Political Party Funding Bill: public hearings Day 1

Meeting report

Opening remarks
The Chairperson welcomed everyone to the second round of oral submissions. In September, a first draft of the Bill on Funding of Represented Political Parties had been sent out for public comment. Presenters could talk to the proposals, highlighting blind spots or making contributions. On 10 November, the Independent Electoral Commission would present its views and the following week, the Committee would work on the Bill to present it to Parliament by 30 November 2017. The Chairperson apologised that the BLF submission in the first round of submissions had been mislaid.

Submission by Black First Land First
Mr Lindsay Maasdorp, National of Spokesman of Black First Land First (BLF) accepted the Chairperson’s apology but hoped that the omission at the previous hearings had not been deliberate. He apologised for the absence of the President of BLF. He indicated that he would be talking about private funding and public funding, and particularly how the movement aimed to move the country away from a funding model that embedded corruption within the political organisations of the country. The repeal of the IEC’s deposit requirement would be addressed and why the organisation thought that it was critical to open the democratic platform for society.

He referred to the Public Funding of Represented Political Parties Act of 1997 and its Regulations with special reference to sections 5 and 6. He noted the fact that 90% of the funds were distributed in terms of proportionality with only 10% being distributed equitably to the provincial legislatures in terms of the number of seats per party within each provincial legislature.

This funding model prevented the growth of small parties and thereby hindered the development of democracy. It forced parties into corrupt arrangements to source funding to supplement the public funding. A case in point was Adriano Mazzotti who paid R200 000 to register the EFF some years previously while he had pending SARS cases against him. How did one regulate, taking that into consideration? In comparison, the ANC and the DA received huge amounts of public funding. He proposed that 60% percent of the total amount of funding should be determined proportionally. Proportionality would be determined in accordance with the number of seats awarded to each participating party in the National Assembly and the provincial legislatures jointly. 40% of the total amount of funding would be determined equitably. The amount would be allocated to the provinces in proportion to the number of members of the respective provincial legislatures and the allocation to particular province had to be divided equally amongst the participants in the legislature of that province.

The crux of the problem with private funding was the conflict of interest which undermined the relationship between the political party and its voters. Private funders wished to fund political parties for their own interest and that could give rise to corruption. A party that was in power or close to power would receive funding, such as funding from Johan Rupert to promote the white economic structure and to maintain the status quo.

The Bill regulated against corruption and political parties had to get private and state support. The threshold allowed for corruption as there was no disclosure of funds below the threshold. BLF called for total disclosure of all private funding for current political parties. Going forward, political parties had to be prevented from receiving funding from private donors. A separate administration needed to be set up to receive private funding and to put these funds into the Multi-Party Democracy Fund. People thought that the Guptas had funded BLF but BLF was saying that the Guptas could put their money into the central fund and then be distributed to all parties so that people like Johan Rupert did not control the country. All donors had to reveal their identities.

There had to be limitations on electoral spending – it was not right that some parties ran their campaigns like sports show and others could not afford to do that. To this end, public donations had to be limited. The BLF did not want the popularising of politics. Books and accounts had to be kept and all donations had to be recorded. Parties had to record how much funding was used in electoral campaigning.

BLF called for the review of the IEC deposit requirement of R600 000 to contest the elections throughout the country as it meant that the black majority was locked out of Parliament. Instead, each new political party would have to collect 50 000 signatures to be registered. Not all parties had access to funding from Franschhoek and Stellenbosch, as some parties did.

Mr Ncedisa Mpemnyama, Western Cape Chairperson of BLF, stated that if one wanted to access Parliament, they could not because they did not have the money to register with the IEC. He stated that the voices of the poor could not be heard in Parliament. The DA had large pools of money from Zionists. The ruling party spent R1 billion on electioneering.

Discussion
The Chairperson indicated that a decision had been taken to change the 90/10 formula, even though the final decision on a formula had not been taken. It would be addressed in the spirit and manner of Section 236 of the Constitution.

Mr T Godi (APC) thanked the BLF for the submission and effort as it was usually those who had the means who presented at hearings and they always presented the ideology of those with means. BLF presented from the side of other people who did not have the means. He stated that it was like a breath of fresh air to have the new and different ideas of BLF. He could see that they had gone through the Bill. The input was not very different from things that had already been touched on. On the IEC deposit, the basis of a deposit was restrictive. However, a restriction was not only monetary. BLF wanted to remove the monetary requirement and replace it with another restriction – 50 000 signatures. He saw that as an inconsistency. He wanted to know what the principle was as BLF did not want to remove restrictions, but simply to change the type of restriction. He would have expected the BLF to say that the previous position was wrong and the Committee should go back. The percentages that the BLF gave in terms of equitability and proportionality adhered to the old concept of proportionality. He had expected the organisation to say that it was wrong and that it was necessary to go back to the Constitution. The BLF had glided over the concept of equitable and proportional share. It appeared that BLF had not thought it through.

The Chairperson asked whether the BLF position was that there should be no direct funding to political parties but only to a central fund so that if an individual wanted to donate to a particular party, that individual could only donate by the central fund. What did BLF mean regarding the electoral campaign funding? Would there be a difference between a party campaigning in only one province, a single candidate in a single local government, and another party that campaigned across the country? Sometimes an independent candidate would only campaign in a single ward. How would the election funding incorporate all aspects of electoral campaigning? Was the BLF position that the State should not fund directly? Currently political parties were funded by the State. State money was given to the IEC to be disbursed in the current formula which was currently 90/10, but was he saying that the State should fund, over and above that amount?

Mr Maasdorp replied that the logic that BLF moved from was the decommodification and the personalisation of electoral politics. That was the framework within which all the answers should be viewed.

He responded to Mr Godi’s question about the deposit versus the signatures. The process of entering electoral politics was commodified because they lived in a capitalist society that left many people outside the margins. By taking out the R600 000, politics would be taken out of the capitalist framework and parties would have to work amongst the people to get the 50 000 signatures. People had to be the epi-centre of politics and the signatures would enhance, not restrict, political participation. It was not a restriction, but a responsibility, to get 50 000 signatures. There might be political parties in Parliament that had paid the R600 000 but had not a single supporter.

He had not seen the Amendments so he could not comment on those. BLF did not want direct private party funding. People funded political parties with corrupt interests. The corrupt fabric of society was in the political sphere. The ANC was contesting elections and, if he were someone like Anton Rupert, and wanted to maintain a white status quo, he would back Cyril Ramaphosa; if he wanted the dominant ideas of Zionism, he would put his money into the DA. It was common sense. If he had money, it was common sense that he would the money there. Ramaphosa was bad. They should put all their money in a central fund so that all parties could share the money and then the real people with real voices could decide instead of Rupert and Ramaphosa.

The IEC should control how the system works but the IEC should not make the decisions about how political parties function. It should just administer the money.

He said that SRC elections should be a hub for testing new ideas about funding campaigns. SRC elections replicated the political system and there was the same problem with election campaigning funds for SRCs. SRCs restricted spending to a pro rata amount. It was doable. If one could say that how many people were in Gauteng, x amount could be spent. It could not be right that R600 000 still existed in 2017. People could spend hundreds of millions on campaigning and win because they had the money, not because they had good ideas.

The Western Cape Chairperson said that if he had grown up in a country where the PAC had had money to contest elections, he would have joined the PAC but he had grown up in an environment where the people had been bludgeoned by the ANC and indoctrinated by ANC thoughts. The allocation of funds meant that the narrative that young people picked up was determined by the funding model and they were unable to save the country, not in a neo-liberal way, but in a democratic, inclusive and redistributive way. The young people had been bashed with data and SABC TV. A cap on elections should be R500 million and then one had a lonely BLF with R1 million. That was grossly unfair because BLF was suppressed. Proportionality was right. BLF did not support that people said Zuma must go because they have not been to the township areas to see how those people felt. That had come from the people who supported imperialism.

The Chairperson thanked BLF for the input. He warned them that politics was tough and that, while they were sitting on that side, they could complain about the ANC and call the DA the Zionists, but it would be different when they were in politics because people would then have things to say about them. He pointed out that legislation was dynamic and so, even if in five years’ time the ideas had been not been incorporated, the BLF could always propose them again.

South African Local Government Association (SALGA) submission
Ms Lindiwe Ntshalintshali, SALGA Deputy President, apologised for the absence of the SALGA President, but he was out of the country. SALGA was very concerned that local government had been omitted in the Bill.

Ms Gombo, Councillor and NEC member, spoke on the nature and form of the South African State as that was critical to their submission. The current political funding status seemed to be the result of an oversight by the drafters of the Constitution. There was a lacuna in the funding status as local government had not been included. That had resulted in an inherent misalignment between what the Constitution expected of each sphere of government and what it provided in terms of funding for constituency work. There were no constituency funds at local level and she presented the case for the extension of political funding to local government. SALGA proposed a differentiated funding model. SALGA recommended a separate funding regime and management system for Ward Councillors, Community Based Organisations and represented political parties at local government level.

SALGA believed that there might be some justification to exclude the local sphere of government as a beneficiary of the Represented Political Parties Funding as there was a constitutional and legislative lacuna. However, they believed that the Multi-Party Democracy Fund (MPDF) could include the local sphere of government. Phase one would be inclusion in the MPDF and Phase two would be an Amendment to the Constitution and legislation.

Ms Ntshalintshali concluded by stating that the details of the SALGA input were contained in the submission and it highlighted those things that specifically needed additional attention.

Discussion
Mr J Selfe (DA) stated that he admired the work done at local government level, and specifically noted that people at that level were not paid very much, despite the fact that they had to fulfil countless functions at local level, but the thousands of councillors country-wide would put a financial burden on the funding system. At the same time, municipalities were struggling to pay their own accounts. Many municipalities owed Eskom large sums of money, billions of Rand. There was enormous decline. He wondered whether SALGA should not get the funding of essential services right first, before looking to funding for councillors.

Ms L Mathys EFF) asked why SALGA had recommended that funding should go to the official opposition party at local councils. Why was that? She asked whether SALGA was also recommending funding of independents, which meant that the organisation wanted funding per councillor and not per political party.

The Chairperson agreed that part of the problem was the lacuna in the Constitution. He advised SALGA that the organisation should address the parliamentary Constitutional Review Committee first and then the organisation could begin to address the funding issue. SALGA would have to deal with the Constitution first. He pointed out that legislation should look to the future and that what was determined in the current process should stand for years to come. He asked about the scenario of independent councillors without party backing becoming the norm. How would the independent Councillors be funded? Should the Multi-Party Democracy Fund fund them? Currently, the parties received a share of the funds. How would it be shared amongst councillors? South Africans were asking who was using the funds and for what purpose. He noted that Ward Councillors were in one day and out the next day. In the MPDF, accountability was the responsibility of the political parties and not people such as the Municipal Manager. Could the Municipal Manager manage funding for all councillors? The Committee was constrained by its mandate but the ad hoc Committee had determined that the issue of local government level funding would be raised in Parliament.

Ms Gombo replied that while South Africa could be a unitary state, the impact of government should be at the local level. The growing of democracy should be directed at the local level as the development of the communities was key in any state. But the funding was aimed at provincial and national levels, and those representatives were never seen at local level. Costs needed tighter scrutiny. Ward councillors did not have their own funds. The assistance of Ward Councillors was currently in the Speaker’s Office and that was why they had determined that that was a suitable office. The Speaker was responsible for community participation. If costs were the only criteria, a lot of things would not be happening in South Africa. If engaging the majority of the people in the country was seen as a problem because of the cost, she would have a problem. If the Committee said that there was no money for local government, she had a problem. Democracy South Africa was not mature. The real place to deal with democracy was in the communities. She understood that SALGA would have to approach other Committees.

Ms Gombo asked that the issues of the political party funding not be linked to the payment of Eskom and she cited the problem of revenue collection and the fact that the government did not fund municipalities adequately. The government relied on people who had never had electricity to pay for it, and so municipalities were struggling. The basis for revenue collection was problematic. For the first time, she had heard someone at national level sympathising with the allowance that councillors had, which was as low as R5 000. Councillors could not even afford to go around the ward. The Chief Whip at local government level had an office but no one else, not even the official political, because councils could not avoid it. The money was about service delivery and so there were always issues about councillors serving their communities. Wards were the basic structure of the local government system.

Mr Sonwabo Gqegqe, Executive Director for Parliamentary Affairs, stated that SLGA had made a detailed written submission which addressed certain clauses, but supported the concepts of the transparency of the fund. SALGA appreciated the attempt to put the democracy of the Republic back into the hands of the citizens. There was no way that citizens could avoid paying for its democracy unless they wanted to allow an elite capture of their democracy. Parties at national level needed to note the assumptions that SALGA was making in its submission. One of the issues raised was that it might have an oversight of the drafters of the Constitution but also it might have been that the drafters had a different view. At the time, there were over 800 municipalities and they had not been consolidated. Now some municipalities were bigger than many countries in the world, and needed funding to participate in democracy.

Mr Gqegqe wanted to assume that Members were aware of the skewed fiscus disaggregation model. Over 800 municipalities had 1% of the fiscus in 2001. In 2017, 4% went to local government, excluding conditional grants, which were prescribed and so municipalities could not decide how to use that money. It was also necessary to look at how geography had been used as a political tool in the country and how that had left certain municipalities unable to fund or resource themselves and were now dependant on grants.

He wanted to suggest that they did not get into the Eskom issue as they had addressed it at many Committees and SALGA wanted to take it up for a constitutional review. There were many issues including how municipalities were billed by Eskom. He acknowledged the crisis but it was a matter under review. He acknowledged that he would have to take it up with different Committees.

Three categories were important. The first category was that of wards and ward councillors. The local government system had proportional representatives and Ward Councillors or representatives. The Committee should extend funding to Municipalities for Wards, and not Ward Councillors, and hence the Speaker had control over the money which meant that the Municipal Manager had to be the Accounting Officer. SALGA needed political parties to support the work of councillors and the campaigns, but that was another issue. Providing funding for Wards and not Ward Councillors would deal with the issue of the turnover of councillors. Community organisations competed for elections but candidates were required to state whether he or she was with a political party or a community organisation that was limited to that municipality. Political parties should be subjected to political party legislation, but if the candidates were from an NPO, it would be dependent on the management and control of the Speaker. The funds for a Ward Councillor would be limited to community support and not be for political issues. Community organisations and Ward Councillors would be funded only for work with the community in the Ward.

The link between political parties at national and local government level was another issue. SALGA was in no position to say how political parties interfaced with local government but it seemed that there was very little support for political party members at local government level. Therefore, SALGA believed that there should be funding at local government level. Political parties could test the assumption of SALGA that party funding was not used to any real extent to support local government elections or councillors.

As far as funding of the official opposition was concerned, and it was open to discussion, SALGA believed a political party needed money to run its office in a municipality.

If the funding was not extended, it might increase challenges and if the Bill closed the window for funding, it could have adverse effects on local government. If the Committee did not extend the funding to local government level, the Committee was implying that all work at local government level, should be stopped. SALGA believed that the Cape High Court judgement meant that all funding at local government level had to be disclosed and the same level of accountability and transparency needed to be ensured.

The Chairperson explained that the funding at the national and provincial level came from Parliament and not from the Multi-Party Democracy Fund (MPDF). The MPDF would not be a substitute for state funding. The solution might be a mechanism that allowed local government to ringfence a kitty of funding to serve constituencies. He understood and sympathised with the fact that they did not receive much money at local government level but that was the mechanism in use at national and provincial level. He did not want to raise anyone’s hopes because the Committee had a specific mandate. The MPDF was never intended to substitute for state funding. He did not want SALGA to believe that the Committee could undertake to do that. It was an important matter, but he could not see it being included in the current Bill, although the Committee would like to find a way to start the process.

Mr Gumede (ANC) believed that the fiscus should fund democracy at all levels. No one was against an extended approach but the Committee could only address national and provincial levels. There could be a staggered approach and it could be addressed at a later stage. He believed that when the current legislation was complete, they had to address local government funding. It had different complexities.

Dr P Mulder (FF+) stated that the concerns could not be addressed in the current Bill as it would make the Bill unconstitutional. The best way was to include it in the report to Parliament.

Mr Selfe endorsed the Chairperson ‘s approach that the Constitutional Review Committee be approached as the correct way. Although a two-stage process was proposed, the Committee could not address the second stage as it would be unconstitutional at that stage, so the answer was to address the Constitution.

Ms Mathys thanked SALGA for the submission as the EFF was sympathetic and did understand the difficulties of local government and councillors. She noted that it was impossible to include in the current Bill, but she thought that SALGA had to come up with a very specific plan that addressed challenges and accountability. One issue was that the Speaker could not account for the money if it was going to the next level. The Ward Councillor would have to account for the money. How would that be managed? South Africans wanted to know how the money would be spent and how it would be accounted for. She encouraged SALGA to develop a proposal that addressed the real challenges in such a process.

Ms D Dlakude (ANC) stated that she was even more frustrated as the Committee had discussed the inclusion of local government several times but there was no way forward in the current Bill.

The Chairperson thanked the colleagues from SALGA. Members were sincere when they said it was an important matter and the Constitutional Review Committee would be their gateway.

Information Regulator submission
Adv Pansy Tlakula, Chairperson of the Information Regulator, accompanied by Adv Lebogang Stroom Nzama, responsible for the Promotion of Access to Information Act (PAIA), presented.

Adv Tlakula noted that the Information Regulator had been established in terms of Section 39 of the Protection of Personal Information (POPIA) and was regulated to use its powers and perform its functions in accordance with POPIA and PAIA. The IR welcomed the Bill but wanted to address the impact of the Bill in relation to PAIA and the recent judgements in the Western Cape High Court in the My Vote Counts case. She was mindful of the mandate of the Committee but was hoping that the issues that they were raising would be included in the report to the National Assembly.

The application in the My Vote Counts case was premised on the right of access to information in terms of Section 32(i) of the Constitution, and Section 32 entitled citizens to have access to information, and the Court had determined that that information included information on the funding of political parties. Such information was necessary to enable the electorate to exercise its right to vote, as articulated in Section 19 of the Constitution. The two Sections had to be read together. The Regulator concurred with the Court in that regard.

 PAIA had been drafted without including a reference to political parties. However, IR believed that, in order for the electorate to exercise their right to vote, all information held by political parties had to be disclosed and that was the crux of the IR submission. PAIA had to be amended and had to include political parties in their entirety, as currently, the public had no recourse if a political party did not want to provide information. The IR proposed that political parties should be pro-active in making information available. The Bill gave an opportunity for information to be disclosed.

In the Bill, Section 3 (5) allowed that a donor to the MPDF could ask the Commission not to disclose that donor’s identity or the amount of the contribution. The Court had decided, in the My Vote Counts case, that, in the light of the public nature of political parties, information about the funds received, including private funding with a distinctly political purpose, should be disclosed. In that case, the privacy of the political party was attenuated. Section 3 (2) defeated the principles of the Bill regarding accountability and transparency.

Section 15 (2) dealt with investigating a complaint. The IR believed that the section was too broad as any person could request anyone to provide information. It had to be limited to make it consistent with 15 (4). The mandate of the IEC was very specific and so investigations could simply relate to the disclosure of funding.

Discussion
The Chairperson was aware that the ruling of the Western Cape High Court had to be confirmed. If it were confirmed, would Section 3 (5) be considered unconstitutional? If it would be unconstitutional, they would have to address it. The Committee legal team had noted that PAIA was a different piece of legislation that would continue, separate from the Bill. He explained that the IEC would have all the information but they would not have to disclose every single small contribution as it would be a nightmare. According to the Bill, political parties would not have to disclose membership fees and levies. The threshold was determined at a practical level, but anyone could request the information from the IEC. Those were his two concerns.

Mr Selfe needed clarity about whether they were talking about 3 (1) (ii) or 3 (5). The response was that the IR had meant the latter. He turned his attention to PAIA. He wanted to know where the Committee’s responsibilities stopped in terms of the court judgement. What did “all” information mean? Did political parties have to give out information such as who the members were and did they have to release every detail? Where did PAIA stop? If it was correct, did Cabinet have to reveal all information about what was discussed in Cabinet because it was essentially a political party meeting? Did the public have a right to know what was going on in there? He understood one wanted to stop a particular family capturing the state, but where did it stop?

Ms Mathys noted that the EFF interpretation of the Court judgement was that it related to funding only. She asked about the Amendments to PAIA. Were they going to relate to funding only? She asked about the impact of the My Vote Counts judgement and whether the Committee was addressing it adequately in the Bill. The Committee just needed to know from IR where it had over-stepped the mark.      

Mr Gumede thanked Adv Tlakula for the submission. He understood that it was about empowering democracy for all and for parties with poor membership. Perhaps total government funding was the way to go, but the Committee knew that it was not possible. The Committee knew that funding by private individuals and organisations was going to be very difficult if all details had to be disclosed. Could the Committee not consider a regulated disclosure? Was there a model for regulated disclosure? They were working towards a social democratic government suitable for Scandinavia with a far larger per capita income than any of the South African political parties. If private funding was removed, how would they fund political parties as the funds in government were not sufficient to fully support political parties?

Adv Tlakula replied that she had not intended to talk to Section 3(2). What if everyone said that they did not want their funding disclosed? What would be the point if the Bill did not promote transparency and accountability? If the Constitutional Court approved the judgement, the Bill would be in court the following day as that Clause would not pass muster. IR, therefore, recommended that litigation should be avoided. She told Mr Gumede that they were not advocating refusing to allow private funding. The point was that funding had to be disclosed. Political parties were central to democracy in South Africa and so their premise was that the funding of political party should be in the ambit of PAIA. She told Mr Selfe that there was international jurisprudence that determined where the line had to be drawn. The Act stated that personal information or political persuasion could not be disclosed, except to political parties. Personal information of members was not the issue. How far did one go? One could ask for information on the party’s Constitution, what internal democracy processes were in place, election processes etc. That information should be made available proactively by political parties.

She did not want to enter the political arena, but at the moment there were a lot of court challenges as members of political parties challenged each other. When they went to court, they were asking for information. PAIA should be able to give them access to information, or address a complaint regarding the political party disputes, so there were advantages in a strong PAIA, even for political parties.

Adv Lebogang Stroom-Nzama stated that Section 3(5) would definitely affect the Bill. PAIA had to be amended and, once amended, it would render 3(5) unconstitutional.

The Chairperson summarised the point on section 3 (5). It meant that no one could state that the donation would not be disclosed and that, even the request of the donor that such funding was not disclosed, would be inadequate in terms of the constitutional position. He noted that in the Committee meetings, Members had been concerned about people who did not want to make their funding public. Could the IEC not accept a donation on those terms? Did the court judgement say that, in that case, the funding could not be accepted? Would that be in conflict with the law?

Ms Mathys observed that all the information regarding constitution, processes, elections, etc., should be made available but would PAIA be able to demand that the minutes of a meeting within a political party? She believed that it would be very difficult for a party to make available all minutes and decisions from right across the country. It would be an administrative nightmare. She needed clarity on that point.

Adv Tlakula said that in terms of PAIA, all public bodies had to disclose all information proactively and on request and so should political parties, even the minutes of meetings, decisions etc. Because of the role that political parties played in the public space in South Africa, they should provide information. She was quite sure that political parties had nothing to hide. In terms of PAIA, public bodies had to provide all information and at the same, it should apply to political parties. Even donors need to know that if they made a donation to a political party, it would become publicly available to all South Africans. The IR was taking over the role from the Human Rights Commission. IR would be responsible to see that information was readily available, after 22 years of democracy.

The Chairperson noted that it was clear.

Dr Mulder joked that he would have to take the IR to court. On a more serious note, he thought that the matter might still be taken to court. He did not believe that PAIA could have access to political strategies etc.

Adv Tlakula noted that certain secret and confidential information could be protected even under PAIA.

The Chairperson thanked Adv Tlakula.

University of South Africa submission
Prof Dirk Kotze and Ms Zandi Radebe represented the Department of Political Sciences at the University of South Africa (UNISA). The written input had been detailed but they would be addressing the PowerPoint submission. The Bill seemed to consist of two elements: the public and private funding to political parties, and the private donations. In the past, the private donations were not subject to Section 236.

The notion or concept of political parties as used in the Bill, on one hand defined political parties as in the Act, but with respect to private donations, as in Section 3 of the Bill. The definition in the Act was illogical as it defined a political party terms of a political party. The IEC had a list of political parties and political parties had defined themselves as such because they wanted to be in that domain, so it was not necessary to define political parties. The IEC had already applied the definition of a political party when it had registered political parties. The UNISA recommendation was that it would be sufficient to define a political party as parties registered with the IEC as then all registered parties could receive funds, but it would also mean that registered parties had to declare their funding.

Clause 9 (3) referred to the members of political parties but there could be hundreds, thousands, millions of members. UNISA would suggest changing it to an elected representative or any elected party official or an appointed employee. Those persons would become subject to the legislation and would have a mandate to operate according legislation.

The submission focussed on disclosure. The focus was on political parties, but there were many other bodies linked to political parties, such as investment companies, trusts, foundations, NGOs etc. What about private donations given to them? Political parties would look for alternatives for garnering funds and so that gap or loophole should be addressed. What was also possible, was that funding donated at local government level for the party, could be used at provincial and national level. UNISA recommended that the legislation should also include entities financially associated with political parties.

Party-to-party funding was a relevant issue, i.e. where one party outside of the country gave funding to parties inside of the country, but reference to party-to-party funding was not included in the Bill. If the logic of the legislation was to prevent influence in the domestic affairs of the country, that loophole had to be closed as the parties were often substitutes for other governments.

Section 5 dealt with electoral matters. The IEC’s involvement had been used as a precedent but, from a political science point of view, UNISA cautioned against that approach. The powers and responsibilities given to IEC did not deal directly with electoral matters. The IEC was responsible for managing all aspects of private donations. There was a potential for disputes between the IEC and political parties over funding issues if it had to handle all issues relating to funding, even down to misappropriation of funds. The IEC had done good work and had been credible. Those tasks could damage the credibility of the IEC. UNISA proposed that many of the aspects were judicial in nature and so the Electoral Court would be in a better position to make the decisions and then IEC would implement, without being accountable for any decisions. Alternatively, a new body could be created.

The legislation before the Committee had started with the 2005 IDASA court case and subsequently there was some work done in respect of public funding, but very little had been done in respect of private funding. The current process was the first step in the public disclosure of private funding. Parties had to declare funding, but it was a watered-down process. A separate auditing body would be a better option.

The Bill said very little about electoral funding. There was a somewhat confusing issue about reporting after one month and 12 months. In the current Act, party accounts had to be closed 21 days before an election so that the money could not be used for elections, but that point did not seem to have been captured in the Bill. It suggested the money in the accounts could be used for elections. It was not clear in what ways the funds could be used for elections. UNISA suggested two options. Firstly, a maximum total funding per party, regardless of size, but that had issues and so there would need to be categories of parties. The second option was a ceiling on private donations to be used for elections. No foreign funding could be accepted. Disclosure of public funding was mainly before the election, but the public would want to know how funds had been spent after the election.

Discussion
The Chairperson knew that the Bill would not be the panacea of all problems. The Bill was only a first step towards dealing with problems. The input had been informative.

Mr Selfe asked for clarity in respect of 9(3) which allowed for party-to-party funding, provided it was used as per legislation, as was the case currently. Did UNISA have a principled objection or was it about foreign parties owning South African parties?

Ms C Ncube Ndaba (ANC) had the same question as Mr Selfe.

The Chairperson noted the insistence that members of political parties should not receive donations. He presented an example. Party A was going to a conference and someone gave someone, who was not a representative, the money to get him elected and, after being elected by the party, he would be captured by the person who had given him the money. The second point about the upper cap was addressed in the Regulations. Regarding the IEC, the Bill should be very clear that all decisions would be taken at Electoral Court level and the Electoral Court would decide in cases of disputes etc.

The Auditor General’s Office would do its own audit at the IEC. What did Professor Kotze want another auditor to do? Or should an entity to audit political parties be appointed, and, if so, who would manage and fund such an audit? Regarding parties not represented, the Chairperson pointed out that the Bill was covering represented parties. He could assure the UNISA representatives that a million people would start a political party the following day but it would not be possible to control them. A man and his fax machine often thought he was a political party. The Chairperson thanked the UNISA representatives saying that it was informative engaging with a Professor of Political Science.

Prof Kotze stated that party to party donations were not referred to in Section 9(3). Everyone knew that the Chinese Communist Party and the Labour Party in the UK had given money in the name of their parties to South African political parties. Some of those parties were governing parties giving money to South African parties. If the logic was to prevent external influence, then that was problematic.

He believed that Section 11 addressed the Chairperson‘s point about members but Section 9(3) referred to members receiving money in the name of the political party. Section 8 referred to the receipt of money in a positive context but it was exceptionally difficult for a leader to disclose if he did not know about it. The point was to make it fairer for accounting by leaders.

Chapter 5 was about enforcement and he did not see anything about decision-making by the Electoral Court, except when there was an appeal. In the Bill, initial decisions were to be taken by the IEC. The Electoral Court would introduce sanctions. He did not think that sanctions should be an IEC decision. The determination of irregular expenditure should be Electoral Court decision. He especially thought that it was not the IEC’s decision to cancel registration of a political party as per the sanctions in the Bill.

The point about the audit was that parties had to establish accounts and the parties had accounting officers who had to appoint their own auditors but one could sometimes ask questions about the quality of auditing. The Auditor General could decide whether to audit political party reports or not. Because public disclosure was in the public arena, he believed that the parties’ disclosure had to be audited. Those audited reports were not to be sent to Parliament and the reporting might disappear in the larger IEC report. Because it was in the public arena and in the public interest, he thought that the party’s disclosure had to be audited. He did not see anything about the political parties’ audited statements being presented to Parliament.

UNISA was recommending that political parties that were registered with the IEC, even if they did not have representatives, had to report on funding. The legislation meant that a party could accumulate funds from any source until the party had a representative in a legislature.

The Chairperson said that the last point bothered him because there were over 200 parties registered with the IEC and it was going to be very difficult to audit all of them. As far as disclosures to be sent to IEC were concerned, the books had to be audited privately. The Auditor General audited by means of sample. He understood UNISA to say that the books should be audited independently and accepted the sentiment, but he was interested in the practical implications.

Ms Dlakude stated that it was true that parties not represented could receive funding from outside the country. The Committee had to think about it.

Ms Mathys spoke about the definition to include all political parties registered with IEC. Did UNISA suggest that those parties should get funding? Or were they saying that it was just about monitoring and that they could be deregistered if they did not submit? The Committee had to find practical solutions. She noted that the Committee had had extensive discussions and had come up with the MPDF to promote multi-party democracy and to encourage people to donate. Monitoring was the best they could do.

Mr Selfe had some misgivings about the practicalities. He thought that it would take an army of people to monitor it, for little reward. To those who received money before they had representivity, such as the EFF, he would just say good luck to them. On the balance of cost and benefit, it would not be the path to take as they could not police it. The DA had a registered auditor and the auditors were particularly careful because a political party was under the spotlight. Some of the financial statements were presented to Parliament in respect of constituency allowances and to the IEC in respect of the public funding. All audited statements would have to be published. So, he did not think that there was a need to strengthen auditors when they would have to be audited by the Auditor General anyway.

He noted that the Electoral Court was a Court of Appeal and if parties wished to appeal a decision of the Electoral Court, they would have to go to the Constitutional Court, the Court of Appeal for Appeal Courts, which would not be able to manage as it was not set up to do deal with such cases.

Dr Mulder stated that Section 236 determined the scope of the Bill with regard to representative parties. There had been an emphasis had been on transparency and disclosure rather funding. They wanted to make it easier for parties to make disclosure, but what if someone gave a donation to a member and not to a representative official? The party-to-party donations had to be addressed.

Mr Godi had had to leave briefly for another meeting. He was intrigued about those who had to account and those who called for accountability. Was it a one-way street or a two-way street? The submission was in detail so how had it missed that the Bill sought to give reality to the clause in the Constitution that the legislation dealt with Represented Political Parties. Regarding the parties registered with the IEC, how did they deal with the fact that the Constitution defined the parameters? Dealing with anything outside of that perhaps needed a different instrument.

UNISA responded that it had interpreted Section 236 as referring only to the public side of funding. That was why there had been no challenge to it. The Section did not meet the requirements of the Constitution. They were concerned about using the Bill for two different issues. Section 236 was silent on private funding.

The Chairperson responded that the current legislation permitted private funding. All the Committee had done was to separate the two funds. Nothing had been done outside Section 236. The previous Act had dealt with private funding. The difference was that the current Bill was making the difference specific. He asked whether UNISA believed that what the Committee was outside Section 236.

Prof Kotze said that the definition of a political party did not refer to registered political parties. There was a definition of represented political party but there was another definition that was not the same (p 8 and p13). The IEC definition was not a good one, as it could include COSATU. He proposed an alternative definition of a political party.

Mr Godi said that whatever one was should be determined by substance and not by being registered with IEC. The Bill talked about registered political parties and UNISA was talking about the political party as one that was registered with the IEC. He did not believe that that was a common definition for a political party, i.e. registered with the IEC. A party needed to be registered to participate in elections but he was not sure if registration was necessary to exist as a political party.

The Chairperson said that the drafters of the Bill would contact UNISA to clarify some of the issues.

Prof Kotze said that he understood that practicalities were immense and he also understood that political parties on their own would not close the gaps. His Department had simply wanted to make the Committee aware of some of the issues. He did not expect all the issues to be addressed in that Bill. The investment companies, trusts, foundations etc remained a problem. One of the biggest difficulties in identifying foreigners or other avenues was that there were endless possibilities and endless fronts that could be used. He would like to see a public audit report made available to the public. The Electoral Court was an Appeal Court but at the time of elections, all matters were taken to the Electoral Court as the responsible court. It could be any court, but it should be removed from the domain of the IEC as it would complicate the already complicated work of the IEC.

Organisation Undoing Tax Abuse (OUTA) submission
Ms Liziwe McDaid, OUTA Parliamentary Officer, presented on behalf of Mr Matt Johnston, Information Analyst, who had had his wisdom teeth out and could not present. Ms McDaid had attended the Open Society meeting in Paris at a time when it seemed that South African political parties were not open to disclosure. OUTA wished to make the point that gross inequality of financing would create an impression of unfairness. She would be highlighting a few items from the written input. How did one ensure transparency and disclosure that would aid the deepening of democracy and accountability? Accountability should aid the deepening of democracy.

OUTA was concerned that Regulations often had very little public oversight. OUTA believed that the Regulations for the Bill had to come before the House or the Committee so that there was some scrutiny, especially in view of what was contained in the Regulations. Pre-funding and reimbursement after an election could be considered. Ms McDaid indicated that there were examples from many countries.

The legislation was good but the critical factor was that it would be only as useful as it could be enforced. The IEC would need to be strengthened. Because there was limited time, it might be constructive to look at the Kenya Funding Act as it dealt with false statements and the use of media, especially state media. In terms of enforcement, the issue of “may” versus “must” was important, especially Section 15 could have more teeth if may was changed to must. The Anton Piller Proceeding allowed one to act without prior warning, which might assist in enforcement. Perhaps civil society could be requested to present on the reports from political parties when they came to Parliament. She also made reference to the Open Governance Society that South Africa had joined.

Discussion
The Chairperson noted that a recurring concern was the IEC. Currently IEC administered public funding and the Bill added the necessity to have two funds and to monitor in terms of disclosure. He thought that IEC could do it but so many submissions had referred to the matter. Why re-create the wheel? A new Commission would take three years to set up. The IEC would be presenting to the Committee on how it would manage the funds.

Mr Selfe raised three things from the written submission. In paragraphs 3 and 7, OUTA had referred to abuse of state resources through tender systems or directly for party political gain. It did not feature in the Bill. Should it be in the Bill? If not, what would be the best way of prohibiting abuse of state resources for political party gain? The third point was about not using public funds for legal cases. He noted that OUTA often had to go to court. He agreed that it should not be about internal disputes but what about defending democracy. Could the funds be used for that type of litigation? He thought that political parties should be given discretion as to how they used the funds to promote the interests of the party and its members and democratic processes.

Ms McDaid noted that OUTA did not want to get into details. It was around definitions and reporting, providing that it was clear that donations in-kind were included. The information from that reporting would show when contracts were illegitimate. For example, buses and posters were sometimes supposed to be a donation but, after election success, those people got the contracts. Sub-contracting and so on could not be specifically defined. If more money was going to be given to political parties, the funding should not always be used for that purpose. Litigation was not always democracy and the organisation hoped to see less litigation.

Mr Selfe asked who the judge was in terms of whether the fund could be used for legal purposes.

Ms McDaid said that that she could not respond directly but OUTA did not want to all the funding go to litigation.

Ms Mathys asked whether OUTA’s submission suggested that it was possible for funding to be used for litigation should that be in the public interest. The country was not in the perfect democracy and possibly would not be going in that direction any time soon. She agreed that legislation should look to the future but it should also look to problems that may arise and litigation might be the only way to solve the problems.

The Chairperson noted that OUTA had made a comment about facilitating the involvement of civil society when disclosures were made. The Bill currently said that the IEC had to make the reporting publicly available in an accessible and cheap format. Was that not sufficient involvement of civil society? If it was not, the spirit would be to strengthen it so that political parties could self-regulate.

OUTA responded in terms of legislation going towards the future. In its report, OUTA had particularly noted how many government departments spent their times defending their positions in court, but she took the point that litigation, if it were in the public interest, could be important and, valuable. The involvement of civil society needed to be strengthened as it was not just about disclosure but also about accountability. Civil society knew how things could slip through unnoticed. Similarly, if Regulations had to be accountable, they would have to go to Parliament.

Mr Gumede found Western ways detrimental to South African ways. One had to look at South African ways before looking at Western ways. Too much disclosure could lead to unintended consequences, such as a position where there would be no funds, no donations and no public funding. Only those with partnerships would be strong. Poorer communities could not afford to support political parties and the parties would be forced to go to foreign governments for donations as their communities could not afford to support them. South Africa was not a Scandinavian country and did not earn what Scandinavians earned. If there was too much disclosure, donors would disappear. In Namibia, disclosure was up to the Auditor General. It was necessary to be careful as political parties could end up without any donations. They could leave it to the courts or they could become funded by the West or China. Regulation was important but a framework of disclosure still had to be worked out. Members had heard that there should be total disclosure but was it going to be possible to run a democracy? He was not being negative but he was saying that there were positive things to be looked at. That needed to be discussed with their principals. He could then come back with the position of the ANC. How was a party to be the political party of the poor?

Ms McDaid agreed with Mr Gumede about taking things from the West and the fact that there could be a lot more funding and a lot more nefarious funding. The examples that OUTA had looked at were in South America, where there was huge poverty and inequality and it was found that disclosure of funding worked best. She understood that she would not want to see honest parties become poorer. She understood that there was no real option in respect of total disclosure as the Constitution demanded it.

The Chairperson made it clear that the consultation Mr Gumede was referring to was consultation with principals in political parties. There would be no further public consultation.

South African National Editors’ Forum (SANEF) and amaBhungane submission
SANEF indicated that 1996 was their date of origin, and not 2006 as indicated in the submission.

Mr Izak Minaar, representing the leadership of South African National Editors’ Forum (SANEF), said SANEF commended the work done so far as it laid the foundation for party funding disclosure. Their input had been to strengthen the Bill. SANEF’s media freedom positions were about the public’s right to know and to support an informed electorate. A key issue was proactive information. He urged the Committee to look at the guidelines from the African Commission on Human and Peoples’ Rights, and to see that the Bill was in line with the clauses in the Model Law on Access to Information for Africa which looked specifically at funding disclosure and elections and included clauses that required line item reporting and the funding thereof.

Ms Karabo Rajuili presented on behalf of amaBhungane, which engaged in best practice in investigative journalism and encouraged investigative journalism, and ensured that information was available to allow investigative journalists to investigate. The submission was limited to public disclosures: MPDF, private funding, circumventions of the Bill and party business ventures.

amaBhungane welcomed the Bill that was attempting to create a barrier between private funding and political parties but there was still scope for undue influence. There was still an opportunity for private donors to donate to the MPDF without disclosure of their identity or the sum of the donation at their own request. At provincial level, a company could indicate that it would give money to the MPDF from which the ruling party would get the majority share. In that way they would be able to influence getting a tender, which meant the inherent corruption would not have been removed. Essentially amaBhungane’s concern was about preventing money laundering.

Proposals on direct funding to political parties should include donations in-kind and the frequency of donations. Personal service skills could allow for a multitude of services to be provided without disclosure, including services that could provide substantial benefit, such as accounting or management services. The frequency of disclosure was required more frequently than annually, given the current revelations around state capture and the vulnerability of undue influence being exerted in the public procurement processes. It was their contention that adequate public disclosures should be changed to quarterly disclosures. The current context of state capture demanded it. Quarterly disclosure should not prevent right to access as per PAIA. The Bill had to refer to PAIA specifically so that a link was created with that legislation.

Collusions, such as splitting a donation between two parties, required sanctions. The IEC needed to have access to all information even if some was not publicly disclosed. Circumvention of the clauses in the Bill required specific legislation. amaBhungane proposed a need for a definition for the “same source”. The original source of donations had to be disclosed. Party business ventures, such as the corrosive Chancellor House, would suggest a complete ban was required, but if not, at least a much more robust disclosure.

Mr Minaar noted that the Money, Politics and Transparency Project across 54 countries showed that credibility lay in making financial information easily available on a quarterly basis. The IEC had been a shining star about making raw data and full information available and the proposal was that the IEC create a portal where the latest information was available and could be downloaded and data mined by parliamentarians, journalists and the public.

The organisation had included drafting suggestions in the written submission.

Discussion
Mr Selfe had heard the balance the IEC needed to maintain. He understood the importance of quarterly reporting but there were limited resources. If a Rolls Royce model were to be set up, he was worried about the administrative burden on the IEC, so it might have the opposite effect on the normal stellar reporting.

The Chairperson stated that audits were done annually. What would be the value of unaudited reports? Disclosure of campaign expenses by line item? That was a utopia. For example, DA spent R5 on glue and R15 on posters, etc. The Committee did not want a law that could not be implemented. Members did not want to create a law that could not be adequately enforced. He was under no illusion that the Bill would not be ideal. How would the IEC find out the original source of funding? How would the IEC verify the source of a donation? What was ideal and what was first class was different from what was practically implementable. In describing the work of the Committee, someone had said that the Chairperson was trying to build a Rolls Royce but the roads were still full of potholes.

Ms Mathys stated that the Committee had agreed that the full amount of donations had to be disclosed but that there needed to be a level above which funds in cash or kind would be disclosed and the maximum donations that could be made. Another huge issue was about proportionality and equitability. At the end of the day the Committee had to put down figures. The Committee had had long discussions on investment arms and any funding from an investment arm would have to be disclosed so the idea of banning investment arms had been abandoned.

Mr Gumede said that when dealing with information, in any society, there were different levels of information such as public information, need-to-know information, top secret information etc. He asked amaBhungane from whom they got information. They would not disclose, but they were saying that government had to make total disclosure. The media did not share information. The government supported a free press but everyone knew that the media was a commercial interest. Should government not classify information? Total disclosure was subversive. No society disclosed the kind of information that they wanted.

Ms Rajuili responded to Mr Gumede informing him that the organisation did investigative journalism in the public interest and the intention was to ensure that the public was well-informed as to the state of any corrupt practices that were happening in South African society. The organisation published audited reports. amaBhungane had a limited capacity to do investigative journalism and so the organisation supported others to do investigative journalism. The organisation aimed to operate as transparently as was possible. It was a non-profit media organisation and all donors were disclosed on the website. The public was asked to make donations through crowd funding. The organisation had looked at the threshold for crowd funding and did not allow splitting of donations. Corporate donations were not accepted. There was no government or state funding, so they had no handlers. amaBhungane encouraged readers to critique the work and the ethical standard of work. The only thing that amaBhungane had to do was to protect its sources as people actually risked their own lives to talk about the terrible situations that they encountered. That right was protected in the Constitution. However, they ensured that information was confirmed. The following week a public discussion on whistleblowers and investigative journalism was to be held. Readers were encouraged to check the veracity of reporting.

Ms Rajuili said the Committee and the public were looking to build a road that would allow any vehicle to travel the road and which would weather the future storms of the country. The resources of the IEC were an issue. The IEC would have to ensure that they received adequate funding and make appropriate choices. It was not pie in the sky but a desire to address a genuine problem.

On unaudited information, she explained that investigative journalism would use the data but would have to investigate in order to verify a picture. They would have the annual audited reports and PAIA. On the threshold, amaBhungane had stayed clear of that point as that was not where its interest lay but the journalists would apply their minds and submit in writing. She recommended that the legislation was strong enough to withstand a changed environment.

Mr Minaar said they just wanted to see that the legislation ensured the free-flow of information and access to information. The Committee might not be able to use all the input but he was sure that the Committee would make wise choices. On quarterly disclosure, some information might be easy but he suggested that the Committee engage with accountants and auditors to see what was possible. On the formula split, SANEF thought that there were better expert advisors than the media.

The Chairperson spoke about the Regulations that people had requested to see. He pointed out that the Committee was trying to determine what was proportional and equitable. 90/10 was not on the cards. The notion of a cap on donations to a political party was generally agreed upon. They were looking for an acceptable figure. The Committee did not want the existence of one party to be funded by a single donor. The desirability of a threshold needed to be discussed.

Submission by Dr Gregory Ash
Dr Gregory Ash made a private citizen submission. Section 236 of the Constitution referred to proportional and equitable, but what was proportional, might not be equitable. The answer was to look at the intention of that Section of the Constitution, which was “to promote multi-party democracy”. The intention, therefore, was to level the playing field. The Bill sought to establish two funds from which political parties would receive money. Logically, if there were a pro rata 100% of funds going to parties according to the size of the representation, and the only determinant was political success, then the Bill would automatically eventually create a single party state and not a multi-party democracy as required by Section 236. The allocation of funds was left too much to the Regulations. The Bill needed to be far more prescriptive.

The three largest parties should receive the same amount of funding and other parties should receive a lesser amount. It would, however, create an insurmountable hurdle for any party outside of the big three so he proposed a smaller amount, perhaps a third, be split amongst other parties, but the Committee would determine that. New parties, from which the most innovative ideas came, would have to gain signatures to share yet a smaller amount of start-up funds. It would create a three-level funding system.

Funds were given for constituency work and that was necessarily pro-rata but that money should cease when there was an election as that funding was then not used for constituency work. The donations to political parties should not come from corporates as they did not have idealistic principles. Corporate donations would be made with a quid pro quo in mind. Only natural South African citizens should be allowed to donate directly to political parties as they were idealistic donors who believe that a party could improve conditions in the country. Powerful people controlled multiple organisations could cause a large number of organisations or companies to donate. Companies could only donate to the MPDF which took away the quid pro quo aspect. Loopholes should be closed to prevent money influencing political parties. The Bill should control how political parties spend money. The risk of a political party owning a business was intrinsically a high risk for corruption because a business was in the business to raise funds, i.e. to make money.

Discussion
The Chairperson stated that none of the points were new but they would assist Members to apply their minds. The start-up capital would simply encourage people to find however many signatures necessary to get access to the start-up funds, with no intention of standing for elections. Not allowing the use of funds for six months before an election would suggest that all government work and constituency work should also cease. Should he, as a Member of Parliament, stop all constituency work six months before an election? If companies could not directly fund a party and the company was owned by a man and his son who supported the DA, could they not support the DA? If a company had a serious problem with a particular party, they really would not donate to the MPDF. He was playing devil’s advocate and challenging Dr Ash to respond.

Ms Mathys said that she did not think that there was anything that had not been discussed but she would appreciate recommendations. She understood the point about the MPDF not being about ideology but about strengthening democracy and creating a robust country. Those were very different things. There was a tension between wanting a party to do well in the elections and wanting a multi-party democracy.

Mr Gumede asked for clarity on the concept of proportional and equitable. Equitable means fair and reasonable while proportion was something having due regard to proportion. He did not understand the rationale for why proportionality should not apply to the three biggest parties. Where, in case studies, had Dr Ash seen that formula? Constituency work went on regardless of elections. The car allowance continued etc and the issues of the constituency had to be handed over to the next incumbent. Another area was the upper limit. In Namibia, the upper limit was 5% of the total budgeted amount of a party because 5% could not influence a party. In the South Africa case, did he think there should be a cap, and if so, what should it be? What had other case studies told him? The issue of public funding had not been mentioned. The start-up amount would start a party but as soon as the party expanded, it required more funding. Democracy was a public good. He did not want the opposite.

In response, Dr Ash explained that proportionality could be many different things and one would have to turn to science. He could argue that the smallest party could get the most to balance the proportionality. It should be inversely proportional to balance the parties because the parties, especially the ruling party, had the advantage of being able to make promises of what they would do when they got the vote. Proportionality did not mean in the same direction. The wisdom of Solomon was necessary to understand equity. If each party found itself in a different position after the next elections, what would those parties then want? What would one do if one’s size were different? It was not possible to completely square the circle.

How many would choose to donate to the multi-party fund, if they could donate directly to a political party? In response to the Chairperson’s question about private companies, he surmised that a private company could pay itself dividends and the individuals could donate directly, as natural citizens, to the party of their choice. It was a matter of risks. The moral risk of companies was inherent as companies were not idealistic but looking to make money and so the risk was too great. Why were they donating to a party? Only to get business in one way or another. The Soccer Party easily got the required number of signatures without anything more than a very big party.

Constituency funding was a difficult one but he would put it to the politicians that, being realistic, in the months before an election, politicians went to constituencies to garner votes. Hence funds should come from the election funds.

The Chairperson asked Dr Ash why a company could not donate but the directors could pay themselves a dividend and donate. How did they become better people with idealism when they donated as individuals?

Dr Ash responded that it was right about the person not becoming better or different but it was because it was easier to maintain control by treating all companies in the same way. It was unlikely that all directors from a large corporate would put the money into the same political party.

Submission by Mr Richard Bryant
Mr Richard Bryant presented in his private capacity. He had 25 years’ background in finance and so he had seen how money could influence matters. He was also involved in several environmental community bodies. He had sympathy for the political parties and stated that the available funds were hopelessly inadequate. He agreed wholeheartedly with the judgement that disclosing financial donations was the best way to ensure that voters could make an informed vote.

The main thrust of his submission was that local authorities created enormous wealth out of property rezoning processes. He had witnessed collusion between property developers and local and provincial authorities. The corrupt process led to a serious break-down between local communities and government and resulted in things that communities did not want. The Kommetjie Residents' and Ratepayers Association had taken Cape Town City Council to the High Court, although they did not have money. The spoils of rezoning were too great. The developments were undesirable, but they were being pushed through. The value of the rezoned property accrued to the property owner and developer, who often happened to be a generous donor to the sitting party in the local governments. He had examples of the corrupt practices happening in semi-rural areas across the Cape Peninsula and Western Cape. He had noted that when rezoning was turned down via the administrative process, the decision was overturned by the Mayoral Committee.

One had to deal with the lucrative spoils of the situation either by a capital gains tax or by ensuring that proceeds of such enhancements be held in a fund by Treasury and used to fund low cost housing.

Discussion
The Chairperson stated that the Committee was not dealing with a money Bill and if they started talking about a capital gains tax, it would become a money Bill. However, he stated that disclosure would allow the public to know that the funds had come from a corrupt practice.

Mr Gumede thanked him for the information.

Mr Selfe understood the argument but he noted that Mr Bryant had not been able to join the dots, but he had stated that rezoning was always a case of collusion or corruption. Perhaps, because it was in Cape Town and on the edge of the city, it might have been about finding housing for people. It was irresponsible to imply collusion without proof. If he came to Parliament with such allegations, he should have adequate proof.

Ms Mathys said that expropriation without compensation would resolve the gains from the rezoning.

In response, Mr Bryant stated that they had found out several years after a rezoning that a property developer had made a sizable donation to the relevant political party. It should be unlawful to gain from such activities and the donations should be returned.

The land had been mostly used for gated villages with very expensive homes which were not for the poor. The developer in Langebaan had admitted that he had made a donation to the ruling party in the province. He was unable to join the dots because of the secrecy. The party should be obligated to return the funds.

The Chairperson said that he reconfirmed the urgency of the legislation to overcome those kinds of problems and that the party had to report unlawful funds. If a party did not report, disclosure would ensure that someone else would report. He hoped that the engagement would just be seen as an interaction and that it had strengthened the urgency of disclosure and had strengthened the need for consequences for unacceptable practices.

Submission by Mr Neil Murray
Mr Neil Murray presented in his private capacity and assumed that his input had been read. His submission focussed on privacy. He wanted to stress the difference between individual privacy and secrecy. He was speaking about individual privacy and had no interest in foreign donations etc. He suggested that it was necessary to have facts as correlation did not imply causation. Knowing who donated to a party would not be enough. Making a donation and winning a contract was simply information and one could not assume that the one had an impact on another. It was misguided to suggest that all donations were inherently corrupt.

He advocated not allowing anonymous donations but allowing donations to be private, as knowing someone’s name would not help. Once private names were out, they could not get them back. If there were names attached to donations, newspapers would be used to discredit either the donor or the party. The important information was about the number, the size and the pattern of donations. He believed that privacy could be retained while the veil of secrecy could be lifted. One more election cycle without names could not harm the process. NGOs could make a narrow PAIA request for a specific donation number, and that could be defended.

Since everyone was in the dark, there was no way of making appropriate legislation. The process could be repeated when there was information about political party funding. He added that banning foreign donations was isolationist and that the IEC should not be politicised.

Discussion
The Chairperson was astounded that Mr Murray thought that the Bill should allow anonymous donations when the Cape High Court had stated that anonymous donations were unconstitutional. Mr Murray had commenced by referring to the courts but chose to ignore the Cape High Court judgement. He asked for clarification as to whether the party or IEC could receive funding without knowing the source. Did FICA allow one to accept money without knowing the source? Some people would die defending the sovereignty of South Africa. There might be foreigners who would make donations but with strings attached and, in the future, there might be people who would sell the country for 30 pieces of silver. What was he saying about the judicial system? Could donations be anonymous? In terms of secrecy and privacy, should the recipients know where the money was coming from?

Ms Mathys said that, essentially, Mr Murray did not want the dynamics of political party funding to change. The IEC should be the watchdog. She thought that he was saying that the Committee was being reactionary but the country was in the state that it was precisely because of the lack of information. The Bill had long been needed. The country was in the state it was because of the secrecy about political funding. One did not have to donate to a party if one did not want one’s name out there. What was the political party that he was not proud to donate to? If he felt passionate about a political party, why did he not want people to know about it? How were voters going to make key decisions if they did not know where the parties were getting their money from?

Mr Gumede wondered how, if donations were not identifiable, did he know the source of the donation? Small donations could add up to a sizable amount and influence the party. How did he deal with those dynamics?

The Chairperson asked whether the Constitution required transparency.

Dr Mulder suggested that Section 1 of the Constitution spoke about transparency.

Mr Murray responded to the question about anonymous donation. The difference was between secrecy and privacy. It was about the public not knowing the donor’s name. Donors could keep their privacy but the party or IEC would know who had donated and each donor would be given a number to identify and tag the donation. He had suggested foreign donations for policy development should be allowed, but not foreign donations generally. He was not satisfied with the status quo. He said that there should be disclosure but he wanted to err on the side of caution and that the process had to be taken slowly. He said the right to vote was about making an informed vote but the right to privacy was an inherent right. Even PAIA only allowed disclosure when other rights were threatened. It was not a free-for-all. The slippery slope was then wanting to know about books a person read, who his companions were, etc. because maybe that informed how the person thought about things. Money was easier to measure.

The Chairperson asked Mr Murray about his opinion of the judgement of the Western Cape High Court that had said disclosure was absolutely necessary and which had been confirmed by a previous presenter. Was he suggesting that the obligation to disclose should be challenged in the light of the Western Cape High Court judgement that found disclosure was essential

Mr Bryant said that he was not a legal expert. Firstly, the judgement had said that PAIA had missed out political parties but they would be included when the Act was amended. He was saying that, instead of each person requesting information via PAIA, request information about a specific donation. That would reduce the administrative burden. What would one do with the name? One would have to investigate the views of the person and whether he had changed the views of the party. He did not want to condemn the judiciary but he did not think that one could give up the right to privacy.

The Chairperson announced that the following day submissions would be made by those who had made submissions in the first round. He invited those who had presented to observe the following day.

Meeting adjourned.