A blow for transparency in South Africa – civil society

Civil society organisations are mulling their next move after the Western Cape High Court dismissed a case that sought to require political parties to fully disclose all of their funding sources.

In February, civil society organisation My Vote Counts (MVC) took the Political Funding Act to court to challenge its constitutionality.

Joel Bregman, MVC project lead on Money in Politics, said that the reason they approached the court “was to curb elite influence over our politics.”

It was also “to strengthen voter accountability over public representatives, and to deepen the right of access to information so we can vote and exercise our political rights from an informed position,” he added.

According to the judgment, delivered by Judge Nathan Erasmus, with judges Melanie Holderness and Hayley Slingers concurring:

“The applicant [MVC] requires that all donations be disclosed because the aggregate thereof can affect party behaviour. The relief sought in this regard is defective as it relies on speculation in the absence of established facts.”

Bregman said that the organisation is consulting its legal team on the way forward, with the possibility of a Constitutional Court Challenge.

One of the respondents of the case, ActionSA, welcomed the dismissal, calling MVC’s application “misguided.”

“ActionSA’s legal team successfully argued against a short-sighted attempt to protect the political status quo,” it said in a statement.

It said that the application “was silent on this widespread non-compliance and instead sought to restrict the work of newer political parties.”

“Anyone with a practical understanding of South Africa’s political democracy would recognise that such an application does nothing to advance our democratic project,” it said.

Party funding disclosure in South Africa

In 2017, MVC successfully challenged the constitutionality of the Promotion of Access to Information Act (PAIA) to the extent that it failed to provide for access to information on the private funding of political parties’.

This failure rendered PAIA inconsistent with the constitutional right to access information.

Parliament was afforded 18 months to amend PAIA. This resulted in the enactment of the Political Party Funding Act of 2018, later amended to the Political Funding Act to include independent, which was enforced from 2021.

It required disclosure of private donations above R100,000 and capped individual contributions to a political party at R15 million per year.

It also banned foreign state donations and established the Multi-Party Democracy Fund.

MVC welcomed the introduction of the Act but argued that the thresholds limit its purpose of transparency. It then approached the courts to challenge this.

Yet, many political parties have bemoaned the Act’s disclosure requirements, arguing that it decreases incentive to donate to political parties.

“The implementation of the Act has… led to a significant drop in private funding for many political parties, making it challenging for them to meet operational costs,” said Finance Minister Enoch Godongwana at the Independent Electoral Commission’s (IEC’s) Symposium on Political Funding in South Africa.

Earlier this month, President Cyril Ramaphosa gazetted new regulations that double both the disclosure threshold and the maximum amount a single donor can donate annually, following an amendment to the PFA by Parliament.

Political parties can now accept donations in higher amounts, up to R200,000, without disclosing it.

Additionally, a single donor can now donate up to R30 million a year to a party and may make donations within this limit to as many parties as they choose.

“This will deepen secrecy in political funding and make it easier for private interests to influence our politics and for corruption to occur,” said MVC.

Godongwana said that “transparency is at the heart of party-political funding. To make informed choices when voting, voters need to know who is behind the funding of political parties and what agendas they are pursuing.”

Yet, the Minister warned that loopholes and weak enforcement in the current framework continue to threaten the integrity of democratic processes.

“Challenges remain in enforcement, local transparency, and curbing illicit financing,” said Godongwana.

For example, the majority of parties have failed to submit annual audited statements over the past three years, as required by law, and the IEC is pursuing sanctions.

Godongwana reported progress in removing South Africa from the FATF grey list, yet more needs to be done.

“To do this, we must curtail opportunities for parties with questionable intentions to gain power. This requires a strong fiscus and responsible public finance management, shunning wastage and ensuring traceability of all money flows.”

Read the full judgement below: