IEC & National Treasury responses on Political Party Funding; Outstanding decisions

Ad Hoc Committee on the Funding of Political Parties

01 September 2017
Chairperson: Mr V Smith (ANC)
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Meeting Summary

The IEC had been asked to respond to the Committee’s desire to see the IEC as the manager of the Multi-Party Democracy Fund (MPDF). The question put to the Commission was that if the Committee gave IEC that job, what would be its response? National Treasury had been asked to attend so it could indicate whether Treasury could provide additional resources to the IEC to implement that fund and to give an opinion on whether there were funds available for enhanced public funding for represented political parties.

The Electoral Commission agreed to take on management of both public party funding and the MPDF, on condition that it did not cannibalise the electoral function of the IEC. The Commission presented a list of resources that would be required to implement the management role and recommended that a management fee be paid for management of the funds. The IEC proposed that sanctions would have to be based on the principles of the sanctions being enforceable, proportional and dissuasive and suggested that the types of sanctions could include warnings and notifications, fines and imprisonment, and loss of political rights.

National Treasury was of the opinion that there were sufficient funds in the system for the IEC to fund both political party funding and the new MPDF. No additional funds were available to hand. It would be a political decision but to enhance public funding of political parties, Treasury would have to borrow, raise taxes or cut budget somewhere else in the system. Political party funding, including provincial allocations, equalled about R1 billion in the current year. Funding by Parliament provided to political parties to fulfil their role as public representatives had increased at an annual rate of 12% per year since 2000/01. There was no legislation at provincial level, and absolutely no regulation at local level. The Committee was urged to consider bringing national, provincial and local funding into regulation and within the ambit of the law.

As a solution to the legitimacy of the proportionality versus equity clause, the Committee determined to use the same clause for allocation of both the proportional and the equity parts of the political party funding formula, i.e. that the funds be divided amongst all parties in Parliament and the provincial legislatures to result in a more equitable distribution.

The issue of full transparent disclosure of private funding was not fully resolved, although the only point outstanding was whether disclosure should be to a particular body or to the public in general. Both views were to be included in the draft Bill and the Committee would assess the public input. There was agreement on the concept of a cap for the disclosure of donations and the Chairperson suggested that they should look around the R100 000 mark. The IFP, which supported the receipt of donations in-kind from foreign donor foundations, noted that Parliament received over 10 million Euro per annum in capacity-building support from the European Union and therefore believed that it set a precedent for acceptance of such funding

The Chairperson noted that the way in which provincial legislatures were supplying political parties with money and the amounts being provided was a huge concern. He referred to a court ruling in Limpopo that had struck down the way in which Limpopo had been providing funds to political parties and therefore a clause in the Bill stating that a provincial legislature should follow Section 116 would suffice. Regulations could be drafted to regulate Section 116.

Meeting report

Opening remarks
The Chairperson noted that at the last meeting, the Committee had concluded what he called Draft One but that there were a few outstanding issues. In presenting the agenda for the meeting, he explained that the IEC was being asked to respond to the desire of the Committee to see the IEC as the manager of the Multi-Party Democracy Fund (MPDF). The question was that, if the Committee gave IEC that job, what would be its response? National Treasury had been asked to attend the meeting so it could indicate whether it could provide additional resources to the IEC for the implementation of the MPDF, and also to discuss whether a tax rebate could be given as an incentive to donors. The Committee was hoping that all sectors of civil society would contribute towards the MPDF. Thereafter, the Committee needed to look into the legitimacy of the proportionality versus equity clause, the 90/10 split (although that was relevant only to the Regulations), the privacy issue of partial versus complete disclosure, and, finally, whether foreign foundations should be permitted to donate in cash or kind.

Once those issues had been resolved, the legal advisor could begin drafting the Committee Bill. After the draft had been completed, the Committee would meet to approve the draft and then send it out for public review. Three weeks would be set aside for the public to critique the draft and to forward submissions. Hearings would be held on 7 and 8 November for those who wished to supplement their written submissions. The Committee needed to find a way of enticing business or one of the business organisations to make submissions as they had not submitted in response to the first request for public comment. After 8 November, the Committee would no longer accept stakeholder input and prepare the Committee Bill for submission to the National Assembly before the end of November.

Dr P Mulder (FF+) indicated that last sitting for Parliament was on 30 November.

The Chairperson indicated that he would try to get the Bill in before the end of November

Presentation by the Independent Electoral Commission (IEC)
Ms Esther van Wyk, CFO at the IEC, suggested to the Chairperson that the CEO of the IEC be requested to make the presentation and that Bongani Finca, Deputy Chief Commissioner and Commissioner Janet Love, together with the CEO, would respond to questions from the Committee.

Mr Sy Mamambolo, Acting IEC CEO, asked to share two possible functional nexuses and the sanctions that could be applied. The IEC recommended that a management fee of 1% be paid from the Represented Political Parties Fund (RPPF) for management of the Fund. The IEC anticipated a higher management fee structure for managing the MPDF but recommended that the Committee consider fewer prohibitions on sources of funding as the funds would be less prone to risk of corruption and influence. The IEC recommended enhanced regulating frameworks to govern the use of state resources than direct party funding. The Commission presented a list of resources that would be required to fulfil the management role and suggested two possible scenarios. One would be the establishment of a separate business unit reporting directly to the Commission and the second was to create a new division in the existing IEC. The IEC determined that sanctions would have to be based on the principles of being enforceable, proportional and dissuasive. The types of sanctions could include warnings and notifications, fines and imprisonment, and loss of political rights.

The Chairperson appreciated the assistance of the IEC. Committee members were invited to ask questions.

Dr P Mulder (FF+) thanked the IEC for an excellent presentation. Would the management fee percentage of the MPDF be a percentage of the money donated to the Fund? What if nothing was paid?

Ms D Dlakude (ANC) noted that currently there were no funds allocated to the IEC for significant audits or for investigative capacity. How did they deal with the matters if, and when, they arose? She asked Treasury how it would assist the IEC with the resources that the IEC required.

Mr R Lees (DA) in reference to the IEC mandate, asked whether the IEC did not see a possible conflict of interest in an enforcement role. There were enormous possibilities for a conflict of interest. The Committee really needed the IEC to present its position on the potential conflict of interest. In terms of the structure, what would the IEC’s reaction be if the Committee were to channel all political party funding and resources, including constituency allowances, via the IEC? At the current time, it seemed impossible to find out what political parties were being paid across the country from the fiscus. It was a hodge podge and no one seemed to know how much was being paid out in political party funding. He asked the IEC to comment.

Ms L Mathys (EFF) asked for clarity on the use of public funds in respect of the proposal to prohibit the use of funds for legal expenses and the point about prohibiting the use of political funds for legal costs relating to internal party disputes. Did it refer to disputes within the political party or did it refer to a party, for example, taking Parliament to court for not following procedures?

Mr N Singh (IFP) assumed that the presentation was based on the proposals made by the Committee. He wanted to clarify that the IEC was currently charging 0,3% for managing political party funding but was proposing 1% in the future. The IEC confirmed his understanding. He noted that the IEC wanted National Treasury to top up for certain functions but he asked if the cost of the functions could not come out of the management fee that would be charged. How would the in-kind donations be managed? Would the IEC keep record of in-kind donations etc.?

Ms Janet Love, IEC Commissioner, responded to the observation about no donations being paid to the MPDF. She said it was for that reason that the CEO had distinguished start-up costs, which could be viewed as risk costs, because the process may not be required and people may not be required to fill those positions. But, if things moved, then it would be on percentage basis. On the question about the cost of investigations, some Commissioners had already expressed concern about holding that function under the existing IEC as the Commission did not receive sufficient funding for its functions and therefore it was already cannibalising other funding. The IEC had had a huge number of investigations during the 2016 local elections but those investigations had not been independently funded and so they were doing the work as best they could but funding was a major concern. However, there had been no contraventions in political party funding and so there had been no need for the investigations.

Commissioner Love said that conflict of interest was a valid concern but conflict was an ongoing matter that the IEC had to manage, including contraventions of the code of conduct. The minute the IEC had a dispute amongst parties, it had to manage potential perception or the reality of conflict of interest. The IEC was mindful of the need for a professional capacity to carry out investigations. The IEC’s view of managing all of the funds was that if the fees were to be linked to a percentage of the funds, it would be possible. However, the IEC would have to give feedback to Parliament on whether that percentage would cover possible investigations, although the IEC believed that 1% would, in all likelihood, cover such investigations. On the use of funds for legal purposes, the IEC believed that spending the money to access the judiciary was something that it did not think should be prohibited. However, there would be a concern about going to court about internal disputes within a party. It might be something that it could prohibit, but it would have to be established whether such a prohibition was constitutional.

The management fee of 1% was to manage the public funding of political parties but were the IEC to manage the MPDF, it could not say what the fee would look like, although it would be higher than the 1%. The Commission would be able to make a better estimate after publication of the Bill. Funding in-kind would need evaluation, but it was a hard one. Part of the disclosure would have to be an evaluation of the value of the donation.

Mr Bongani Finca, IEC Commissioner, added that there would need to be further debate at the IEC on some of the matters, especially that of funding in-kind. The question about conflict of interest was an interesting one as the IEC was mandated to create conditions conducive to free and fair elections. The proposed management would require that the Commission add to, and enhance, that capacity. They had to look at current violations which the IEC escalated to the Electoral Court.

Commissioner Love asked whether the Committee had considered a time frame for donations and the time frame for violations. She pointed out that, for example, if a violation occurred the day before elections, there would be very little that any structure could do. The Committee needed to consider the speed at which such things would have to be dealt with.

The IEC Acting CEO noted that the IEC had not discussed constitutional allowances or provincial funding as it was not covered in the outline of the Bill.

The Chairperson informed the Committee that constituency funding was contained in the Financial Management of Parliament Act and therefore could not be managed by the IEC. The IEC was asked to give input on the revised draft within 14 days.

Mr Singh asked whether any party was currently non-compliant in respect of political party funding.

Dr Mulder asked if the IEC had an opinion on where one should make provision to deal with the enhancement of state resources - in the Electoral Act, the Code of Conduct or in the Act itself.

The IEC Acting CEO told Mr Singh that the IEC had not received a clean audit because five political parties had not submitted their audited statements by the deadline. They had subsequently submitted and everything was in order. On the use of state resources, the Commission had debated it and felt that it was also about using public money. They believed that the current process had to deal with the enhancement of state resources required.

The Chairperson noted that the Committee would have to look at it. He suggested that it may be best to include it in the Regulations.

Commissioner Love suggested that the Committee asked National Treasury for advice as it had a role to play in the use of state funds.

Ms L Maseko (ANC) commented that it was not right that political parties were able to prevent a clean audit of the IEC. The IEC should propose a sanction to be imposed on parties that did not submit their audited statements timeously or fulfil other requirements.

Ms Mathys suggested that they should try to compel parties to comply timeously. South Africa needed to know which parties did not comply. It was public money and the public needed to know.

The Chairperson said that the information would be in the IEC Annual Report and that the current forum was not the correct forum to discuss those matters.

National Treasury presentation
Mr Michael Sachs, DDG: Budget Office at National Treasury informed the Committee that the letter asking Treasury to present had not contained detailed questions so his colleague would go through the slides and then he would follow up with some specific responses to the issues raised in the meeting.

Mr Timothy Murwa, Director at National Treasury, gave the presentation which dealt with funding to the Represented Political Party Fund. The RPPF had been growing by 5% per annum. Constituency funding had increased at a rate of 12% per annum. Provincial party funding was not regulated and there were vast discrepancies in the amounts allocated by the provincial legislatures, with the Eastern Cape allocating five times the funding allocated in the North West, and four times the funding allocated in KwaZulu-Natal and the Western Cape. Political party funding, including provincial allocations, equalled about R1 billion in the current year. No enhanced public funds were available. It would be a political decision but to provide additional funding, Treasury would have to borrow funds, cut from revenue, or cut from the existing baseline.

Mr Sachs stated that National Treasury did not have exact figures on money going from provinces to particular political parties as Treasury had to rely on annual financial statements. If the province did not publish the information about how much went to each party, Treasury could not publish the information as it was not Treasury’s money. However, provinces funded political parties from the equitable share given to provinces, primarily to fund health and education. The report had not touched on local government as they had no clue. There was already a large amount of money going to political parties from public sources. If they were to add money to political parties, they would have to borrow, raise taxes or cut budget somewhere else in the system. He had not spoken about a decision made by National Treasury but had made a statement about how funds worked. There was widespread underfunding in society – higher education, healthcare, basic education were all underfunded. There were real needs but real financial constraints. Given that there was R1 billion in the system and the IEC was short of R500 000, that money should be found in the current pot. More money in the Fund did not raise auditing costs. They would need to look at the fixed costs in the management of the Fund but he believed that the IEC should be able to resources its needs from the funding available.

He had not considered the taxation issue and would need to speak to his colleagues at Treasury but what they were proposing by suggesting tax breaks was an erosion of the tax base as it would become a deduction from taxable income for companies. It was a complex issue that could not be rushed but which could be considered. On the use of state resources, National Treasury looked at how finance was managed but there had to be legislation to ensure that resource flow was transparent and used correctly. One could not only rely only on the IEC. There needed to be legislation to obligate parties to account for all the funds that they receive in an open and honest way.

The Chairperson noted that Treasury was basically saying “fund itself” in terms of the new entity. The Committee had to accept that. Treasury was saying that the Committee should regulate more accurately so that they knew how funds were used, which was what they were doing. Democracy was not a cheap exercise. At some point South Africans had to understand that somebody had to pay for multi-party democracy. If they went to business and asked business for the funds, business would say they wanted a tax break but Treasury had pointed out that that would diminish revenue. It was a difficult balancing act.

Ms Mathys said it was worrying that they had to ask National Treasury for funding for political parties. It was quite worrying that money was provided to political parties but Treasury could not account for it. There were all sorts of provincial level allowances. Could Treasury suggest how the Committee could regulate to ensure disclosure? If the Committee insisted that funding for political parties had to be increased, from where were budget cuts most likely to come?

Dr Mulder referred to the R1 billion in public funding to political parties, saying monies were allocated according to different formula because they were based on different sections of the Constitution. The IEC dealt with funding that was determined in Section 236, whereas the provinces and Parliament provided funding in terms of Section 57 and Section 116. Although the funding went to political parties the purpose was to fulfil their role as public representatives. The Committee did not know whether provinces were basing their allocation on Section 57 or Section 116 so it did not know how much was for performing their duties as public representatives and how much of it went directly to political parties. That was where the problem lay and he did not think that Treasury knew either.

Mr Singh noted the premise that there was a large amount of R1 billion in the system but it could not be verified. He was surprised that Treasury could not obtain the information from provinces. He understood that they could not go into provincial accounts but surely, through collegiality, they could find out from their provincial colleagues how much was allocated according to each of the relevant sections of the Constitution. How did one justify the amount of money that had been allocated? Was there no way that the information could be obtained either through Treasury or through Parliament?

Mr Lees asked if the presentation had indicated the full amount of funding that political parties received from Parliament. In terms of municipalities, there were absolutely no figures, he assumed. The Committee knew for sure that the metros were paying out large sums of money, and probably municipalities too. In Parliament, Members got a number of flights but in some provinces, members were given lump sums of cash for travel and accommodation to spend as they saw fit. Surely, Treasury needed to be informed about how the money given to provinces was being spent. He suggested to the Chairperson that the Committee should ask Treasury to get the figures for them. Democracy was being paid for. It was costing R1 billion. It was a question of whether it was underfunded, which was a value judgement. Democracy was expensive and should not be undermined by underfunding. However, it was currently hugely funded in the light of the conflicting demands on the fiscus.

Ms Maseko was worried that National Treasury did not know how the money was being used. They had acknowledged that the IEC was under-capacitated. She agreed with her colleagues that democracy was not cheap but it had to be funded from within if they wish to avoid corruption. In the absence of disclosure, parties could go on a shopping spree in soliciting funding from outside. No one would be able to stop them receiving funds from wherever they could get them so the goal of curbing corruption would not be realised. How did Treasury propose that provincial allocations should be regulated and should such funding be allocated? Attempts to regulate the provinces had always been difficult and one could see that smaller provinces far outweighed the bigger provinces and generally their subsistence and travel allowances far exceeded those paid by Parliament. A lot had to be done but she believed Treasury should reconsider its stance.

The Chairperson, personally, believed that Section 116 empowered provinces to put money aside for political parties and elections and so on, but because it was a constitutional prerogative, there was nothing that the Committee could do to control how the provinces allocated political party funding. His understanding was that provinces had carte blanche based on the political party mandates and on the competing needs in the province. The only thing that the Committee could do was insist that provinces adhered to Section 116(2)(c). He agreed with his colleagues that they could not leave the matter without doing something about the provinces. How did they best navigate Sections 236, 57 and 116? It would end up as a political decision but perhaps the presenters could enrich the discussion that the Committee would be having.

Mr Lees asked if the figures for Parliament included the cost of travel to home and constituencies.

The Chairperson informed him that Members’ benefits were separate.

Mr Sachs, DDG from Treasury, referred them to the table in the presentation that gave the audited outcomes of provincially allocated budgets for political party funding in some way or the other but they could not say how much each party was allocated. If provinces did not publish in their annual financial statements the breakdown per party, Treasury obtained the information from the provinces. However, Treasury could not publish accounting information which did not belong to National Treasury. There was a critical question about three aspects: firstly, Section 236 dealt with funding to support parties directly; secondly, Sections 57 and 116 which was intended to enable public representatives to perform their representative functions, and thirdly, Members’ benefits, although those funds were small in comparison and were a separate discussion. The amount of funding provided for representative functions by Parliament had increased at an annual rate of 12% per year since 2000/01. He did not believe that the number of parliamentarians or the constituency work of parliamentarians had equalled a double inflation rate. The real growth rate was more than double the inflation rate. That money, which had been less than the money given to the IEC, now massively dwarfed the money given to the IEC. That was why it was important to look at the full envelope that went to political parties and to public representatives to support multiparty democracy. At provincial level, were all funds going to parties in terms of Section 116, or were they direct transfers to political parties, potentially in violation of Section 236? There was no legislation at provincial level, and absolutely no regulation at local level. He would strongly urge the Committee to consider that question and perhaps bring national, provincial and local funding into regulation within the ambit of the law much more clearly. Surely there was a way of working out how much a constituency needs? As well as looking at the outflow being accounted for, there should also be regulation of inflow. Should parties not have to account for all funds that they received?

In response to the question about where money would cut, Mr Sachs explained that Treasury had not said no but was giving the trade-offs. Parliament appropriated funding, not National Treasury. He was merely explaining from where the money would come. He asked how the objective was valued, and how efficiently current monies were being used.

Commissioner Love stated that R500 000 was not what was needed for the MPDF but what they would need to pay for current IEC political party funding. Extra funds would be required for MPDF. Also, additional audits would be required for the additional party funds. Scenario 2 of the IEC presentation showed the capitalisation needed for a separate section and the capacity required. The additional mandate should not undermine the electoral process and funds intended for that process. The Committee would not be enhancing democracy if they undermined the IEC. Notwithstanding the Constitution, the form of reporting was possible at all levels. The issue around efficiencies had to be addressed. If funds at different levels were revealed openly, the efficiency could be assessed and improved. The Committee could identify whether there were pockets of funds within the area of public representation that could be used to support the new process. This information was critical.

The Chairperson indicated that the Committee would have to have the discussion again after Draft One of the Committee Bill. The IEC was saying that it did not know what its capacity requirements would be until it knew the full gamut of Draft One. The Committee would have the full gamut of Draft One by the end September and then the IEC could present exact figures and the Committee would have to take a decision about the percentage. It had been agreed that the IEC would be managing the funds and, as politicians, the Committee would look at Scenario One and Scenario Two and inform the IEC which one the Committee would prefer. The Committee would then have to decide how to fund it.

Right to Privacy: Parliamentary Legal Unit presentation
Mr Michael Prince, Parliamentary Legal Adviser, noted that he had been required to comment on privacy considerations. Did the privacy rights of individuals who donated to political parties precede the requirement for openness and accountability as contained in the Constitution and whether the details of individuals who donated to parties could remain private? After considering the applicable law and constitutional jurisprudence on the matter, the parliamentary legal position was that the right to privacy and freedom of association as well as political rights as contained in the Bill of Rights were not absolute and may be limited. The nature of those rights was such that if they were exercised in the public arena, they would enjoy far less protection than when exercised in the purely personal realm. And limitation of those rights could be justified as it sought to enhance openness and accountability. Furthermore, the National Law superseded the Bill of Rights. International law demanded accountability and openness when dealing with political party funding. South Africa was a signatory to the United Nations Convention that sought to promote political accountability and combat corruption through, inter alia, access to information.

The view of the parliamentary legal advisors was that the question was not whether privacy could be trumped by openness and accountability as, in their view, they were equally important but whether the privacy rights could be limited and whether that limitation could be justified in the interests of an open and democratic society. It was their view that both the questions had to be answered in the affirmative.

Mr Lees appreciated the legal adviser’s opinion but he had his own view and opinion which was different. He noted, however, that the opinions were not terribly different. The difference was really in the application.

Ms D Dlakude (ANC) appreciated the legal opinion but suggested that other parties had the right to consult with their own legal advisors.

The Chairperson agreed but said that the suggestion would only apply if the Committee came to a complete deadlock.

Mr Lees felt they could reach consensus.

The Chairperson stated that the Committee needed to look into the legitimacy of the proportionality versus equity clause, the 90/10 split (although that was relevant only to the Regulations), the privacy issue of partial versus complete disclosure, and, finally, whether foreign foundations should be permitted to donate in cash or kind

Ms Dlakude asked why had the legal advisor had tagged the legislation as Section 75.

Mr Prince replied that it was Section 75 as it was National Assembly legislation. However, he pointed out that all Bills went from the National Assembly to the National Council of Provinces (NCOP). It was only the voting procedure that would differ in the NCOP and would be without the same time limitations.

Equity interpretation
The Chairperson said the interpretation of proportionality and equity as contained in Section 236 related to the R140 million of IEC funds. The concerns were the 90/10 split. All parties got a share of the 90, but the 10 was calculated only for parties represented in the provinces. Was it possible to bridge that gap? The Chairperson believed that it was possible. The principle was required - they were not going to deal with the Rands and cents.

Dr Mulder suggested that the Committee needed to take a decision as to what the interpretation of equitable was as contained in Section 236 and how it affected the distribution of public party funding. From his point of view, the equitable part could deal with two different things. One approach could deal with the question of equitable versus proportional. There would be no answer as they would be looking at the meaning of principles. They could go to court to get an interpretation but that was not productive. The second approach was to look at the impact of the application of Section 236. Fifteen political parties were in line for the funds. Thirteen were elected at the national level and two were represented only at provincial level. When it came to the proportional part, all 15 parties got a share. When it came to the equitable part, three political parties on national level were excluded from those funds. It was a strange anomaly that left Agang with two members in Parliament receiving far less than one of the parties that had only one Member of a Provincial Legislature. Agang had received 52 000 votes whereas the provincial party had received only15 000 votes, but it received more money than Agang.

Section 236 of the Constitution currently gave three options in Section 5(2)(a)(i) of the Public Funding of Represented Political Parties Act. The option selection for proportionality was (ccc) whereas equity was determined according to (bbb). He suggested that to fix the principle in the Act, the Committee should remove all options except (ccc) in both clauses. The formula of 90/10 would be dealt with in terms of the Regulations.

The Chairperson added that the nett effect would be to share all funds equitably. At this point, they were dealing with the principle of how funds were to be shared. The Rands and cents would be discussed later.

Mr Singh stated that the smaller parties had discussed the position and he believed that (ccc) took care of the principle which had been a major concern from the beginning and took care of House of Assembly members. He suggested the establishment of a task team of four people to discuss the 90/10 formula.

The Chairperson explained that the Regulations would come after Draft 2 of the Committee Bill and so there was no urgency to make that decision.

Mr Lees stated that he had to check with his party as to whether the proposal on (ccc) was acceptable.

The Chairperson explained that a decision was needed for the current draft and that he could always suggest an alternative position during the second draft. It was agreed to insert (ccc) and to delete (aaa) and (bbb) in Section 5(2)(a)(i).

The Chairperson stated that the legal advisors had started to inform the discussion on full disclosure or part disclosure of political party funding and he asked Mr Lees to lead the discussion.

Mr Lees agreed that the question was whether there was full or part disclosure and that there was no argument about what trumped what. It was the degree of disclosure. There was a different test for individuals and corporates in terms of disclosure and that had been established in various court cases. In the drafting of the Bill, he had suggested a cap on disclosure of donations directly to political party.

The Chairperson informed observers that the Committee was talking about donations directly to political parties and not to the MPDF.

Mr Lees stated that there was also the point of how or when the IEC disclosed. He had been told who the best and worst countries were. Denmark was held up as a bastion of democracy: they disclosed but not the actual amount. France had different levels for individual and corporate disclosures. Italy had a particularly high level of disclosure. In Greece, the Netherlands, Slovenia, India and Sweden there was no obligation for donors to be named. In Malta, Mozambique, Bolivia, Israel, Singapore, some cantons in Switzerland, Kenya and Rwanda there was full disclosure but not public disclosure. All countries had caps below which there was no disclosure. In Italy where there was full disclosure, they had a very high cap below which no disclosure was made. He would therefore request that, in the drafting of the Bill, provision was made for firstly, a threshold and, secondly, a distinction between individuals and corporate. If the disclosure was to a state entity, then there might not be a need for a distinction between individuals and corporates but there had to be some kind of mechanism for disclosure under certain circumstances.

The Chairperson found the comments very helpful. What they were trying to do was to find a way to record it in the draft Bill.

Dr Mulder requested a copy of the briefing document used by the DA.

Mr Singh commented that he had been looking at the legislation from the drafting of a Bill perspective and of putting it out for public comment. He asked if it was possible for a hybrid way of presenting this so  that the public could be given an opportunity to comment on the differing views. He believed that proposals that had not been fully accepted should be given to the public to comment on.

The Chairperson noted that there were three different options in Section 5 of the Act so he could not understand why they could not put both options in the draft Bill. He, personally, was strongly in favour of full disclosure but he believed that the other side should also be given the opportunity to be heard.

Ms Dlakude agreed that all options should be made available to the public. The ANC proposed full disclosure to the public for the sake of openness and transparency and accountability. The party documents on donations should be sent to the IEC at the end of the financial year for them to make public all donations above the threshold. The ANC had nothing to hide and so wanted openness and accountability. That followed the opinion that had been presented by the parliamentary legal team. Everything should be made public, especially donations directly to political parties. They did not want a situation where mining would play a better game of controlling democracy in South Africa.

Ms Mathys noted that they were now “self-regulating” and so it became a bit of a Catch-22 situation as the Committee was determining how political parties would function and how they would report to the public. The Members had been voted in by the public and ultimately the public had to determine what they wanted to know from parliamentarians. The EFF’s seventh cardinal pillar was open, free and accountable government and they had to live by example so they were pushing for full public disclosure of funding. It was also to combat the vast corruption in the country. Public submissions had requested full disclosure and parties had to listen to constituencies.

Dr Mulder did not believe that they were that far apart. He noted that there were three issues. Firstly, they all agreed that there should be a threshold below which there would be no disclosure. Secondly, there was no dissension that full disclosure was required. The only outstanding point was whether the discovery disclosure should be made public or to a different body. The information would be available and a certain mechanism would have to be triggered to obtain that information. Therefore, the question to debate was whether there should be disclosure publicly and immediately or whether the disclosure should be to another body, with mechanisms for accessing the information.

The Chairperson said his own view was that there could be no accountability in the dark. There had to be full public disclosure to be transparent. Those things had to be credible. A party could disclose to the IEC and the public had to be able to obtain information. He suggested that the disclosures could be made to the IEC and that the IEC would have to disclose annually. The IEC books were audited and therefore had to be declared in its Annual Report. Why were they asking which party had not submitted budget information when, at the same time, they were saying that funding should not be disclosed? The IEC had to declare the donations made to each party. He agreed on full disclosure. He agreed with caps or limits below which there would be no disclosure. And he was saying that the IEC would have to put it in their Annual Report. He was happy for both options to be put in the first draft Bill that would go out for public comment. Between 8 November and 28 November 2017, they would have to bed down the point on disclosure. The disclosure limit would be discussed when they discussed the Regulations but the principal point for him was that the amount had to neither create significant influence nor be unmanageable in terms of accounting. He was thinking of a threshold of R100 000.

Mr Lees agreed that the figure was reasonable at this time but would be reduced by inflation over time unless that could be countered in the Regulations. So, should the cap go into Regulations? He suggested that a third option might be the disclosure of names and no amount but as he was not familiar with the motivation for that practice, he thought it best to leave that aside.

Dr Mulder explained that the Act would state that there was a threshold and the amount of the threshold would be contained in the Regulations.

Ms Maseko said that the threshold should be clear in the Regulations and had to prevent donors from breaking a large donation into small amounts to remain below the threshold.

The Chairperson agreed.

Direct donations in cash or kind to political parties
The Chairperson asked if direct donations in cash or kind from foreign foundations to political parties should be prohibited.

Mr Singh was pleased to hear the Chairperson talking about donations in kind. He did not want to hear the word “prohibit”. The previous day, he had heard about a capacity building programme in Parliament that was funded by foreign funds to the tune of 10 million Euros. The IFP had received certain capacity building programmes offered in the country and led by local people but funded by foreign foundations. He suggested that they should not prohibit such funding but set a value to the capacity building and perhaps a cap on the value that may be donated. He was against any foreign cash donations.

The Chairperson summed up stating that Mr Singh had suggested that they move foreign donations in kind from the prohibited list to a list with restrictions.

Mr Lees stated that the DA would support the proposal. He pointed out that following World War II, every party in Germany received money from the Bundestag and parties were obligated to promote democracy throughout the world. Various South African political parties received funding from German foundations but all of that money came from the Bundestag. It should not be outlawed.

Dr Mulder wanted to alert Members to the fact that they would be enhancing funds to parties and that there was a Regulation (Paragraph 9) that stated that parties could carry over 50% of funding to the following year. It was necessary to ensure that provision was included in the new Regulations so that parties were not obliged to go on a spending spree. He recommended that political parties consider whether the percentage should remain at 50% or whether that needed to be adjusted.

The Chairperson observed that the Committee had not spoken about the split of money in the MPDF. How was that to happen and where should it be located in legislation? Should it be in the Act or the Regulations? His second point was about the provinces. Should they not say to provinces they had to adhere to Section 116? He suggested that the Committee could include a statement in the Bill stipulating that all political parties in legislatures had to adhere to Section 116 of the Constitution and then the Committee could find a way to regulate Section 116. The Chairperson invited comment.

Mr Lees suggested that the way that provinces were distributing funds was outside the ambit of Section 116. The constituency allowances would probably fall within the ambit of Section 116 but he thought that the money paid directly to political parties was unconstitutional. Could they get senior counsel opinion on the matter? The matter had been bouncing around for a few years and they needed at least a parliamentary legal team opinion on the way that provinces paid political parties.

The Chairperson thought that there had been a court ruling in Limpopo striking down the way in which Limpopo was providing funds to political parties. If that were the case, a clause stating that a provincial legislature should follow Section 116 would suffice.

Dr Mulder reminded the Chairperson that they would use the same formula as used for the IEC Fund but he wanted to ensure that they found common ground on that formula before he suggested the same formula for the MPDF. It had to be borne in mind, however, that the IEC had said that they would also look at unrepresented parties and at local level representation. If that were the case, the Committee would have to determine a completely different formula.

Mr Singh asked for a copy of the judgement. He thought that since the legislation had been outlawed, the legislatures were using policy as a basis for making the funding distributions.

Mr Lees asked whether parliamentary legal services could find the provincial legislation.

The Chairperson explained that there was no legislation but all legislatures used policy to distribute funds since the court finding on the Limpopo Legislature. The Speaker at each legislature determined how much would be allocated, which was why the Committee had to consult the Speakers Forum. What the Committee needed was to find a common way to manage all provinces.

Ms Mathys said that she understood that the mandate did not include local government but felt strongly that the Committee should make a note in its Committee Report when presenting to the National Assembly about the problem of the lack of legislation at local government level.

The Chairperson announced that the 14 September meeting would deal with the final copy of Draft One. When the Committee looked at Draft One, Members would look at the definitions, including the Preamble.

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