Review of Public Funding of Represented Political Parties Act: public hearings day 2

Meeting report

Opening remarks
The Chairperson welcomed everyone and indicated that after the public hearings, the Committee would meet and decide whether to retain the legislation, propose an amendment to the legislation or draft new legislation. There would be a second opportunity for public input in September and the deadline for the final Committee document was unequivocally 30 November 2017. The Chairperson asked all presenters to be as brief as possible and simply highlight key issues as the Committee had studied their written submission in preparation for the hearings. Presenters were welcome to provide further written clarity or provide evidence asked for by members of the Committee while, at the same time, the Committee would contact them if it should require further clarification or additional information. The Chairperson requested that there be no intra-committee political sparring when listening to presenters.

Council for the Advancement of the South African Constitution (CASAC) submission
Mr Lawson Naidoo, Executive Secretary for CASAC, Prof Richard Calland, member of the CASAC advisory council and executive committee, and Michael Laws, researcher, represented CASAC. Mr Naidoo commenced with a few words in commemoration of the victims and families of victims of Marikana on the fifth anniversary of the tragic event. He thanked Parliament and the Committee for the opportunity to present on such an important matter that went to the very heart of South Africa’s democracy. He indicated that the CASAC submission would focus on those aspects of its input that had not been sufficiently addressed by other presenters the previous day. CASAC’s starting point was that political parties were central to South Africa’s system of governance and democracy and that political parties needed sufficient funding to be able to play their part in enhancing democracy.

The Council’s approach was to look at how political party funding could be regulated, not how to restrict funding and how regulation could give the public confidence in the funding of political parties. There were problems in the way in which public funding was allocated and the formula that was used which did not adhere to the intentions of the Constitution and the overall governance of funding needed to be transformed, by putting into place a regulatory and disclosure system. Political parties should receive funding from three sources: public funding, private funding, and a new multi-party democracy fund. CASAC believed that public funding could be increased, dependent on adherence to four conditions: the enactment of legislation that dealt with the disclosure and regulation of private funding; that some of the funding be allocated for specific capacity building and democracy building exercises; the revision of the 90/10 allocation of funding; the availability of resources in the public fiscus. The formula for allocating public funds allowed bigger parties to monopolise funds to the determent of smaller and new parties, and in contradiction of the constitutional dictate of multi-party democracy. Furthermore, the equity portion of the formula was not equitable and therefore in contradiction of the Constitution. The suggestion was that 50/50 should be a starting point. Even the 10th portion of the 90/10 was distributed on a proportional basis. The result was that three parties got two-thirds of the equity portion of the funding, which did not enhance multi-party democracy.

On private funding, it was suggested that donations should be calculated cumulatively and include donations in kind and made public annually in non-election years but more frequently in election years. CASAC noted that no private funders had made a submission to the Committee and it was recommended that the Committee approach Business South Africa to give input on the matter. Foreign donations should be allowed, subject to a cap. Party-to-party donations from other countries should be allowed but be transparent, whereas all donations from foreign governments should go into the proposed multi-party democracy fund. The concept of a multi-party democracy fund was proposed to help all political parties and assist democracy.

There was a need for an oversight body that was provided with adequate resources. Penalties would apply for failure to comply on an incremental basis. All relevant legislation would apply and law enforcement would take its course. CASAC cautioned against political sanctions as that could lead to manipulation. CASAC supported adding the oversight functions to the IEC, which would require additional resources.

Discussion
The Chairperson noted that no presenter had indicated which parties were eligible for the 90/10 split. Was the allocation made after the fact, i.e. to those who had gained seats in the parliament or legislature or was it used to assist all parties contesting the election? Who was eligible for political party funding? He asked about donations to individual MPs or MECs, Cabinet Ministers and leadership candidates within a party. Why would donations be made to individuals instead of a party? The proposal that a deposit had to be paid to the regulatory body might well exclude smaller parties and therefore act as a hindrance to the promotion of multi-party democracy. If a deposit was required, small parties would be excluded by reason of financial inability. When was the deposit paid and if a party did not get a seat, did they get it back?

Mr J Selfe (DA) corrected a point in the CASAC submission about a secret donation made in early 2000s that was received by the New National Party, not the DA. How likely was it that donations for political purposes would get a tax deduction? There seemed to be a resistance to giving tax deductions for certain purposes, such as political party funding. CASAC had not mentioned that the right to privacy and the right to freedom of association were all about getting the right balance. The Promotion of Access to Information Act (PAIA) had attempted to get the right balance between what was private and what had to be disclosed. Did CASAC think that the current regulatory framework prohibiting corrupt activities was sufficient or insufficient? CASAC had suggested that the new legislation was required to counteract the reasonable concern of improper influence but what about the economic intimidation against donors? There were a number of ways in which individuals and companies could be disadvantaged that did not deal primarily with the award of tenders. He would appreciate comments on that.

Mr D Gumede (ANC) found the submission professional and profound although he did not agree on certain points. He agreed with the regulation of private donations and greater transparency as well as the increase in funding from the public purse but they would have to look to National Treasury on the matter of affordability. A lot of debate was needed around the 90/10 split. He argued that bigger political parties needed to communicate with and educate more people in more regions. They also reported back to more people and more areas. They had more offices to maintain and the logistics would differ. A party won elections because it had better networks. For that reason that he would argue that it needed debate to look at both sides. He maintained that the 90/10 split was proper. It had to be recognised that bigger parties had greater engagement in all areas in the country and needed more money. He thanked CASAC for the submission that had not been emotional and had not referred to specific political parties.

Ms L Mathys (EFF) asked if CASAC had any recommendations on increased public funding, especially in the light of corruption and misuse of power. It was not perceived corruption, it was corruption. So how could they go to the voters and ask for more money? How could they go to the public and say they knew they had not delivered toilets etc, etc and Parliament had not even held the Department of Water and Sanitation accountable, but they wanted an increase in public funding to perform tasks in Parliament that they did not perform as well as they should? Was the 50/50 formula to be applied to all funding given to political parties? Could a donor go to the multi-party fund and give money for a particular party or was it only intended for strengthening multi-party democracy and to be split between parties? She noted that there was no mention of investment arms of political parties and the huge amount of money that they benefited from doing business with the State that was obviously redirected to the party, especially during the election period. She would like CASAC to speak on that issue. Would the IEC or whoever was the overseer and enforcer, have prosecuting powers as the EFF did not want commissions that made recommendations which took 10 years for implementation or prosecution? She mentioned the Marikana Commission on which millions of Rand were spent but five years later no one had been prosecuted. She noted that the IEC did not seem to be in a position to perform that task.

Adv B Bongo (ANC) wanted CASAC to share with the Committee a more practical way to share the 90/10. CASAC said it was necessary to re-evaluate the formula. How was that to be done? He asked CASAC to indicate how the funding would work at local, provincial and national level. At local level individuals were contesting elections as independents, at provincial level there was something else, and at national level they were parties, so how did one synergise between the three levels?

Mr A Lees (DA) noted that there were about 67 political parties in South Africa of which 13 parties were represented in Parliament. Should all the parties receive a share of the donations, including those without representation in Parliament? Was there not a danger that some parties would register, not gain a seat in Parliament but benefit from the funds that flowed from the state, and possibly a share of the donations, for five years? Was there not a very real danger that the already prolific number of parties would just explode given the incentives that would flow from funding all parties, even those not represented in Parliament?

Prof Calland spoke on the 90/10 split. The question of who was eligible for funding was an interesting one. He referred to an African country which had recently made funding available to parties not represented in Parliament and that had given rise to a proliferation of laptop political parties. There was a very real danger that that could occur. The position of CASAC was therefore that the trigger for funding would be gaining the votes of the electorate. That seemed to be the right trigger for national elections but it was unsure whether it should be applied at local or provincial level. Five years between elections was a long time and local government elections took place in the middle of that period so to allow funding to parties that gained a seat at local or provincial level would give them an opportunity to contest for a seat in Parliament.

A Constitutional Law point was that the Constitution had equity and proportionality in mind as principles when they designed Section 236. Clearly equity was something different from proportionality as both were mentioned. However, even the equitable part of the allocation was based mostly on proportionality. The equitable principle in the Constitution had been eclipsed and did not enhance the intention of the Constitution to promote multi-party democracy. He was surprised that no one had challenged that point on the grounds of unconstitutionality. If the 90/10 split served only the winners, then it undermined the multi-party intentions and created a monopolisation of the public funding.

The multi-party fund would facilitate donations from companies that supported multiparty democracy because they believed in it but did not wish to be associated with a particular political party. There would naturally be discussions between the donor and the fund to determine how the donor would want the money to be spent. For example, it may be determined that for the first three years of a government, it would mainly be spent on developing the capacity to create policy. It could invite donations directed at those sorts of opportunities. Democracy funds were evident around the world and there was a huge amount of experience that could be drawn upon.

Not many countries permitted political parties to own investment vehicles. Prof Calland explained that creating an investment arm was a strategy developed about 10 years ago to raise funds in an attempt to clean-up their act. However, some of the impact of that process had been adverse. The Hitachi case showed that both donors and parties skated on thin ice in establishing such investment vehicles. It was something that should fall within the ambit of the Committee’s deliberations.

Mr Michael Laws responded to Mr Selfe and acknowledged that the rights of donors were an important consideration. Their right to privacy was implicated as well as their rights to association and political affiliation and there had to be a balancing act between various rights. Section 36 of the Constitution referred to balancing a number of rights but the courts had held that rights were stronger as they moved towards individuals and less strong in the public sphere. For this reason, it was important that the Committee consulted with donors. The Committee was dealing with the rights of an individual donor versus the rights to know by the broad public but the interest of transparency and accountability outweighed the rights to privacy.

He agreed with Mr Gumede that parties with a large number of seats would benefit from the proportionality part of the funding formula. He agreed that parties with more seats had more citizens to represent and therefore needed a greater slice of the funding. However, even changing the 90/10 to, for example, 50/50, would still give the larger parties the majority of funding because it was based on proportionality. He was also of the opinion that more private funding went to the larger parties. The solution should ensure that those bigger parties with more representatives received more money but without sacrificing multi-party democracy. He replied to Ms Mathys that CASAC would support an increase in public funding subject to the four criteria presented, which included the availability of funding. National Treasury could say whether there would be availability in the budget.

Mr Naidoo noted that the Chairperson had picked up an error in the input and confirmed that CASAC had intended that donations to individuals should all go into the multi-party depository. Donations for candidates for office within a political party could be allowed but would have to be disclosed. The current legislation dealt adequately with malfeasance and corruption but it did not deal adequately with transparency and making information available to the public. PAIA did not deal with it adequately. CASAC’s focus was on the gap that existed in laws. He responded to Mr Gumede by saying that the report-back responsibility where a party had many constituencies was provided for through the constituency allowances that Parliament made available. It was important not to conflate issues but to look at all funding that was given to parties. The issue of three tiers was raised but public funding made available at provincial level was unconstitutional as Section 236 clearly referred to “national legislation” and needed to be challenged as part of the current process. He agreed with Ms Mathys that there was an issue of corruption or perceptions of corruption, However, political parties had to be funded. Regulations on the funding should address corruption. There was a need for a regulatory body that ultimately reported to Parliament. The issue was that Members of Parliament were the stakeholders so unless Parliament cooperated with the regulatory body, it would not work. He explained to Mr Lees that CASAC referred to represented political parties when it spoke of making funds available to all parties. Furthermore, there was no problem with investment vehicles that had passive investments. However, any investment vehicles owned by political parties should not be given government tenders.

Mr Selfe noted that Mr Naidoo had said that the legislation was needed to plug the gap between PAIA and other legislation. Was the reason for transparency that it was good in and of itself, or did CASAC want transparency in order to deal with corruption? If CASAC wanted to deal with corruption, it needed legislation. Mr Selfe’s argument was that there was already legislation for dealing with corruption. Was transparency good in its own right and did it trump privacy?

Ms Mathys asked when the right to privacy began and ended in the need to support a multi-party democracy that remained strong and uncorrupted. When voters no longer felt that parties were doing what they were supposed to do, and were confident in the electoral system, then political parties had failed. A subsequent low voter turnout would put the country on a slippery slope to nowhere. Could he speak to that? Provincial funding was illegal, but should it be allowed and should it be included as an amendment to the Act?

The Chairperson had heard, and was not challenging, Mr Selfe’s comment but he suggested that accountability started with disclosure which gave people knowledge and held people accountable.

Prof Calland responded that transparency had to be a means to an end and the end for transparency in political party funding was to promote accountability. Transparency for transparency’s sake was rarely of any value. There was no empirical evidence on trust by the voters but there was growing evidence that trust in the political class and institutions in South Africa had dropped markedly in the past five to ten years. The Afrobarometer data, the most highly regarded linear data on the continent, showed that confidence and trust in Parliament, and in members of Parliament and other political institutions, had fallen markedly. Legislators had to consider whether transparency would allow for greater accountability and rebuild trust. Many countries around the world had decided to reform in order to address that particular issue.

Mr Naidoo reminded the Committee that the total basket of funding available for political parties totalled over R1.1 billion. He suggested that the provincial legislature funding should be looked at it in its totality. Ultimately, the Committee had to find a way of funding all levels of government.

Congress of South African Trade Unions (COSATU) submission
Mr Matthew Parks, COSATU Parliamentary Coordinator, said that the Congress wanted to assure Parliament of its willingness to assist in whatever way it could. It was equally willing to assist opposition members, as there was always a chance that it could convert them. COSATU appreciated the public hearing, especially at the current point in the democratic revolution and in light of the current corruption and the 200 000 emails revealed by the media. The challenge of state capture affected all parties.

COSATU supported the 90/10 split as it recognised the level of support that the larger parties enjoyed. When it came to election time in fact more than 200 parties registered as political parties, including parties consisting of a man, his wife and the fax machine. There was a need for political parties to account to Parliament in full. COSATU would not support an increase in public funding in the light of the current economic environment. There was a need to look at funding at local government level within budget constraints and at reasonable levels. Municipalities were at the ground level where political activities were close to the public. COSATU believed that all donations from state owned enterprises had to be banned. SOEs were making enormous donations while at the same time retrenching workers. COSATU supported private funding as parties should earn their keep and the state could not afford the full burden of funding. There had to be full disclosure by all donors of all amounts to Parliament, the IEC and on websites. COSATU was required to audit its finances annually and to present the audited report to the Department of Labour. It saw no reason why political parties should not do the same. A company should declare donations in their annual report as there was a need to err on the side of transparency and disclosure in the current climate. COSATU recognised the fear that donors would be penalised but that was a lesser problem than the current problem of state capture and there was legislation to deal with that kind of discrimination. It noted that the taxing of donors was necessary. There should be a limit to donations. In theory, it was a good idea for companies doing business with the state not to donate, but it would be difficult to manage and therefore a cap was necessary. COSATU was against foreign donations as 23 years into democracy, it was difficult to justify such funding. There was a need to consider a code of ethics around political party funding.

Discussion
Ms Mathys asked about the 90/10 funding split. Even smaller parties with a smaller number of constituents could be spread across the entire country so simple proportionality based on actual members in Parliament made no sense. What support was there for parties between elections? Not funding smaller parties would support the status quo and not allow smaller parties to grow. What was COSATU’s view on the electoral fee that all parties had to pay, albeit refundable? What about direct funding to individuals and leaders, given that voters vote for parties?

The Chairperson asked about the banning of certain donors to political parties. One presenter had suggested that trade unions should not be permitted to donate. What was COSATU’s view?

Responding to Ms Mathys, Mr Parks understood that it was difficult for new parties but there were endless parties that popped up and public funding was not for a man and his little fax machine. However, only a quarter percent of the vote was needed, that was around 16 000 votes, to gain a seat in Parliament. The DA had shown that it was possible to grow and EFF had gone from 0% to 7% in the year so there was room for growth. It was not desirable to give a majority party and a minor party the same allowance. Proportionality was justified. COSATU agreed with the paying of a deposit by a political party. Public funding could not be used to fund the approximately 200 parties that emerged at election time. Sometimes one had to fund oneself. Even COSATU had to raise funds. The Congress did not support donations to individuals within political parties. The funds should be given to the parties and parties could make their own decision as to how to allocate funding. COSATU was aware of the situation in the USA regarding the banning of political involvement by unions. COSATU believed that unions should be allowed to donate. Unions could not be equated with foreign ownership. Caps on funding were more useful than attempting to ban funding.

Ms Mathys asked which parties were not accounting for public funds received but were continuing to receive money. As far as she knew there were very stringent regulations for accountability and reporting on public funding given to political parties.

The Chairperson pointed out that if it were true, such information would be publicly available.

Mr Gumede asked whether COSATU did not support an increase in public funding in principle or because of the current economic situation.

Mr Parks was reluctant to expose the parties that had not accounted for their funds but he added that the lack of accountability was at provincial level. He could provide the information in writing, if required, as it was rather a hot issue. COSATU rejected the notion of increasing public funding in the light of the economic constraints. There was a serious cash flow crisis in many departments, the country needed to fund the national health system and so on. COSATU’s position was determined more by budgetary constraints than by principle. He suggested to the Chairperson that it be might be appropriate to do research into the level of funding required for a political party to function effectively.

Democracy Development Programme (DDP) submission
Mr Paul Kariuki, DDP Vice Chairman, noted that the DDP was established in 1993 to promote democratic principles and values in South Africa. They had 160 members in KZN and he spoke on their behalf. DDP proposed that there be a cap on donor funding. Private donations should be made public and should be disclosed in real time and that should be done through a Chapter 9 Institution that was trusted by the public. There should be expenditure limits on political campaigns and those limits should be informed by average campaign costs in previous elections. The IEC should be able to provide such information. DDP supported the continuation of the current funding model. There should be an audit by the Auditor-General. Political party accounts should become public accounts in order to allow for disclosure and to create trust as well as an understanding by ordinary citizens of how political parties spent their money.

Discussion
The Chairperson was intrigued by the notion that political party bank accounts should be made public. He understood what he was saying about auditing accounts but he needed clarification as to how making a political party bank account public would ensure that donors did not have undue influence etc. How was that going to enhance transparency? He accepted that financial statements should be made available.

Mr Kariuki said that it was a bold ask. To which the Chairperson responded that it seemed that the DPP was challenging political parties. Mr Kariuki affirmed that understanding.

Ms Mathys asked if DDP had any recommendation in respect of caps.

Mr Kariuki stated that DDP had not taken a position as political parties differed in size and activities and that it was better that the Committee and political parties should take that decision following a consultative process.

On a lighter note, Ms Mathys asked if DDP wanted the bank account numbers so that the DPP could put money in their accounts. She asked if DDP was aware that audited financial statements on the expenditure of public funding were available.

DPP admitted that the public had to do more work on the matter but they could go looking in the wrong place and so not find the information. He asked where the information was available. He explained the importance of the public availability of bank accounts to his constituency so that they could be aware of what was going on within political party funding, but he did note that it was a bold ask.

COOL Youth Church submission
Pastor Gavin Ferrier informed the Committee that everything that COOL Youth Church did was done in consideration of its impact on the youth. The position, therefore, of the COOL Youth Church was that when considering the funding made available to political parties, the Committee needed to take into account the impact on the youth. COOL Youth suggested that an understanding of a specific need was important and there had to be an understanding of what funds were used for. The issue of bank accounts outside of South Africa had to be considered. There was no longer a need for South Africans to have foreign bank accounts. All funds should by now be in the country and so foreign accounts should be closed and the money deposited in South African accounts. All donations over R100 000 should be earmarked for a specific project and the purpose of donations had to be respected. Various promises were made during campaigning and donors would want to support specific projects promised during the campaign. COOL Youth recommended that all foreign funding should go into a common democracy fund which could be used for building South Africa and not just for campaigning.

The 90/10 split had to be looked at through the lens of fairness. The equal distribution of funding had to be looked into in the light of fairness in encouraging smaller parties that could represent the public in specific constituencies. Regardless of the split, i.e. 90/10 or 50/50, public funds should be given to parties that had garnered the vote and earned a seat in Parliament. Political parties should use funds efficiently. One way of cutting costs was by staying relevant with technology. In the App age, communication could be via television, Twitter and so on and so there was no need for huge tents and other costly equipment during campaigns.

Discussion
Ms Maseko asked what COOL Youth understood as fair in the allocation of funding. Pastor Gavin had also spoken about equal funding. Was it fair for a party that had garnered over 200 seats to receive the same allocation as a party that received one seat? For her, that was not fair and so funding could not be equal. Was a cap of R10 000 not too low?

Mr Selfe asked whether COOL Youth was suggesting that if an individual donor gave more than R10 000 and one dollop or R100 000 over a year, that that was the threshold? If one was promoting multi-party democracy, how did one support new parties as there was a huge financial barrier to get into Parliament? However, it was also necessary to screen out those who were creating political parties simply to get some money out of the process. Prior to 1994, a party had to produce a reputable opinion poll to the IEC, showing that the party had support. He wondered what the Pastor’s views were on that arrangement.

Ms Mathys asked which political parties had foreign bank accounts that were being used corruptly. What was the opinion of COOL Youth about investment arms of political parties and of companies that did business with the state? What were its views on who should be monitoring, what recourse should be available to whoever was monitoring to deal with those that did not follow the requirements of funding regulations?

Pastor Gavin explained to Ms Maseko that COOL stood for “Christ Our Only Lord”. COOL Youth wanted fairness. The reason that they were sitting there was that political parties needed more funding to do what they were doing. His suggestion was a 70/30 ratio as he liked the biblical connotations of the number 7. That would allow new parties an opportunity to participate in the political sphere. The limitations would differ for individuals and corporate donations.

Ms Maseko asked what would happen if someone wanted to donate only to the party that had empowered a person.

Pastor Gavin stated that giving back was an accepted premise but it would be wise to give a reason for making the donation and indicate exactly what the money should be used for. There needed to be a disclosure as to where the funds had come from otherwise it would open the door to corruption, especially if corporates channelled money through individuals.

South African Catholic Bishops Conference (SACBC) submission
Adv Mike Pothier, SACBC Research Coordinator, noted that Pope Francis recently described politics as a noble profession. Unfortunately, politicians were amongst the least trusted persons in society and what should be a noble profession was not. So much of what was being discussed was about suspicion and where money was coming from and whether anyone was been influenced by that money. Openness and transparency would encourage trust. It was a theme running through the Constitution - openness and democracy. Political funding did not meet that expectation. Political parties carried out public functions and, in that sense, they could not be considered completely private bodies. Policies were set by political parties and governing parties implemented their policies when they were in power so they had a very definite public impact. The public had a right to know whether funding had influenced the implementation of policies but funding could also encourage opposition to policies for equally dubious reasons. Most neutral observers saw the increase in parties in governing positions at provincial and local levels in a positive light, but it meant that transparency was even more important at all levels.

Allegations that companies could lose government contracts if their funding was disclosed, was a negative approach. If donations had a negative impact that had to be dealt with but this could not weigh against the right of the public to know. The key to regulation was openness. There were no large corporations present and he queried why they were keeping their heads down. There was no need to place a ceiling on a donation. The SACBC did not know how much political parties received but it doubted whether it was in the billions of Rand. A ceiling was, therefore, not necessary at this point in time and there would be an opportunity to put a cap in place, when and if necessary. The SACBC noted that the possibility of donations influencing actions and policies was real and therefore the public needed to know if conditions were attached to donations.

The 90/10 split seemed unfair but that required expert input. The IEC could look into a realistic threshold for disclosure of funding and donations in-kind and the question of conditionality, but it was important not to do more harm than good. Openness about investment vehicles was critical. No private funding had been donated to the IEC to support political funding. Tax deductions for donors to public benefit organisations did not include political party funding but a category could be created on the basis of the promotion of democracy and money lost through taxes would be gained by supporting the democracy process.

Discussion
Ms Maseko noted that politics was everywhere and she was pleased to see the church engaging with Parliament. She had heard the emphasis on openness. There had been a process for religious openness and for disclosure of funding but there had been a great deal of resistance, even though South Africa was a religious country. The church should lead by example but one often saw church leaders with mansions and a fleet of luxury cars. On the proportionality split, the Committee wanted to hear a proposal that could be taken into consideration when making decisions. She queried whether the SACBC thought the IEC had adequate capacity to manage the funding. She appreciated the point made that opposition parties received donations with conditions attached requiring them to oppose policies.

Mr Selfe asked if the IEC had the mandate to manage funding and be a policeman, even as it was currently a referee. He asked for further clarification about the trust deficit and whether its origin was around the secrecy of funding. He alleged that distrust of politicians was the fault of the system of the list. MPs could not be responsible for not being held accountable and thus creating a trust deficit. He believed that the list system had far more to do with the lack of trust than the failure to disclose funding. He wanted the opinion of SACBC on a package deal that would also eliminate the abuse of state resources. Why should funding be regulated and not state resource abuse?

Mr Lees asked about the undue influence of funding on policy. People voted for policies promoted by a party and it was irrelevant from where the influence came. Why did it matter how that policy was devised? Lobbying was a normal part of politics and took place on a daily basis and it should be happening because politicians should be listening to the public, even as the Committee was listening to inputs from the public. Mr Lees suggested that the abuse of state resources was much wider than the abuse of the tender process. Certain departments conducted onerous inspections of organisations as a mechanism against those thought to be against the governing party. New legislation could not deal with that kind of abuse any more than the current legislation. Mr Lees suggested multi-party democracy was being supported – but was not been made transparent for those reasons – and that public disclosure would cool off donations to certain parties. He asked for SACBC’s position on the matter. He suggested that it was impossible to believe that a donor who was completely opposed to a particular policy would donate to a fund that shared out the funds to all parties, including the one to which the donor was opposed.

Mr M Dlamini (EFF) informed the presenter that donations to the ANC ran into billions of Rand. Why would a disclosed donation not influence policy? The policy influence did not occur in the transferring of money from one bank account to another, but in the discussions that preceded that transference of money, be it disclosed or transparent. What was SACBC’s take on the state doing business with the investment arms of political parties and how could that be detected? Looking at the concept of a multi-party democracy fund, he asked whether churches in South Africa had a common fund for all donations to churches which were then distributed proportionately to all churches? A party’s policy was the best idea that a political party put out there. If people wanted to donate directly to the state, why not do so? Were SACBC’s suggestions practical?

Ms Mathys asked about corporate donations. She wanted to know how corporations decided which party to fund. She was curious as not all management, workers and investors would support the same party. In the interest of transparency, workers needed to know that a company for which they worked was investing in a particular political party.

Mr Gumede agreed with the transparency regulation and confirmed that politicians would like to see an increase in political funding. He knew it needed debate but he believed that the 90/10 split should be maintained. The issue of political party investment arms needed debate. The issue of tax deductions needed to be considered further but he thanked the Church for their submission and believed that the Committee was blessed.

Adv Pothier suggested that if proportionality had been the only consideration, then there would have been no need for a split. The split of 90/10 was created because the intention was to support smaller and newer parties to grow. The question was whether 10 were sufficient and there seemed to be a concern that it was not. He could not speak on behalf of the IEC but it could be anticipated that they would need more money. Although the IEC was a referee between parties, he did not see why its mandate could not be extended, in principle. Currently the IEC was charged with managing public and private funding to political parties so he did not see why they could not fulfil that mandate. Adv Pothier agreed that the trust deficit had its origin in all sorts of matters. He was sure that the proportional representation (PR) system contributed to the trust deficit but he noted that the constituency electoral system in the UK had also produced a low level of trust in the political class. So, it was something about the political class that engendered the mistrust. The greater the degree of openness, the greater the level of trust would be built up. The question of voters voting on the content of policy was supported by the example of the UK government’s decision to move to electric cars which was lauded as an important step against global warming and a future-thinking policy decision. However, that policy would be seen differently if Elon Musk had made an enormous donation to the governing party. The policy would be looked at in a completely different light. The corollary of that thinking was that a government would change policy on the basis of a larger donation.

SACBC accepted that there would be a cooling off of donations initially but that was the price to be paid in order to move towards openness. On the sharing of donations between parties, it suggested that funding of multi-party democracy should be seen in a different light and not simply as a spin-off. That fund could be used for training and political schools and for the education of voters. It did not have to be simply a conduit for money. Multi-party democracy ought to be a permanent feature and companies that wished to donate should understand that. If a company did not want to support multi-democracy because a portion of the money would go to a particular political party that they did not like, that company needed to better understand multi-party democracy. If there was no way of knowing from where the influence for policy came, the public was unable to interrogate the policy. He informed Ms Mathys that donations from corporates would be determined at company board level and probably workers would have no say in such a decision. If there were openness and one knew to which party corporates donated, one could challenge them.

Ms Mathys asked about the multi-party fund and whether SACBC had an opinion on the use thereof for legal costs. Currently opposition parties were spending millions on going to court in an attempt to hold the ANC and Parliament accountable.

Adv Pothier replied that political parties could go to court for reasons of public interest or good but they could also go to court to support their policies etc. Therefore, the multi-party democracy fund should not be used for court matters. Parties should raise funds from the public to challenge the government in court.

Azanian People’s Organisation (AZAPO) submission
Mr Strike Thokoane, AZAPO National President, recognised the 40th anniversary of the death of Steve Biko.

AZAPO viewed the discussion on political party funding as a continuation of the struggle against colonisation. The organisation was aware that freedom needed to be worked at and systems needed to be put in place so that in 20 – 50 years, people on the ground would be seeing the fruits of the liberation. The lives of ordinary people had not yet been improved. He noted that political parties in Africa envied the system of public funding in South Africa. However, the funding was skewed. Those parties with money made it into Parliament. Not all parties had to be funded but only those that made it into Parliament. AZAPO had a concern about money flowing into extra-parliamentary organisations which also received foreign funding and could undermine the sovereignty of the country. When society and people were frustrated, they resorted to other methods. People had to believe that casting their vote meant something. Questions had been raised about the difference between the public funding made available to political parties for campaigning which was far exceeded by the money received from private donations. Proportional funding gave an advantage to those parties that had won the race in the first running. AZAPO proposed an upper limit on money spent during a campaign and that all parties should be given an equal opportunity to participate as the game started afresh with each election. Media coverage was also allocated according to the 90/10 split, which was frustrating for smaller parties. 50% of the public funding should be distributed equally to all parties. Provision had to be made for private donors to donate to a pooled fund. Foreign country donations had to be outlawed.

Discussion
The Chairperson noted that the presenter seemed firstly to suggest that a political party had to get a seat in Parliament before it could get funding but then he said that the playing field should be levelled for each fresh election. He asked the presenter to clarify.

Mr N Singh (IFP) asked if AZAPO had any thoughts on how there could be an arrangement for funding of political parties not yet in Parliament.

Mr Dlamini asked whether AZAPO thought that as long as a party had money, it got into Parliament. He thought that AZAPO would have queried the cost of registration that was not proportional. What did he expect in respect of getting support in-kind? What was he proposing in terms of media coverage? Did he have concrete proposals or had he come just to complain? AZAPO had to make concrete proposals for the challenges that it had identified.

Mr Bongo asked about foreign donations and the role of NGOs in terms of the funding of political parties. What were AZAPO’s scientific thoughts about levelling the playing field? He sympathised with the view that every election was a fresh one but one started with the number of members a party had. Did they want to give the same amount to political parties that had vastly differing numbers of registered members?

Mr Thokoane clarified that he was making the point that assistance should only be given to parties in Parliament as they would have met the threshold. However, he believed that there should be funding for parties that were recognised in society, had an influence in society and had a part to play in a multi-party democracy. There were parties out there that did not have the financial resources to stand for election. In other countries, there were debates on national television which included all political parties. All were given an equal amount of time to speak but in South Africa the amount of time that smaller parties could speak on the media was determined according to that proportion. The ANC had not started with a million members. He noted that the ANC had been assisted to get additional members based on the public funding. Parties like AZAPO were going down because of the issue of funding. He wanted to know why other political parties were not making submissions.

There should be no foreign funding. The struggle was for now and for the future. Laws should not be made for subjective reasons. There would come a time when those who were benefitting from the current system, may well find the system worked against them. In other countries NGOs were used to undermine democracy and money was channelled through them, so NGOs should be controlled. He did not want people going underground. This country had been through the time when people were unhappy and restless and took up arms.

Mr Dlamini pointed out that one could not pick and choose about democracy. The only people who could say who came to Parliament were the voters. It was one man, one vote. Experience was not a reason for coming to Parliament. AZAPO wondered where other parties had got the money; they could also go there and get the money to make the waves that parties in Parliament were making.

African National Congress (ANC) submission
Dr Zweli Mkhize, ANC Treasurer General, said that the organisation felt that it was important to take the opportunity to make a submission to deal with an important matter of policy and the creation of a framework for political party funding in the country. The matter had to be reviewed regularly so that voters would be assured that there was no undue influence on political parties in the policy-making processes and that there was an effort to stamp out any corruption that could be associated with the area of party political funding, particularly as it related to private donations. The issue had been raised in court and the ANC had felt that it was necessary to deal with the matter in Parliament. The ANC believed that there had to be accountability and transparency while at the same time balancing that out with an improvement in the quantum of party political funds provided by the fiscus. The whole issue of state capture had created an environment of mistrust.

The ANC had focused on three aspects: public funding, regulation of private finance, political party transparency. There was less regulation of party funding in South Africa than in other countries and to correct that there was a need for a regulatory framework. The current accountability for public funding was adequate and did not need to change. If private funding was made transparent, there would be a need for increased public funding, particularly at the time of transition. ANC believed that the IEC had been efficient and remained the most appropriate body to conduct oversight.

Additional points it wished to make was that a multi-party democracy party fund would be funded largely publicly but corporate donors should be encouraged to donate to that fund. Those who wished to donate directly to parties could do so. Private donations to parties needed to be allowed but if funding from the fiscus was increased, there could the capping of funding based on a proportion of how much comes from the public purse. Donors to political parties would have to declare their donations and the ANC did not buy the argument of fear although there may be some trepidation in the early years. As far as caps were concerned, absolute amounts would be unworkable but percentages would be workable. A party that received all its funding from a single donor was at risk. Therefore, an individual donor could only donate a percentage of the total donations. Subscription programmes were very different and those should not be disclosed.

There could be no anonymous donors, either to parties or to the multi-party fund but the identity of donors could be known only to the authorities of the fund and not publicly declared. That was discretionary disclosure. However, it would be a problem if a bag of money was given without anyone knowing from where it came. Donations to political parties had to be non-transactional and unconditional. There should be no donations from foreign governments, foreign political parties or foreign intelligence or quasi-intelligence agencies. Donations from foreign corporate donors had to be capped and there had to be disclosure. Donations to individual leaders within a political party had to be outlawed. There could not be restrictions on how a party spent its funds. Prejudice to disclosed donors had been raised but no evidence of such had ever been produced but the Committee could create guidelines for how such discrimination could be reported and how it could be dealt with to dispel accusations. Direct party shareholding should be disallowed, especially in the light of the Financial Intelligence Centre Act (FICA) and the Foreign Corrupt Practices Act. There should be a guide to blind investments of legitimate party monies. One could not invest in companies that were trading with government. ANC supported the 90/10 split but would consider a shift. However, 50/50 was not fair. The legislation had to apply both to national and provincial funding and the constitutionality thereof had to be resolved. Legislation for local government party funding would require more study and proposals and would clutter the national and provincial debate.

Discussion
The Chairperson referred to the ANC’s reference to a need for additional public funding, especially during a period of transition. Should the proposed legislation be enacted in November 2017, when would the additional public funding be provided? As someone had mentioned, the legislation would have budgetary implications and it was long past the time for budgetary inputs for 2018/19, so what would be the best time for the legislation to kick in?

Prof Khubisa welcomed the submission which cut across other submissions. He noted that all funds had to be transparent and he wanted Dr Mkhize’s take on funds obtained through events such as dinners. Such events or dinners did not apply only to one party. It could be individuals or corporate donors who donated sums of money just before the elections. How should those donations be declared? What about the budgetary impact if the public funding was increased? The ANC input stated that given the current financial environment, resources would have to be shifted from other important public priorities, such health and education that could be sacrificed for political party funding.

Mr Selfe asked whether the document was a discussion document or whether it was an ANC policy document. He asked that in the same way that there would be restrictions on private donations, that restrictions would be placed on the use of state resources, especially before elections. There were occasions before elections when the distinction between state and party was blurred. Why would anyone donate to the IEC when no one had done so in 20 years? If the public funding had to compensate for private funding, how big would the increase have to be in the light of the fact that the ANC apparently spent over one billion Rand on campaigning? The increase in public funding would have to be substantial and he questioned whether that would be appropriate in the current economic circumstances when there were so many pressing needs and so many desperately poor people.

Mr Singh noted that in the ANC’s input, it was stated very clearly that a 50/50 split would be a distortion of democracy. He asked what was not a distortion of democracy in the view of the ANC. He noted the intention to ban the political party investment income and pointed out that some parties had investments from which they received dividends and that these investments had been made even before for the advent of democracy. How fixated was the ANC on the notion that any income from investments should be disallowed? Dr Mkhize had talked about parties not represented in Parliament. The current framework did not support independent candidates who were not linked to parties or new parties not represented in Parliament. What kind of thinking had evolved within the ANC to deal with unrepresented parties and individual candidates?

Dr Mulder spoke to the formula. Different parties would have different views from the ANC. Some parties would want it to be 100% equitable and others would want it to be 100% proportional. The current position was the 90/10 formula. However, Dr Mulder argued that it was not in line with the Constitution, but was, in fact, exactly the opposite. The whole process started with Section 236 which did not say how much should be equitable and how much should be proportional, which was why people were suggesting 50/50. All other public party funding was 100% proportional. 50/50 was fair in the light of the fact that the Constitution specifically says it must be equitable and proportional. He would like the ANC to help him with an understanding of that.

Mr Dlamini asked for clarity on the statement by the ANC that funds could not be based on borrowing and therefore funds would have to come from other departments such as health, education, welfare. Was the ANC proposing that money for political funding be taken from education, and so on? How could the ANC be asking that more money be taken from the fiscus despite the challenges and the common knowledge that there was insufficient funding? Could the ANC be so brave as to come to Parliament and take money from the people and give it to the politicians? It was in bad taste of the highest level! Mr Dlamini was flabbergasted. He did not know what was wrong with the ANC as a party because if that was party thinking then there were more problems than everyone had thought. Why were they challenging anonymous donors? When had that started? Was it because the ANC had accepted that they were losing power and so they realised they would not be able to have anonymous donors. The EFF knew for a fact that the ANC had been using those donors secretly. The EFF knew that the Guptas had paid for the 2012 ANC Conference. He could challenge Dr Mkhize because they were in Parliament and to lie in Parliament was a criminal offence. Political parties had to get their own funding. The EFF agreed on the transparency and that it had to be known from where the money came. The EFF had been saying to the ANC for a very long time that there had to be transparency about those funders. Now that the ANC was moving out of power, they were starting to move in that direction. If the ANC were genuine, they would have explained in their own discussion document how they had survived on secret and anonymous donors. The matter of party leaders getting private funding was an internal political issue and should not be brought to Parliament. If they suspected such things, they should have dealt with it in their own party. Mr Dlamini repeated that coming to Parliament and asking for money to be taken from the people to be given to politicians was wrong and would never be allowed especially in the light of the corruption in the country.

Mr Bongo thanked the Treasurer General for the superior submission into which he had put a lot of thought. Unlike the previous speaker, he thought that Parliament was engaging with the issue for three reasons: to enhance transparency, to enhance and to defend democracy, and to deal with issues of accountability in the funding of political parties. That was the backdrop against which they were entertaining the matter. It was not true that the ANC was losing power. What benchmarks had Dr Mkhize used in terms of other African countries? What was his concrete position around the 90/10 formula? What was his view on capping and what should be the ceiling in terms of percentages? After they had passed the legislation and there were transgressions, what sanctions would need to have been put in place?

Ms Matthys raised the issue of provinces that might be acting outside of the Constitution in terms of providing funding for political parties. When was it discovered by the ANC? Did that mean that the ANC and DA had been acting illegally for over 20 years? Was it that the ANC knew that it was losing provinces come 2019 and so they wanted to eliminate the provincial funding from the legislatures? It was evident that the ANC was losing power because the party was consistently doing less well in by-elections and garnering far fewer votes than in 2016. She noted that Dr Mkhize had not spoken much on investment arms doing business with government. What regulations did they want to see in that regard? She did understand that only blind investments would be acceptable but where was the cut-off with the state? Corporate donors should have the option to donate to the multiparty democracy fund if they did not agree with any of the parties but they could also donate directly to a party if they wished to support it. How did corporates come to the decision on how to decide which party to support? How did the executives make the decision given that there were workers and shareholders involved? Her colleague had spoken to the issue of the additional public funding which was extremely shocking.

Ms Maseko said that in relation to some of the input she wanted to say that if the shoe fits, wear it. The issue that they would dealing with was to harmonise and to regulate where there had been imbalance and to ensure that every party that was represented in Parliament or in the legislatures benefited from political party funding. The advert had called for any person or any organisation or any association to make representation. She noted that some parties had not taken the opportunity to make a submission but they should not punish the ANC and AZAPO that had done so. Regulations on the funding of political parties was not new to the South African Parliament. It was a global phenomenon and something that all democracies, including emerging democracies, were looking at in terms of funding regulations and sanctions for transgression. Issues could be raised about the Guptas and what have you, but they could similarly raise issues about parties that go abroad and meet business people. The Bill would enhance transparency, accountability and good governance. She asked Dr Mkhize to elaborate on the issue of capping and party membership. She congratulated the ANC for coming to the Committee and presenting a well-researched document.

Mr Gumede welcomed the humble, open and constructive submission that was indeed profound and well-researched and well thought through. With 24 years of governing, the ANC had recognised a global problem. The ANC had researched and had looked at other models and had looked at case studies. The public was concerned because it knew that he who pays the piper calls the tune. Therefore, the public was concerned when private funding was given to parties. Therefore, to allay the concerns of everyone in the public, the ANC was saying that the brains of South Africa should come together to see how the concerns could be allayed. They owed it to show the funding that they had received and to show the public what had been donated, whether they looked at energy problems in the future or whatever. He supported increased public funding, if and when it could be afforded. He thanked Dr Mkhize for a well thought-out submission.

Dr Mkhize asked for a bit of injury time owing to the number of questions, although he was not likely to get injured. However, he could not elaborate in the time available. Mr Valli Moosa would add to his responses.

He thought that the legislation could be implemented soon after passing. Those who went to dinners generally belonged to a group of donors so they could be part of a comprehensive disclosure. In some countries, lottery funds were used to top up party funding and there were many formulas that one could think of. The document was an ANC document. The abuse of state resources had nothing to do with the current discussion as, with or without party funding, there should not be abuses and that issue needed to be faced but it should not contaminate the funding discussion. He noted that nobody had ever asked donors to donate to the IEC. He pointed out that the DA should thank the ANC for raising funds for them because sometimes the ANC went out and in a response to questions about allocation of funds, they would suggest that the donor donated to all parties The ANC had not spent R1 billion on campaigns – Mr Selfe read too many newspapers. He told Mr Singh that 50/50 was a bridge too far but a negotiation around 80/20 could be discussed. There was nothing wrong with the ratio. The use of genuine investment would be difficult at that point in time so they should not dive into that space at present. They also needed to look at parties that were not in Parliament. Laptop parties were a reality. He had responded to the points raised by Dr Mulder but he had to understand that because they were prepared to negotiate, it did not mean that it was undemocratic. He told Mr Dlamini to stop getting fixated about losing power. That was his imagination. He told Mr Dlamini that there was no such thing as anonymous donations and he as the Treasurer General would know so Mr Dlamini should not make assumptions. Yes, the Guptas had donated to the ANC but they had also donated to the DA and he did not know whether they had donated to the EFF because the EFF never told anyone who donated to them.

The ANC was responding to several court cases but, in any case, the matter would have caught up with South Africa as political party funding was being regulated in the rest of the world. Political funding in South Africa was amongst the most unregulated in the world. He asked whether all parties would like to hand back all public funding. It was a question of balancing issues. One could not have regulations limiting private donations and not increase public funding. Even within the ANC, the matter had been debated. “Democracies Unlimited” was an interesting book that looked into donations in democracies and pointed out that people had even paid to become peers and the United Kingdom. When it was exposed that people had paid to become Sir so-and-so, it was a highly embarrassing issue. The Constitutional issue had always been a debate but had never been ruled upon in court although the matter had been raised over a number of years. Dr Mkhize was adamant that it was not about the ANC losing power; but about regulating things. He noted that corporate donations were decided upon by the Board. The issue of funding individuals within a party was not an ANC issue - it had been raised in the hearing and was not a contradiction. Government had to meet the public halfway as the fears of corruption were not unfounded. It would be a proactive offer to the public so that they would know that there was control over public party funding. Regarding capping, they could go into further proposals at another time.

Prof Khubisa asked for the views of the ANC on governance and management and for guidelines and criteria for accessing funds from the multiparty democracy fund.

Mr T Godi (ACP) referred to the formula. He was certain that what was known as the equity share was, in fact, a provincial share. That meant that a party like the ACP that did not have a member in a provincial legislature, did not participate in the equity share. He suggested that they were only talking about the proportionality of money. Therefore, whether it was 90/10 or 50/50, the party still would not get anything from the equity share. He wanted to know if this was something that the ANC was aware of and, if not, would ANC members be given the green light to support a change because it would have an implication for how the money was distributed. He asked for a further unpacking about foreign corporates. Various countries set up institutes and trusts and offered workshops and training for political parties and funded them for various things, especially the ruling party. The institute or trust was, in fact, an arm of government and funded parties through this agency. Could that be considered a donation in kind?

Ms Mathys noted that they had already agreed on total transparency and so she did not see how that had anything to do with increasing public funding from the fiscus. She said that Mr Mkhize had not spoken about how corporates determined to which party they would donate money. She mentioned that Standard Bank offered funding to all political parties, although the EFF had declined the offer.

Mr Dlamini thanked Dr Mkhize for clarifying what most had denied and that was that the ANC had taken money from the Guptas. He wanted clarity on political party investments arms. He asked whether the ANC had an investment company and whether this had contracts with the state that were currently running.

Mr Selfe accepted that abuse of state resources was different from political party funding but he was asking for a commitment from the ANC that that matter would be dealt with as part of the current process.

Mr Valli Moosa, representing the ANC, replied that in most jurisdictions there were regulations dealing with the use of state resources for party political activities and particularly election campaigns so that was an area that had to be dealt with. Parliament was trying to improve on the relatively good democracy that South Africa had. A weak link was the funding of political parties. The Constitution was clear that there was no difference between advanced and developing states in democracy and human rights.

There was a case for increased public funding. Most countries provided for public funding of political parties to ensure that there was not a dependency on private donors. Donors were not altruistic. Donations were made to acquire influence or acquire some other gain. There should be a limit on what parties could spend on an election campaign as enormously expensive campaigns could distort views and it was a little like buying votes. Regarding foreign funding, it was necessary to distinguish between NGOs, religious organisations and political parties. It was not right for politicians to be paid by persons outside of the country who were not affected by the laws put in place by those politicians.

The IEC was probably the right institution but he was not sure whether their law allowed it. The regulation of funding of political parties was work that should have been done at the time of the writing of the Constitution but political parties were not interested at that time. Twenty years on there was a realisation of the need to regulate the funding to close that one weak link.

Dr Mkhize suggested that Mr Selfe should table a proposal on the regulation of the abuse of state resources. There was not a divergence of views but the question was how it would be stopped. He explained that the Guptas had made a tiny donation. The ANC did not accept donations that they could not publicly acknowledge. The ANC no longer had directors in companies. Chancellor House had been debated in Parliament and Chancellor House had been audited twice to ensure that nothing untoward had been done. The ANC wanted to put it behind them. Legislation was going to make it hell for parties to be too closely involved in business. He said that it was up to the EFF to reject the Standard Bank donation if it wished. He understood the question differently from Mr Godi as they were talking about the national and provincial levels. The question was whether a party should get funds when they did not hold a seat at provincial level. The question of the constitutionality of funding provinces had to be resolved and it was necessary to negotiate the formula. Another presenter had spoken about tax incentives. The ANC would not be opposed to it as corporate donations could alleviate the pressure on the fiscus. There would be stage fright when the process of disclosure started but it was about democracy and about voters being in charge of political parties.

Submissions from the Forum for Cape Flats Civics, Mr Lwando Scott and Mr Keith Gottschalk scheduled for the day were not presented as the presenters had withdrawn or had not arrived. The IEC would appear before the Committee on 19 August. On 22 August, the Chairperson and his staff would present a first draft to the Committee.

Ms Mathys proposed that the Committee write to the JSE and invite them to present before the Committee.

The Chairperson agreed that they would advise Business Unity South Africa (BUSA) that the Committee was looking for input. A letter had been sent to Black Land Black First (BLF). The Chairperson discussed the matter in private with the Committee.

Meeting adjourned.