Opinionista Gregory Solik 2 April 2014

Party funding, the illness at the heart of our society

Secret funding of political parties poses a serious threat to a strong, independent and democratic society as it enables a tiny minority of influential people and corporations to exercise an electoral influence stronger than a single vote. Secrecy breeds corruption, and it’s making our democracy very sick indeed.

Last week we experienced the first signs of winter. Every winter, tens of millions of people around the world get the flu. Human flu symptoms usually include fever, cough, sore throat, and muscle aches, but in severe cases, it can cause death. According to a study in 2005, human flu in the U.S. resulted in approximately 36,000 deaths and more than 200,000 hospitalisations annually at a total cost of over $10 billion. The study states:

‘Although remarkable advances have been made in science and medicine during the past century, we are constantly reminded that we live in a universe of microbes – viruses, bacteria, protozoa and fungi that are forever changing and adapting themselves to the human host and the defenses that humans create. Influenza viruses are notable for their resilience and adaptability. While science has been able to develop highly effective vaccines and treatments for many infectious diseases that threaten public health, acquiring these tools is an ongoing challenge with the influenza virus.’

The problem of party funding is not dissimilar to the problem of human flu.

The comparison is helpful in at least three ways. First, like the seasonal infections of flu in winter, party funding scandals periodically rock South African politics, usually around election cycles, but not always. Second, the problem of money in politics, like the common flu, has the potential to have an enormous impact on the health of a country when not dealt with decisively. The arms deal, yet to be redressed, is perhaps the most vivid example of the pernicious effects of secret campaign finance. Third, like the resilience of the flu virus, money in politics is difficult to regulate because there are so many variations – different strains. Despite serious advances in our constitutional democracy, and research into possible vaccinations, a cure – in our case, legislation to regulate party funding – remains elusive:

‘There are no simple legislative or regulatory templates available to guide their deliberations. Party funding is at the heart of politics, and so it is interconnected with the policy process, media freedom, corruption, the party system, internal party democracy – and more or less everything else’.

To fund their campaigns, political parties are raising hundreds of millions of rand from private donors who secretly fund our politics, in addition to the public money they receive from taxpayers. It is important that we understand the problem of party funding as one that encompasses a concern with the lack of transparency around publicly administered taxpayer money.

The Public Funding of Represented Political Parties Act, passed in 1997, was intended to give effect to the constitutional obligation to pass national legislation to regulate party funding. The Act established a public fund, administered by the IEC, which for the previous financial year increased the allocation to all represented political parties from R108,2 million to R114,8 million. The ANC receives 62% of this public pot because 90% of the fund is allocated to parties based on their performance in the past election. New political entrants like the EFF and AgangSA will not receive any of this money.

A second major source of public funding, which is often overlooked, is the Parliamentary Constituency Allowances and Party Administrative Allowances made in terms of the Policy on Political Parties. The total annual budget for constituency allowances and associated services has increased from ±R60 million in 2002/2003 to ±R330 million in 2013/14. This represents a 500% increase in the past decade. A third source is the provincial funding of political parties. Almost all provinces have funding laws, which allow for the allocation of additional constituency funds to political parties. For the year ending 2012/2013, about R250 million was allocated to political parties from provincial coffers.

Like the Parliamentary Constituency Allowances, these provincial funds are open to use by political parties in a way that might not directly serve constituency work. A major flaw in the way national and provincial monies is regulated is that parties do not need to make full disclosure of income and expenditure. This has led to allegations of mismanagement and possible abuse of these funds to the detriment of the constituencies that political parties are required to serve.

Both the amounts and the lack of reporting and compliance mechanisms of these public monies are staggering.

The problem of private funding, however, is far more concerning.

It is difficult to report on private donations to political parties because they are made in complete secrecy. OSF reported that in the 2009 national and provincial elections approximately R550 million was collected from private funding sources. Since 2009, however, private donations to political parties seem to have increased exponentially. For example, Matthews Phosa reported that the ANC alone raised R1,66 billion from 2007-2012. (‘ANC looks at cuts to staff as its operating costs soar’, Cape Times 18 December 2012) There is absolutely no information available to the public about the finances of the opposition party, nor is there any information about new entrants such as AgangSA and EFF.

What we do know is that this poses a health risk to our democracy, as it does to democracies around the world. How much money parties raise, and from whom; whether foreign governments should be allowed to make donations; how parties spend their money; and how much we as citizens should contribute: these are essential questions that remain unanswered.

Secret funding of political parties poses a serious threat to a strong, independent and democratic society as it enables a tiny minority of influential people and corporations to exercise an electoral influence stronger than a single vote. Secrecy breeds corruption and the secrecy surrounding sources of private funding of political parties is no exception. The ANC’s refusal in 2009 to grant a visa to his Holiness the Dalai Lama (allegedly an attempt to maintain funding from the People’s Republic of China) or the mystery donor who prompted AgangSA and DA to merge, are certainly not isolated examples of this pernicious practice. It should not be surprising that China’s two largest rolling-stock manufacturers are the biggest winners of a R50bn deal to manufacture more than 1,000 locomotives for Transnet.

These specific examples are intended to show that the toxic mix of money in politics is not simply about corruption, although corruption is naturally one of the most nefarious consequences.

Knowing who funds a political party is fundamental to democratic participation as it provides an essential tool to consider government policies, tenders, contracts and relationships with individuals, governments and businesses. The right to vote is the right to cast an informed vote, and the Constitutional Court has accepted that in a democratic society such as our own, “the effective exercise of the right to vote also depends on the right of access to information. For without access to information, the ability of citizens to make responsible political decisions and participate meaningfully in public life is undermined.” [President of the Republic of South Africa and Others v M & G Media Ltd2012 (2) SA 50 (CC).]

Money in politics therefore poses a triple threat: it creates political inequality, breeds corruption, and contributes to the loss of accountability.

Despite this threat, the prevailing position is that there is no legislation requiring disclosure of the sources and sums of money donated privately to political parties, whether before, during or after an election. So when South Africans go to the polls on 7 May, most of the voting population will know nothing about the finances of its political parties.

Political parties are a special kind of private body with wide-ranging public obligations, as they are the primary vehicles through which we participate in democracy. Yet despite years of campaigning, political parties refuse to remedy the situation.

Two justifications are often offered – particularly by the opposition party – in defence of this position. The first is that if parties are forced to disclose the sources of their private donations, potential funders will be less willing to make donations. A second justification is that political parties are private organisations and that individuals should be free to associate with a view to pursuing common projects without state interference.

Both of these arguments are specious.

Although we accept that money constitutes an essential electoral resource necessary for media campaigns, specialised skills, offices, goods and services, salaries and so on, there is no evidence to suggest that the ruling party would punish opposition donors. And if that were the case, our democracy should ensure that such actions are punished. But even assuming that the threat should be taken seriously, there’s no reason why alternative forms of financing that are more open and transparent should not be adopted. One popular idea, for example, is the democracy fund.

The stalemate in party funding regulation raises an interesting conundrum: what do citizens do when political parties refuse to enact legislation that is constitutionally required? One obvious answer might be to turn to Parliament as an institution in itself. But Parliament too refuses to accept its constitutional duty to ensure that national legislation is passed to protect multi-party democracy. In fact, Parliament has actively obstructed the passing of comprehensive legislation.

On 22 April 2010, Lance Greyling, former Chief Whip for the Independent Democrats, requested Parliament’s Joint Rules Committee to establish an ad hoc committee to draft the required legislation. This request was declined and Mr Greyling approached the Chief Whips’ Forum for relief, which was unsuccessful. On 01 June 2010, Mr Greyling sought Parliament’s permission to introduce a Private Member’s Bill to regulate the private funding of political parties but this was ultimately rejected. Since 2010, a coalition of NGOs has petitioned political parties and Parliament to honour its manifestly important obligation, only to be disappointed.

The consequence of this failure over a 17-year period is that the toxic mix of money in politics has made our democracy sick.

On 31 March 2014, a wide range of community-based organisations and NGOs concerned with the current lack of transparency and accountability wrote to 14 political parties demanding to know that their ordinary ballots will not be outweighed by the bank balances of others whose interests might come into conflict with our own. They demand to know that political party campaign promises cannot be undercut by the hidden hands of financially influential individuals, corporations or foreign governments. They write,

‘As you campaign in the elections we call on you to show South African voters that you are genuinely committed to the Constitutional principles of accountability and transparency by providing us with a detailed breakdown of all private donations that your party received over the past twelve months (1 March 2013 – 28 February 2014). Private donors include individuals, trusts, corporations and foreign governments. Please provide detailed information including the name of the donor and the amount received.’

Political parties will have two weeks to respond before those affiliated to the campaign collate and disseminate the collected information to the voting public.

It is a simple request that thousands of individuals affiliated to those organisations expect to have answered. Because, although flu is a complex virus, it can be inactivated through simple interventions such as sunlight, disinfectants and detergents. Frequent handwashing, especially, reduces the risk of infection. This is a good start; no one should be turning to legislation as a silver bullet. Changes in the makeup of scandals will always require us to develop new vaccines on an annual basis and forecast which ‘strains’ of campaign finance are likely to predominate, and require remedying. For now though, parties must know that if they don’t finally listen, then the electorate is bound to make them pay. DM


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