Letter to the Editor: The Party Finance Court Case… Again.

Dear editor,

Ho hum. Guess what? An NGO has again pursued the issue of party finance disclosure through the courts, only this time through the Constitutional Court.

It is popular wisdom to claim that regulation of private political party donations will have a cleansing effect on the political system. This is not self-evidently supported by the evidence, as scandal upon scandal in the US, UK, France, Germany etc. shows. Politicians around the world, are less concerned with the regulatory frameworks and have proved themselves adept at loop-holing them. What is of particular concern is the means politicians devise and the lengths they go to in circumventing such regulation.

A few examples will suffice to illustrate this point. Donations to public interest organisations not officially affiliated to political parties who fund attack adverts at the time of elections. Ask John Kerry about that one. In the UK, an ingenious device called a non-repayable loan was used by the main parties to keep large donations from influential people off the books that were open to scrutiny. Ask those donors, some of whom were made Lords, for more details on how that worked. These US and UK examples are important because the abuse occurred in contexts where private donations to political parties are highly regulated and yet circumventions persist.

So money will always find a way into political party coffers!

What does this all mean for South Africa? IDASA failed some years back to convince the courts to impose a regulatory regime on party finance. There were good reasons for the court’s decision: political parties are not simply public bodies subject to constitutional provisions on transparency. As private entities, they are not obliged to declare their financial standing. This is the basis of the current challenge, to ask the Constitutional Court to find that they, in fact and deed, are public institutions and therefore subject to disclosure provisions.

The Court’s findings will have significant implications for the funding of democratic elections in South Africa. Party donations are a form of speech and association protected by the Bill of Rights. Disclosure might suppress these freedoms should donors prefer not to contribute to parties, lest their identities become public. This will affect majority and minority parties, as sources of funding may well dry up. This might negatively influence their ability to provide the public with information for the formulation of rational preference formation at election time.

Of particular concern in South Africa is the dramatic decrease in private donations, at least from publicly listed companies, in the support of political parties. As corporate governance becomes more onerous, more and more companies are ceasing to make political donations. This is not a positive development for democracy as it limits the ambit of party operations and thereby the flow of information at election time.

There are good reasons why a secret ballot is a cornerstone of modern democracy. We are scornful of elections where voters stand in front of a poster of a particular candidate as a mechanism for registering a vote. A secret ballot allows for the registering of a political preference that protects the voter from present and future harassment. The same applies to potential private donors. As a thought, why not take “transparency” all the way and request that voters show their ballots before depositing them in a box at voting stations?

Perhaps the most important reason for not being optimistic about “Disclosure” or “Regulation” cleansing politics in South Africa is that it has not worked as claimed in almost all developed democracies. Despite complex regulatory architectonics, circumvention and non-compliance are the order of the day. In fact, what really happens is that instead of transparency, regulation forces funding into the shadows making the relationship between parties and money even more opaque.

What the South African experience shows is that a vibrant media and excellence in investigative reporting contributes more to sanitising the money/ politics interface than regulation, with all its bureaucracy and transaction costs, will ever achieve.

Let’s hope that the Constitutional Court Justices, in their wisdom, dissect this perplexing issue in all its complexity and do not rely on a one-dimensional assertion of the alleged positive consequences of regulation, disclosure and transparency in party political finance. The unintended consequences of a poorly-considered policy are always worse that the situation ex ante.

Dr Ivor Sarakinsky

Wits School of Governance

Photo: A South African woman checks her ID card as she waits in line to cast her vote at a polling station in Khayelitsha township, Cape Town, South Africa, 07 May 2014. South Africans started voting in general elections expected to keep the ruling African National Congress in power, even if polls said it could lose votes over corruption and enduring poverty. About 25 million people were eligible to vote in the elections. EPA/NIC BOTHMA