Political Party Funding Bill and Regulations: deliberations on public comments and amendments

Ad Hoc Committee on the Funding of Political Parties

21 November 2017
Chairperson: Mr V Smith (ANC)
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Meeting Summary

All documents confidential drafts:  Summary of issues still to be decided; Detailed notes from legal team of 60 pages; Proposals for Changes in Clauses 3, 5, 8, 11; Draft Bill

The intention of the Committee meeting was to give the legal advisor and the drafting team guidance to complete the final draft of the Bill and Regulations. The legal advisor and drafting team would come back on 23 November with the product for the Committee to look at in preparation for the adoption and forwarding to Parliament before 30 November 2017.

The difficulty in the meeting was that there were proposed changes from the drafters, changes suggested by the public, policy concerns and concerns that redrafting changed policy positions, while the Members also had proposed amendments to the Bill and Regulations. This entailed the Chairperson repeatedly having to revise the structure of the meeting as related issues were brought to his attention. By the end of the meeting, all issues had been addressed and the drafters had guidance for producing a final draft of both the Bill and the Regulations.

The most important issues addressed, included the weighting to be given to the principles of equity and proportionality. All minor parties were strongly of the view that it should be a 50/50 split between equity and proportionality. Ultimately the EFF stood by its interpretation of the will of the Constitution while other smaller parties agreed to negotiate and proposed a one-third/two-thirds split. They were supported by the DA. The ANC suggested that a 70/30 split would be fair. It took a return to principals to arrive at an agreement of a one-third/two-thirds split which would apply to public money for political parties as well as the allocation of any monies donated to the Multi-Party Democracy Fund.

The minimum amount below which donors did not have to disclose was agreed upon unanimously at R100 000. A maximum donation cap of R15 million per donation to a political party was agreed upon. Both the threshold and the cap would apply cumulatively per annum. In respect of training and development by foreign entities, the Committee agreed to a cap of R5 million per foundation per annum to limit the influence of such entities. There was no cap on donations to the Multi-Party Democracy Fund because there was no direct effect on party. All donors had to disclose to the IEC.

Everyone who made a donation above the threshold, when it came to private funding, had to disclose to the IEC. The intention was to create a double check. Disclosures would be made quarterly and financial statements had to be produced annually. It was determined that all companies above the threshold of R100 000 should disclose when donating to the MPDF but not individuals.

Sanctions and the role of the Electoral Court versus the IEC were resolved.

Meeting report

The Chairperson thanked the Members for bearing with the revised arrangements as some Members had been required in the House to cast a vote. Members had been given a pack that included a summary of issues still to be decided, the draft Bill, the detailed notes from the legal team of 60 pages, the Minutes and Proposals for Changes in Section 3, 5, 8, 11. As the Committee got to those sections, the Members would look at the wording. The intention was to give the legal advisors guidance to complete the final draft of the Bill and Regulations. The legal advisors would come back on 23 November and would give the Committee the product to look at.

• Regulations
The Committee had added three new provisions to the existing Regulations. The Committee would go through the other provisions to ensure that they were aligned to all changes.

1. Definitions
The Chairperson asked if there were any changes.

Mr N Singh (IFP) asked how the Committee would define a “foreign government agency”. Did the Committee have to define it? Would the Committee have to deal with it under definitions or could they accept what foreign government agencies were at face value?

Dr S Mulder (FF+) said that the definition should not be in the Regulations, but in the Act, as the term “foreign government agency” was only used in the Act.

The Chairperson noted that there were about five definitions in the Regulations, but suggested that the Committee deal with the definitions when they got to the Act. He asked if there were any amendments to definitions in the Regulations. There were none.

2. Funding
The Chairperson said the wording would remain the same but there had been an agreement to change the formula in 2(a) and (b). At the last meeting, it had been agreed that Members would go back to their caucuses to discuss proposals. He had also given Members a spreadsheet showing the implications of the changes and Dr Mulder had further enhanced the spreadsheet. Dr Mulder had given Members a one-pager which showed the changes according to percentages from 90/10 to 50/50. If one moved away from 90/10 there would be a decrease for the larger parties and an increase across the board for the smaller parties. That would start to level the playing field, which was the intention. He asked colleagues to have a look at it.

The Chairperson explained that, at the last meeting, when Dr Mulder was not in attendance, Members had had a preliminary discussion and decided to go away and have a caucus discussion and come back with caucus positions. Could they agree? He asked for proposals, but not 90/10 as he would not accept that.

Mr Singh said that his caucus had said that equitable and proportional meant 50/50. That was their point of departure. Without compromising on what they believed it meant, they could live with what Dr Mulder was suggesting of one-third/two-thirds. It sounded reasonable and reflected the current numbers in Parliament, more-or-less. So, he was supporting the proposal by Dr Mulder of one-third/two-thirds.

The Chairperson asked for further input.

Mr J Selfe (DA) said that when he debated it 21 years ago, he believed in 50/50 as his party was a very small party then. He still believed that that was equitable and proportional but it might not be politically saleable. What was constitutionally flawed was the 90/10 so his party would accept something in the middle as it did not have an exact percentage. He did not have particularly strong views on whether it should be 70/30 or two-thirds/one-third, but something in that order would satisfy the DA.

Ms L Mathys (EFF) stated that the EFF had had discussions about it and they went back to the Constitution which was their guiding light. It was the source of their position, regardless of whether they would get more, or less, money. She read Section 236 of the Constitution, emphasising that the Constitution referred to multi-party democracy and did not give a weighting to either equitable or proportional. The EFF confirmed that, according to the Constitution, it could be nothing other than 50/50, which was very clear. The EFF would therefore not deviate from that, neither at the present time while they were a small party in Parliament, nor in 2019 would they would be the governing party. The constituency funding, which was the largest portion of money, was distributed proportionally. She did not understand why they had to get into a huge debate when the Represented Political Party funding was clearly meant to be shared 50/50. She was of the opinion that the ANC was aware that it had been disingenuous in pushing 90/10 for so long and that it should never have been allowed to happen.

Mr R Mdakane (ANC) reported that the ANC had looked at the matter and wanted to accommodate everyone. The principle guiding the ANC was that parties represented in Parliament were first and foremost, proportional. The equitable part was just to create a balancing act. The ANC could live with 70/30. It was a fair number. He thought that the DA was raising the same number. He hoped that his colleagues in the Committee would realise that it was correct as they did not have time to deal with all of those other things. It was the end of the year and they had to be thorough. The Committee should accept the 70/30 in terms of the numbers. The ANC felt that they should try and close the matter that day and move forward.

Dr P Mulder (FF+) commented that the ACDP’s position was that it should be 50/50. If one looked at the Constitution, it said equitable and proportional; it did not favour either. If one wanted to argue proportionality, throughout the Constitution, proportionality was taken into consideration and parties were benefiting from their proportional strength in all other ways, but in that section, the Constitution was different. It was the only section that put proportionality and equity on the same scale. From a legal point of view, if one tested it, that was what would be found to be correct constitutionally. On the other hand, if the purpose were to level the playing fields, one would have to go way beyond 50/50, to the other side, to 20/80. The Committee would have to find some kind of compromise. In an ideal world, with time available, one would test it in court, although he did not favour that approach as someone else took the decisions on their behalf. They were close to one another. The ANC said 70/30. Mr Godi had suggested not using figures. Although he believed constitutionally it should be 50/50, he would support one-third equitable and two-thirds proportional. It was very close to 70/30.

Ms L Maseko (ANC) stated that the Members should accept proportionality and that as the ANC was still on the 90/10, it could do that, but the ANC had moved and in the spirit of equitable and proportional she thought that the 70/30 was a fair one and that should be accepted. No one should take it to court as someone else would be taking the decision on their behalf, and perhaps the court would come to a determination of 90/10. 70/30 was a fair move.

The Chairperson noted that the starting salvo was 50/50, 70/30, 67/33. Those were the three proposals on the table.

Mr Mdakane said that 67/33 was almost 70/30 so people should go for 70/30. 50/50 would not work because they were talking about parties represented in Parliament, not parties in society. In a general election, people had decided to give them the percentage that was there. The resources should be distributed in that way. For the ANC moving from 90/10 was a great compromise and all parties would benefit from it. The Committee could not undermine the will of the people. 70/30 covered everyone in Parliament.

Ms Mathys was under the impression that the Committee was only discussing parties represented in legislatures. So, the debate was not about other parties. The EFF was not disputing the importance of proportionality in funding. The Constitution captured that very well when it spoke of constitutional funding that was distributed proportionally. That was a different aspect of the Constitution. The debate was not about proportionality. Here the Committee was talking specifically about strengthening multiparty democracy and not about the will of the people. That was the principle. Parties should not think about the money, but about the principle. They were not discussing how many seats parties had. Of course, they did not want to go to court and but when Parliament made incorrect decisions in the interest of parties and not the Constitution, it ended up going to the Constitutional Court. Even the proportional section of the split dealt with the number of seats that a party held. The ANC was saying that it was doing other parties a favour. It was not about the ANC doing a favour and it was not right for them to say that. Why did they not talk about the Constitution? 50/50 would be a fair call.

The Chairperson noted that Section 236 talked about two principles. The Constitution was talking about two principles but it did not give percentages allocated to each principle. Both principles were being discussed. He had presented Members with a spreadsheet showing percentages, and Dr Mulder had prepared a spreadsheet showing both percentages and numbers. He asked Members to look at the documents. He wanted to be reasonable but they would have to find a way of breaking the deadlock. Parliament was about power and the Committee would have to make a decision. He would hate it to go to a vote. He hoped that parties would re-consider.

Ms Maseko said that they had to be fair when interpreting the Constitution and level-handed. It had always been about proportionality and now when it suited Members, they wanted to change that and forget about proportionality. In promoting democracy, it was distributed proportionally and equitably. For her, and the ANC, 70/30 was fair, taking into account proportionality. If the EFF was in power in 2019, they would understand as they would have worked hard and would have the numbers.

Dr Mulder stated that he thought that they were close to each other. He did not want to be pedantic but the Constitution mentioned equitable first. He agreed with Mr Godi’s proposal about not making a determination of the percentage. If any percentage were attached to either of the terms, it would be an arbitrary act. One-third/two-third also allowed for proportionality and it meant that ANC funding would go down by 1.4 % and the DA funding by 0.21%. The smaller parties would get a very slight percentage increase. Was there any chance that they could think about it before taking a decision? He was happy that Mr Godi had arrived.

The Chairperson explained that the figure was being put in the Regulations which were renewable annually so even if the final formula did not pan out well, the new Parliament would be able to adjust it. He could only appeal that it be resolved on the day. He would be reluctant for them to go back to their parties as they had done that. He appealed that the decision be taken that day. One option was that the Committee completed the other sections and came back to that one.

Mr N Godi (APC) noted he had given up hope of being there but eventually the SASSA matter had been wrapped. He hoped the funding issue could also be wrapped. They were all saying that they needed regulations that would not be amended when another party came into power and used that as a stick. He had proposed a wording rather than a number and it was the type of wording that was used in the House, two-thirds, a simple majority etc. Unless there was a gulf of difference in suggestions, he wanted to put into the Regulations things that would stay. He wanted to find something that would stand. He gave examples of laws in other countries that were not changed once there was consensus. His wish was that the process be concluded that day. What that meant was that Members should take positions. He hoped that they would not go to the trenches. Having moved away from a legal point of view which would have been 50/50, Mr Godi reiterated the point that he was suggesting two-thirds/one-third. As a percentage it was 67/33 but he did not want to use words. He had moved away from 50/50 but that would have required a legal argument and they were politicians, not lawyers.

Mr Singh stated that his party had also suggested 50/50 to start with. He thought that the one-third/two-thirds was 76 and two-thirds so 2% off the ANC figure. He accepted the EFF’s argument and the legal argument but they were in a political situation. He appealed for the Committee to finalise the matter that day. He suggested that the ANC consult with their principals during the lunch break to see if it was possible to move. If they voted at that moment, the opposition would win, but he knew the ANC would call in troops from the National Assembly. He was buying a bit of time.

The Chairperson summarised the three positions. The ANC was agreeing to go from 90/10 to 70/30. Others were going from 50/50 to 67/33 and the DA was happy to go either way. The EFF was at 50/50. There was general agreement that it was not going to be postponed. There was a proposal to put it on hold and go to lunch, discuss for a couple of minutes and resolve, or go for a vote. Members could speak to the three proposals.

Mr Mdakane said that he thought that it was possible to deal with it after lunch and that the Committee should continue with other things.

Mr Selfe wanted to address the argument about proportionality. With all respect, that was faulty logic. He had no doubt that had the 90/10 been taken to court, it would have been found to be unconstitutional and everyone had to accept that. Logically, the 50/50 was, in fact, the most defensible point of view. What was being done in the Committee was pure pragmatism and should not be dressed up as anything else. Having heard the arguments, he was persuaded by the one-third/two-third argument. The numbers were not far away and he believed that it could be resolved after lunch.

Dr Mulder was covered and suggested that the Committee move on.

The Chairperson asked that everyone who needed to consult, did so during the lunch break. There were three proposals on the table: 50/50, 70/30, 67/33. Nothing else would be considered.

Mr Godi agreed but wanted that the latter proposal always be couched as one-third/two-thirds.

3. Proportional Allocation
The Chairperson asked if there were any amendments to Point 3. It had been dealt with early in the programme by removing the alternatives. There were no further changes.

4. Equitable Allocation
The Chairperson asked if there were any amendments to Point 4. It was similar to the previous point but putting it in words. Mr Godi had previously proposed the amendment. The point was accepted as in the draft.

5. Times, intervals and instalments of payments
The point was unchanged from the original set of Regulations and agreed to without change.

6. Manner of payments
The point was unchanged from the original set of Regulations. It was agreed to without change.

6A. Disclosure threshold
The Chairperson advised that the point was a new one. It was about the threshold below which there need not be any disclosure for the purpose of pragmatism. The information would be with the IEC and any Joe Soap could get the information from the IEC. The disclosure would be linked to cumulative amounts. He asked what figure the Committee wanted to see in the Regulations.

Mr Singh proposed R100 000.

Mr Mdakane agreed that R100 000 was fair.

Dr Mulder seconded it as well.

All other Members agreed. The Chairperson was pleased that it had been easily agreed upon as R100 000.

6B. Upper limit
The Chairperson said that the principle of the upper limit was that a person who donated even up to the upper limit would not be able to capture the party, but remembering that political parties needed money. One donor should not be able to influence any single political party. It was something practiced across the world. It was an upper limit per donor per annum.

Mr Singh suggested R20 million as an upper limit.

Mr Mdakane suggested R15 million as he believed that it would not cause a lot of harm.

Mr Godi suggested that R20 million was too much. He thought it should come down to R13 or R14 million.

The Chairperson reminded Members that it was about not influencing a party.

Mr Godi thought that R20 million was a lot of money. It was not scientific. He accepted R15 million.

The Chairperson stated that it was a serious matter and that parties should not be bargaining.

Ms Mathys said that she could see how uneven the playing field was as she could not believe that parties could have completely a different understanding of large donations. She thought that the Committee had decided to consider a percentage of what each party was eligible to receive.

Mr Selfe was opposed to that principle because he thought that a percentage was inherently unfair as it was based on how the party had done in the previous election. It was fair for everyone to have the same cap. His view was that R15 million was a reasonable figure.

Dr Mulder tried to work out a percentage, noting that the percentage would be lower for those who received less money so percentages would not be fair, but he understood exactly what the EFF was saying.

The Chairperson asked Mr Singh if he could come down to R15 million. He asked Ms Mathys if she still wanted to argue for a percentage.

The Chairperson clarified that decision was a cumulative cap of R15 million per person, per organisation or per company, i.e. per donor, per year.

It was agreed that the cap would be R15 million.

7. Separate books and accounts
It was agreed to.

8. Generally descriptive categories of purposes in connection with which amounts are spent
Mr Selfe was a little unsure if party legal expenses were curtailed. If the party was being curtailed in the funding, he would like to propose that parties could use the funds for legal fees in cases of public interest litigation.

The Chairperson recalled the discussion about legal fees and asked for further input. He understood that there was no current restriction, but Mr Selfe wanted to be sure.

Mr Selfe clarified that, at the time, political parties could not use public funding for legal services.

The Chairperson suggested adding a sub-point which would state that the funds could be used for litigation if it was in the public interest, but not for taking fellow party members to court.

Mr Mdakane said that if it did not do any harm, if it was for the benefit of society, it could be included, but not against party members.

Mr Godi stated that he was not opposed but asked if there could be a wording that allowed the funds to be used to support public interest, which might not be confined to legal action. The issue was not about legal activities, but about any form of defending the public interest.

The Chairperson asked for clarity. Did Mr Godi want to add an additional point? He suggested that Mr Godi could a line.

Mr Godi suggested that the point should be couched in such a way that was broader than just legal fees. He was not suggesting another line but to broaden the mechanism that may be used to protect the public interest.

9. Prescribed percentage of allocations that may be carried over.
Dr Mulder recalled a discussion where this point was going to be completely removed.

The Chairperson noted that it had been agreed.

New clause 9. Short title
The Chairperson asked if any changes were needed.

Mr Godi stated that it was fine.

The Chairperson asked if they should state that the Regulations should be reviewed annually and approved by the National Assembly. Would such a clause be included in the Regulations?

The legal advisors and Dr Mulder noted that the point had been included in the principal Act.

Ms Maseko suggested that it should be included in Regulations.

The Chairperson indicated that the Regulations could not be changed regularly but had to follow a process.

Dr Mulder noted that there was an appropriate clause in the Act.

The Chairperson stated that the Regulations had been completed, barring the formula.

The Parliamentary Legal Advisor, Mr Michael Prince, referred the Committee to Regulation 3(5).

The Chairperson noted that the fee to defray should be in the Regulations.

Mr Selfe asked whether the Committee was going to put the fee for the IEC for handling the fund in the Regulations.

The Chairperson stated that the principle was to put it in the Regulations but Members could disagree. He proposed that it came out of the Multi-Party Democracy Fund and that it could not be more than 10%. Left as it stood, the Committee would give the IEC carte blanche to take whatever fee the Commission wished to take. He pointed out that the Committee had no idea how much would be in the MPDF. It could be either a rand value or a percentage, but if so, what percentage?

Mr Godi asked whether it would be legal to add just “10%” in the current 3(5) “The Commission shall charge a fee of not more than 10%.”

The Chairperson noted that it would be retrospective and it would be taken at the end of the year.

Mr Selfe noted that IEC should not be making a profit from the activity.

The Committee agreed.

Dr Mulder took the Committee back to Regulation 8(1) which dealt with financial statements. It listed the headings to be found in the financial statements in order to give specific reporting categories. It did not give approval for parties to use the funds for certain things. In the Act, Section 6 and 7, specifically 7(1)(a) to (g) indicated what the money could be used for and 7(2) indicated what the money specifically could not be used for. He suggested that to state funds could not be used for legal action against party members in 7(2), would automatically allow parties to use funds for other legal purposes.

Mr Selfe reminded the Committee that the factual position was that public funds could not be used for litigation.

The Chairperson agreed that the prohibition be put there.

Mr Godi asked if it was not prohibited in Section 7(2), where did the prohibition come from. It had to be attended to by asking the IEC for an explanation.

The Chairperson recalled the IEC saying that it was not allowed.

Mr Selfe thought that it was dealt with under prescribed purpose so it had to be stated explicitly.

The Chairperson noted that the principle was agreed but the question was where it should be put. He asked the Legal Advisor to craft something that could be included so that whoever had been able to stop the funds from being used for legal fees would no longer be able to stop it. All parties had agreed that funds could be for litigation if it was in the public interest or the common good of South Africa. The Legal Advisor had to tell him where they had put it.

Mr Singh said he thought that it came under the Administration section, but which regulation was the IEC using to prevent parties from using the funds for litigation? He confirmed that currently parties could not use the money for litigation. He did not see it in the Regulations so how did the IEC stop them?

The Chairperson asked if there would there be any harm in putting it in as it would then be dealt with and would supersede any other regulation the IEC might have. Surely, if it was legislated, the funds could be used as they believed they should be used?

The Legal Advisor informed him that if it was clear exactly what the funds could be used for, it went in 7(1). If the Committee wanted to be specific about what it could not be used for, it should go in 7(2).

Dr Mulder suggested that the Committee put in the prohibition. One could be more precise. It was too difficult to list all the ways in which the funds could be spent so it was easier to state that it could not be used for internal party disputes.

Mr Godi said that putting it in 7(2) meant the funds could not be used for internal party disputes. That enabled the use of the funds for all other external litigation. It separated the two legal processes.

Ms Mathys had a side issue. She noted that the Committee was dealing with represented political parties and the Committee had early on decided that the Bill had to be durable for political party funding across all legislatures. Each provincial legislature used funds differently for political parties. Had it been captured that the Bill was binding on provincial legislatures so that the funds had to be used consistently? She was worried that the Committee was focusing too much on the Multi-Party Democracy Fund. The Constitution stated that the funds related to both national and provincial levels. She was particularly concerned about the funds voted by provincial legislatures for political parties.

The Chairperson was sure that there was something in the Bill to that effect. The Committee would deal with it there. He agreed that the Committee needed to deal with that point, but they would come to it in the Bill.

The Chairperson suggested that the Committee go through the Bill page-by-page and asked the Legal Advisor to point the Committee in the right direction. The Committee would go through the Bill and also address the various pages on proposals and discussion points handed out by the Legal Advisor.

• General issues relating to the Bill

Long Title and Preamble

Ms Maseko said that what Ms Mathys had been asking about the need to include provinces, had relevance in the objectives of the Bill. It should state that provinces would have to work within the framework of the Bill.

Mr Godi was not sure if it was possible for the Committee to put in the Bill that provincial legislatures could not establish any other political party funding, other than what was in the Act. Secondly, his proposal was that in the first sentence that the words “national assembly and provincial legislatures” be included immediately after the reference to political party funding. That would clarify immediately that the Act affected both levels. He was not sure exactly where a clause could be added to prevent legislatures establishing other political party funding.

The Chairperson suggested that Clause 22 in the Bill covered what the EFF was concerned about.

Ms Maseko said that while other things were contained in the Bill, the point about funding at provincial funding should be included in the Long Title.

The Chairperson accepted the recommendation.

The Legal Advisor reminded the Committee that it had been decided that the Bill should be more positive than negative in its language.

The Chairperson suggested that any additions injecting a positive spirit should be in the Preamble. Members could think about it and deal with it before the meeting adjourned that evening.

Chapter 1 Interpretation
The Chairperson asked the Legal Advisor for input. Was everyone comfortable with the definitions?

‘third party entity’
The Legal Advisor spoke about the new definition for ‘third party entity’, the old political action committee (PAC), which was what they were trying to regulate. The definition had to be read in conjunction with Clause 11.

The Chairperson asked him to clarify his point. Was Clause 11 to remain the same?

The Legal Advisor replied that the proposal was that the words in Clause 11 be completely changed. The Committee had to define ‘third party entity’, or a PAC. He suggested that the definition for ‘third-party entity’ be as follows: A third party entity is an entity that accepts donations to support or propose any political party registered in terms of 15 or Section 15(a) of the Electoral Commission Act or its candidates, in an election.

Clause 11 currently spoke about prohibited donations but the drafting team proposed that it be re-drafted to say: “No donor may make a donation for party political purposes to a) a member of a political party, unless that member is authorised by the party to receive the donation on behalf of the party; b) to a third party entity unless it is registered in terms of Section 15 of the Electoral Commission Act.

Ms Maseko thought that the definition should be added to Clause 1 and that it then related to Clause 11.

The Chairperson indicated that the definition would come in Clause 1 and so he wanted to deal with that. Clause 11 could be amended when they got to Clause 11.

“foreign entity”
Mr Singh pointed to the suggestion in the notes that all the definitions from Clause 8 be moved to Clause 1, which made sense, in which case he wanted to discuss the new inclusion which stated that funds could not be received from foreign governments or foreign government agencies. What was the difference between foreign governments and foreign government agencies? Previously, the term “foreign entity” had been used. There needed to be consistency in the use of terms and those should be defined. He pointed to Clause 3(8)(b). There was a definition of foreign person as a person or entity. In the Legal Advisor’s proposal, he used the term “foreign government agency”. What was the difference?

Prof Halton Cheadle, legal drafter, explained that the reference to foreign government, agency and entity was in the original Bill. Mr Singh was looking at foreign agency in Clause 8, which was premised on prohibition. In order to avoid problem arising from things such as dual citizenship, it had been turned around to provide for eligible or permissible donors rather than prohibiting certain entities. It was a mirror image. So that would automatically suggest that donations were not permissible from anyone other than those not permitted. He pointed out that words carry their ordinary meaning so words that have a common understanding did not need to be defined. It was shift from a prohibition to permissible. He stated that the problem was that the drafters had been asked to pull out specific sections for discussion but now they were straying into other areas. As a drafter, he believed that definitions should come at the very end of the Bill, instead of at the beginning.

Prof Cheadle stated that other legislation used terms such as foreign governments without defining it. A court would define it if there was ever a dispute over it. By turning Clause 3 of the Bill from prohibited to permissible, it became unnecessary to define a whole lot of terms. The UK legislation used registered voters as the criteria for making donations, which would resolve so many points if the IEC accepted only from South African registered voters. That would resolve Mr Selfe’s issue about both he and his daughter donating if they were both registered voters.

The Chairperson asked Committee Members to go page by page.

Mr Selfe objected that Members had been handed the changes only now but the changes made very substantial changes to the original Act. One example was that it was not a mirror image. He referred to the new Clause 8. Indicating that only registered voters could donate meant that those under 18 and permanent residents in the country were excluded from voting. Those were substantive changes.  He wanted a break as he was not comfortable to look at the loose pages. He had a horrid suspicion that things had been slipped in. He needed to work through all the changes.

The Chairperson agreed that Members could take the pages and go through the proposals. They were proposals and had not been included in the Bill. They were just proposals as to what could be changed. None of the changes were in the Bill. It was for Members to determine what to include in the Bill. Nothing had been smuggled in. That was why he was suggesting that the Committee go through the Bill.

Ms Maseko asked that Clause 1 include all definitions, and definitions should not be included in other clauses. Definitions in Clause 8 had to be moved to Clause 1. It would make the Act easier to read if all definitions were all included at the beginning. It was not how Bills were being drafted.

Mr Mdakane thought that the Committee was going to go through the Bill clause by clause. Members could look at the clauses and the proposed amendments would be included or rejected. That would assist the Committee. There would be no harm going clause by clause. The drafters could explain the proposed changes.

The Chairperson explained how he had planned the process. The Committee was to go clause by clause and agree or disagree. Anyone could indicate proposals which could be debated. It was the only way to manage the process. When the Committee came to Clause 8, the definitions could be moved to Clause 1. He suggested that Members went away and studied the drafters’ proposals and then return to the meeting and the Committee would go through it page by page. By then, Members would also have to consider the formula for splitting the funds.

Dr Mulder suggested that the drafters quickly motivate changes to Clauses 3, 5, 8, 11.

The Chairperson agreed. The proposals by the drafters had come from the public submissions so he would ask them to motivate each of the points where they had suggested changes.

Proposals for Changes in Clauses 3, 5, 8, 11
The Legal Advisor indicated that the change to Clause 3(5) was a proposal from the IEC and dealt with the cost of administering the Fund.

The Chairperson said the drafters should not talk to issues already dealt with. Talk only to new things.

The Legal Advisor referred to Clause 5(1) The IEC had proposed that a separate, suitable and qualified person be appointed as Accounting Officer and CEO who would be responsible for the Funds.

The Chairperson explained the change was a response to the Committee’s request that administration of the Funds be separated from the electoral processes. Clause 5(2) was in the Act.

Mr Godi asked if there was anything substantive in the pages and, if not, they could throw it away.

The Chairperson suggested that they just go through the new proposals so that there was not a problem when the Members went through the pages.

Prof Cheadle referred to Clause 8, which was Clause 9 in the new Bill, which was the mirror image, but he admitted that there were some changes. The Committee could use citizen as an alternative definition, which then included people under 18. He explained his motivation by saying if they had included the term “voter”, the IEC could immediately check on the status of the person as they had all the registered voters on their database. The company register and trust register was the same as before. He had included trade unions and non-profit organisations because they were included in the UK legislation and they were registered in terms of South African law. The important thing was that everything was identifiable. 8(2) and 8(3) were the same as before.

Mr Selfe had two questions of clarity. He did not understand about minors not being legally competent to donate. Clause 8 had originally referred to a foreigner as someone who was not a citizen or a permanent resident. He referred to the definition of a citizen, which was not a mirror image of a definition of a foreigner.

The Chairperson stated that the meeting had agreed not to debate issues but simply get clarification of the proposals. Was he suggesting something different?

Mr Singh asked for clarification. Was it being suggested that the current Clauses 8 and 9 be moved into the new Clause 8.

Prof Cheadle said that the drafters had been instructed to remove all the definitions from Clause 8 to Clause 1 and that was what they had done. That led to a missing section so Clause 9 then became Clause 8 in the revised Bill. Clause 10 became 9 and Clause 11 became 10. He explained that when he said, “mirror image” there were obviously differences. Policy decisions were for Committee members to make. They were not trying to hide anything.

The Legal Advisor stated that 8(2) referred to the upper limit. That was new.

The Chairperson asked about prohibitions in Clause 11. Was that old stuff or new?

The Legal Advisor explained that it had been redrafted.

The Chairperson noted that all Members accepted that all definitions would go to Clause 1. Members should go back to their principals and decide on 70/30. The Committee was not going to go home until it was finished, even if they had to vote.

Afternoon session
The Chairperson informed the Committee that there would be voting that afternoon in the House so there would be some disruptions as Members would have to go and vote, although permission had been granted for the Ad Hoc Committee meeting to continue. Members had agreed to discuss the formula for the allocation of funding. It was the last piece of the jigsaw of the Regulations.

• Formula for allocation of funding
The Chairperson noted that it had been agreed that the same formula would apply to both the public funding and the MPDF. He asked for the position of political parties.

Mr Singh said that he had had a quick meeting of some of the ten small parties and it was agreed to re-propose two-thirds/ one-third.

Dr Mulder explained that it was one third equitable and two-thirds for proportionality.

Mr Selfe indicated that one-third/two-thirds was his preference but he could accept 70/30.

Ms Mathys explained that the EFF stood by Section 236 in the Constitution where it was indicated that the funds were for multi-party democracy and not just party funding. She understood that they were politicians and not lawyers, but they had taken an oath to uphold the Constitution. She said that the EFF felt very strongly about 50/50.

Mr Mdakane stated that the ANC felt that 70/30 was very fair and so it was difficult to see what else they could do, but they had considered what could be done to resolve the matter. Their view was that the ANC was not married to the percentages but the principle. They could live with one-third/two-thirds.

Dr Mulder proposed one-third equitable, two-thirds proportional.

Mr Mdakane stated that the ANC supported their colleagues. He took note of Mr Selfe’s position. The proposal one-third equitable, two-thirds proportional was supported.

The Chairperson asked if anyone opposed the proposal.

The EFF requested that its objection be noted.

The Chairperson proposed that the one-third equitable, two-thirds proportional be included in the Regulations. He informed the EFF that they could raise the matter in the House when the Bill went for approval. He thanked the Members for coming to agreement.

• General issues relating to the Bill

Chapter 2 Funds

The Chairperson noted that Clause 5, in Chapter 2, dealt with management and control of funds. The intention of the proposal was that, in the Act, reference would be made to the need for a separate unit within the IEC with a separate Accounting Officer and CEO. That had come from the IEC proposal

Mr Selfe did not accept the evidence that the IEC had given. He believed that they had over-stated the case, both in terms of the quantum of the fund and the need for two separate business units. It was simple: money came, was receipted and accounted for and then disbursed. It was not rocket science. There ought not to be competing sites of power. Everything should be under the Chief Electoral Officer. Money came in, went into separate accounts and was disbursed. There ought not to be competing sites of power in the IEC. His view was that the Chief Electoral Officer should manage the funds. Otherwise, the Committee should have created a completely separate entity.

Ms Mathys supported Mr Selfe. She did not see how a whole new system needed to set up. The IEC was already administering the public funds. The only additional tasks were to record the donations, advertise the MPDF and open a second account. Whatever money came into the MPDF would be checked and disbursed. Whatever money went into the MPDF would be absorbed in managing that new unit. It could not cost so much to manage the funds. They needed additional staff but not a whole new entity.

The Chairperson reminded the Committee that it was the Members who had raised the conflict of interest in terms of funding administration versus electoral issues. Secondly, the Act brought additional responsibilities, including follow-ups and enforcement. He was simply putting the IEC’s point across as they were not there to do so. He noted that the IEC was talking about R50 million in costs. It was not in the Bill as it stood so the Committee could discuss that.

Clause 3 Establishment of a Multi-Party Democracy Fund
Ms Maseko asked for clarity as 3(1) had changed and she asked for the rationale. In addition, 3(4) did not make sense. It referred to 3(2) but 3(2) related to bank accounts. She was not sure whether there had been agreement on 3(5).

The Chairperson noted that there were changes in Clause 3. He had understood the drafters to say that there were no changes to Clause 3. It had been agreed that 3(5) would be removed.

Mr Singh sought clarification on Clause 3(4). He had earlier asked what a ‘foreign government agency’ was.

Mr Mdakane suggested that a foreign government agency would mean a development agency or any foreign organisation linked to a government, or any state organ. An example was USAID. It would be helpful for the drafters to explain.

Dr Mulder stated that 3(1) in the current Act specifically stated that the funds were for funding political parties that participate in national and provincial governments. The proposed 3(1) spoke about funding to political parties from private sources. Those were two different animals.

Mr Selfe said he had picked that up as it meant that 3(1) opened up the door to the municipal level. 3(5) in the current Bill provided that contributors to the Fund could opt to remain anonymous, or apply to remain anonymous. In the proposals, that had been changed. In the hearings there had been some who opposed it and there had been some who had supported the right to remain anonymous, strangely enough, including Right2Know. The idea was that because the funds were open and controlled by the IEC, donations were private and could remain so. Under what aegis had it been removed?

The Chairperson determined that 3(1) was not going to be amended and the 3(1) in the original Act would be retained. He did not understand the problem with 3(4).

Mr Singh noted that it was the first time that the Bill referred to a foreign agency so he wanted to know if there should be a definition.

The Chairperson interjected that it had been in the original Act.

Mr Singh amended his point, agreeing that it was not included for the first time, but asked for an explanation of a “foreign government agency”.

Ms Maseko clarified her point that reading 3(4) in conjunction with 3(2) did not make sense as sub-clause 3(2) referred to opening an account.

The Legal Advisor noted that it had been an oversight and it should state that 3(4) had to be read in connection with 3(3).

The Chairperson returned to Mr Singh’s question about foreign government agencies.

The Legal Advisor explained that the Committee had received comment during the submissions on the concept of foreign agencies that funded political parties. They had tried to include the concept of an agency funded by a foreign government but they had not defined it as they thought that the term would be readily understood and a definition might be too narrow. Donations could be made only for training and development from foreign foundations funded by governments but not for purposes of funding. No foreign agencies could donate to a political party.

The Chairperson asked Mr Singh what he would call the CIA. Was it not a foreign government agency? He would have a problem if the CIA or MI6 donated. If there was no harm, fine, but if there was harm, he would have to explain why.

The Committee was interrupted by a need to go to the House of Assembly for a vote.

Resuming the discussion, the Chairperson explained that the Bill said that the IEC could not accept money from any organ of state, any foreign government or a foreign government agency. He was trying to understand why they were having the discussion as there was no change in the wording.

Dr Mulder referred to 3(4)(b). He stated that a foreign government agency was linked to a foreign government and the Committee did not want foreign governments or their agencies to donate directly to political parties. So that made sense. But if one went to Clause 9(3), the Bill spoke of a foreign entity and that the Bill would allow training and development by a foreign entity. Dr Mulder suggested that that was an entity that had no connection to a foreign government. 9(3) was technically correct but the Bill could make the lack of association with a foreign government clearer.

Mr Mdakane agreed that the issue was covered and should be retained in its current form.

Ms Maseko agreed about foreign government agencies but thought that a definition was necessary.

Ms D Dlakude (ANC) agreed but did not know where NGOs should be put as they were funded by other governments and pushed the agenda of foreign governments.

The Chairperson reminded Ms Dlakude that the Committee was actually on Clause 3 and would deal with NGOs when they came to Clause 9.

Mr Singh said that he could live with Clause 3 but the clause that Dr Mulder had referred to in Clause 9 in the published Bill had been omitted in the new revised version so it would have to be re-included.

Mr Selfe raised the point of 3(5) in the Bill which referred to anonymous donations.

The Chairperson re-read the clause in the Bill and recalled that there had been extensive discussions on disclosure, including those who had gone to court in respect of disclosure. The proposed changes excluded the anonymity. He asked if the Committee was comfortable with 3(5) as it stood in the published Bill.

Mr Selfe said that he did not think that there a big problem because some people did not want to disclose their donations and that a donation to the Multi-Party Democracy Fund (MPDF) could not influence a party. He felt that if that right to request non-disclosure was not included in the Bill, there would be very few donors. It was an incentive to people who did not want their donations to be known.

Mr Mdakane agreed as the main intention had been about disclosure of donations to political parties. The MPDF was different. Those donors were funding everyone, with no party allegiance.

The Chairperson accepted that 3(5) would remain as it stood in the published Bill.

Clause 5 Management and control of Funds
The Chairperson referred to the proposed changes and the question was whether the Committee included the proposed 5(1). Mr Selfe and Ms Mathys did not understand why a new business unit was required.

Mr Singh stated that the Committee was creating a separate Accounting Officer for the funds only. He did not believe that it was necessary to set up someone at Director General level. That would be divisive in a single entity and would create two centres of power. He suggested that the Bill refer to the Chief Electoral Officer, as it had in the original Act. The Chief Electoral Officer could employ people to engage and assist.

The Chairperson asked if they could talk about the principle. Did the Committee want a unit with a head with the equivalent of a DG, or did the Members want a unit at a lower level reporting to the Chief Electoral Officer?

Mr Selfe said that the really complex part of the job was to account for the disclosures; but the clause deals with the administration and auditing of accounts. If you want a high flyer, that person would have to have a big responsibility but at the moment it was just a duplication of the original public party funding administration.

Mr Mdakane said that there would be a lot of work accounting for every cent of every political party and there were many parties. A unit was expensive, but it was a permanent fund as long as there was democracy in the country.

The Chairperson reminded the Committee that they were referring to the whole process which included administration, disclosures, enforcement etc. There were two questions. Did Members want a separate unit? At what level should that unit be pegged?

Mr D Gumede (ANC) stated that a unit going up to a director level would be better than expecting the CFO and CEO to handle everything.

Ms Mathys stated that the concern was that it was going to be a whole unit that might have very little to do. They were currently managing political party funds. The IEC did not audit every political party as that was the job of the political party to provide audited statements. The new task was to identify who was donating the money and marketing. She could not see the need for an Accounting Officer. It might be rushing ahead as, to date, no one had put money into the Fund. She could not approve of spending all that money when it was possible that there would be no donations. She agreed that additional staffing was needed.

The Chairperson reminded the Committee that in Clause 15, the Commission’s work was indicated. He asked if it required a dedicated unit. If it was under the leadership of IEC CEO, Sy Mamabolo, Members would complain that on one day, he would be deciding about funding for parties and on the next trying to run a fair election. Those were the issues that had been raised.

Dr Mulder had not attended the meeting with the IEC but he did agree with the need to make provision for an additional unit. He understood that a Department had to have a single Accounting Officer. He disagreed with the budget but the person was different.

Mr Selfe agreed that a unit could be set up to do all the work as the IEC would have to appoint staff but the proposed change to 5(1) referred only to “funds”. The IEC would have to set up a new accounting officer to deal with everything and not just the funds. It had to be defined differently in another clause.

The Chairperson noted that it meant that the Act had to clarify the work to be done by the IEC.

Ms Mathys asked if the “political party unit” would handle both the public funds and the MPDF funds that would go to political parties.

The Chairperson agreed that they were talking about a single unit for all political party funds.

Mr Singh accepted in principle but he remained adamant that there could not be two Accounting Officers in the IEC as an Accounting Officer was a specific position.

The Chairperson agreed that they needed a CEO or someone else as they could not have a second accounting officer in the IEC. The Legal Advisor, and drafting team, had to find a position for it in the Bill and define what the unit would be doing and then make a proposal.

Clause 8 Donations
On the proposed changes, Clause 8 Donations had moved from Clause 9 in the published Bill. The heading had been changed from Prohibitions to Donations.

Mr Selfe had a big problem with the reformulation, partially for reasons articulated in the morning but essentially because potentially so many donors would not be permitted to make a donation, such as an attorney firm, a dental practice. They were omitted as they would not fit into the definitions of those who were permitted to donate. He believed that it would be better to define who could not give rather than who could give. However well they defined who could donate, they would probably leave someone out. They had to bear in mind that donations were controlled by caps etc.

Ms Maseko asked for clarity. Had the old Clause 8 been removed? What had happened to the old Clause 8?

The Chairperson explained that the Committee had agreed that the old Clause 8 would be moved to definitions and therefore what had been Clause 9, now became Clause 8. Mr Selfe was suggesting that the prohibitions be retained and the Committee could look at any amendments that might be required. The Committee could deal with it immediately or flag it and continue page by page.

The consensus was to go through the items page by page as previously agreed.

Clause 10 Prohibition on donations to member of a political party
Clause 10 had been Clause 11 in the published Bill. The next proposal for change was about prohibited donations. The proposed title was Prohibited donations.

Prof Cheadle explained that the problem was about circulatory. Many submissions had raised the problem of circulatory in donations to a member. The drafting team proposed the deletion of the word “member”. That was a re-working to deal with problems raised by submitters about people collecting money for political parties. The change made it clear that only authorised persons could receive funds for the party. That clarified the intention of the original Bill.

The proposed change included a reference to a third party not being able to receive funds on behalf of a political party. It had been a definition in Clause 8. The IEC and others had suggested that there be a specific definition of third party. In the published Bill, the Committee had tried to regulate third party entities by including them in the definition of a political party. The amendment was a refinement to clarify the circulatory in the published version.

Mr Singh suggested that any prohibited donation had to come under the new Clause 8 and not under 11. Then the Committee could consider the content.

Mr Selfe suggested that the original formulation was better but he had difficulties with third party entities. He used the example of a Catholic Party that opposed abortion and an NGO who opposed abortion. Could the NGO be said to be supporting the Catholic Party? He gave a number of examples trying to explain that the legislation was intended to prevent people setting up a separate entity as a vehicle. Therefore, they should set up the legislation in a way that prevented precisely that.

The Chairperson noted that the Bill stated that no one could donate to a third party. The Committee was not mandated to prevent people from making donations to third parties, whatever that might mean.

The Legal Advisor explained that a third party could be set up to raise funds for a party which would circumvent the legislation preventing certain donations. They were trying to prevent a special entity obtaining donations and then give that money to the political party.

The Chairperson reiterated his point that the Bill stated that no one could donate to a third party and the Committee was not mandated to prevent people from making donations to third parties

Mr Mdakane agreed that that was his dilemma. The purpose of the Bill was to protect the country’s democracy and to prevent donors from hijacking political parties. He thought that that point could make it very difficult for those who could not receive funding. For example, SANCO would find it problematic if SANCO could not receive donations.

Ms Mathys said the submissions were referring to political parties that used outside organisations to push their agenda. A political party want to show its strength so money went via the civil society in order to push the agenda of the political party. The way it had been captured was very milky and would not work in the best interest of everyone.

Mr Gumede had a problem because as it stood, the third party could be an ad hoc group addressing a certain issue but the same issue could be addressed by a political party. To strengthen their case, someone could donate to the third party. Further specifics were required.

Mr Selfe asked what could be done to regulate the third party if they accepted a donation.

The Chairperson did not believe that the Committee had a mandate to regulate third parties. Besides which, the IEC had no mandate to sanction such bodies.

Prof Cheadle clarified that in the proposed amendment the third party had to be registered with the IEC as the IEC already registered such entities. The amendment proposed that such bodies would have to register with the IEC. The third party had to openly promote or oppose a political party in elections. It was limited to elections and limited to a party. In the past, independent people had raised money to promote parties independent of political parties. It had been in the published Bill. The point was getting donations simply to support a political party. The proposal had attempted to refine the clause that had been in the published version of the Bill. It stated quite simply that a “party” had to be registered if it wanted to go out and raise funds. It was not about a cause such as the environment. Donations had to be intended specifically to support a political party during an election. It had been in the published Bill but the drafting team had revised it in an attempt to resolve definitional difficulties.

Mr Mdakane understood Prof Cheadle’s explanation but he was concerned about the complications. He proposed that the discussion should be deferred to when the discussion reached that point in the page-by-page discussions.

• Discussion on the Bill as published for public comment
The Chairperson reminded the Committee that the decision had been to put a positive spin on the legislation. Members had also decided that a reference to provinces should be considered in the Preamble.

Mr Mdakane accepted that he was new in the Committee but he did not think that there was adequate funding for parties. He recommended that the amount of funding not be defined. Remove “adequately” and add “sufficient”.

Long Title
Mr Singh suggested that the Bill was “providing for” and not just “regulating” the fund, which was more positive.

The Chairperson suggested that the Bill should contain both “providing for” and “regulating” the fund. Was that sufficient positive spin?

The Legal Advisor explained that the long title was not the place to have a positive spin as it merely indicated the framework of what the Bill was about. It was a statement. The Preamble was where the Committee would explain the progress from one fund to two funds and other intentions of the Bill.

The Chairperson requested that Mr Singh’s proposal to add “provide and” be accommodated in the long title.

Ms Maseko raised the question of the reference to provinces.

The Legal Advisor suggested that it be included in the third paragraph in the Preamble.

Mr Selfe steered clear of preambles because they were not really justiciable but he pointed out that the fifth paragraph in the Preamble afforded the National Assembly plenary legislative authority to pass legislation on political party funding, he wondered whether it went to Parliament and not just the National Assembly. He presumed that it went to the NCOP.

The Committee was interrupted by a call to go to the National Assembly to participate in a vote.

On resumption of the Committee meeting, the Chairperson indicated now was not to ask questions but to clean up the Bill. He asked if there was a problem about the word ‘National Assembly’.

Mr Selfe said that it simply meant that Parliament could pass Bills, nothing else, which was pointless.

Ms Mathys said that it was not acceptable to use “National Assembly”, but she could live with “Parliament”.

Dr Mulder explained that it was intended to explain that it was not an Executive Bill.

The Legal Advisor explained that the Committee wanted to establish where the Bill had come from. He wanted to explain the purpose of the Preamble but the Chairperson cautioned the Legal Advisor not to explain as he would open a debate.

The Legal Advisor then advised that it to be changed to “Parliament”.

The Chairperson noted the Committee agreed that “National Assembly” be replaced with “Parliament”.

Mr Gumede indicated that he wanted to add another paragraph in the Preamble. “And whereas it was important to promote national interest over foreign and other interests.” He did not have the right phraseology but the drafters could assist.

The Chairperson asked the Legal Advisor to add something about safeguarding the sovereignty.

Clause 1 Definitions
The Chairperson asked if there were any amendments to the current definitions.

Mr Gumede wanted the reference to the Constitution amended by adding “as amended”.

Ms Maseko stated one never appended “as amended” in reference to the Constitution.

Mr Selfe said that his problem lay with the lack of consistency in the way in which the Acts had been cited.

Ms Maseko explained that the Constitution as the founding legislation and, for citation, no Act was ever added.

Mr Gumede withdrew his proposal regarding “as amended”.

The Chairperson agreed that there would be consistency in reference to all legislation except for the Constitution.

Clause 8 Interpretation for purposes of this Chapter
The Chairperson explained that the definitions in Clause 8 were being moved to Chapter 1

Dr Mulder suggested that in Clause 8 the Bill was dealing with “interpretations” and not definitions. There was a difference between a one sentence definition and broader interpretations.

Mr Selfe noted that the wording in Clause 8 suggested that those interpretations applied only to that clause.

The Legal Advisor proposed that the definitions go to Chapter 1 to clean up the Act. He pointed out that in actual fact, those words and terms could not be misinterpreted and used incorrectly elsewhere. He assured the Committee that an interpretation was a different or expanded way of writing a definition.

Mr Singh suggested that the definitions should stay where they were.

The Chairperson suggested that the Committee look at content and then come back to positioning.

Prof Cheadle stated that the IEC would be dealing with all donations and the word donation applies in the other Chapters, owing to the changes in the Bill. He believed that the recommendations to consolidate all definitions in Chapter 1 came from both public input and Members of the Committee and that was a good consideration. The placement of the definitions had to be coherent and consistent.

Dr Mulder agreed with Prof Cheadle.

Prof Cheadle explained that they had removed the definition that spoke to a donation made to a member of a party. That would be dealt with under Clause 11. They had addressed the issue of circulatory. It was a drafting issue that had been pointed out by public input so there would be changes when the Committee received the full Bill but they were simply a response to technical issues. When Members received the Bill, they would see that that definition had been removed and covered by Clause 11.

The Chairperson said that Prof Cheadle was making it difficult. He had thought that the Committee was going through the Bill clause by clause, but the drafters had different pages on their laptops. If they were going to propose changes throughout the document, then it defeated the purpose of the day’s objective. The Committee would have to repeat today’s exercise.

The Legal Advisor stated that there were not so many changes that it would prevent the Committee going through the other clauses. It was only on donations. The two options were whether the Bill dealt with permissible donations. If the Committee decided on that route, the change that Prof Cheadle was talking about became relevant. But there were not many changes to other clauses.

The Chairperson asked if they could agree that the drafters would re-work Clause 8 with the definitions, print it and give it to the Committee to look at it. He wanted confirmation that their changes referred only to donations or there was no point to the exercise in which the Committee was engaged.

Prof Cheadle had supplied a document that showed that they had identified clauses where they were proposing that changes should be made. The proposed changes were based on the submissions. And then there were major technical drafting changes. For example, 2.3 stated “Remove the circulatory in relation to a member.” So, the drafter had alerted the Committee to the issues. They had not put the definitions upfront because it was for the Committee to make the decision. They were not slipping things in. They had been asked about the definitions and the answer was that it was a change proposed in the document on major technical drafting changes.

The Chairperson attempted to understand what the drafters were saying. Was he correct in saying that Clause 8 in the Bill was to be changed?

Prof Cheadle said that it was a minor change to address circulatory relating to a member of a party. They had not provided the change because they were not asked to do that.

The Chairperson suggested that the Committee went through the two-pager from the drafters.

Mr Selfe did not understand what circulatory meant. He pointed out that the changes were not technical drafting changes; they were substantial policy issues. Could the Committee go through clause by clause when there were policy issues on the side lines? It was unsatisfactory because they were wandering about in the dark. The so-called technical drafting changes should be made so that the Committee could look at them. Even better would be a new Bill with proposed deletions and insertions.

The Chairperson asked for proposals on how to deal with that issue as well as the two-page document that they had before them.

Mr Gumede proposed that the Committee continue and address the issues when the process had been completed.

Mr Mdakane believed that the Committee had resolved three of the major decisions that had to be made. Some of them were technical in nature and once the policy issues had been clarified, the drafters could complete their work. There were nine issues in total. He thought that the Committee could agree on rest of the issues otherwise the drafters would be continually re-drafting. They needed to identify policy issues. He thought that it could be finalised by talking about the issues.

The Chairperson referred the Committee to the document provided by the drafting team.

Deletion of Clause 5 regarding anonymity was not accepted but the proposal to defray expenses had been agreed to. The obligation for dual disclosure had to be discussed.

Mr Selfe believed that dual disclosure would be a hassle factor and that it would it would be very difficult to administer. To the extent that it was necessary, it should apply only to listed companies.

The Chairperson noted that the business people who had made a submission had specifically referred to listed companies.

Ms Mathys queried whether he was referring to JSE listed companies.

The Chairperson noted that there was also a ceiling on donations, therefore the business representatives had said that dual disclosure would be expected from JSE listed companies.

Ms Mathys believed that the Business Leadership forum had been agreeable to dual disclosure but had not referred only to JSE listed companies. All companies had to report on donations and they had to disclose it to SARS, so the requirement of dual disclosure should not be limited to JSE listed companies.

The Chairperson recapped the input. All companies above the threshold should make dual disclosure when donating to the MPDF. He reminded the Committee that everyone who made a donation above the threshold of R100 000, when it came to private funding, had to do dual disclosure. He assumed that it would be placed in the clause on disclosure

Mr Selfe preferred that dual disclosure of donations should be for JSE listed companies.

Mr Mdakane said that all companies should disclose as he saw no reason not to.

The Chairperson explained that Mr Selfe’s concern was about individuals who should be exempted. They would be disclosed by the political parties so why should they do dual disclosure?

Mr Selfe felt strongly that individuals should be excluded. He did not mind if all companies disclosed but he wanted to defend individuals. They would be disclosed by the political parties so why should they do dual disclosure?

The Chairperson suggested that disclosure could be voluntary.

Mr Mdakane suggested that if an individual was so endowed with resources as to be able donate over R100 000, those individuals would have accountants. He was, however, not married to individual disclosure. He proposed that all companies disclosed.

Mr Gumede recalled that no one had ever donated to the MPDF and he thought that the Committee should first look at things that are likely to trigger participation, rather than hindering people from donating.

The Chairperson suggested that all JSE registered companies had to disclose.

The Legal Advisor explained that all political parties had to disclose all donations above R100 000. Submissions had suggested that both parties disclose donations above R100 000 to political parties.

Mr Mdakane suggested that as it was a new fund being set up, for a time, at least, dual disclosure could be for companies and individuals should not have to disclose at this stage. There were regulations around who could and who could not donate. The legislation should not discourage individuals who might want to donate.

Dr Mulder questioned whether the purpose of dual disclosure was to ensure that political parties did declare and to ensure that the IEC would know exactly how much had been donated. It was a double check as he understood it.

The Chairperson agreed that the intention was to create a double check.

Mr Mdakane believed that the legislation could be changed should it be necessary but initially it would be good to encourage individuals to donate.

The Chairperson noted that it was agreed that all donations beyond the threshold be disclosed, including trusts etc., except in the case of individuals.

The next point was about allowing foreign entities to fund training.

Mr Mdakane suggested that a percentage of money from the MPDF could be used for training and development. They wanted to avoid individuals giving funds for party training outside of the donations declared.

Mr Singh explained that it was not about using funds for training as that was not restricted but that registered foundations with offices in South Africa, such as the European Parliament and other "stigtings" offered political training and development. They provided training for councillors or mayors, etc. They could go to the IEC and indicate what training they would like to offer. There had been a concern that some of the training sessions could be disguised for political purposes. The legislation had attempted to specify and limit the organisations that could offer such training. Personally, he did not have a problem with those entities offering training. The challenge lay in a donation from foreign entities.

Mr Mdakane believed that political parties should be forbidden from accepting foreign funding. He could not see why foreign entities were allowed but not foreign government agencies. They needed to define foreign entities. Even if a foreign entity had offices in South Africa, it was funded by a foreign government. However, he acknowledged that he had not been in the Committee when it had been discussed and so he would go with the Committee decision. He still did not know what a foreign entity was, but it could cause a lot of harm.

Mr Selfe knew only about the donations from foundations in Germany which received funds from the German Development Aid. Those foundations used their funds for very strictly specified training and development of parties. The foundations only allowed funds to be used for development of individuals and ideas. Most political parties in South Africa derived some benefit from those foundations. It would be a pity to throw the baby out with the bath water.

The Chairperson asked if it was possible to put a cap on the amount provided for training. For him the problem lay in allowing some strange entity directing policy formulation. Could Members meet halfway by putting a cap?

Mr Gumede’s concern was about influence on a party, but a cap would limit any influence.

The Chairperson noted that the cap should go in the Regulations. How much per foundation per annum?

Mr Selfe proposed R5 million as a cap.

The Committee agreed to a cap of R5 million per foundation per annum.

The next proposal for amendment was about separating bank accounts to disclose all income.

Mr Singh explained that his party already had separate accounts for each of the funding streams. The proposed provision convoluted matters.

Prof Cheadle stated that the requirement was in addition to separate accounts.

Dr Mulder asked, in reference to 6(3), what donations below the threshold had to be compliant with?

Prof Cheadle explained that the auditor would check that a person had not made multiple donations below the threshold that exceeded the threshold.

The Chairperson noted that the next proposal for change was to remove the clause dealing with unspent monies. That had been agreed.

The next proposal for change was about increasing the administrative fines.

The Chairperson explained that if a party received a donation of R16 million and was in contravention, a fine of R1 million was irrelevant.

The Legal Advisor pointed out that the wording had been amended to include a percentage.

Mr Selfe noted that the Committee had had a discussion about giving the role of instituting sanctions to the Electoral Court. He was not happy about the IEC imposing fines as it would become the enforcer, which was the invidious position that the IEC had wished to avoid. The Electoral Court could be constituted as a High Court which would allow for a reasonable appeals process. Opinions needed to be tested. He was not happy with administrative fines.

The Chairperson pointed out that the Committee had agreed that there would be sanctions. When the IEC picked up a contravention, it would refer that to the Electoral Court. Alternatively, the legislation could require the Electoral Court to impose an appropriate sanction.

Dr Mulder explained that the argument was that specific amounts would not work as the fines could be calculated into the contravention. To avoid this, the proposal had been a percentage of their income would be the sanction. He was not sure whether the Bill could dictate a sanction to the Electoral Court.

The Chairperson noted that the spirit of the proposal was that the consequences would be such that a party would not even take a chance.

Mr Selfe recalled that the schedule for the sentencing framework in the relevant Act had been found to be unconstitutional.

Mr Mdakane believed that the Electoral Court should be free to set appropriate sanctions. There were other options if it did not work.

Ms Mathys understood that the current practice was if a party had not met the requirements, it did not receive the next tranche. She asked if the Electoral Court legislation allowed it to make decisions on the matter of political party funding.

The Chairperson noted that the IEC had suggested that the Electoral Court manage the process where there were contraventions.

The Legal Advisor indicated that it was important for the Committee to give the Court guidance as to a maximum sentence so that the court understood how serious the misdemeanour was and could rule in accordance with that understanding. The Electoral Commission Act referred to a maximum fine or sentence of imprisonment.

The Chairperson agreed that that was the process of guiding sanctions even in the PFMA.

Mr Selfe agreed with the proposal but asked if it was necessary to prescribe to the Electoral Court as it could be any court that sanctioned the party as the legislation had created the offence.

Ms Maseko asked what would happen to the funds. Should it be distributed equitably amongst the other parties.

Dr Mulder said that it was necessary to separate the sanction of political parties from the sanction of individuals. Individuals could be taken to court but guidance should be given to the Electoral Court as to how to deal with political parties. He suggested that simple figures not be given but a percentage of funding be given.

The Chairperson asked the Committee to indicate the percentage of the income to be docked, using the draft schedule as a guide. The drafting team would develop a proposal.

The Chairperson said all technical amendments were appropriate and would be dealt with when the Committee got to the appropriate clause

Amendments to the Bill
The Chairperson worked through the Bill.

Dr Mulder noted that all references to political parties had to stipulate “represented” political parties. The current drafting was correct on that point.

Ms Maseko noted that the Committee had decided to define the term “foreign agency”.

Ms Mathys queried the difference between a “foreign entity” and a “foreign government entity”.

The Legal Advisor noted that the term “foreign government entity” had not been used. A foreign agency was linked to a foreign government, i.e. foreign government agency but a foreign entity was not necessarily linked to a foreign government.

Ms Maseko asked if the contributor contemplated in Clause 3(3)(a) took the Bill back to the issue of a foreign donor and contradicted what had been said earlier.

Mr Selfe explained that the purpose of the Bill was to prevent political parties being captured but a contributor to the MPDF could not capture anyone. One of the incentives for donors was to contribute in anonymity if the donor was an individual.

The Chairperson informed Ms Maseko that that was what had been agreed upon earlier in the meeting.

Ms Maseko was concerned that it would let loose a private source from outside of the country and open a gap for allowing foreign donations.

The Chairperson explained that it was about the central fund and not the political party.

Ms Maseko asked if there was a threshold and a cap on donations to the MPDF.

There was no cap on donations to the MPDF because there was no direct effect on a party and therefore sources from inside and outside the fund were permitted. All donors had to disclose to the IEC.

Clause 4 was in order.

Clause 5(1) had to be amended to elaborate on the purpose of the IEC unit

Mr Selfe suggested that the requirement was for an institution and a person who would be responsible for funds, disclosure and so on, but was not the Accounting Officer.

The Legal Advisor would find the right place in the Bill.

Clause 6(3) referred to the National Assembly.

Ms Mathys suggested referring to Parliament instead of National Assembly.

Mr Mdakane reminded the Committee that the reference was about allocation of funds to members of the National Assembly so it had to remain the same.

Clause 6(7) referred to the prescribed intervals at which funds had to be paid.

Prof Cheadle explained that the IEC would determine the intervals at which funds would be disbursed to political parties.

Clause 7 referred to the purposes for which money from the funds may be used.

For litigation – it had to state the public interest of the litigation

The Legal Advisor said that the Committee had agreed to talk about what the litigation was not allowed to do.

Mr Selfe referred to the permissible use of funds for litigation. Currently the IEC prevented parties from using funds for legal fees.

The Chairperson indicated that 7(1) should indicate that funds could be used for litigation.

Dr Mulder believed that it would be tighter legislation if 7(1) were left as it stood but to include “prohibited for intra-party litigation” in 7(2), which indicated prohibited use of funds.

Ms Mathys was concerned as the IEC had made a decision that funds could not be used for litigation and she could not see from where the right for the IEC to make that decision had come.

Prof Cheadle believed that the IEC had made an incorrect interpretation in not allowing political parties to use funds for litigation. It should have been taken on review. The proposal by Dr Mulder would make it clear that funds could be used for all other legal processes.

The Chairperson suggested stating what funds could not be used for, that is, intra-party disputes.

Mr Selfe agreed that it would be fine, but he wanted belts and braces to ensure that it was clear. In 7(2)(d) he wanted the words “in terms of Regulation 23” to make it clear.

The Legal Advisor explained that the words “prescribed” meant that there had to be regulations. Regulation 23 had been divided into those that required regulations from the Bill and those that would apply to IEC regulations.

Dr Mulder agreed. He also noted that the legislation stated that funds would be used for the modern functioning of a political party would definitely include litigation.

The Chairperson suggested that the addition of a couple of words in 7(1) to ensure that funds could be used for the common interest of the public.

Dr Mulder stated that it would still be the same as indicated already. It was repetitive. Legal costs, except subject to Clause 7(2), funds may be used for any purpose.

The Chairperson explained that the point was simply to ensure that the IEC did not attempt to prevent the use of money for litigation and it was agreed to add the words. He wanted “in terms of Regulation 23”.

The Committee had dealt with Clause 8, which would be included in Clause 1. The next clause was Clause 9 in the published Bill which would become Clause 8 in the final Bill.

The Chairperson indicated that the reference to the Lottery Board was superfluous as the Lottery Board did not make payments to political parties so the Committee would remove it.

On 9(3), Mr Selfe noted that the Committee had agreed to include “subject to the prescribed cap”.

The Chairperson indicated that the drafters had to include that as 9(3)(c) or new 8(3)(c).

The Legal Advisor noted that the upper limit had not been included. It had been agreed that a party could not accept a donation above R15 million.

Ms Mathys noted that there was a different cap for foreign training.

Mr Selfe reminded the drafters that the cap would be per individual.

Mr Selfe noted that the IEC had found 10(3) to be something of a headache and an administrative burden to be quarterly at precisely the time that they would be at their busiest.

There was some discussion by the Committee as to what the IEC had suggested.

Prof Cheadle reminded Members to note the difference between disclosures and financial statements. Disclosures were quarterly and financial statements had to be produced annually. The IEC would use annual statements to check whether parties had disclosed. Disclosures would be an electronic process.

On Clause 11, Mr Selfe did not believe that his concerns had been addressed in the proposed revision. He argued that the first part applied throughout the year and not just during election periods. He thought that the proposed revision was riddled with ambiguities and possibilities for litigation. He believed that it was not possible to draw the line between organisations and political parties.

The Chairperson explained the genesis of the argument. It had started by trying to prevent donations to an individual because either it might not be handed in to officials or it would be factionalism. The Committee was clear that it wanted to prevent donations to individuals that would promote factionalism

Dr Mulder stated that the problem was that an entity outside of the political party could receive donations and campaign on behalf of the political party, thereby circumventing the regulations. That was what the Committee needed to prevent.

Mr Selfe noted that he was still in ignorance of “circulatory” but believed that political parties had been adequately defined in the published Bill.

Mr Mdakane believed that the concerns were covered and it would not assist to pursue it further.

The Chairperson asked Members to address Clause 9 in the published Bill and to determine from that whether amendments were required.

Mr Singh suggested remaining with the published Bill as the Bill was saying that persons could only accept donations for the party but not for themselves.

Mr Mdakane suggested that the original clause in Clause 11 be retained.

13(1)(c): The Chairperson explained to Ms Mathys that it just meant funds had to be kept separate but there was no need for two bank accounts.

13(2)(d)(ii): Dr Mulder asked if the political parties had to indicate each person who paid a membership fee.

The Chairperson clarified that the sum of membership fees had to be disclosed. He asked the drafting team to ensure that that was clearly and unambiguously stated.

13(3): Prof Cheadle stated that there had to be an inclusion stating the Auditor General had to check for soft loans and commercial donations in-kind.

13(5): Dr Mulder asked if Auditor General could the books of political parties. Was it a normal practice?

Mr Singh stated that the Auditor General could not look at the books of political parties.

The Chairperson suggested that the Auditor General could audit the IEC books but not political party books. However, it seemed that the Auditor General was being given permission to audit the books of political parties.

The Legal Advisor explained that in the current Act the Auditor General could audit political party books in relation to public money given to the political parties.

Mr Mdakane agreed that the Auditor General could audit money given from the public purse.

The Chairperson noted that 14(2) which related to the return of unspent funds, was to be removed.

15(2)(c)(i): Prof Cheadle explained that this related to requesting permission to enter premises. If permission were refused, a court order would have to be obtained as per 15(3). He explained that the Committee had agreed to those clauses being published in the draft Bill. It was designed so that the IEC did not impose anything, hence the request for permission.

16(1)(2)(d): “the cancellation of the registration of the political party in terms of the Electoral Commission Act”. It was agreed by the Committee that 16(1)(2)(d) be removed. Several submissions had also supported the removal of that clause.

18(2)(b) suggested that the Commission could recover any money by setting off the liability against any amount to be allocated to that political party.

Mr Selfe did not see any inclusion of the audi alteram partem rule. Clause 16 allowed for a response from a political party but where was the remedy if the IEC did not accept the explanation. It would simply recover any money by setting off the liability against any amount to be allocated to that political party.

Dr Mulder suggested that Clause 16 gave a party the right to be heard.

Prof Cheadle noted that there was an audi beforehand and then audi afterwards via the Electoral Court.

Ms Mathys said that the Committee had had discussions about not allowing the IEC to deal directly with sanctions but in that section the Act gave the Commission the powers to issue sanction. That negated the discussion about the IEC not being the one to implement sanctions.

The Chairperson noted that that was the current position and power of the IEC.

Mr Selfe said that the IEC could withhold money if there was no accountability for public money spend. But in Clause 18, it related to criminal or quasi-criminal activities. It seemed an instance where there had to be an audi alteram partem rule

The Chairperson thought that the option of going to Electoral Court was available to parties.

Prof Cheadle said that there was audi before the decision is taken by the IEC to remove monies, then the political party could gain real audi via the Electoral Court. The monies that the IEC was setting off were the monies that the IEC was paying out and if funds were not paid, there was an audi rule in that case.

The clause remained as it was in the draft Bill.

The Chairperson noted that IEC could not be referee and the player but it seemed that it was adequate.

Dr Mulder noted that Clause 19 still allowed the IEC to impose sanctions. He noted that the IEC could withhold funds but it did not impose a sanction – that was the sphere of the Electoral Court. Clause 19 had to be fixed.

Mr Singh said that Clauses 19 and 20 had to be reviewed together. If the Court imposed the fine, where did one go for the review?

Ms Mathys noted that Clause 16 allowed the Commission to issue a directive if the IEC was of the opinion that the political party had failed to adhere to the Act.

Dr Mulder referred to the fact that IEC could only issue a directive in respect of 16(2)(a) suspend the payment and 16(2)(b) recovery of money. Clause 16(2)(d) had been removed and, by implication, so should 16(2)(c) be removed.

Prof Cheadle pointed out that the imposition of the fine in Clause 19 could only be imposed by the Electoral Court but the IEC could, in the directive, suggest the fines that the Court could impose. He could draft that easily.

Mr Mdakane agreed that the IEC should not be given additional power.

The amendment was agreed upon.

The draft Bill contained 21(1) and 21(3). That had to be corrected to be 21(1) and 21(2). In Clause 22 Funding of political parties by legislatures and municipal councils, the reference to Municipal Councils had to be removed and the grammar in 22(1) corrected to reflect the single National Assembly.

Dr Mulder noted that 22(1) had huge implications. It was not wrong but he was concerned about the reaction from provincial legislatures when they realised that funding for political parties was restricted to funding through sections 57(2) and section 116(2) of the Constitution, section 34 of the Financial Management of Parliament and Provincial Legislatures Act, 2009 and the Bill under discussion.

The Chairperson pointed out the importance of clarifying what the Constitution permitted. The Bill could not be taken to court as it stipulated that provinces had to work in accordance with the Constitution.

On Clause 23 Regulations, Mr Selfe suggested that an oversight mechanism should be considered for ensuring adherence.

The Chairperson noted that there had to be a parliamentary body that would conduct oversight as the Ad Hoc Committee would cease to exist on 30 November 2017.

The Legal Advisor stated that it was implicit in the section that Parliament had to create a mechanism to deal with oversight, but it was not being prescriptive that it had to be a Committee.

Mr Singh asked if the wording in 23(1) meant that the President had to sign and publish the regulations. He did not want the President, or a future President, to be able to interfere with the publishing of Regulations.

Prof Cheadle explained that although the President “may” send it back, that would only apply if it were unconstitutional. It was the same language as used in the current law.

Clause 24 allowed that, once the Regulations were passed, continuity would be ensured.

On Schedule 1, Mr Selfe suggested that the schedule should refer to percentages of public funds because that was legally certain funding.

Ms Maseko asked if Schedule 1 had included the fines discussed previously. The amendments would be included.

On the Memorandum on the Objects of the Funding of Political Party Bill, the Objects were not complete and the list of public input had to be amended to include those who had presented during the second call for public comment.

The Chairperson asked the Legal Advisor for a timeline or roadmap until 30 November 2017.

The Committee would look at the changes on the 23 November and on the 28 November, the Committee would adopt the final cleaned-up copy of the Bill. It would then be forwarded to the National Assembly. The Chairperson requested a quorum on Tuesday, 28 November.

Meeting adjourned.

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