South Africa holds local government elections in just under two months. Our new three-part series looks at political party funding and the implications of disclosure or non-disclosure of private funding. Part one examines the results of a 2015 global study focusing on the transparency and effectiveness of political finance regimes. In part two we republish a recent analysis, from the first 2016 edition of the HSRC Review, by the South African researchers who contributed to the study. In part three we discuss the Electoral Integrity Project’s report on electoral integrity in Africa.
Weeks before the 3 August elections, political parties are hot on the campaign trail. This is a costly exercise and donations do ease the financial burden, but parties are not mandated by law to disclose any details of private donations – they only have to reveal how they use public money. Non-disclosure of private funds is a dangerous situation that can lead to corruption, cronyism and policy capture.
Advocate Gary Pienaar of the Human Sciences Research Council and Collette Schulz-Herzenberg, an independent research consultant, contributed to a recent global study on this topic. Pienaar was the South Africa country researcher while Schulz-Herzenberg was the peer reviewer.
The study was published by Money, Politics and Transparency (MPT), a joint initiative between the Sunlight Foundation, Global Integrity and the Electoral Integrity Project. The project aims to foster a worldwide network of national-level reformers by providing resources, such as in-depth research, analysis and global principles, on political finance.
The MPT report examined and compared the transparency and effectiveness of political finance regimes in 54 countries, including South Africa. Other African countries included Rwanda, Nigeria, Ghana, Botswana, Malawi and Kenya. The goal is for the reform community to then use this information to set up global principles which guide fair, accountable and transparent political finance systems.
SA not alone in erratic party funding systems
Countries were assessed across five categories and nine sub-categories. The bold, bracketed figures indicate South Africa’s scores:
- Direct and indirect public funding (81)
1.1 Direct public funding
1.2 Indirect public funding - Contribution and expenditure restrictions (0)
2.1 General rules on electoral campaign contributions
2.2 Limits on contribution and expenditure during electoral campaign periods - Reporting and public disclosure (17)
3.1 Reporting requirements to the oversight entity
3.2 Availability of electoral campaigns’ financial information to the public - Third-party actors (0)
4.1 Applicability of the law to third-party actors - Monitoring and enforcement (82)
5.1 Monitoring capabilities
5.2 Enforcement capabilities
Researchers used 50 integrity indicators within these categories and sub-categories to compile a score. Countries were assessed on the regulation and enforcement of political finance in law (de jure) and in practice (de facto), and the results showed that about half of political parties failed to regulate cash donations.
Forty-three of the 50 indicators were given quantitative scores, corresponding to fixed points on a scale of 0 (low) to 100 (high). The rest were open questions. Scores were aggregated at the sub-category and category level, meaning that aggregate sub-category scores were the average of all the indicator scores within that sub-category, and category scores were the average of the relevant sub-category scores.
Each country also received an overall aggregate score – the average of all five section aggregate scores. The individual indicator scores are generally comparable across countries, as are category and sub-category scores to a lesser extent. However, warned MPT, overall aggregate scores should not be compared, because they present the national situations in too broad a scope, and policy- and decision-makers are advised to study the individual indicators to get a clearer picture.
South Africa scored 36 for indicators in law, 47 for indicators in practice, and 36 overall.
South Africa – good and bad
The country scored well on direct and indirect public funding – meaning that it has laws that provide direct public funding to parties and/or candidates during campaigns, and indirect funding, such as free access to advertising. In practice, the mechanism to determine direct public funding for electoral campaigns is transparent, equitable and consistently applied – but National Treasury, the Independent Electoral Commission (IEC) and Parliament, while they do make disbursement information publicly available, do so with varying degrees of pro-activity and promptness.
However, the Electoral Act of 1998 does not explicitly prohibit the use of state resources to influence election outcomes, while it is not unheard of state resources to be abused before an election. A formula exists for the allocation of airtime for party election broadcasts and this access to free slots is provided in a transparent manner, but circumstances don’t always allow the parties to use the opportunity.
South Africa also scored well in the last category – monitoring and enforcement. Public funding disbursed to political parties by the IEC is all subject to oversight, audit and investigation by the IEC, the secretary to Parliament and, ultimately, the Auditor-General. Political parties are required by the Electoral Act to appoint an auditing firm to audit their financial records.
South Africa fell short, however, in the indicator regarding the publishing of results of investigations or audits, where it was noted that the IEC, the Auditor-General and Parliament do not publish any details of audits of party funding, not even in the relevant annual reports.
In terms of enforcement, South Africa has laws that define violations of political finance laws, as well as sanctions for specific violations. The oversight authority does have the power to impose sanctions, but in practice not all offenders comply with the sanctions imposed, or there are a few repeat offenders, although most are not.
South Africa’s scores for the remaining three categories were poor. There is no legal ban on anonymous donations, nor do in-kind donations and loans to political parties and individual candidates have to be reported. There are no limits on the amounts that can be donated by individuals, companies, third parties, or foreign sources. Political parties have no limits on the amount of funds they can spend on their election campaigns.
For reporting and public disclosure, it was noted that there is no legal requirement for parties to report itemised spending or contributions to the oversight authority, or to report their financial information on a monthly basis during the campaign, or a quarterly basis outside of the campaign.
In law, financial information from political parties and individual candidates does not have to be made available to the public, nor can citizens access information concerning funds received from private sources – only information concerning public sources.
In terms of third parties, these are not required in law to report itemised contributions received and expenditures to an oversight authority, or to make the information publicly available. Third parties include foundations, think tanks, unions, political action committees, etc. In practise, therefore, this is not done.
In practice, journalists and citizens are not able to easily access the financial information of third parties, including the political spending of those parties in support of South African political parties and individual candidates. Such information is usually made available to the public only through the efforts of investigative journalists, or because of leaks to the media by disaffected factions within political parties involved. Once in the public domain, the information generally is not denied, but little additional information is provided by those responsible.
In part two of the series, we publish the analysis and implications of this report by Pienaar and Schulz-Herzenberg.
