount that was so small that it could not buy votes would not have to be declared. The amount would have to be put in the Regulations.

The Chairperson said that the abuse of state resources would be outlawed. All aspects of abuse of state resources would be frowned upon.

The cost of registering for elections was viewed as a barrier to entry but the IEC had explained that it was intended to limit the number of parties on the ballot list.

Dr Mulder suggested that the matter had to be discussed with IEC as the Committee needed to find where that was regulated and if it was necessary for the Committee to include something in the Regulations.

Section 1 was to be discussed as the final agenda item on 1 September. The Chairperson asked if there were any other items to be discussed.

Ms Mathys reminded the Committee that the whole point of the exercise had been to get more money. It had not really been about amending the Act so when would they be discussing the money issue. She knew it would not go in the Act but surely there was going to be some discussion about it. That was the biggest question: was the Committee supporting an increase in public funding or not?

Dr Mulder said that it was not just about the money but to regulate private funding to political parties.

The Chairperson said that the process was never about money but about equity and fairness. The process was never about political parties wanting to get more money.

Mr Godi agreed saying the Amendment Bill would not have been necessary if the purpose were simply to ask for money. He asked that Committee members did not vulgarise the issue.

The Chairperson decided that that was content for Version 4 of the Working Document. On 1 September, National Treasury and the IEC would meet with the Committee. The committee programme for the rest of the quarter had been handed out. There was very little room to manoeuvre so he asked that the Committee accept the programme in principle.

The Chairperson referred Members to the draft letter to the IEC requesting further information and asked for any additions or changes. The Committee gave the Chairperson the authority to send the letter.

The Chairperson raised the proposal that the Committee look at a study tour to Ghana, Uganda etc. The question was whether it was necessary for some or all of the Committee to go. It could only be done while awaiting the public submissions. The Chairperson asked if the Committee approved such a study tour in principle.

Ms Maseko said it was a good idea as they might get new ideas and give them a better sense of what they were trying to achieve.

Mr Gumede said that the ANC had included some models in Africa in their submission and those could be considered. In principle, he agreed but only to one or two countries and it had to be on an informed basis.

Mr Singh thought that the Committee should continue with the desktop exercise. He did not think a face-to-face meeting would add value. He knew that the Ghanaian Parliament was not available until January so a visit there was not possible. But one or two people could go.

Mr Bongo suggested that a decision had to be made immediately as the secretary believed that an application to travel took three months. The secretariat could check on the countries in the ANC submission.

The Chairperson replied that he and the secretariat would do the spadework and report back to the Committee if a study tour could be arranged in the time available.

The Chairperson informed the Committee that the final document was largely prepared and that it would only need some input from the meeting of 1 September with National Treasury and the IEC as well as some final decisions that the Committee would have to make. The draft Amendment Bill would then be finalised by the Legal Advisor and it would come to the Committee for approval before it was sent out for public comment. The public would have three weeks in which to submit comments and then the Committee would reconvene. He thanked the Members for their constructive participation in the process to date.

Meeting was adjourned.

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