South Africa

‘Private donors a threat’ – Political Party Funding Act’s ‘loopholes’ in the spotlight after ANC disclosure

Despite the Political Party Funding Act (PPFA) marking a significant stride towards enhancing accountability with political financing, critics say the inability to address the undue influence from private donors could be a threat to democracy.

Calls for scrutiny have intensified following the ANC’s disclosure of a significant donation from Chancellor House, sparking fresh demands for an investigation into the party’s financial dealings and the party dodging the PPFA.

Party funding disclosure report

ActionSA argues that the sudden transformation of the ANC’s financial status, from struggling to pay salaries to funding large-scale events and settling nine-figure debts, cannot be overlooked without eroding public trust.

The party funding’s third-quarter disclosure report for the 2023-24 financial year showed that the ANC declared R10 million.

It was the third-highest donation of monetary nature and were received from Chancellor House Trust. The donations were of R5 million each, both received during the month of December last year.

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However, Robyn Pasensie, funding researcher of My Vote Counts political party, said the PPFA, while important as a step towards private funding transparency and accountability, had some weaknesses or blind spots which had the potential to undermine the integrity of the entire system.

“One of these is it does not impose any onus on donors to disclose who they are if donating through a holding company such as Chancellor House.

“This presents an opportunity for potential abuse by those who deliberately wish to obfuscate the source of their funds. Therefore, given what the PPFA allows for, the ANC is not breaking any rules,” Pasensie said.

“However, the use of Chancellor House to make donations is cause for concern, especially if investment is encouraged to the holding company and not directly to the party to deliberately avoid public transparency and accountability,” Pasensie said.

IEC called to probe

Action SA called for the Electoral Commission of South Africa (IEC) to investigate the ANC due to the donation it received.

It happened in the same quarter in which the party issued a two-line press statement in December last year, announcing its R102 million debt settlement with Ezulweni Investments had been settled.

“Despite a public commitment from President [Cyril] Ramaphosa to avail the details of the settlement, no such information has ever been provided,” ActionSA chair Michael Beaumont said.

READ MORE: ‘No such thing’ – Ezulweni denies being promised tenders by ANC after R102m settlement

However, Pasensie noted the IEC had a very specific mandate in terms of investigating possible transgressions to the PPFA and could only undertake formal investigations once it received a prima facie complaint.

“Given that donating through a holding company is not prohibited, it would also mean the IEC would not in any case be obligated to investigate this donation to the ANC,” she said.

Political parties transparency

Political analyst Ralph Mathekga said while the PPFA had led to some degree of transparency, with parties complying by disclosing their financial contributions, questions persist regarding the honesty and completeness of these declarations.

“One of the key issues we face is whether political parties are truly being transparent,” Mathekga said.

“Are they declaring all donations, both monetary and in kind, and are they accurately valuing these contributions?”

He emphasised the need for greater scrutiny into party finances, suggesting existing laws may not go far enough to achieve their intended objectives.

Mathekga proposed the enactment of additional legislation to enhance transparency around the internal use of funds in political parties.

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