November 25, 2022

The Law on the financing of political parties still has work to do…

A milestone can be sweet, especially when it’s the first of something. We’re waiting impatiently. Celebrate it. Praise it, even. There has recently been one such event worth noting: a full year of political party funding disclosures under the Political Party Financing Act (PPA). It may not be the first thing that comes to mind when we think of incredible events, but there has never been a major milestone like this act.

The implementation of the law was a historic moment for South Africa that left many political parties and private businesses uneasy.

In a country where kleptocracy abounds, where politicians and corporations seem more interested in their own enrichment and where the South African public is lose confidence in its elect, the law offers hope for something better.

But, as promising as the act was, its short life was hampered by talk of gutting its most important aspect: disclosure thresholds. With the recent release of fourth quarter information by the South Africa Electoral Commission (CEI), the PPFA gave us the opportunity to reflect on the year and the measures taken by political parties to shorten it.

After an exceptionally long road to pass the PPFA, it was finally implemented on April 1, 2021. This marked a new era in politics and the South African public would now have access to private funding information of their political parties.

While the disclosures so far have given us crucial insight into who funds and influences our policy, they have also exposed gaps in the legislation.

Since April 2021, we have been able to get a better idea of ​​​​the relationship between money and politics in South Africa. Granted, we had already had a front-row seat to the sordid spectacle of exposing the details of the toxic relationship between money and politics through the Zondo Commission, but the PPFA disclosures gave us the opportunity to start connecting the dots. and to begin to scrutinize the links between money and political decision-making.

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The ANC, despite allegations of financial hardship it has filed with the PPFA, has been able to raise at least R66,643,938 through private funding sources over the past year.

Interestingly, much of this money came from three major donors who each donated a maximum of R15 million: United Manganese of Kalahari, Chancellor’s House and the Batho Batho Trust. These donations alone represent almost 70% of the total donations received by the ANC.

But that’s not the only interesting thing about these gifts. Kalahari United Manganese (UMK) is a Russian-linked company, partly owned by the Renova Group, itself owned by Russian businessman Viktor Vekselberg. Vekselberg recently had his $90 million superyacht seized as part of the charges against him for fraud and money laundering.

Chancellor House also has its hand in UMK as a BBBEE investor holding an indirect stake of less than 25%.

The PPFA is silent on investment vehicles and holding companies like Chancellor House. Sources of money funneled to holding companies such as Chancellor House fall outside the scope of the law, presenting an opportunity for murky deals to take place.

As the ruling party, the ANC accepting money like this through Chancellor House could jeopardize political decision-making and party policy. Although we are aware of these donations through the PPFA, we cannot use the law to issue punitive measures against this as it does not specifically address this issue.

When we add the Batho Batho Trust donation, things only get worse. The Batho Batho Trust has investments with Shell, which has come under scrutiny for its Karoo fracking project and his exploration attempts along the Côte Sauvage. The ANC also has a long-term investment in the Batho Batho Trust.

But the ANC is not the only party to have received large donations from just a few sources.

The DA received 15 million rand from Oppenheimer’s heir Mary Oppenheimer-Slack and businessman Martin Moshalas well as almost R3 million in foreign donations from Friedrich Naumann Foundation and the Danish Program for Liberal Democracy.

The Oppenheimer family donated around R25 million to political parties (just under R10 million to ActionSA and R15.5 million to DA).

The PPFA does not regulate interdependent donations that may come from the same source. Money given by members of the same family to a party would therefore not be read as a single donation, but as three separate contributions. This makes the cap of R15 million per donor for the year easily circumvented.

The PPFA exists to improve political transparency and voter rights and to limit the toxic relationship between money and politics. These revelations alone show how necessary the act is. The PPFA has shown how our political parties are heavily dependent on a small group of very wealthy and very powerful entities to finance their activities, a very dangerous mix.

The fourth quarter revelations also showed that only major parties such as the ANC and DA may be able to secure donations on a regular basis. The continued lack of donations to smaller parties ensures that only a few parties can present themselves as viable candidates to voters. This is not in the spirit of multiparty democracy. Private donors who spend large sums of money on a few parties only serve to maintain the status quo. South African voters deserve better.

One solution to this could be better regulated public funding, distributed in a way that serves all parties on a more equitable basis. Monitoring and reporting like the PPFA may be necessary for this type of public funding to ensure that the money is not abused, but used for the benefit of the public.

Despite claims to the contrary by political parties, political parties are not just voluntary associations. They perform a public function and they should be accountable to what the public wants, not private money. Overreliance on these big donors only serves to provide an opportunity for narrow interests to take root.

Multiparty Democracy Fund

An important step in this direction for a decrease in dependence on private funding is the Multiparty Democracy Fund (MPDF). The MPDF is a new provision created under the PPFA that accepts donations from anyone, no matter how small.

Over the past year, the MPDF has raised the respectable amount of R5,012,000. This will be distributed by the IEC to parties represented in national and provincial legislatures.

If effectiveness can be measured by the fear it creates, then the PPFA has been effective. In December last year, just over six months after the PPFA was enacted, the ANC’s national working committee revealed that the party intended to extend the annual disclosure threshold by 100,000 rand to between 250,000 and 500,000 rand, and to expand the annual cap on donations from 15 million rand to between 50 and 100 million rand, or simply removed entirely.

This is because the ANC is experiencing a funding crisis, in part because of the limits the law places on private influence. This despite the fact that it could fetch over R60 million. Where and what did this money go to?

Thresholds work and they must be protected. An act just a few months old that has South Africa’s biggest party nervous shows it is doing its job.

However, we should not be complacent. While the law works, we still don’t know the extent of private funding and are far from limiting the toxic relationship between money and politics. We need to work together to make the PPFA even more effective.

In addition to the quarterly disclosures that political parties must make, the PPFA also requires them to disclose audited financial statements to the IEC by September 30 this year. This will give us deeper insight into private funding and influence. But if it is to achieve its goals, the PPFA needs to be strengthened.

In the next phase of the life cycle of the law, we should strive to guard against threats to the law and to strengthen it. The law must ensure that holding companies, especially those with political ties (such as Chancellor House), disclose the source of their donations.

It is also clear that the R100,000 disclosure threshold must be drastically reduced to deepen transparency and that the R15 million cap on annual donations per donor must be reduced to limit narrow private influence in our politics.

It is important to have well-funded political parties and independent candidates in our multi-party democracy to ensure that they can govern well. However, this should not be done through heavy reliance on private funding.

Instead, alternative financing through public funding mechanisms should be used to reduce this dependency. This will build accountability and build people’s power, rather than power shaped by money.

The first year of the PPFA has been a rollercoaster ride, with many ups and downs. But the job of accountability in party financing is not done. The PPFA is only the first step. The first year of the law should be used as a measure of what we can do better and a tool to get there.

Milestones are only worth commemorating if they Actually make a difference. SM/MC

Robyn Pasensie is the Political Party Finance Researcher for My Vote Counts. She holds a BA in International Relations, a B Admin Hons (cum laude) and is a candidate for an MA in Political Science at the University of the Western Cape.