The Gap in South Africa's Transparency Regime

transparency accountability political parties funding
Wednesday, 27 January, 2016 - 11:20

In this article the writer focuses on the complaint by Holomisa to the Public Protector regarding the alleged abuse of public funds by the Public Investment Corporation 

The last time the United Democratic Movement’s Bantu Holomisa lodged a complaint with the Public Protector, it led to the eventual resignation of the chair of the Independent Electoral Commission (IEC), Advocate Pansy Tlakula, who was found to be presiding over an ‘unmanaged conflict of interest.’

This month, Holomisa lodged another complaint with the Public Protector’s office. This time it involved the African National Congress (ANC) and an alleged abuse of public funds. Holomisa requests that the Public Protector investigate an allegation that an amount of R40 million was paid from the Public Investment Corporation (PIC) to the ANC in the second week of last month. It is further alleged that this money was used to pay ANC staff salaries ahead of its 104th birthday celebrations in Rustenburg. The PIC is one of the largest investment managers in Africa and manages over R1.8 trillion in funds. The PIC is wholly owned by the South African government and invests funds on behalf of public sector entities, based on investment mandates set by each of these clients and approved by the Financial Services Board (FSB). 

At the moment this remains an allegation, yet if it is found to have merit it would not be the first time this has happened. Shades of ‘Oilgate’ still remain with us. In 2004, Sandy Majali was accused of channelling money from the state-owned company PetroSA to the ANC via his company, Imvume. Then the Public Protector at the time, Lawrence Mushwana, found no wrongdoing in a report that was largely discredited and deemed a whitewash.

If Holomisa’s allegations are true, then that would be the abuse of public money on a grand scale. It would point to the ANC’s desperation to access cash to appease its staff and also that it is comfortable betraying the trust of those citizens on whose behalf the PIC invests money.  Both the PIC and the ANC have denied the allegations. The ANC has accused Holomisa of playing politics ahead of the local government elections. It is an election year and all parties are in campaigning mode. Campaigning requires funds.

This brings us neatly to the issue of transparency as regards party political funding. Currently, South Africa has no regime to regulate private funding to political parties and this means that parties are able to raise as much money as they wish in secret. My Vote Counts recently lost an application in the Constitutional Court demanding transparency in relation to private donations made to political parties. Yet, the matter cannot end there.

Elections require money and the ANC, as the incumbent party nationally, has access to the coffers of state to either bus voters to venues, distribute food parcels and T-shirts at great cost. In past national elections, evidence gathering on the ground has suggested that this happens almost routinely. With its back to the wall the ANC may well attempt to use public funds to gain votes, while blurring that line between party and state.

Chancellor House, the ANC’s investment vehicle, has bid for state contracts, starting an intense debate on whether that should happen at all. Despite mutterings by
senior ANC leaders that the ANC should not bid for state contracts, one has the sense that there is no urgency to deal with the matter. Of course, that privilege of incumbency also applies to whichever party happens to hold power in a specific province or municipality and might apply equally to the Democratic Alliance in the Western Cape.

For as much as the ANC has displayed coyness about its sources of private donations, likewise the opposition Democratic Alliance has been reticent to disclose its sources of funding. 

So, the question remains, who will lead the way with regards to closing this gap in South Africa’s transparency regime? Logically, it would have to be the ruling party, with its overwhelming majority within Parliament. The ANC’s commitment to transparency in relation to party funding was articulated in its Polokwane resolutions. It therefore has a mandate from its members to legislate on this issue. Yet there has been little movement on the matter since Polokwane, or Mangaung for that matter. Recently, ANC treasurer-general, Zweli Mkhize, has made some useful suggestions regarding the establishment of a democracy fund through which donations can be filtered.

It is clear that political parties need money to operate. But, knowing where the money comes from is crucial if political parties, and in particular the ruling party, is serious about their stated commitments to transparency as regards tender processes and conflicts of interest. Without transparency in relation to political donations there can be no way of knowing whether tenders are being allocated because of what companies or individuals have donated to the ANC, for instance. What is the quid pro quo being offered to those who donate? In the absence of regulation, can we be certain that policy decisions that have been made, or are going to be made, will be in the best interests of the country or the narrow interests of the ruling party?

Moreover, it is clear that the more than R100 million per annum of public money that the political parties currently receive is not enough to finance the myriad activities political parties need to undertake. South Africa is a particularly challenging country within which to contest an election - a sprawling land mass, large rural areas, eleven languages and a low literacy rate.

Reform and regulation now represent mainstream modern democratic thinking, though the detail of the regulation varies and must be contextually orientated.
In Britain public disclosure of contributions is required only of corporations and unions. Parties are required to submit quarterly reports that detail donor information such as their name and address and the nature of the donations that are submitted to the Electoral Commission. German law entitles parties or several of its bodies to receive donations, but donations that exceed a value of €10 000 per year must be publicly disclosed by giving the name and address of the donor as well as the total amount in the annual report. Donations that exceed €50 000 have to be reported immediately.

Whatever the shortcomings of regulating private funding to political parties (and as has been seen in the United Kingdom, Germany and the United States, there have been problems with the implementation of regulations), the advantages of transparency are abundantly clear. Increasing public funding might only be part of the solution, because public money will never be enough and will not do away with political parties’ need to raise private money. So, in a sense, requesting greater amounts of public money is only one aspect of this challenge because the nub of the problem lies in the millions of rands raised in secret and the accountability deficit that this has created in our political processes.

So, the question of money and politics is a complex one with several manifestations. The current allegations regarding the ANC and the PIC must therefore be dealt with as a matter of urgency. This would go a long way to remove the cloud that now hangs over the ANC and the PIC which manages public money. The outcome of the investigation should also be made public immediately since citizens have the right to know how state funds are being managed.  

Given that it is an election year, it is important too to draw a line in the sand regarding what is and is not acceptable as regards raising money for a political party.

Photo courtesy: Find the Edge.

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