Politics

Analysis: Forget Malema’s money, party funding is the real threat to democracy

By Phillip De Wet 26 July 2011

Yes, Julius Malema manages to stretch his salary an implausibly long way. But while we're worrying about where he gets his pocket money, political parties continue hiding the sources of their income – despite a half-decade old promise to improve transparency. Unlike Malema, we actually know party funding is being used as a conduit for bribes, and we can't help suspecting it’s also helping foreign governments buy our state. By PHILLIP DE WET.

When Libya started falling apart, some pointed questions were asked about South Africa’s confusing and changing  policy towards the crisis. Did Muammar Gaddafi dip into his country’s oil wealth to buy favour with the ANC, perhaps? It’s impossible to be sure he didn’t, especially if either Gaddafi or the ANC was even marginally clever about hiding the money trail. South Africa’s ever-changing stance on the Côte d’Ivoire crisis was equally puzzling. Just as we can’t be sure the Democratic Alliance is not, in fact, a puppet of imperialist forces. Or that the Dalai Lama was not refused entry into South Africa to protect current or future money flows from China.

While foreign government funding for political parties is theoretical, if particularly frightening, we know for a fact that party coffers are being used as an avenue for tender bribes and the buying of favours in general. The ANC in KwaZulu-Natal has promised to pay back a R1 million donation from Gaston Savoi, the Uruguayan businessman whose Intaka sells hospital equipment, including to the KZN provincial government. The Oilgate scandal involved a simple transfer of government money into private hands of Sandi Majali, then on to the ANC. In 2002 the DA took a big hit when German fugitive Jurgen Harksen said he’d made large donations to the party. Before its demise, the New National Party was accused of taking money from property developers in return for special treatment. And that’s ignoring a near constant background murmur of allegations that various municipalities, controlled by various parties, are swapping kindness for cash.

Besides the money they receive directly from the tax coffers, proportional to their share of the vote, South African political parties can fund themselves pretty as they see fit: By running investment arms (such as the ANC’s Chancellor House), by levying membership fees, by selling face-time with their high office bearers on the sidelines of conferences or by accepting donations. Donations of any size, from any source and in any form. Individuals can drop off suitcases filled with cash at party offices, foreign governments can provide export credits, companies can provide goods or services. There are no limits, no regulations and no reporting requirements. Suspicious payments are only investigated after a media exposé or, more rarely, thanks to a criminal complaint – and those are most likely just the tip of the iceberg.

While individuals or even businesses may donate small amounts of money to parties in a purely altruistic support of democracy, large sums are unlikely to come without ulterior motives. “If you are donating more than R50,000, you are probably trying to buy influence,” says Independent Democrats MP Lance Greyling, who has been trying to introduce party funding legislation before Parliament for a long time, but without success. Indeed, large listed companies that try to support democracy by giving parties money to campaign before elections often do so in a blaze of publicity and using some kind of formula to determine who gets what, precisely to avoid accusations of buying influence. Such donations probably make up only a small portion of the funds parties receive though. We just don’t know, because we don’t know how much money parties receive, or how much they spend.

The funny thing is that everyone – parties, political analysts, judges, civil society, activists, governance experts – agree that party funding should at least be regulated and probably be made mostly public. They’ve agreed about that for a long time; the big parties all happily agreed with a court judgment in 2006 that called for Parliament to introduce legislation, rather than have the courts adjudicate (if only because the Institute for Democracy in Africa pushed them into it). They agree on all levels; the ANC’s 2007 national conference, its highest decision-making body, in Polokwane resolved that the party “should champion the introduction of… an effective regulatory architecture for private funding of political parties”. Yet nobody does anything.

Well, that’s not strictly accurate. Let’s rather say nobody of consequence. It is invariably small or new parties that make a noise about funding rules: the UDM did it, Cope did it, and the ID’s Greyling has been tilting at this particular windmill for years. His latest attempt to introduce draft legislation for debate was shot down on the grounds that, in the opinion of the state law advisor, political parties have the same rights as people, including a right to privacy, which extends to financial privacy. Sadly that’s not even close to the weirdest excuse Parliament has come up for complete inaction.

The ANC has been studying the issue of party funding for many years, but has shown no sign of introducing legislation, or formal debate, or even of regulating itself internally. The DA is almost as bad. “If the DA believed legislation regulating the disclosure of the funding to political parties was effective, it would support it,” says James Selfe, chairman of the DA’s federal council. “However, it would need to be persuaded that such legislation was even-handed and watertight, and that it dealt with every contingency. In particular, the DA would have to be persuaded that, if direct political funding was circumscribed, political funding was not rerouted via other avenues, such as Chancellor House.”

The DA argues it cannot unilaterally start disclosing donors because those donors fear they would suffer for being seen to support the opposition. Indeed, it doesn’t take a crystal ball to predict that such donors would be labelled anti-revolutionary and find it harder to do business with the government anywhere outside Western Cape.

The executive arm of government won’t touch it, nor will the courts. The opposition won’t be embarrassing the ruling party into doing it, and the ruling party itself seems to have a bit of a blind spot about the issue. That leaves only civil society to take up the fight – and, given the current score on the Protection of Information Bill, success down that avenue doesn’t seem too far-fetched anymore.

“I would like to see some kind of Right2Know campaign,” says the oft-thwarted Greyling. “That was a very successful at lobbying around the POI Bill. Why not have a similar civil society campaign on this, which is fuelling a whole lot of corruption?”

As an intellectual exercise, consider the following purely hypothetical scenario. You are the leader of a sub-structure of a political party and stand accused of dubious business dealings. So, instead of accepting payments via a trust closely associated with you, you heavily encourage donations to your party. Then you arrange that the party receive a small commission for funnelling those donations to your sub-structure, and pay yourself nice performance bonuses based on your fundraising achievements. If that process siphons off half of the original sum, would it be worth it, considering that it would make your successful prosecution for bribery or corruption nearly impossible? DM


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