It’s not even a year since a law was put in place compelling political parties to tell voters who their biggest funders are, and already these disclosures have revealed a lot about the money SA’s democracy runs on.
As a result of the Political Party Funding Act, it has emerged that the super-wealthy Oppenheimer family has been among the biggest funders of the DA, for example, while the ANC has been getting big bucks from, among others, a manganese mining company owned by Russian oligarch Viktor Vekselberg.
The disclosures have also shown how President Cyril Ramaphosa himself has stepped in twice, at least, to bail out his cash-strapped party. And former businessman and ActionSA leader Herman Mashaba got money for his political endeavours from his own company, Black Like Me.
But the act is now coming under fire from parties, which claim it hinders their ability to raise funds. At the same time, the Electoral Commission of SA (IEC) has been accused of not chasing up parties that are suspected of being in contravention of the legislation.
For example, there have been questions about the EFF’s failure to disclose any donations for the first two quarters of the 2021/2022 financial year.
While the party insists it received only donations below the R100,000 threshold for declaration, IEC chief executive for party funding George Mahlangu has let slip that the IEC is holding back some allocations in the represented political parties fund (RPPF) as particular parties might have transgressed some laws.
"Until such time they [the parties] have corrected the transgression, the money will be kept in the RPPF account," he says.
Mahlangu doesn’t want to say how many of the 15 parties receiving funds are affected, and he doesn’t want to divulge names. But he does note that information on parties that did not disclose has been published and is in the public domain. However, he believes the IEC’s powers to probe transgressions are limited and don’t extend to conducting investigations unless there is clear evidence of wrongdoing.
"We can only operate within the four corners of the legislation," he tells the FM. "There are expectations out there from the public that we should do certain things, but unfortunately we are limited to how the legislation has been drafted."
He says section 14(4) of the act clearly implies that the IEC cannot investigate a matter unless someone else has brought the information to the commission to do so. It reads: "If a complaint relating to the income or expenditure of a political party is lodged with the commission, it must, if the chief executive officer is of the view that there is prima facie substance to the complaint, investigate the complaint."
But Halton Cheadle, professor of public law at the University of Cape Town and part of the team that drafted the Political Party Funding Act, believes Mahlangu is mistaken.
He says section 14 was meant to empower the IEC to proactively ensure that parties follow the rules. According to this section, the IEC has the power to request party officials to "disclose any relevant information" and produce documents. The commission also has the power to ask for permission to enter party offices "to inspect any relevant book, record, report and other document".
It’s a lot of administrative work because we raise a lot of money to run the organisation
— Paul Mashatile
According to Cheadle, monitoring compliance "has to be initiated by the IEC", and the authority does have investigative powers. He likens the monitoring function to that of a traffic officer who stops cars to check driver’s licences, even if the officer doesn’t have evidence that the driver might be breaking the law.
"It is the same power that any inspector has. The only powers they [the IEC] don’t have is to arrest and seize [property]," he says.
If any party feels it is being unfairly accused of transgressions, or that it is targeted because the IEC is biased, it has the right to go to the electoral court to contest the issue, he adds.
Audits of the parties’ accounts, expected to be made public by December, might also reveal which parties have been hiding donations.
While it’s not possible to check up on this in real time, Cheadle says any irregularly donated money may be taken away from parties. There are also steep fines or a prison sentence of up to five years for those found to have tampered with the books.
But there is a legal way for parties to get past disclosing their donors — or to change the thresholds requiring disclosure — and that is to change the law. Already, the ANC has signalled its intention to do so.
As ANC treasurer Paul Mashatile tells the FM, the new rules have not only had a chilling effect on some donors, but they’ve also resulted in an unmanageable amount of paperwork.
Though he says the party doesn’t have a problem with being transparent and it has disclosed all its donations as required, "it’s a lot of administrative work because we raise a lot of money to run the organisation".
He says having to disclose every donation of more than R100,000 has meant not only a lot of paperwork for the head office, but also for the party’s branches.
The fact that donations from any one company are capped at R15m is also limiting, Mashatile says. "It means once we’ve raised that amount we have to stop for the year when in fact we need those resources," he says. "The R15m limit doesn’t help us because we need more than that."
The R5m cap on donations from foreign donors is also too low, he complains. "If you do a lot of training and research, the money can be used for that. We have a political party school with a lot of training throughout the year. You can’t do it with R5m."
Opposition parties have also reported constraints as a result of the legislation.
DA federal finance chair Dion George, for example, says the party has found that "some donors prefer to donate below the disclosure threshold", but says his party doesn’t support the ANC’s intention to tamper with the thresholds.
"We have not proposed any amendments, though we have raised our concerns with the IEC that the EFF and the ANC are not compliant," he says, referencing the EFF’s lack of disclosure, and raising concerns around ANC investment arm Chancellor House.
Activist and long-standing ANC member Valli Moosa, who pushed for the party funding legislation from the time he was constitutional development minister in SA’s first democratic parliament, says parties should not blame the law for their cash-flow problems.
The ANC, he says, has had cash-flow problems for a long time, so this has nothing to do with the act.
He adds that political parties don’t like to disclose their donors and want to "destroy the act", which is why they are blaming it for their problems.
There are, however, other options open to them, he says. For example, parties "run the parliament, they vote the budget", he explains. "With that budget, parties can be given more money to operate."
There are steep fines or a jail term of up to five years for those found to have tampered with the books
— What it means:
The private funding problem
President Cyril Ramaphosa could find himself on the wrong side of the law if he raises funds privately for his re-election this year as he did for his CR17 campaign for the ANC presidency in 2017.
The Political Party Funding Act, which came into force in April last year, provides that donations for political party purposes can be received only by a member of a political party who has been authorised by that party to do so.
This could affect any planned CR22 campaign drastically.
The law can’t deal retrospectively with the CR17 campaign donations, which have been contentious, as the ANC’s rules don’t allow for active campaigning for party positions, much less for private fundraising. But it will apply to any fundraising Ramaphosa might intend to do ahead of the ANC’s elective conference in December.
A number of party structures have already — and prematurely — declared that they want Ramaphosa to run for a second term.
And he’s given no indication of an intention to do the contrary.
The matter of funding presents a big issue not just for Ramaphosa but for the whole ANC. The law would, for example, also apply to funds used to put delegates up in hotels for the elective conference, or to fund their food and travel. Every elective conference in the ANC, whether regional, provincial or national, involves some private funding.
Experts have suggested that the only way to comply with the legislation would be for the party to designate an official to deal with the issue and to set up an account into which all the funds raised by the contenders would go.
These funds could then be disbursed in proportion to the amount each candidate raised.
It is not clear whether the ANC has faced up to the issue yet. Treasurer-general Paul Mashatile says the party has established an electoral committee, headed by former deputy president Kgalema Motlanthe, to draft guidelines for and run its internal election in December.
“When the nominations process opens in about September, [the committee] will be responsible for that,” he says.
“It will look at the [previous] conference resolutions and the [ANC] constitution, but it will also come with guidelines.
“It will indicate how everything is going to be managed, and if people are campaigning, how they must do it.”
Mashatile says those who want to run for positions should wait for the committee to set down the guidelines before they campaign, otherwise they could find themselves in trouble.
The electoral committee is expected to submit its first report to the party’s national executive committee at its meeting this weekend.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.