The Funding of Political Parties, Democracy and the Right to Know
[2004 April 30]

This is a joint project between the Right to Know Programme and PIMS-SA
By Judith February and Richard Calland

It is estimated that political parties spent between R300-500 million during the 2004 election period. Only a small fraction of this money was public money. Public funding for 2003-04 amounts to approximately R66 million – not nearly sufficient to fund what the parties are spending on communicating with voters in addition to their daily upkeep. In a situation in which public funding is insufficient, private donations are clearly needed.

In South Africa, there is currently no regulation of private funding to political parties. What this means is that donors can give as much as they want, in secret, to the political party of their choice. But why does regulation of private funding to political parties matter and what is the link to corruption? Democracies require strong, independent political parties operating in an open and truly competitive political system to function properly. In order for political parties to adequately fulfill their role they require sufficient resources. Similarly, a well-informed electorate that can exercise equal influence over the decision-making processes are preconditions for genuine participatory democracy. For some time, however, there has been concern about the manner in which political parties in South Africa are funded and more particularly about the absence of effective rules governing the receipt of private sources of support to political parties and individuals in political parties. Allegations linking prominent international political figures to party funding scandals have been witnessed around the world- French President Jacques Chirac, Former German Chancellor Kohl and here at home, the Malatsi/Marais and Jacob Zuma allegations are cases in point. Whether for example the Chirac, Malatsi or Zuma allegations are true or not, they have exposed the link between inappropriate secret funding of political parties and corruption. Corruption or even the whiff of corruption by members of political parties merely serves to introduce an unwelcome level of cynicism about the political process amongst citizens. Moreover public trust in otherwise legitimate and credible institutions and processes of governance stands to be eroded. Political corruption, it has been argued increases income inequality and poverty through lower economic growth, poor targeting of social programmes and the use of money by the wealthy to lobby government for favourable policies which could in effect have the potential to perpetuate inequality. In a country as unequal as South Africa, allowing the wealthy to buy influence by donating as much, in secret as they wish, may well result in the “drowning out” of the voices of the poor and marginalized who are unable to buy such influence. Thus, the regulation of party funding is, at its heart, a question of political equality. The one time citizens experience true equality is when they cast their vote at the ballot box. Where there is no control over the private funding given to political parties a situation of unfairness and distortion of electoral competition may arise ultimately undermining the equal value of each person’s vote. When wealth is allowed to buy influence and access by unregulated secret donations the effect on political rights and participatory democracy could lead to the average citizen’s voice being eclipsed by the undue influence wield by wealthy donors; he who pays the piper may play the tune.

This is the background and rationale to Idasa’s campaign for reform. The campaign, which is jointly led by the Right to Know programme and The Political Information and Monitoring Service-South Africa [PIMS-SA], aims to build knowledge and capacity around the subject, and public awareness, and also a civil society network. To this end, Idasa has spear-headed the launching of the Civil Society Network against Corruption [CSNAC]. CSNAC is a loose network of 12 civil society organisations working broadly on anti-corruption issues. CSNAC has been crucial in garnering broad-based civil society support for the campaign to regulate private funding to political parties. A key strategy is the litigation that was launched by Idasa against the four biggest political parties in November 2003. The litigation, which asserts Idasa and the public’s constitutional right to information, arises from the refusal of the political parties to respond to requests for information about their private donors made under the Promotion of Access to Information Act. The court action raises a number of ground-breaking legal and policy issues and has attracted a large amount of interest both in South Africa and around the world. Apart from the main issue concerning the public’s right to know, and our application for a declaratory statement of principle, the case also raises the question of whether political parties perform a public function under the Act, at least when it comes to certain activities, such as spending the public funds that they receive. The case has already had a large impact. We believe that it has helped educate the public around the constitutional right to know, as well as increasing debate about transparency in party funding. We have worked hard to ensure that organised civil society is supportive of the campaign and we believe that it is. Media interest is high. The response of the corporate sector has been very interesting. We worked with a number of leading companies to encourage them to adopt Codes to govern their own donations, and a number have now done so. Between launching the case and the election in April 2004, at least ten major corporates decided to publish their donations, including AngloGold, Standard Bank and MTN, many of them saying that now that the principle of openness was established they would be making donations for the first time. Around R30m new money has thereby flowed into the political party system, helping to allay fears expressed by the parties themselves that disclosure would result in a drop in donations. Although the parties are defending the legal action (although the ACDP settled the action by choosing to disclose their major private donors), they have done so in a very serious and constructive manner; their legal papers add significantly to the discourse. This, and the very fact that we felt comfortable in taking the significant last resort step of launching the case, reflects well on the maturity of South Africa’s democracy.

South Africa is by no means unique in seeking solutions to this thorny problem. In the United States, campaign finance has long been the source of much controversy and legislation there is currently the subject of a Supreme Court challenge. In the United Kingdom, the law has only recently been over-hauled. Throughout the world though there is an increasing trend towards openness and regulation of party funding. Internationally global standards on governance issues mean that the United Nations, the Commonwealth and various civil society organisations are monitoring the progress of South Africa in relation to ensuring sufficient measures to combat corruption. South Africa, in addition is a signatory to the African Union Protocol to prevent corruption. This Protocol calls on member states to adopt legislation to regulate private funding to political parties. It is therefore only a matter of time before South Africa faces the inevitable challenge of regulation. Many political parties see any proposal to regulate party funding as a sure means to cut the flow of money they receive. Regulation should not be seen as a threat to the right to donate. Admittedly too, the nuts and bolts of such a law are not simple- but neither do they represent an insurmountable hurdle. International experience has shown that regulation of party funding can be implemented successfully if laws are well-designed, backed by effective sanctions and accompanied by a parallel diffusion of appropriate ethics and norms. The broad basis of a regulatory framework could however surely include limitations on the type and sources of funding, that private funding be defined broadly to include “in-kind contributions” and that certain prescriptions are made concerning foreign funding. A crucial aspect of regulation is of course implementation and enforcement. South Africa’s challenge is not only to find a regulatory framework that is appropriate to its contextual particularities but also one which promotes the Constitutional imperatives of transparency, openness and accountability. As South Africa celebrates ten years of democracy, the time is right for the conversation about regulation to be revived.