Political Party Funding Act
Political Party Funding Act Draft Regulations
Regulations for Political Party Funding Act: IEC Public Hearings Day 1
Regulations for Political Party Funding Act: IEC Public Hearings Day 2
My Vote Counts NPC v Minister of Justice and Correctional Services and Another (CCT249/17)  ZACC 17; 2018 (8) BCLR 893 (CC); 2018 (5) SA 380 (CC) (21 June 2018)
The Portfolio Committee on Justice and Correctional Services conducted public hearings on the
Promotion of Access to Information Amendment Bill. The Promotion of Access to Information Act (PAIA) was being amended subsequent to the proclamation of the Political Parties Funding Act and a court judgement which had determined that the Act had to be amended to provide for access to information about political parties.
The presenters were assured that the Committee would be considering all oral presentations as well as all written submissions when considering the draft Bill. One organisation had decided not to present and another had deferred its presentation to the following day. The presentations were concise and to the point, focusing very specifically on certain issues in the Bill. A common theme amongst presenters was the fact that the threshold of R100 000 for the declaration of a donation was far too high and allowed far too much room for the manipulation of donations. The period for keeping of records was considered too short.
The first presentation was made by a representative of the amaBhungane Centre for Investigative Journalism. Key points were that the threshold of R100 000 was too high and should not be contained in the Bill but in the regulations to the Bill. To avoid circumvention of the intention behind disclosure, amaBhungane recommended that donations from substantially related sources, including funding from party investment vehicles, be disclosed. The proposed keeping of records for five years should be increased to a minimum of seven years. It advised the Committee to consider harmonising the Amended section with the rest of PAIA. Parliament should exercise its oversight in updating the Section 50 Manuals.
Members asked how amaBhungane believed a balance could be achieved between administrative ease and the requirements for disclosure of party donations. Why had significantly different and separate legal entities had been lumped together in amaBhungane’s recommendations? Would investment vehicles not be after the fact, that is, investment vehicles related to what the party did with the funds that had been raised, in which case, would the normal laws regarding investments not apply? Why align the period of record keeping with the Companies Act when most parties had a conference at national level every five years? One Member asked about the investigations through the private emails of politicians. Did amaBhungane operate under PAIA or its own common sense when it revealed so many things? Which legislation allowed amaBhungane to investigate emails? Did it apply to do that or did it just do it?
Representatives from Allan Gray submitted input on the basis of the company’s learnings in dealing with the sources of funding and similar financial matters. In the opinion of Allan Gray, the threshold of R100 000 was too high, mainly because it defeated the purpose of the concerns around corruption and the public’s right to real or informed access to information, as per the Constitutional Court judgement. The presenter reminded the Committee that political parties had to determine the source of funds as that was a requirement in legislation dealing with corruption as well as in the Financial Intelligence Centre Act. Allan Gray did not understand how an auditor could sign off on the accounts of a political party if the auditor could not see all the assets and all the money that went into the accounts. The proposed wording of the draft Bill contained no direct mention of gifts to political parties, and their related value, such as a gift of a house or a vehicle.
Members asked whether Allan Gray could suggest another figure for the threshold, other than R100 000. They also asked whether the Financial Intelligence Centre’s reportable figure was R100 000 and whether the reportable figures in the “Know your clients” and “Suspicious transactions” programmes of the Financial Intelligence Centre were also R100 000.
A private citizen presented concerns that he wished to bring to the attention of the Committee. Section 52B(1)(a)(i) failed to address small funding via crowd funding or different channels through which monies could be donated or fed into political coffers. The definition of political parties in section 52A(a) was such that it could apply to anyone with a political motive who could then accept donations. The Bill did not deal with money-laundering of funds via provincial and municipal coffers. Other forms of non-financial donation which resulted in favours and assets in exchange for donations had not been addressed. The time period for the retention of records was far too short in light of the long time it took to obtain information from PAIA. With technological advances, there was no reason not to enforce the retention of records.
The composition and Chairperson of the Subcommittee on Correctional Services was formally confirmed by the Committee.
The Chairperson welcomed everyone, noting that the Committee had a tight programme. He appealed to the presenters to stick to the point so that the Committee could finish on time as there was a sitting of the National Assembly that afternoon. Each presenter would have 15 minutes to present and that would be followed by questions. The Committee would be considering all presentations as well as all written submissions when considering the draft Bill. Some people had chosen not to make an oral presentation but the Committee would attach equal weight to all presentations and submissions.
Briefing by amaBhungane
Ms Karabo Rajuili, Advocacy Coordinator, amaBhungane Centre for Investigative Journalism, noted that it was the media company’s first appearance before the new Committee and provided a brief background about the company. She highlighted that the submission was made as part of amaBhungane’s advocacy mandate.
She stated that the draft Bill prescribed a threshold of R100 000 which was too high. The amount should be lower and should not be in the Bill but in the regulations to the Bill. To avoid circumvention of the intention behind disclosure, amaBhungane recommended that donations from substantially related sources, including funding from party investment vehicles should be disclosed. The proposed keeping of records for five years should be increased and records should be kept for a minimum of seven years, as was required in the Companies Act, 2008. The period of disclosure of financial information to other private bodies was too limiting. The records should be made available on request to be consistent with the Promotion of Access to Information Act, No. 2 of 2000 (PAIA). The draft Bill made the accounting officer the designated person to ensure records were recorded, preserved and disclosed but PAIA generally placed those obligations on the Information Officer. The Committee should consider harmonising that section with the rest of PAIA. Parliament should exercise its oversight in updating the Section 50 Manuals.
The Chairperson thanked amaBhungane for adhering to the given time. He trusted that Members would be succinct.
Mr J Selfe (DA) referred to the R100 000 disclosure. He would make the same point that he had made in the public hearings on the Political Parties Funding Act (PPFA). In principle, a political party should be funded by a large number of small donations rather than a small number of large donations, but that came with an enormous burden. In order to give effect to the recording of those details, one would have to employ an army of bookkeepers, even down to branch level. How did amaBhungane see the balance between administrative ease and the requirements for disclosure of party donations?
Mr Selfe referred to amaBhungane’s written submission, which highlighted donations by a husband and wife. It was not his business which political party his wife donated to, and, of course, that would also refer to life partners and so on. It opened a door that ought not to be opened.
Adv G Breytenbach (DA) also referred to the point made on closing the loopholes and substantially related sources, being defined as a natural person and a juristic person of which the former is a shareholder, a beneficial owner, a trustee, a director or a partner. Those were significantly different and separate legal entities. Why had they been lumped together? What she did in her personal capacity had nothing to do with her being a trustee in a particular organisation and she did not see why they should be connected or why the one should be connected to another.
Adv H Mohamed (ANC) thanked amaBhungane for the presentation. He referred to the point on the prescribed threshold for disclosure. Maybe Ms Rajuili had a comment on the regularity and degree in terms of regulations? Concerning the inclusion of funding from party investment vehicles, he asked whether investment vehicles would not be after the fact, i.e. investment vehicles related to what the party did with the funds, and, in that case, the normal law in terms of the Companies Act, etc. would apply.
Adv Mohamed asked whether the duty to create and hold records would not create an administrative burden, particularly for smaller parties. Ms Rajuili had quoted the court judgement but had the court not said that there should be a balance between disclosure and the administrative burden on the parties themselves? He did not want anyone to be scared to donate in the democratic era. He noted that keeping records for seven years was in line with the Companies Act. Why align with the Companies Act when most parties, like the ANC, had a conference at national level every five years?
Adv S Swart (ACDP) said that he knew that the R100 000 threshold was in the regulations to the PPFA but in PAIA it was in the Act. amaBhungane said that the threshold was too high, but political parties might find it too low and if it was in the Act, it was entrenched. However, if it was in the regulations, it was much easier to amend. She was saying too high but others, especially political parties might say it was too low and too onerous and they could easily change it.
Adv T Mulaudzi (EFF) appreciated the presentation. He noted that Ms Rajuili had said that since 2010, amaBhungane had been interacting with Parliament, civil society and stakeholders. How had the cooperation been with the drafters in the time since amaBhungane first interacted with them in 2010? In the presentation, the presenter had stated that the threshold was too high. How much did amaBhungane think was appropriate?
Adv Mulaudzi asked about the investigations through the private emails of politicians. Did amaBhungane operate under PAIA or its own common sense when it revealed so many things? Which legislation allowed amaBhungane to investigate emails? Did it apply to do that or did it just do it?
Ms Rajuili replied that amaBhungane preferred that the threshold be in the regulations because it allowed more flexibility. The regulatory process, similar to the legislative process, was a public participation process and so amaBhungane would expect Parliament to exercise its constitutional duties to provide the public with an opportunity to express an opinion on the matter. AmaBhungane had chosen not to point to specific instances where corruption had pointed to undue influences and the reason for that was intentional. AmaBhungane spoke on principle so that it did not become a partisan matter, but she would be willing to provide examples of how undue influence took place, should the Committee require such evidence to be able to understand how undue influence took place. She could provide specific case study examples if that was of use to the Committee. AmaBhungane’s view was that entrenchment was not the issue. It had seen sufficient evidence of undue influence and the R100 000 was already too high. Parliament could not, in all due conscience, make the threshold any higher than it already was.
AmaBhungane had deliberately not given a threshold because in the ideal world, it would say all donations should be disclosed but it also understood that would create an undue burden. AmaBhungane’s position was that a threshold should not be open to abuse in any way. If the threshold was lower, there could be fewer safeguards than those that amaBhungane had proposed in the Loopholes section of its submission, which would address the concerns of the DA in that regard.
Ms Rajuili stated that to come up with a working definition of what a substantial related source would be, amaBhungane had based the definition on the evidence that it and other media houses had seen. Unfortunately, there was evidence of people using their domestic relationships to conceal money or to buy influence in undue ways. It might not be appealing to disclose a domestic partner’s donations, but that kind of abuse had taken place and there was, therefore, a much greater duty when a person was going to make a donation for such relationships to be disclosed. What she was hearing behind the question was why the right to privacy should not be upheld in that regard and her answer was amaBhungane had seen sufficient evidence of such relationships being used in a corrupt way. In the spirit of the Constitutional Court judgement, the duty to disclose such information so that the public could be adequately informed, applied to those specific examples.
Responding to the question on party funding investment vehicles, Ms Rajuili stated that amaBhungane offered a definition in its main submission. It referred to any political party that had made investments and had returns on those investments, such as dividends, etc. The submission spoke to principle and not to specifics so as not to appear partisan. There was information in the public domain was about the returns that the ANC had received from Chancellor House investments. That type of investment was not covered in the PPFA so Parliament would be wise to close the gap in PAIA. That concern had been raised by many organisations in the public comments on the PPFA. The PPFA was not the subject of discussion so she was not going into the details but it was a gap that had been identified by civil society. amaBhungane could provide specific examples so that the point was not so abstract and the Committee could focus its mind on how that had played out.
Concerning the duty to create records, the Constitutional Court had said that because the information was of such significant importance to the public, irrespective of burden, it was important for information to be disclosed. The court had also said that Parliament could also consider some threshold and, in the judgement, the figure of R10 was mentioned. AmaBhungane said that R100 000 was open to abuse.
Ms Rajuili explained that in making requests through PAIA, amaBhungane had found that an entity would say that it could not provide information because there was no record of the information. If political parties did not create records of donations below R100 000, the rights of the public to such information would be impinged upon. That was why it was important to compel political parties to create records. As political parties had to apply accounting standards and create records, those records had to be made available to the public through PAIA. If Parliament wanted to create a lower threshold for recordkeeping, it was something amaBhungane would be prepared to look at.
Ms Rajuili said that amaBhungane would find it ideal if records had to be preserved forever but, failing that, it had researched other legislation in respect of preservation of documents. The best example available was the seven-year period in the Companies Act. If preservation was limited to five years, which was the election lifecycle of a party, but the public might wish to access records after the election period, the records from the previous election period could have been destroyed. In addition, there were local government elections which happened at an alternate time to national elections. Seven years seemed an adequate time period and the Companies Act provided for an example of that period in current legislation. She indicated that it was possible to go for more complex legislation that meant retaining different records for different periods of time but the simplest and least complex was to have a single period for retention of records. Five years was simply insufficient.
Ms Rajuili responded to Adv Mulaudi’s query on the legislation under which amaBhungane operated. The editorial principle was to operate in a legislative framework where the media had an obligation to report on matters of public interest and in amaBhungane’s investigative work, it tried to reduce the accountability gap through exposing matters which were in the public interest. As an independent outfit, amaBhungane subscribed to the press code of the Press Council which obligated it to get its information in lawful ways and so it got its information in legitimate ways which could be through PAIA, which it used extensively, from sources, or whistle blowers. It was important to know that amaBhungane always conducted its work in a lawful and ethical way. She hoped that it would settle any concerns Adv Mulaudzi might have about that matter.
The Chairperson thanked Ms Rajuili, stating that the Committee would be looking at amaBhungane’s submission in its deliberations as it went through the Bill, clause by clause.
Adv Swart requested the additional document offered by amaBhungane.
The Chairperson informed Ms Rajuili that the Committee would accept submissions up until the time that it started clause-by-clause deliberations.
Adv Mohamed was not satisfied with the response to the question on political party funding vehicles. He believed that such a donation was included in ‘entities’ in clause 52B (1) The accounting officer of a political party must— (a) create and keep records of— (i) the identity of and the amounts of money paid by all persons or entities who donate more than R100 000 per financial year, as defined in section 1 of the Political Party Funding Act, 2018, to the party concerned. If all entities had to disclose funds, why was it necessary to specifically include political party funding vehicles?
Ms Rajuili stated that amaBhungane’s view was that the PPFA did not include party investment vehicles. She understood that she and Adv Mohamed held differing points of view but she was prepared to elaborate in the additional submission that she had promised.
Briefing by Allan Gray
Ms Nishaat Limbada, Head of Compliance, Allan Gray, introduced the briefing. She was aware that political parties did not fall under the Securities Services Act but Allan Gray was a financial company that was making a submission as an interested party and sharing its learnings in respect of entities that made payments to Allan Gray where it had to look at the ultimate source of beneficial ownership and control of such funds. A submission of that sort might be of use or value to the Committee and so it was submitted on the basis of the company’s learnings.
Mr Hermanus Wiid, Compliance Officer: Data Protection, Allan Gray, presented the details of the submission. Allan Gray regarded the threshold of R100 000 as too high, mainly because it defeated the purpose of the concerns around corruption and the public’s right to real or informed access to information as per the Constitutional Court judgement. Thresholds did not excuse auditors from picking up discrepancies in the books of a company as per the judgement in the case of the Thoroughbred Association versus PriceWaterhouseCooper (PwC). It seemed to him that parties had to keep detailed records. Political parties had to determine the source of funds as that was a requirement in the corruption legislation as well as the Financial Intelligence Centre Act (FICA). It was also in line with the court judgement that the ultimate donors of funds be identified and disclosed as part of the accounting records. In the light of those requirements, he did not understand how an auditor could sign off on the accounts of a political party if the auditor could not see all the assets and money that went into the accounts. Mr Wiid also noted that the proposed wording of the Bill contained no direct mention of gifts to political parties, and their related value, such as a gift of a house or a vehicle.
The Chairperson provided Members with an update on the programme: Right2Know was not coming and the Human Rights Commission had requested permission to present the following day.
Adv Breytenbach was interested in a longer explanation about why Mr Wiid had said it was in the best interests of voters to know the source of donations. She could ask him who he was representing. Was he representing Allan Gray or everyone who had invested in Allan Gray? Did they all agree with his input? It was the same question. She also did not understand the obsession with R100 000. It was not that much money, so why was there such a concern about the amount? One could not be corrupted for R10.
Adv Swart asked for details on the PWC case. Would Allan Gray suggest another figure? In terms of the Financial Intelligence Centre’s Corrupt Activities Act, the figure was R100 000 for reportable transactions. As far as he knew, for “Know your clients” and “Suspicious transactions” programmes, the FIC’s reportable figures were also R100 000. Could the presenters provide more information on that point?
Ms Limbada stated that the reportable amount for cash transactions was soon to be updated to R25 000. The suspicious amount did not have an amount attached to it. Each accountable institution reported on any deposit into an account that seemed in any way suspicious.
Mr Wiid stated that the PWC case was against the Thorough Breeders Association where the court had determined that the materiality set by the auditors was no excuse for fraud not detected.
Addressing Adv Breytenbach, Mr Wiid explained that he would try to respond with a scenario as he was more of a risk and scenario type of person. In terms of the ultimate onus, the concern of Allan Gray was that people might hide behind shelf companies and use fronting which meant putting a non-related person into the shelf company and then the fraudsters could hide behind that shelf company. In his experience and what the company had seen, it was in the best interests of their clients and the public in general, to determine who the real donor was because easy to hide behind a curtain. It was particularly difficult to see who the beneficiaries of trusts were. Voters had to see who had the potential to influence. It should speak to practices in other legislation. In the PPFA sec 8 (3), the onus was on political parties to make some effort to identify the donors. He did not have proposals regarding the threshold as he believed that Parliament should make that decision. He supposed that it was related to SARS donation tax. His company saw how people bypassed controls by cutting up R1 million and donating at intervals via different people. He had seen how people bypassed controls and so the controls needed to be embedded.
Ms Limbada recommended that the Committee consult the Guidance on Transparency and Beneficial Ownership document produced by the Financial Action Task Force (FATF) established by a Group of Seven (G-7) at a Summit in Paris, initially to examine and develop measures to combat money laundering. She was aware that political parties were not financial institutions but noted that it provided quite a lot of guidance on beneficial ownership and corporate vehicles.
Ms N Maseko-Jele (ANC) noted that Allan Gray had stated that there was no mention of gifts. Why would Allan Gray want that to be mentioned in the Bill and how could it be managed?
Mr Wiid explained that it related to a conflict of interest. The Act did not speak to non-monetary gifts. Someone could gift a house, a car or technological gifts and that could influence the person or party. It was a loophole because one would have to disclose the monetary amount but not if one gifted or donated a car, etc.
Briefing by Mr James Tunbridge
Mr Tunbridge made his presentation as an individual member of civil society as he had concerns and wished to bring certain issues to the attention of the Committee.
PAIA did little to disclose political party funding since 1994 and even prior to 1994. The SA public had not been afforded the “dignity” to vote in a referendum on the Bill so there was an entire period of SA’s history that had been whitewashed.
He noted section 52A which referred to an Accounting Officer but no qualifications or skills were required to be an Accounting Officer and one could not rely on auditors. The Auditing profession was rather corrupt and unless the auditors could be held accountable there was no one to hold the Accounting Officer to higher standards.
The definition of political parties in section 52A(a) was such that it could apply to anyone with a political motive who could then accept donations.
Section 52B(1)(a)(i) failed to address small funding via a crowd funding and different channels through which tranches could be donated or feed into political coffers. It did not deal with money-laundering of funds via provincial and municipal coffers. Other forms of non-financial donation which resulted favours and assets in exchange for donations had also not been addressed.
In Section 52B(3), Mr Turnbridge noted that, considering the time it took for corruption or ill-gotten gains to come to light, and the long time it took to obtain information from PAIA, especially when members of the public were obstructed when trying to obtain information, that the five year retention period was too short for the corruption to be investigated. With technological advances, there was no reason not to enforce the retention of records.
Ms Maseko-Jele asked if he wanted records to be kept, perhaps, for 20 years. How were political parties going to keep that information? That situation would put a burden on political parties, especially as they needed donations to survive.
Ms Mofokeng (ANC) referred to the recommendation of keeping records for 20 years. Was he making that suggestion because there might be a particular situation or was it about tracking the donations, or what? Could Mr Turnbridge please explain?
Mr Turnbridge replied that he had heard the concerns regarding the administrative burden. Parties could rely on electronic transfers for small amounts. The 20 years’ retention was to deal with foreign influence on policy formation and that should be a concern to civil society. One needed to know how policies were formed and where the policies came from.
The Chairperson thanked Mr Turnbridge for his presentation. He added that with the withdrawal of Right2Know and the fact that the Human Rights Commission would present the following day, proceedings had come to an end for the day.
The Chairperson informed the Committee that it was necessary to formally establish the Subcommittee on Correctional Services.
He informed Members that all parties had submitted names and he called on the parties to advise who would chair the Subcommittee.
Ms Maseko-Jele nominated Mr Q Richard Dyantyi (ANC) as Chairperson.
Adv Breytenbach said that the Members were wasting their time as the Chairperson had been imposed on the Members three weeks previously. The deal had been done.
The Chairperson stated that Mr Dyantyi had accepted the nomination.
Adv Mohamed confirmed that Mr Dyantyi had accepted the invitation to Chair the Subcommittee.
The meeting was adjourned.
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