JUDITH FEBRUARY: Untangling SA's toxic web of money and politics will be hard
‘Hard things are hard’ - Plaque on former US President Barack Obama’s Resolute desk during his time in office.
The vexed issue of political party funding and the sustained advocacy on the matter came full circle last week when President Ramaphosa signed a Proclamation for the commencement of the Political Party Funding Act, 6 of 2018, which regulates public and private funding of political parties. The Act comes into effect on 1 April 2021.
It was also somewhat poignant to think back to 2017 when then-ANC Chief Whip and now the late Jackson Mthembu said, “We are late but better late than never,” as he announced that he would “soon” be tabling a motion for the establishment of a multi-party ad hoc committee to develop legislation for increased public funding of political parties and the regulation of private funding to political parties.
Then his statement came like a bolt out of the blue, although the ANC had resolved to tackle the thorny issue of money and politics at both its Polokwane and Mangaung conferences. The issue has a vexed history.
The Public Funding of Represented Parties Act was passed in Parliament in 1997. In many respects, it was the start of the debate on the private funding of political parties. That Act allowed for money to be appropriated from the public purse for the maintenance of political parties between elections.
At the time, many argued that the Act ought to have included some regulation of private donations to political parties. Valli Moosa, then Constitutional Development Minister, refused to accede to this and so the law allowed for money from the public purse to be allocated to political parties on a 90:10 split.
Therefore, 90% of the funding was allocated proportionately, that is according to the percentage of votes received in elections, and 10% was distributed equitably among parties represented in Parliament.
The lacuna in South Africa’s anti-corruption framework has long been the failure to regulate private donations to political parties. Private individuals and companies have been able to donate as much in secret as they wished, leaving the door wide open for corruption and the buying of influence. In a country already divided by high levels of inequality, wealthy individuals have without doubt been able to buy proximity to politicians in myriad ways, thus “drowning out” the voices of the already poor and marginalised.
In 2005, the Institute for Democracy in Africa (Idasa) took the five major political parties to court to reveal their sources of funding in terms of the Promotion of Access to Information Act. Idasa’s contention was that political parties are public bodies and therefore the public has the right to know who funds them, or, alternatively, that they were private bodies, but the right to vote included knowing who funds political parties.
In a somewhat narrow judgment from Judge Bennie Griessel in the Cape High Court (as it was then known), it was found that political parties were private bodies and there was no need for them to disclose their sources of funding.
Then the ANC undertook to lead on the matter in Parliament. Idasa took the ANC at its word. That this never happened was (another) sad indictment on the ANC. With hindsight, it was a mistake to take the ANC at its word and Idasa ought to have taken the matter on appeal.
In 2007 when the political winds of change were in the air, the ANC’s commitment to transparency in relation to party funding was articulated in its Polokwane resolutions. Yet there was no action.
We now know that back in 1999, one of the major drivers for the arms deal corruption was political party donations. Because only a handful - maybe even just one or two -ANC leaders knew where the party’s funding was coming from in those days, it is unlikely that the truth will ever emerge as to how much money the ANC itself culled from the arms deal.
In another scandal in 2015 Hitachi agreed to pay $19 million to settle the US Securities and Exchange Commission charges that it violated American anti-bribery law through improper payments tied to the supply of boilers to Medupi and Kusile here in South Africa. Hitachi agreed to the settlement without admitting to or denying the SEC’s allegations. The SEC claimed Hitachi had violated the Foreign Corrupt Practices Act by inaccurately recording improper payments made to Chancellor House Holdings.
The SEC said in a statement on its website that: “Hitachi allegedly sold a 25% stake in its South African unit to Chancellor House Holdings (Pty) Ltd, allowing the company and the party to share profits. Hitachi paid Chancellor House, which it knew was a front for the ruling African National Congress, $5 million from the contracts and another $1 million in ‘success fees’.”
The SEC also alleged that in 2008 Hitachi paid an additional $1 million in “success fees” to Chancellor House, which was improperly booked as consulting fees. Hitachi settled the matter and there is, therefore, no admission of guilt. The $19 million settlement, however, raised more questions than answers regarding alleged payments made to the ANC as a result of the deal.
Why would Hitachi have paid a settlement figure? What was that in lieu of?
In January 2016, the ANC’s disgraced Beaufort West Mayor, Truman Prince, brazenly wrote a letter on a municipal letterhead in which he offered potential donors to the ANC a more than decent quid pro quo. He could not have been clearer about the aim when he wrote: “We (will) want to see construction companies sympathetic and having a relationship with the ANC to benefit, in order for these companies to inject funds into our election campaign process.”
Recently, more overt and brazen allegations of “state capture” have shown a far cruder and more dangerous expression of the challenge to prevent the buying of influence. President Jacob Zuma himself is at the centre of these allegations, as are his associates. This plays out in our living rooms daily as the Zondo Commission wends its way to a close.
Clearly, therefore, the toxic impact of money on politics has many shades and manifestations. To untangle this web will take some doing.
Strong democracies require healthy political parties. In turn, political parties require resources to sustain and operate a basic party structure, to contest elections and to contribute to policy debate.
The toxic impact of money on the political system is not unique to South Africa. One need only look to the United States to see the influence of “big money” and so-called “Super PACS” on the electoral system. It’s a multi-billion dollar business.
In Britain, public disclosure of contributions is required only of corporations and unions. Parties are required to submit quarterly reports detailing the name and address of the donor and the nature of the donation to the Electoral Commission. German law entitles parties to receive donations, but donations that exceed a value of 10,000 euros a year must be publicly disclosed by giving the name and address of the donor as well as the total amount in the annual report. Donations that exceed 50,000 euros have to be reported immediately.
Whatever the shortcomings of regulating private funding to political parties (and as has been seen in the UK, Germany and the United States, there have been problems with the implementation of regulations), complete secrecy about private donations became unsustainable even for the ANC and other South African political parties who benefitted from such secrecy. Secrecy only breeds mistrust and an environment that is ripe for corruption.
The new Act:
establishes funds to provide political parties represented in Parliament and legislatures with funding to undertake their work. It also requires that donations be disclosed by parties and donors to the Independent Electoral Commission (IEC). The Act prohibits donations by foreign governments or agencies, foreign persons or entities, organs of state or state-owned enterprises. Parties may however receive funding from foreign entities for training, skills development or policy development. No member of a political party may receive a donation other than for political party purposes.
Through the establishment of the Represented Political Party Fund, which provides public funding to parties, and the Multi-Party Democracy Fund, which funds parties from private sources, the Act seeks to ensure that all represented political parties receive sufficient funds for their work in a fair and equitable manner.
In his statement, Ramaphosa said, “The commencement of the Political Party Funding Act on 1 April 2021 is part of the commitment of this administration to improving transparency and accountability in government.’
Time will tell us who pays the piper even as we know legislation is never the panacea for all ills. This law will need to be properly enforced - always a challenge in the South African context.
But, the legislation is without doubt a victory for civil society activism and its dogged determination over more than two decades. At various points, different individuals and organisations picked up the transparency baton - mostly recently My Vote Counts - and ran the race to the finish line. It’s how democracies survive – when ordinary people do hard things.
We should not become too cynical to lose that lesson.
Judith February was the Second Applicant in the 2005 Idasa party-funding court case, reported as Institute for Democracy in South Africa and Others v African National Congress and Others (9828/03)  ZAWCHC 30; 2005 (5) SA 39 (C)  3 All SA 45 (C) (20 April 2005).
February is a lawyer, governance specialist and Visiting Fellow at the Wits School of Governance. She is the author of 'Turning and turning: exploring the complexities of South Africa’s democracy'. Follow her on Twitter: @judith_february