Have all South Africa’s political parties been truthful about their funding?

31 Aug 2022

For the first time since SA’s political party funding laws came into effect, parties have to submit audited financial statements to the Electoral Commission — by the end of September. Only a handful of parties have, to date, disclosed receiving large donations. How likely is it that the others are concealing information — and, if so, what happens?

The Electoral Commission’s (IEC’s) publication of the latest records of big donations given to South Africa’s political parties confirms a trend that is by now well established: only a handful of parties are routinely disclosing large donations.

The most recent disclosures cover the first quarter of the second financial year for which the legislation has been in effect. Just four political parties have reported receiving single-source donations of more than R100,000 over the most recent period: the DA, the ANC, ActionSA and the Patriotic Alliance.

Of these four, the DA brought in the highest quantum of donations at almost R16-million for the first quarter, with the ANC taking second spot thanks to a R10-million donation. The bulk of the DA’s money came from Capitec founder Michiel le Roux, with the ANC once again benefiting from the largesse of mining magnate Patrice Motsepe.

With a year of these disclosures under our national belt, it is now clear that only the ANC and the DA can be relied on to report substantial donations for each financial quarter. Herman Mashaba’s ActionSA gets an honourable mention — for having disclosed donations in every quarter, bar one.

And the rest?

But for the rest of the political parties represented in Parliament, disclosures have been thin on the ground.

Over the course of five financial reporting periods, for instance, the Economic Freedom Fighters disclosed just R3.1-million in donations — the majority of which came from Motsepe just before the 2021 local government elections. The EFF is known to have cosy relationships with wealthy businessmen like tobacco smuggler Adriano Mazzotti, but those names appear nowhere on the funding disclosures.

The Freedom Front Plus, who many assume to be raking in Stellenbosch money, disclosed less than R500,000 in donations over the same period. (The donor in question was once again the fairy godfather of South African political parties, Patrice Motsepe.)

Is this plausible, given that these parties and many others were able to run extensive campaigns — always a costly business — in the lead-up to the 2021 municipal polls?

Of course, says FF Plus leader Pieter Groenewald.

Groenewald told Daily Maverick it is perfectly logical that only the ANC and the DA are able to attract consistently large donations.

“It has always been like this. The big donations are usually from businesses. Businesses see their donations as an investment, and therefore the governing party and the official opposition will always receive these big donations.”

Brett Herron, secretary-general of the Good party, stressed that the absence of disclosures does not mean either an absence of transparency or an absence of donors. (Good has disclosed around R464,000 in cash and in-kind donations so far.)

“It means none of our donations reached the [R100,000] threshold for declaring in [that] quarter,” Herron told Daily Maverick.

“We would obviously welcome a generous benefactor, as the DA and ActionSA have, but we remain encouraged by the small donors who assist with cash and in-kind assistance.”

Herron also said that the disclosures suggest above all that the largest parties are worryingly reliant on a few donors.

“To me, this raises some alarm for the DA because after decades of being in existence, harvesting donors, they do not have a broader base of donors who donate more than R100,000.”

Daily Maverick sent questions about funding disclosures to six parties that have disclosed donations only once or twice so far: the FF Plus, Good, Patriotic Alliance, the African Christian Democratic Party, the EFF and the IFP.

Only the FF Plus and Good responded to our questions.

Visit Daily Maverick's home page for more news, analysis and investigations

Audited financial statements

But parties that aren’t keen to get into discussions about their funding with journalists are about to face another form of financial scrutiny. For the first time since the introduction of the political party funding legislation, parties have to submit their audited financial statements to the IEC by the end of September.

These statements must include details of all donations, loans, membership fees and income, as well as lists of bank accounts into which this money is deposited.

“With the end of September drawing close, the Commission is readying itself to receive, analyse and publish the audited financial statements of registered political parties,” the IEC stated this week.

“This will be the biggest task yet to be carried out by the Commission since the coming into effect of the [Political] Party Funding Act in April 2021.”

The IEC previously indicated that it was carrying out training with political parties to enable accounting officers to submit financial statements in the required way.

But there have been a number of hints along the way that the IEC is bracing itself for what it diplomatically termed “any eventuality” in its last statement, but which the rest of us may understand to really mean “political parties not cooperating, or lying”.

The IEC “is currently finalising the appointment of a panel of investigators, comprising auditing professionals and firms, forensic investigators, legal firms, and so forth”, it stated, with the purpose of this panel being to look into “complaints and allegations of contravention of the act”.

Criminal offence

Such a panel may well be busy. Giving false or incomplete information to the IEC about party funding is a criminal offence, punishable by a maximum fine of R500,000 and/or two years in prison. If the IEC proves to have sufficient backbone to pursue suspicious cases in the manner it needs to, quite a lot will be at stake.

The FF Plus says it has no problem complying with any aspect of the legislation — and that it would even support the call made by lobby group My Vote Counts for the reportable threshold of donations to be “drastically reduced” from R100,000.

The majority of FF Plus funding simply comes from sources like the Represented Political Parties Fund, Groenewald told Daily Maverick: the money given to parties represented in Parliament based on how many seats they win in elections.

Herron told Daily Maverick that Good’s funding similarly comes from “smaller donors, our members and the allowances given to represented parties through the IEC and the legislatures”.

The Good secretary-general described the current donation declaration system as a “bureaucratic nightmare” which imposes “burdensome” obligations on parties.

But Herron says that the entire political funding framework needs to be reviewed and the new legislation does not go far enough. In particular, he suggests there should be limits on campaign spending:

“The amounts of money spent on election campaigns are obscene.

“In 2019, the DA was working on an election campaign budget of R600-million while the ANC had a budget of R1-billion. These are obscene amounts in a country with such high levels of poverty and inequality. Why would donors be funding political parties to that extent whilst we are overwhelmed with food insecurity and poverty? There is a perversion of priorities.” DM

Categories:

South Africa

Tags:

DM is much better if you are signed in...

South Africa

And the rest?

Audited financial statements

Criminal offence