South Africa’s New Party Financing Laws Have a Major Flaw

New party financing laws in South Africa are welcome, in the wake of blatant state capture under President Zuma. But University of Sussex PhD researcher Albertus Schoeman argues that they fail to address two issues that are key to understanding South African politics: intra-party contests and patronage.

In January 2019, South Africa finally passed its Political Party Funding Act (2018) after waiting almost a year for President Ramaphosa’s signature. Conveniently, this ensured that the law would not come into effect before the May election. Meanwhile, a second bill that will supplement the law and compel parties to regularly publish records of party donations is under review. The hope is that the necessary capacity and systems will at least be in place for the 2021 local election.

Together the laws will require political parties to maintain and publish records of party donations exceeding R100,000 (£5,200) and will limit single donations to R15 million (£782,000) in a given year. They also prevent parties from accepting donations from foreign governments or agencies other than for training and policy research purposes and from accepting “a donation that it [the party] knows or ought reasonably to have known, or suspected, originates from the proceeds of crime”.

The laws are a welcome development for a country that has long struggled with corruption and is currently investigating “state capture” under the blatantly corrupt leadership of former President Zuma. He and several members of his administration stand accused of selling their influence and handing out government contracts in exchange for kickbacks. The laws are long overdue, but while this is a step in the right direction, they still have several limitations.

For instance, donors can circumvent the law and avoid reporting donations by giving multiple amounts under the R100,000 mark by donating through “straw donors” such as family members, employees or shell companies to obscure the source. Equally, there are concerns over whether the Election Commission of South Africa (IEC) will have sufficient capacity to effectively monitor compliance with the law and punish infractions, since this represents a major expansion of their current function.

While these limitations are concerning, a far more serious flaw lies in the laws’ failure to regulate internal party elections.

In a system where the African National Congress (ANC) has dominated every election since 1994, internal party dynamics are just as important as contests between parties and internal party contests also involve high levels of spending. While it is difficult to estimate how much parties spent in the 2019 election owing to the lack of transparency, some have estimated it to be as high as R2 billion (£103 million) with the ANC spending an estimated R1 billion (£52 million).

By comparison, President Cyril Ramaphosa’s campaign allegedly spent over an estimated R400 million (£21 million) to secure his position as president of the party, and consequently president of South Africa. Reports indicate that his main opponent spent just as much and possibly more.

More concerning still, is that this figure is known only because of leaked emails between Ramaphosa and his campaign manager which came out after the Public Protector (state ombudsman) investigated a claim that Ramaphosa misled parliament by denying knowledge of a donation by the former CEO of Bosasa – one of companies at the centre of investigations into state capture. While there’s no evidence of wrongdoing or illegality in the campaign, some of the revelations have raised important questions around the influence of money in South African politics and called into question the integrity of a president who campaigned on an anti-corruption platform.

Other than the campaign’s links to the corruption-accused Bosasa, one leaked email includes the name of a shipping tycoon linked to the notoriously corrupt arms deal for which former President Zuma is standing trial. Further, there have been suggestions that some party activists who supported his campaign were rewarded with cabinet positions while some donors were allegedly rewarded with positions in state-owned enterprises.

Questions also swirl around the issue of vote-buying, with one of the campaign’s biggest expenditure items logged as back payments of membership dues – necessary for ANC members to vote at the party conference. Perhaps the strangest story to emerge is that about campaign payments made to two parliamentarians who are members of the opposition Economic Freedom Fighters; these have yet to be adequately explained.

Although none of this is necessarily illegal, the lack of transparency around campaign donations and spending means that there is no way of limiting the influence of money in politics and ensuring that no illegality takes place. These types of intraparty contests take place on all levels of government and often, winning a party leadership position comes with a government position. The new laws are unlikely to stop corruption or to break the link between campaign support and the allocation of key government jobs, which come with power to influence the distribution of tenders. Regulating donations to political parties is somewhat irrelevant when senior positions in the ruling party and government are decided by intraparty contests outside the scrutiny of these laws.

Until internal party elections are regulated in the same way as contests between parties, political financing will continue to lack transparency and represent a major corruption risk. As it stands, the contest for the highest office in the country remains largely unregulated.

Posted in Politics, Regions

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