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[OPINION] The problem of money in politics

Eyewitness News logo Eyewitness News 2017-05-19 Judith February
© EWN

Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not represent the views of MSN or Microsoft.

“We are late, but better late than never,” said ANC chief whip Jackson Mthembu.

This came as Mthembu announced that he would ‘soon’ be tabling a motion for the establishment of a multi-party ad hoc committee to develop legislation for increased public funding of political parties and the regulation of private funding to political parties.

This has come like a bolt out of the blue, although the ANC resolved to tackle the thorny issue of money and politics at both its Polokwane and Mangaung conferences. The issue has a long and vexed history.

South Africa has no legislation regulating private donations to political parties. Private individuals and companies are able to donate as much in secret as they wish, leaving the door wide open for corruption and the buying of influence. In a country already divided by high levels of inequality, wealthy individuals are able to influence policy in myriad ways, thus drowning out the voices of the already poor and marginalised.

We now know that back in 1999, one of the major drivers for the arms deal corruption was payments made to the ANC. Because only a handful - maybe even just one or two - ANC leaders knew where the party’s funding was coming from in those days, it is unlikely that the truth will ever emerge as to how much money the ANC itself culled from the arms deal.

In 2015 Hitachi agreed to pay $19 million to settle the US Securities and Exchange Commission charges that it violated American anti-bribery law through improper payments tied to the supply of boilers to Medupi and Kusile here in South Africa. Hitachi agreed to the settlement without admitting to or denying the SEC’s allegations. The SEC claimed Hitachi had violated the Foreign Corrupt Practices Act by inaccurately recording improper payments made to Chancellor House Holdings.

The SEC said in a statement on its website: “Hitachi allegedly sold a 25% stake in its South African unit to Chancellor House Holdings (Pty) Ltd, allowing the company and the party to share profits. Hitachi paid Chancellor House, which it knew was a front for the ruling African National Congress, $5 million from the contracts and another $1 million in 'success fees'.” The SEC also alleged that in 2008 Hitachi paid an additional $1 million in ‘success fees’ to Chancellor House, which was improperly booked as consulting fees. Hitachi settled the matter and there is therefore no admission of guilt.

The $19 million settlement, however, raised more questions than answers regarding alleged payments made to the ANC as a result of the deal. Why would Hitachi have paid a settlement figure? What was that in lieu of?

In January 2016, the ANC’s disgraced Beaufort West mayor Truman Prince brazenly wrote a letter on a municipal letterhead in which he offered potential donors to the ANC a more than decent quid pro quo. He could not have been clearer about the aim when he wrote, “We (will) want to see construction companies sympathetic and having a relationship with the ANC to benefit, in order for these companies to inject funds into our election campaign process”.

Recently, more overt and brazen allegations of ‘state capture’ have shown a far cruder and more dangerous expression of the challenge to prevent the buying of influence. President Zuma himself is at the centre of these allegations, as are his associates.

Clearly the toxic impact of money on politics has many shades and manifestations. To untangle this web will take some doing. It will mean a collective appreciation of the depth of the problem of money in politics and also the creativity to forge a regulatory regime which is suited to our context and which will take care of the worst excesses.

Such a regime also cannot be set up in isolation from other anti-corruption mechanisms, specifically, for instance, the work of former National Treasury chief procurement officer Kenneth Brown, who was attempting to consolidate all tender processes in one database before his untimely resignation. In addition, the Public Administration Management Act that regulates public servants’ involvement in companies that benefit from state tenders is intrinsically interlinked, as well as the recent regulations in terms of the act.

All political parties agree that transparency is a good thing, but they consistently appeared to lose their appetite for it when it came to disclosing their sources of funding especially during election time. Just as the ANC has displayed coyness about its sources of donations in the past, so the opposition Democratic Alliance has been reticent to disclose its sources of funding. The lone Parliamentary voice on this issue has been the UDM’s Bantu Holomisa who has doggedly stuck to the call for party-funding transparency.

It’s become a rather tired debate, and started in 1997 when the Public Funding of Represented Parties Act was passed in Parliament. The act allows for money to be appropriated from the public purse for the maintenance of political parties between elections. At the time many argued that the act ought to have included some regulation of private donations to political parties. Valli Moosa, then Constitutional Development Minister, refused to accede to this and so the law allows for money from the public purse to be allocated to political parties on a 90:10 split.

Therefore, 90% of the funding is allocated proportionately, that is according to the percentage of votes received in elections, and 10% is distributed equitably between parties represented in Parliament. Yet, parties say - and Mthembu confirmed this - that public funding remains insufficient and so political parties have to raise money from private sources, especially at election time.

In 2005 the Institute for Democracy in Africa (Idasa) took the five major political parties to court to reveal their sources of funding in terms of the Promotion of Access to Information Act. Idasa’s contention was that political parties are public bodies and therefore the public has the right to know who funds them, or, alternatively, that they were private bodies but the right to vote included knowing who funds political parties. In a somewhat narrow judgment from Judge Bennie Griessel in the Cape High Court (as it was then known), it was found that political parties were private bodies and there was no need for them to disclose their sources of funding.

The ANC then undertook to lead on the matter in Parliament. Idasa took the ANC at its word. That this never happened is a sad indictment on the ANC. With hindsight it was a mistake to take the ANC at its word and Idasa ought to have taken the matter on appeal.

Perhaps Mthembu is trying to remedy his party’s neglect after all these years? If one is cynical perhaps one might think that he is merely trying to cut off funding to a particular faction within the ANC? Or, at the very least, place it under pressure ahead of the ANC’s elective conference in December and the 2019 elections?

In 2007 when the political winds of change were in the air, the ANC’s commitment to transparency in relation to party funding was articulated in its Polokwane resolutions. Though Polokwane seems a lifetime away, the ANC has a mandate from its members to legislate on this issue. Yet there has been no movement on the matter since Polokwane or indeed, the ANC conference in Mangaung. ANC treasurer-general Zweli Mkhize has made some useful suggestions, such as the case for an intermediate body through which to filter donations. This ‘democracy fund’ might well remove some of the corruption in the system. Mkhize's suggestion could be the starting point for a more interesting and nuanced conversation about the impact of money on politics.

Strong democracies require healthy political parties. In turn, political parties require resources to sustain and operate a basic party structure, to contest elections and to contribute to policy debate. And so it would likely be unrealistic to outlaw private donations. Moreover, as Mthembu argues, it is clear that the more than R150 million a year of public money that the major 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, 11 languages and a low literacy rate. While regulation will not be the panacea for all ills, in its absence can we be certain that policy, environmental and development 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 – be it the DA or the ANC- where they govern?

The toxic impact of money on the political system is not unique to South Africa. One need only look to the United States to see the influence of ‘big money’ and so-called ‘Super PACS’ on the electoral system. It’s a multi-billion-dollar business.

Yet, reform and regulation now represent mainstream modern democratic thinking, though the detail of the regulation varies and must take a country’s socio-political context into account.

In Britain, public disclosure of contributions is required only of corporations and unions. Parties are required to submit quarterly reports detailing the name and address of the donor and the nature of the donation to the Electoral Commission.

German law entitles parties to receive donations, but donations that exceed a value of €10,000 a 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 UK, Germany and the United States there have been problems with the implementation of regulations), we do need to debate the advantages of transparency as opposed to complete secrecy about private donations.

Mthembu has now undertaken to take the bull by the horns. This should be welcomed no matter how cynical we have become about our politics. In South Africa, a multi-party ad hoc committee has the opportunity – albeit belatedly - to forge a piece of legislation that is appropriate for the South African context. It is hoped that the parliamentary process will be open to ordinary citizens and civil society organisations enabling them to engage with the detail of any proposed legislation.

Secrecy only breeds mistrust and an environment that is ripe for corruption. The time has come for years of inaction to turn to action. Mthembu’s leadership will be tested as he tries to garner support from his own party caucus which is divided and in disarray. In addition, he will need the support of the opposition. This will be crucial as we attempt to move towards some kind of transparency in relation to private political donations. The devil, as always, will be in the detail.

Judith February was head of Idasa’s Political Information and Monitoring Service in 2005 when it brought its case against the ANC and other political parties. Follow her on Twitter: @judith_february

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