Regulations for Political Party Funding Act: IEC Public Hearings Day 1

1 August 2019
Chairperson: Mr Glen Mashinini, Commissioner

Audio: 
‚ÄčPolitical Party Funding Act Regulations: IEC public hearings day 1 part 1
Political Party Funding Act Regulations: IEC public hearings day 1 part 2

 

Documents
Political Party Funding Act
Political Party Funding Act Draft Regulations

Meeting Summary
The Chief Electoral Officer of the Independent Electoral Commission (IEC), the Chairperson and four Commissioners, formed the panel to engage with those making public submissions on the Regulations to administer the Political Party Funding Act. The Commission took the opportunity to introduce the newly appointed Chief Executive for party political funding at the IEC. It had been overwhelmed by the response to the request for input on the Regulations. Over 4 300 written submissions had been received from a wide range of organisations, including political parties, civil society and individuals.

Political party funding had been an Achilles heel to democracy in South Africa, which had increasingly put the country and the Commission at odds with peers around the world. The National Assembly, following representation, lobbying and a high court judgement, had passed the Political Party Funding Bill. The National Council of Provinces (NCOP) had passed the Bill late in 2018 and the President had signed it in January 2019. The Commission was in the process of developing Regulations to allow it to administer that Act.

The Council for the Advancement of the South African Constitution was in substantial agreement with the underlying purpose of the draft Regulations, but some provisions could be improved to create greater clarity and give better effect to the purposes of the Act, such as in cases where money had been paid erroneously by any entity listed in the Regulations. If the Commission had reason to believe that the money was the proceeds of unlawful activities, or was otherwise illegitimate or illegal, the Commission should be obliged to preserve the money and refer the matter to the relevant authority. Quarterly reporting would be sufficient, as monthly reporting would be over-burdensome, especially for smaller political parties. A most important aspect was the capacity of the Commission to impose penalties. The wording should be clear that where imprisonment was sought, the Commission should refer the conduct in question to the Electoral Court.
The Commissioners requested clarity about the return of funds and the Commission not having discretion about such funding, and in respect of illegal funds being retained.
Amandli.mobi was concerned about the threshold for disclosure. R100 000 was a very large amount of money and many smaller political parties might never receive donations that large. With government under constant assault from corruption, bribery and state capture, any individual, group, organisation or corporate entity wishing to donate anonymously should be assumed to have malicious and nefarious intent. Because of the timing of the municipal and election cycles, Amandli.mobi believed it to be important that all records of donations that had exceeded the threshold be kept for at least 10 years.

The Commissioners asked if Amandli.mobi was suggesting that, although there would be an aggregation of donations, the amount of R100 000 should be reduced. They required greater clarity about the reference to subsidiaries and shell companies.

My Vote Counts, which had secured a high court judgment declaring that political party funding had to be made public, hoped that the legislation would be implemented well before the 2021 local government elections, and wanted the date of implementation clarified. After the Act had been signed, there had been indications that the DA and the ANC had wanted to review the Act, and it wanted an assurance from the IEC that it would not support such a move. The organisation also recommended the establishment of a whistle-blower process, independent of the Commission. It was a concern that the Act provided no guidance regarding funding for training, policy and skills development. The organisation asserted that the Commission should have a definition to regulate a “foreign government entity.”

Commissioners requested clarity about the suggested whistle-blower policy. My Vote Counts had asked for the disclosure of the number of requests made, accepted and/or rejected by the Commission -- was My Vote Counts suggesting that that the Regulations should be reviewed, or was it suggesting a different process? The organisation had stressed the importance of the independence of the Commission, but it had also suggested that there was a need for collaboration with other government agencies with forensic capability and translation skills and so on. How did My Vote Counts reconcile the two?

The Philippi Horticultural Area Food Farming Campaign was concerned that the aquifer of the Philippi farming area in greater Cape Town of 30 million hectares of farmland had been reduced by the Democratic Alliance-run City Council to 17 million hectares. The Campaign asserted that the DA was solely serving the interest of the developers because the Party was funded by the developers.

The Chairperson declared that the Campaign was sensitising the issue of anonymity, but it had had no comment on the Regulations.

amaBhungane applauded the Commission for indicating that it might disclose the donors to the Multi-Party Democracy Fund under certain conditions. To ensure that anonymous donors were not used to conceal corruption or to launder improper contributions, the Commission needed a much stronger public interest defence. The Commission could extend the public interest clause to include imminent risk and cases where the public interest outweighed the harm contemplated by the donor. amaBhungane was concerned about the risk of donors splitting donations, and proposed the inclusion of a definition of a substantially same person, such as a company and its subsidiary. The Commission should also insist on a declaration of shareholders and beneficial shareholders

The Commissioner asked what “public interest” meant to amaBhungane. What did amaBhungane mean by an imminent public safety or environmental risk? How did it propose that the Commission force political parties to disclose of the source of funds if a third party did not disclose the source to the parties? The Commissioners sought greater clarity on the issues raised around social media.

The Democratic Alliance stated that in Parliament, it had been clear that while it was desirable for political parties to disclose their donors, this ought to be related to the purpose of the legislation. It was seeking to avert what could be seen every day in the Zondo Commission -- that political parties could be bought and their policies determined by large donors -- not that every donor should be disclosed. The view of the DA was that that requirement was ultra vires, and it asked for that provision to be dropped. It was simply impractical and impossible to report the small donations. The system should rely on the auditors and the ability of the Commission to request information if malfeasance was suspected..

The Commission appreciated the difficulty concerning the practicality of requesting the disclosure of all donors and bank accounts, but if the Democratic Alliance was saying that only the bank account into which the Multi-Party Democracy Funds were paid should be disclosed, how did one close the gaps? If the Commission should rely on a single auditor of the party’s books, could it be sure that the auditor would know about the donations made into accounts at the constituency level that he did not audit?

Media Monitoring Africa suggested that the Commission should adopt a rights-based approach to the disclosure of donations. It should decline a request for non-disclosure where any law had been contravened. MMA requested reporting on the number of requests for non-disclosure and the results of those requests. Disclosure should be the accepted position and non-disclosure should be the exception. Greater detail and clarity, and an enforcement power, was needed in respect of promotions, publications and advertising, especially since the rise of misinformation and dark advertising. There was a gap between existing media and social media which targeted citizens with advertisements that did not look like advertisements. All paid political advertisements and content had to be clearly identified.

The Commissioners asked MMA to link the point much more tightly to the topic of political funding. How did they envisage monies from unlawful activities being reported? What would become of that money? Were they suggesting that paid advertising, even if it fell below the aggregated threshold, should be reported on by the political parties and by advertising agents? Secondly, in the example given of dark advertising, which was not overtly linked to a political party, how would the link be made to a political party?

The Congress of South African Trade Unions (COSATU) was aware that the Commission could not impact on the Act, but declared that the R100 000 donation threshold could potentially collapse the system and should be scrapped in its entirety. The sentencing provisions had been reduced to two years in the Regulations. COSATU supported the sentence of five years, as in the Act, as it was keen to see more people who had looted and abused the public purse put in prison. There was no definition for what constituted “political exposure”. It was opposed to expanding public funding of parties in the light of corruption and the austerity crises in the state fiscus which had resulted in service delivery challenges, and state and SOE job cuts.

The Commission asked what the Union would consider the downside of a position where all political parties would be required by law to channel all donations into a single account, to be disclosed in its entirety to the Commission.

The hearing would continue the following day.

Meeting report

Opening remarks: Chief Electoral Officer

Mr Sy Mamabolo, Chief Electoral Officer: Independent Electoral Commission (IEC), welcomed all those attending the hearing and stated that, despite the massive task of conducting elections, the Commission had continued its work in preparing the Regulations to support the implementation of the Political Party Funding Bill. The panel for the hearing consisted of five IEC Commissioners who would engage with the presenters. The five Commissioners were Chairperson Mr Glen Mashinini, Deputy Chairperson Ms Janet Love, and Commissioners Dr Nomsa Masuku, Judge Dhaya Pillay and Mr Mosotho Moepya.

Introduction: IEC Commission Chairperson

Commissioner Mashinini welcomed everyone to the first day of the public hearings on the Political Party Funding Regulations, and indicated that the IEC was deeply overwhelmed by the response to the request for input on the Regulations to the Political Party Funding Act. Submissions had been received from a wide range of organisations, including political parties, civil society and individuals. Over 4 300 written submissions had been received by the IEC. That was an overwhelming response. It showed the interest in the funding of political parties. The IEC had then moved on to the next stage, which was the public hearing on the Regulations, and the IEC was further encouraged by the response and was grateful to those who would be presenting.

He was impressed by the turn-out at the public hearing, but he was not going to acknowledge individuals, institutions and organisations as they would introduce themselves when presenting. The Commission was heartened by the wide range of organisations that had shown an interest and the views and inputs that had been made. He thanked everyone for being at the hearings that day. He commented that he had a team of Commissioners sitting alongside him and the technical team was sitting across from the panel.

Despite the “hurly burly” of elections, the Commission had not stopped its work on the regulations for the Political Party Funding Act (PPFA) in preparation for the implementation of the Act. Mr George Mahlangu was the newly appointed Chief Executive for party political funding, effective from that day. The Commission was confident that he was eminently qualified for the task.

While the IEC had been a pre-eminent body in leading the elections, there was an Achilles heel to democracy and a gap in the Constitution, and that was the funding of political parties. Increasingly that had put the country and the Commission at odds with their peers around the world. The country had recognised the need to close the gap. The National Assembly (NA), following representation and lobbying and a high court judgment, had finally resolved to establish an ad hoc committee to enquire into making recommendations regarding the funding of political parties. That process had culminated in the Political Party Funding Bill, which had been passed by the NA and the National Council of Provinces (NCOP) late in 2018, and to which the President had assented in January 2019. The IEC had realised that it would not be able to implement the legislation in time for the 2019 national elections, but it had worked towards the current process. He invited the Vice-Chairperson of the Commission, who was Chairperson of the Sub-Committee on Political Party Funding, to explain how the IEC was going to take the process forward.

Commissioner Love explained that the Act was a framework and for the framework to be implemented, the IEC needed regulations, and that would be the subject of discussion during the hearings. The IEC had received 4 000-plus responses. Those had been considered and accounted for, and the IEC had advised all of those that had made proposals in respect of the regulations of the opportunity to provide further elaboration. The political parties had been offered an opportunity to make presentations and the public had been informed of the hearings that they were free to attend.

The objective for the day was for the Commission to gain further insight and clarity. Each presenter would have 15 minutes at most to highlight issues or to add to issues if he or she had already made a submission. The Commission wished to assure everyone that any written submissions could be taken as read. The Commissioners would ask questions of clarity following a presentation and if needs be, the Commission would seek further clarity in follow-up one-on-one engagements in order to ensure that the proceedings were managed in an appropriate way.

Commissioner Love added that it might be that matters would be raised that could be addressed only through legislative amendments, but legislative amendments fell outside the scope of the IEC and the legislature might or might not take up those points. The IEC’s mandate was to draw up regulations to implement the existing legislation. Its obligation was to finalise the regulations as soon as possible after the hearings, which would then give the political parties and all donors certainty about what to report and when to report. The Commission was committed to laying that foundation as soon as possible.

Session 1

Council for the Advancement of the South African Constitution (CASAC)


Mr Lawson Naidoo, Executive Secretary: CASAC, said that CASAC had been heavily involved for two years in the process since it began in Parliament, and it was now the fourth presentation that it was making after two presentations to the NA ad hoc committee and one to the NCOP. It was a very important piece of legislation that built on to the architecture of the Constitution. He commended the IEC for continuing with the matter despite the elections, and congratulated Mr Mahlangu on his appointment.

CASAC was in substantial agreement with the underlying purpose of the IEC’s draft Regulations, but felt that some provisions could be improved to create greater clarity and certainty, to better give effect to the purposes of the Act and to enhance the mechanisms of disclosure to ensure they were compatible with modern needs. The legislation was a ground-breaking piece of work. The Multi-Party Democracy Fund allowed private donors to participate in the democracy of the country. CASAC was particularly pleased that it addressed in part the injustice of the 90/10 split of state funding to political parties, which had resulted in a more equitable split. A highlight was the dual disclosure system that ensured accountability and transparency.
Mr Naidoo explained that the oral submission did not repeat the written submission, but focussed on clarity and detail and attempted to avoid misunderstanding.

Regulation 4(1) regarding the IEC’s right to return unlawful donations
The wording “shall have the right” suggested that the IEC had the discretion to return funds unlawfully contributed to the Multi-Party Democracy Fund (MPDF). The Regulations should be clearer on the manner in which the IEC should deal with such cases. If money had been paid erroneously but in good faith by any entity listed in the Regulations, the IEC should be obliged to return the money to the contributor. If the IEC had reason to believe that the money was the proceeds of unlawful activities or was otherwise illegitimate or illegal, the IEC should be obliged to preserve the money and refer the matter to the relevant authority, such as the National Prosecuting Authority (NPA) or the Hawks.
Regulation 4(3) read with Regulation 4(5) regarding the right of a contributor to the MPDF to remain anonymous
If the contribution was from a permitted source, the reasons for the contributor’s wish to retain their anonymity should be of no interest to the IEC.

Regulation 8 regarding the frequency of reporting by political parties to the IEC
Monthly reporting might be over-burdensome, especially on smaller represented political parties. Quarterly reporting would be sufficient.
Regulation 9 regarding disclosure requirements of juristic persons
CASAC suggested that a juristic person might not be aware of the regulations, and suggested that a mechanism be worked into the Regulations that required political parties that received a donation from a juristic person above the threshold to inform that person of the obligation to complete PPR6.
Regulation 10 concerning the manner of publication by the IEC
The IEC should be obliged to provide such information online on its website.

Schedule 1 concerning the capacity of the IEC to impose penalties
A most important aspect was the capacity of the IEC to impose penalties. The wording should be clear that where imprisonment was sought as an appropriate penalty, the IEC should refer the conduct in question to the Electoral Court if it is satisfied that a prima facie case exists. Where an administrative fine was regarded as the suitable penalty for the conduct in question, the IEC should similarly be able to institute proceedings in its own capacity before the Electoral Court. The IEC should not possess the power to impose the sanctions prescribed in Schedule 1 on its own accord.
Discussion

The Chairperson invited the Commissioners to raise questions of clarity or to comment on the presentation.

Commissioner Love had a question in relation to last point. As she understood section 18 of the Act, the IEC could institute proceedings to request the imposition of an administrative fine, and then section 18(2) stated that the electoral court could impose those fines. Secondly, she requested clarity about the return of funds and the IEC not having discretion. CASAC’s concern was that if the IEC received illegal funds, it had to retain those funds and report the matter to the authorities. Had she understood correctly?

Mr Naidoo replied that section 18 in the Act covered it, but the wording in the Regulations needed to be tidied up. In relation to the second question, CASAC did not understand the discretion granted to the IEC in respect of the return of a donation that was erroneously made. However, if there was prima facia evidence that the funds were illegal or the IEC had a suspicion that it was the product of unlawful activity, then those funds should not be returned to the donor.
 
Commissioner Pillay asked if CASAC was suggesting that those funds should be ring-fenced in another administrative account so that when they were passed on to the prosecutorial authorities, the funds were not seen as part of the political party funding.

Mr Naidoo suggested a trust fund be established and the funds be held in such an account until the source of funding had been established. That funding should not to be used for party funding or cost of administration.

The Chairperson thanked Mr Naidoo for his inputs.

Mr Naidoo thanked the Commission, and said he hoped that there would not be another election without the legislation in place.

Amandli.mobi

Mr Khaliel Moses, campaigner on behalf of Amandla.mobi, said the organisation was a movement of over 250 000 people, the majority of whom were Black women. Together they were campaigning to build a more just and people-powered Mzansi. Amandla.mobi campaigned on social, economic, reproductive and racial justice issues that affected low-income Black women. Because they believed by creating a more just and fair society for Black women, they were creating a society that was more just and fair for all.
Mr Moses complimented the IEC and thanked it for taking on the role of managing the funding, despite immense pressure for the scrapping of the Bill. President Ramaphosa had delayed signing the Bill into law, which had perhaps been a strategic decision for the ANC.

Amandla.mobi was concerned about the minimum amount above which political parties should have to disclose donors. R100 000 was a very large amount of money, and many smaller political parties might never receive donations that large. Amandla.mobi called on the IEC to lower the minimum threshold amount to R50 000. That would ensure that all political parties, no matter their size, would be regulated by the Act. There was also a concern that corporations and individuals might find ways around the R50 000 threshold by either making many smaller donations or by making donations through subsidiaries. The IEC had to make sure that that did not happen by viewing all donations from any single individual, group, organisation or corporate as being one collective donation, subject to the R50 000 public declaration threshold.

In the current political climate, with government under constant assault from corruption, bribery and state capture, any individual, group, organisation or corporate entity wishing to donate anonymously should be assumed to have a malicious and nefarious intent. Why else would one want to stop the public from knowing one funded a political party?
Amandla.mobi fully supported the IEC’s requirement that political parties kept financial records of every donation that exceeded the threshold and declared their records to the public every three months, and two months before elections. Those records should be accessible to the public by posting them on political party social media feeds and websites as a first step, but gazettes should also be circulated country-wide. Records should be kept for 10 years, not five years. Because of the timing of the municipal and election cycles, it was important that all records of donations that exceeded the threshold be kept for at least 10 years.

Discussion

Commissioner Love observed that Mr Moses had said that smaller donations could be made to circumvent the legislation, but the legislation provided for an aggregation up to the R100 000 amount. Donations would have to be reported to the IEC, but those above R100 000 would be made public. Was he suggesting that, although there was aggregation, the amount of R100 000 should be reduced? He had made a reference to subsidiaries and shell companies, and she asked that he repeat that point.

Mr Moses said he had been speaking about the R100 000 threshold which Amandla.mobi believed should be lower. It should be R50 000, because R100 000 was a very large amount and smaller political parties might not receive that amount. The point around individuals, corporates, organisations or groups possibly circumventing the Regulations by donating through subsidiaries or shell companies was that there had to be systems and processes in place so that no individuals, corporates, organisations or groups could exceed the threshold in that way. A big national company that might have corporatised to other companies could circumvent the regulations regarding the threshold.

Commissioner Love understood the point. but suggested that it might be difficult to distinguish. Mr Moses had spoken about access to government gazettes. They were currently available countrywide and on the internet, so she was not sure what it was that he was asking for.

Mr Moses replied that the majority of South Africans did not have access to the internet because of the exorbitant cost of data, so even though the information was being made available online, if the IEC wanted the majority of South Africans to be informed about who they were voting for, those South Africans needed to be able to access the information offline.

The Chairperson said that the government gazette had its own limitations. Mr Moses was correct in identifying impediments to online information, but it was not inconceivable that the Commission would be looking for systems of conveying the information, such as a kiosk in the IEC offices. The Commission would make a note of that point. He appreciated the inputs.

My Vote Counts

Mr Joel Bregman, Director: My Vote Counts (MVC), said that MVC was a non-profit company founded to improve the accountability, transparency and inclusiveness of elections and politics in SA. MVC had been pushing for legislation on political party funding. It recognised the damage that had been done as a result of the unregulated public funding of political parties, including the capture, corruption and undermining of institutions. It was vital to hold power to account and note the impact of money on politics in the country. Knowing about the funding was intricately linked to the right to vote so that the public could make an informed decision about who to vote for.

MVC understood that the legislation could not be implemented before the 2019 elections, but hoped that it would be implemented well before the 2021 local government elections. There needed to be clarity around the date of implementation. After the Act had been signed, there had been indications that the DA and ANC would want to review the Act, and the President could still take it back. MVC wanted confirmation from the IEC that it would not support such a move.

MVC preceded its discussion of specific points in the Regulations, relating largely to donations and disclosure, with the question of whether there would be an independent whistle-blower process. Noting the difficulties experienced by whistle-blowers in the country, despite the current legislation, MVC recommended the establishment of a whistle-blower process independent of the IEC.

MVC shared the common concern regarding the dissemination of information about political party funding, and recommended that the Commission work with civil society and community radio. The organisation also suggested that public education, and education for political parties, would be necessary for the legislation to be most effective. The Political Party Funding Act (PPFA) provided no guidance regarding training, policy and skills development. The IEC should have definitions in order to regulate that.

A specific point raised by MVC was in relation to the definition of “foreign government entity.” Section 3(4) of the Act stated that the Commission might not accept money received from any organ of state, state-owned enterprise, or foreign government or foreign government agency. Neither the Act nor the Regulations contained a definition of “foreign government agency,” although there was a definition of “foreign government entity.”

Discussion

The Chairperson commented that MVC had many questions. He made it clear that the IEC was not above the law, and only implemented it. The IEC could not change the Act.

Commissioner Masuku noted the request for timelines, and assured MVC that they would be issued in due course. She requested clarity about the whistle-blower policy concern. Did MVC recommend that the whistle-blower process be conducted by the IEC, or by a separate entity?

Mr Bregman replied that his organisation recommended that an outside agency would best provide a whistle-blower process. An outside agency would protect the IEC from accusations of bias and so on.

Commissioner Masuku asked about the apparent concern of MVC about the process, including an appeal to the electoral court when it came to misgivings about non-disclosure. MVC had asked for the disclosure of the number of requests made, accepted and/or rejected by the IEC; the cumulative monetary value of all accepted requests; reasons that donors had indicated for choosing non-disclosure and reasons for non-disclosure that had been accepted or rejected. Was MVC suggesting that that the Regulations should be reviewed, or was the organisation suggesting a different process?
Mr Bregman explained that the MVC’s main concern about non-disclosure was really about the IEC being transparent and providing information to the public about donations. There were no issues about the review by the electoral court.

Commissioner Masuku commented that in its written submission, MVC had stressed the importance of the independence of the IEC, but had also suggested that there was a need for collaboration with other government agencies with forensic capability and translation skills, etc. So, on the one hand, MVC promoted the independence of the IEC and on the other it recognised the need for specialised assistance from within government. How did MVC reconcile the two?

Mr Bregman understood that the IEC needed to be empowered with those skills, but its understanding was that other entities would have the necessary skills and those should be available to the IEC. Howver, MVC was open to other suggestions and did not intend to prescribe to the IEC how to do its work.

Commissioner Masuku conceded that collaboration with the government did not compromise independence.

Commissioner Love focused on the anonymity for donations to the MPDF. MVC had stated that the IEC should not be perceived as partisan, but she could not see how the IEC could be partisan, given that there was a formula for how the funds were to be distributed.

Mr Bregman explained that the concern was not around that aspect. The IEC would have to determine whether it accepted donations or not. It could be seen to be playing favourites if some were accepted and others were not. It was not about the distribution of funds -- it was about making those things known.

Commissioner Love said that the only time the IEC could refuse to accept funds was if it was suspected to be unlawfully obtained money, or if someone donated but did not make the source clear. MVC had suggested there should be some criteria for making a decision regarding anonymity, and the IEC would determine whether the donation met the criteria or not.

Mr Bregman accepted that there would be different reasons as to why non-disclosure requests would be made, and the IEC should take the public into its confidence by making information available around the different types of non-disclosure requests.

Commissioner Pillay asked whether there should there be a two-stage process: firstly, a determination that the funds were not illegal, for which the IEC would need sufficient evidence that they were not illegal; secondly, when it was clear that the funds were not unlawful, the IEC then had to deal with the question of anonymity if the donor wished to claim the privilege of anonymity.

Mr Bregman agreed with that interpretation of the process.

The Chairperson thanked MVC. He noted that the IEC had already reserved the right to approach any organisation to clarify matters further.


Philippi Horticultural Area (PHA) – Food Farming Campaign
 

Ms Susanna Coleman, PHA campaigner, said the link between the PHA and the implementation of the Act was the link to fair governance which would have an impact on women and 14 million rural people in South Africa. She had brought a video, “Hands off the PHA,” that she had intended showing to the Commission, but the video system in the room did not have sound. However, it was available for viewing on YouTube.

The PHA was concerned about the aquifer of the Philippi farming area in greater Cape Town, where 30 million hectares of farmland had been reduced by the Democratic Alliance (DA) City Council to 17 million hectares. It was the only drought-free land in SA. The farmland had fed Cape Town for hundreds of years, but millions of hectares had been sold off for development. Many more acres of farmland were lying fallow because of uncertainty.

Land use planning was no longer made in the public interest – it seemed to be made by a development forum which had a front row seat in the Cape Town City Council and in all the forums that made development decisions. That had led to constant irrational land development decisions by the City Council, while the red carpet for developers had undermined the democratic rights of ordinary citizens. She explained that land had been bought for R60 million by developers and now, worth R900 million, was being sold back the Council. The PHA asserted that the party was solely serving the interests of the developers because it was funded by the developers.

The Chairperson of the Commission interrupted Ms Coleman, saying that he saw no connection between her presentation and the Regulations. The IEC was only looking for links to party funding. She should either make the point, or the submission would simply be noted.

Ms Coleman said she was not expressing herself well. There was no other factor than anonymous political party funding by the developers. The link was funding to the party, and if there were access to donors, it would explain the decisions made in Cape Town.

The Chairperson said that the PHA was sensitising the issue of anonymity.

Commissioner Masuku asked if the PHA was satisfied with the Regulations.

Ms Coleman replied that the PHA was satisfied with the Regulations.

amaBhungane
 

Ms Karabo Rajuili, advocacy coordinator at the amaBhungane Centre, said the centre was an investigative journalism organisation that promoted open and accountable democracy and advocated for transparency and information rights for amaBhungane, other journalists and the general public.

amaBhungane had been involved with the Political Party Funding Act since the process had commenced in Parliament, as such legislation was crucial for dealing with corruption. Media freedom and the freedom of expression would assist the general public as well as the IEC and Parliament with their oversight functions.

Most of amaBhungane’s comments were related to Section 1. Turning to the definitions, Ms Rajuili pointed out that clause 7 defined a contributor as per 3(a) of the Act. However, the Regulations needed to state clearly that a contributor referred to a natural person and to a juristic person, and that both types of persons were subject to the provisions of the Act.

amaBhungane applauded the IEC for indicating that it might disclose donors to the MPDF under certain conditions. To strengthen the provision that anonymous donors were not used to conceal corruption or to launder improper contributions, the IEC needed a much stronger public interest defence, as in other legislation, and the Commission could extend the public interest clause to include imminent risk and cases where the public interest outweighed the harm contemplated by the donor, so that those donors could be disclosed.

Ms Rajuili addressed the requirement for disclosure by political parties themselves. amaBhungane’s experience in reporting corruption had revealed the splitting of donations just below the threshold, and it had some proposals to lessen the risk of splitting donations. amaBhungane proposed that the prohibition could be strengthened by including a definition of a substantially same person, for example, a company and its subsidiary. The Commission should also insist on a declaration of shareholders and beneficial shareholders in a company. An essential risk was that of using family members to curry favour. The Commission had to ensure that the network of family be disclosed to the IEC. It was vital that any third party making a donation be disclosed. The details of family members, shareholders, etc, should be disclosed on the appropriate form.

On a technical point, amaBhungane requested the manner and timeline around electronic access to information. That was needed to create certainty around the question of political party funding. It would be most useful if the IEC could proactively release information around compliance so that the public and media could scrutinise the information and hold parties accountable.

Finally, Ms Rajuili referred to the rise in political advertising in social media and by influencers. amaBhungane had provided the IEC with a draft about how to deal with influencers. The public and the media needed a disclosure when a post by an influencer was paid for by a political party. That could be achieved either through Regulations, or it could be contained in another policy.

Discussion

Commissioner Moepya asked for amaBhungane’s thoughts on public interest. What did public interest mean to amaBhungane?

Ms Rajuili responded that it was actually a very big question. Public interest was not well defined in law, but one way of defining public interest was to look at other legislation. The Promotion of Access to Information Act (PAIA) had a public interest clause which referred to unlawful actions under the laws, imminent harm to the environment or to people or public interest. It was not as well-defined as it could be. Essentially, pubic interest could be understood in a number of ways. Public interest could be if the person making a donation was a public figure, or the company making the donation occupied or exercised a level of power in society. For example, a company making a large donation to a political party might be known to have been involved in some kind of underhanded link in relation to democracy. A public person was one who exercised power in any particular way. If it was someone who was well-known and the person’s donation could, in some way, be seen as a conflict of interest, there would be a reason for the public knowing about the donation.
 
amaBhungane suggested simply inserting the clause relating to public interest in PAIA. The clause was limited,but it was better to keep it open-ended so that the Commission could apply its mind on a case-by-case basis and, if need be, the matter could be taken to court. Simply put, the exercise of public power, the knowledge of historical corruption and potential conflicts of interest were all things that had to be considered under public interest.

Commissioner Moepya thanked Ms Rajuili for dealing with the issue of the Commission applying its mind. What did amaBhungane mean by imminent public safety or environmental risk?

Ms Rajuili responded that those aspects of public interest were found in the definition by PAIA. An example would be a large mining house that made a donation to a political party. If community members said that the mining house was damaging the environment and there was contestation around mining rights, there would be an understanding of public interest in that mining house because of the imminent harm to the environment. Another example would be the public concern about the plans to procure nuclear power, which could be argued as environmental harm when a grouping or an entity with an interest in nuclear power was making a donation to political parties. That would be an environmental risk.

Commissioner Moepya appreciated the response, noting that the Commission would have to engage on the matter. How did amaBhungane propose that the Commission could force political parties to comply with disclosing the source of funds if a third party did not disclose the source to political parties?

Ms Rajuili explained that there were two sorts of third party entities. One would be where a nominee shareholder did not want to be associated with the donation and therefore wanted someone to make the donation on his behalf. One way to deal with it was to make it a requirement in law that third parties had to disclose, and then the matter was not debatable. The intention of the Act was to bring about more transparency and make the information public. Making a requirement that should a donor attempt to bypass his obligation, he would know that he would face a sanction in terms of the law, and that should ensure that no donors circumvented the requirement. Another way was for the IEC, the political parties and the auditors of political party books to take on an investigative role to ensure that the due diligence work looked into potential third party donations. A third way was where transparency became important. Should there be a third party donation and it came to the notice of an investigative journalist, that journalist would be able to say that the donor had lied to the Commission because that donor had failed in his obligation to inform the Commission. That was a useful tool to ensure disclosure. The original intention of the Act was about transparency about donors, and one had to be aware that the law impacted on people’s behaviour, while the media and the general public would expose a failure to disclose. Potential whistle-blowers might be more willing to speak up if it was a matter of law.

Commissioner Moepya asked if Regulation 8(3) addressed her concerns.

Ms Rajuili said that amaBhungane had looked at Regulation 8(3), and the main concern was the need to define what splitting a donation meant so that it was clear to the public, the donor and those who scrutinised the donations. In amaBhungane’s submission, she had attempted to define splitting a donation.

Commissioner Love asked Ms Rajuili about the issue that she had raised around social media. The Regulations currently did not specify social media, and paid social media, as a donation in kind.

Ms Rajuili said that amaBhungane was happy to be led by the Commission in that regard. She not too sure if it could be provided for in the Regulations as it was not specified in the Act. amaBhungane believed that that was one area that was potentially a risk to electoral politics, and it would be excellent of it could be provided for in the Regulations. Alternatively, it could be contained in the draft policy on the electoral code.

Commissioner Love noted a submission by amaBhungane around PPR4, which was the form for accessing information in relation to companies. There was a reference to the Johannesburg Stock Exchange (JSE), but it would be difficult for the IEC to mimic what was in the JSE records, so there would undoubtedly be cross-pollination. What information would amaBhungane like to see to facilitate record searching? That was not clear. She also commented that the definition of a person might not be entirely clear in respect of who was a relative.

Ms Rajuili accepted that other regulatory authorities had a role to play in scrutinising companies. What was necessary was for the IEC to have a certain minimum amount of information so that the due diligence assessment could be done by the Commission itself, while being fully aware that one could approach other bodies should there be questions about a particular donation. The disclosure of trustees was necessary, but amaBhungane believed that if shareholders also had to be disclosed, that would make it easier to do due diligence, without consistently having to go to another body for information. Sometimes companies would say one thing to one entity and another thing to another entity. The Commission needed to ensure that donors provided sufficient information to allow for basic due diligence and for things not to fall through the cracks.

Ms Rajuili also accepted that one could not define every single scenario in respect of defining a person, so the recommendation of amaBhungane was to use the definition of family of spouse, children, etc, as used in other legislation. It was limited, but at least it covered the first layer of splitting of donations. Regulations could not catch everyone, but at least the minimum amount of information should be given to the Commission to do a due diligence check.

The Chairperson indicated to his colleagues that there was insufficient time to engage further, but the Commission would request additional clarity offline in order to maintain the day’s programme.

Commissioner Masuku commented that Ms Rajuili had spoken about paid influencers. What was her opinion about when an influencer donated its influence in kind?

Ms Rajuili said that the Act stated that a donation in kind had to be disclosed, but if it was made in a voluntary capacity, that was not subject to disclosure. That was a gap,and AmaBhungane could see influencers fall through that gap and then that kind of online campaigning could continue without any transparency. To catch that type of political behaviour, which had a bearing on democracy in South Africa, the Commission should consider ensuring that there was transparency about media influencers in a campaign through the Regulations, or some type of policy code,.

Commissioner Pillay asked, in relation to the definition of a person, if it would meet the requirements if there was a catch-all such as “anyone who was in close association with the donor.” The theme was that the donor and the political party bore the onus of proving their claims. The onus was not on the Commission. If a donor claimed not to have close associates with whom he was splitting a donation, the donor -- and the political party -- was putting his head on the block. Would that address the concern about polygamists, bigamists and other kind of relationships?

Ms Rajuili was inclined to agree, but AmaBhungane would need to give more thought to what was a close associate. The onus would definitely rest with the donor and the political party to do that work. However, there would have to be some interaction between the IEC and the donor so that it was not an easy-to-bypass provision or rubber stamping.

Commissioner Pillay noted that the IEC did not have to return unlawful donations, so the donor had to meet the requirements to prove that the donation was lawful. She was hearing from others making submissions that donations from immoral sources of funding might be considered unlawful donations, such as the example of a company that treated its workers badly, but she was not sure if it was lawful to reject such donors, and the Commission would have to look into that.

The Chairperson thanked Ms Rajuili, and commented that the process had been enriched by looking at it from all angles.

Democratic Alliance

Members of Parliament James Selfe and Alf Lees represented the Democratic Alliance (DA).

Mr Selfe informed the Commission that the DA submissions had been made in March, but the party had been in the middle of an election campaign so those submissions were on technical matters and he took note of the Deputy Chairperson’s assurance that they had been reviewed and that matters in them would be taken up.

He and Mr Lees had served on the ad hoc committee for political party funding in Parliament, where it had been made clear that while it was desirable for political parties to disclose their donors, that ought to be related to the purpose of the legislation. The DA was seeking to avert what could be seen every day in the Zondo Commission, which was that political parties could be bought and their policies determined by large donors. It was large donors that the Bill sought to address. That was why the threshold had been set at R100 000. Any donation less than that would not be able to influence a political party. By implication, anyone who gave more than R100 000 was a large donor.

The DA had no problem with disclosure -- the problem lay with the implementation of section 12(3)(c ). In terms of the Act, a registered auditor had to audit the books of the political party and express an opinion on the books, the financial statement and donations of under R100 000. The understanding of the DA was that those donors could enjoy anonymity if so desired. That was why section 12(3)(c ) referred to donations and not to donors. Provided that the donations were under R100 000 all that would be required was the amount of the donation, but not the donor. However, the form in Annexure “B” to PPR14 required every donor to be disclosed. The view of the DA was that that requirement was ultra vires. The Constitutional Court had previously said that in exercising the power to make Regulations, the Minister had to adhere to the Constitution and the Act. The auditor’s requirement was greater than the law allowed for.

The DA had also contended that it was impractical. Most donations were small and made by way of membership fees and small cash amounts that were receipted but banked in globular amounts. It would require an army of volunteers and an army of bookkeepers to fulfil the requirements of the Regulations. That was not the intention of the Act, and if political parties did not follow requirements such as reporting split donations, the IEC had powers to investigate the parties.

Mr Lees continued the discussion on the disclosure of a multitude of small donations. One of the primary points emphasised in the ad hoc committee and in the National Assembly was the role of the auditor. The appointment of a professional auditor was necessary in terms of Section 12 of the Act, but the Regulations required the reporting of unnecessary details and was ultra vires of the intention of the Act. It was simply impractical and impossible to report the small donations, and the DA asked for that provision to be dropped. The system should rely on the auditors and the ability for the Commission to request information if there was a view that a malfeasance was taking place.

The other provision that was in the DA’s view beyond the requirements of the Act, was the requirement to provide details of all bank accounts held in the name of political parties. The DA had understood that it was the bank details of the fund into which the IEC would pay the Multi-Party Democracy Funds that would be required by the Commission. Some political parties, such as the DA, had bank accounts at constituency level all over the country, but some parties had accounts at branch level, so there were almost 5 000 bank accounts involved.

The other issue the DA raised was a technical one regarding when the Act would be implemented.

Discussion

Commissioner Pillay thanked the DA for pointing out Regulations that were possibly ultra vires. She appreciated the difficulty in respect of the practicalities of requesting the disclosure the bank accounts, but if the DA was saying that only the bank account into which the multi-party funds were paid should be disclosed, how did one close the gaps?

Mr Lees explained that the reporting requirement on the part of the political party and on the part of the auditor was part of the checks and balances. If the political party failed to report donations, then it was up to the auditor to point that out, so there were checks and balances. The Commission was the third check which could investigate the veracity of the reports. He could not see how the Commission was going to deal with thousands of banks accounts. One bank statement generated 100 pages in a month. Checks and balances had been built in specifically because it was impossible. From a practical point, and from an economic point of view, how was it possible?

Commissioner Pillay agreed that the amount of information would be overwhelming, and suggested that perhaps the point was to drown the Commission in paperwork. The Commissioner had two concerns: if the auditor was taking responsibility for the audit, he or she was putting his or her neck on the line, even for the criminal sanctions that might arise, although there might be something in the audit regulations that dealt with that. The second point was that if there was a complaint, support or suspicion, the IEC could call for bank statements and these had to be supplied without question (Section 14 of the Act). Retrospectively, nothing could apply. That was a matter of law.

Commissioner Love did not see where, in the Regulations, the bank statements were required. She was aware that the Regulations asked for information on all bank accounts. The donor was obliged to disclose, and a challenge would arise if he or she disclosed a donation to a political party via a bank account that the Commission could not identify as belonging to that party. A donor could place a donation in a political party bank account other than the centralised account.

Mr Lees said that he was talking about the bank account into which the IEC Multi-Party Democracy Funds would be deposited. The donations that the DA collected could go into any one of its thousands of bank accounts. He read Regulation 12(2)(a): “…must submit every one of its banking account details.” Mr Lees stressed that “details” could be interpreted to mean only name and account number but he had understood it to require the provision of statements. The word “details” was open to interpretation. Perhaps that should be clarified.

Commissioner Love said that as she understood it, the statements were onerous but the provision of a list of bank accounts would not be onerous and could be provided as and when the accounts were opened and closed.

Mr Lees disagreed. It would be onerous, because the party did not have a central database of all those bank accounts. He still believed that it was not required by the Act.

Mr Selfe added that attaching a bank account statement to each donation information form would be a nightmare. For example, if Aunty Maude donated R20, then the appropriate bank statement had to be attached to the form.

Commissioner Love understood the point he was making about attaching a bank statement to PPR14 and that the word “details” of accounts had to be clarified as a list of accounts. However, if the DA did not even know about all the bank accounts, how did an auditor ascertain what was being donated and that the threshold had not been exceeded?

Mr Lees corrected Commissioner Love. He had not said that the party did not know about all the accounts -- it did not have a central database. The individual accounts were audited by auditors all over the country. That was very clear in the party’s financial regulations.

Commissioner Love pointed out that the DA had said that the IEC should rely on a single auditor of the DA books, but how would that auditor know about the donations in constituency books that he did not audit?

Mr Lees conceded that it was an interesting question and that he would have to think about it.

Commissioner Pillay asked if there was benefit in doing random spot checks and, if so, how would the Commission enable such spot checks? One way to enable that would be if the Commission had all the account details.

Mr Lees was not able to give a considered answer, but the IEC definitely did have the authority to do spot checks. However, the question was whether the IEC would know what to ask for unless it was aware of the bank accounts. The IEC could ask about an account in a town, but why did they need the bank account details? He was battling to come to terms with the need for the Commission to know the exact account details.

The Chairperson said that the Commission’s role was that of the custodian, and should not be isolated from the broader details. It was about disclosure to the voters so that they could verify the details at their own discretion. Transparency was the major attribute of the IEC, and the currency was integrity. The media and the public needed to be in a position to see what was happening in political party funding without barriers. Transparency was embedded in the whole architecture of the IEC. Previous submissions had even suggested the importance of whistle-blowers, as the Commission could not be everywhere. He trusted that in the end the Commission would come out with a balanced position.

He appreciated the inputs of the DA.

Media Monitoring Africa
 

Mr William Bird, Director: Media Monitoring Africa (MMA), said MMA wanted to emphasise the importance of information that completed the picture of a political party, and who was behind them. The public needed to know more about what was behind manifestos. Central to that was the ability of the media and civil society to access information for interpretation and distribution.

MMA believed that the Commission should adopt a rights-based approach, so it should include a clause about rights – that the rights contained in the Constitution must at all times be respected, protected, promoted and fulfilled, both online and offline, including the rights to freedom of expression and access to information, and nothing in the Regulations should be interpreted or relied on to unjustifiably infringe the free flow of information. Mr Bird added that all disclosures should be made under oath.

The Commission should decline a request for non-disclosure if any law had been contravened. MMA requested reporting on the number of requests for non-disclosure and the results of those requests. Non-disclosure should be the exception, and disclosure should be the accepted position. In addition, political parties should be required to report any unlawful donation attempts.

Greater detail and clarity and an enforcement power were needed in respect of promotions, publications and advertising, especially since the rise of misinformation and dark advertising. There was a gap between existing media and social media, which targeted citizens with advertisements that did not look like advertisements. Even the USA was talking about the honesty of advertising. MMA submitted that with the rise of social media and the ability to tailor adverts on an almost one-to-one basis, it was essential that users and the public were aware that the content was paid for, and which party had paid for it. That was a key element in transparency of funding for the public. All paid political advertisements and content had to be clearly identified. That principle was in line with standard ethical practice across most other media formats, including top and tail disclaimers. In SA the playing fields were not level, as there were regulations for all journalists except the online social media.

Discussion

Commissioner Masuku appreciated the comprehensive written submission. In the oral submission, MMA had referred to the lack of Regulations dealing with political advertising. She asked him to link the point much more tightly to the topic of political funding.

Mr Bird said that the link was clear, in that people sought to influence people through digital media. In the past, a busload of money would persuade people to vote. In Britain, people had filled in a form about a local councillor but the information had been used to target citizens in the Brexit campaign. SA had seen the Bell Pottinger campaign which had clearly tried to shift public opinion. A lot of those campaigns now happened in dark advertising. The problem was the ways in which those advertisements targeted individuals.

Commissioner Masuku said that the gap was actually in the Regulations, and she assumed that MMA would like to see reporting on the funding of social media campaigns. Secondly, she asked what he meant about donations from unlawful activities not being returned. How did he envisage monies from unlawful activities being reported? What would become of that money? To whom, or to which organisation, should the money be paid? How should the monies be used and to whose benefit? How would that be determined, and by whom?

Mr Bird said that he did not have all the answers at hand and requested that he be allowed to provide a considered written response.

Commissioner Love wanted to understand the issue on political party advertising. Was Mr Bird suggesting that paid advertising, even if it fell below the aggregated threshold, should be reported on by the political parties and by advertising agents? Secondly, in his example of dark advertising in Wales, it was not overtly linked to a political party, so how would he link such advertising to a political party? It might not be easily provable.

Mr Bird concurred with the first point. Given the mechanism that the advertisers had to track advertising, he did not think it would be a problem for advertisers to report on it, even below the threshold. The key element was that the public needed to be made aware of what was paid-for content. Parties could do small micro-payments, and then it would be very hard to track even if they went over the threshold. The issue regarding dark advertising was that SA did not want to allow outside influence over the elections or political parties. Paid advertising or content had to be registered and listed in the public repository with who had paid for it. The digital platforms should identify paid-for advertising or content in relation to political parties or political content so that it was immediately evident when someone was watching paid for advertising online or via Twitter, Instagram, etc.

Commissioner Moepya referred to Regulation 8(1), which clearly referred to all content. Today it was political advertising, and tomorrow it would be another thing. Could paid advertising not be included in PPR4?

Mr Bird agreed that it would help to declare it in PPR4, but a repository was needed so that the public could see who was funding political parties. People did not know that they were watching paid content, so the repository was very important. There was a precedent, as Facebook was making the origin of advertisements a lot clearer.

The Chairperson thanked him.

Congress of South African Trade Unions (COSATU)

Mr Matthew Parks presented on behalf of COSATU and was accompanied by Mr Tony Ehrenreich, both of whom were in the COSATU parliamentary office.

The Chairperson asked whether COSATU was presenting as part of the ANC alliance, or as a union.

Mr Parks said that COSATU was not afraid to disagree with the ANC. The position it took on any issue depended on the impact on workers and their families. COSATU welcomed the Political Party Funding Act and the Regulations’ progressive objectives, especially in light of the crisis of corruption and state capture and the crisis of public faith in political parties and the political system. Workers had had to carry the can for corruption with increased VAT, a desire to lower public servants’ wages, etc.
Some parties raised issues of intimidation of donors, but that was not significant in the light of the extent of corruption. The Act was well-balanced. COSATU ultimately wanted to see that political parties got the funding from the state, as donors always wanted a favour in return. He was very pleased with the barring of donations by government, state-owned enterprises (SOEs) and foreign governments and agencies.

COSATU opposed some issues in the Act which obviously carried through to the Regulations, although it was aware that the Commission could not impact on the Act. The R100 000 donation threshold could potentially collapse the system. It would be easy to circumvent that threshold, and it opened up a loophole for people with wrong intentions. COSATU could not find the logic for the R100 000 threshold, and believed it was open to abuse. It should be scrapped in its entirety.
Section 19 (2) (a) of the Act provided for a sentence of up to five years for offenders violating sub-Section (1)(a) of the Act, but that did not appear to have been captured in Schedule 1 of the Regulations. Instead, the sentencing provisions in the Regulations had been reduced and limited to two years. COSATU supported the sentence of five years, as it was keen to see more people who had looted and abused the public purse in prison.

There was no definition in the Act or Regulations for what constituted “political exposure,” nor was there a cross-reference to another Act which may have such a definition, such as the Financial Centre Intelligence Act, etc. Section 4(3) (e) was consequently extremely vague and open to interpretation and possible abuse. A clear and concise definition of what constituted political exposure had to be added.

COSATU remained opposed to expanding public funding of parties in the light of corruption and austerity crises in the state fiscus resulting in service delivery challenges, and state and SOE job cuts. Parties wanted more money from the state after looting the country into poverty and leaving workers to carry the consequences, and COSATU could not support that.
Discussion

The Chairperson appreciated the carefully considered presentation. He now understood that the position of COSATU was that there should be no threshold for non-disclosure. That had not been clear in the written submission.

Commissioner Pillay referred to the concern raised that the call for all political parties to submit bank statements would be impossible to manage. COSATU had suggested that all donations should be disclosed. What would be the downside of a position where all political parties would be required by law to channel all donations to a single account, which would then be disclosed in its entirety to the Commission? The threshold was another point. She agreed that tax laws and the Financial Intelligence Centre Act (FICA) might have a definition of “political exposure” that could be incorporated into the Regulations.

Mr Parks replied that three years previously, there had been huge debates on the political exposure definition in FICA. It might require tweaking, but it was a very useful starting point.

He believed that it was easier for parties to provide their bank statements electronically. That would make searches very easy. A central account was a good idea, but there would also be branch accounts, and they would have to be checked. It would be a lot of work, but it was important to protect the state. The Commission should be able to enlist the assistance of the Financial Intelligence Centre and the four or five banks that would hold the accounts, because people could be very creative. Although parties stated that it was burdensome for the Commission, it must be remembered that the requirement applied only to the 14 political parties in Parliament, and any additional parties in provincial and local government. It did not apply to all registered political parties.

Concluding remarks

The Chairperson commented that implementation would be phased in because of certain challenges and the position of National Treasury, so some of the aspects proposed might not fall into the first round, especially those regarding enforcement. Ultimately, there would be an overall comprehensive regime. The Commission was looking to strike a balance. He observed that there had been concerns from political parties that had understood things in a particular way when developing the Bill.

He added that the issue of social media had become a concern to the Commission, and the challenges and risks of leakages or loopholes in that space suggested that it was an area that the IEC had to address. However, it was a journey that had to be mapped clearly, but implemented in time. He noted that the Companies Act also provided definitions of political exposure. The Commission would be joining forces with other organisations that had appropriate legislation to enhance the Regulations.

The hearing was adjourned to the following day..