R1-billion in 'illegal' party payouts

Gauteng is one of six provinces giving money to political parties. But Mathews Phosa says this might be unconstitutional. (Oupa Nkosi, M&G)

Gauteng is one of six provinces giving money to political parties. But Mathews Phosa says this might be unconstitutional. (Oupa Nkosi, M&G)

Provincial legislatures have paid out about R1-billion to political parties, relying on laws that appear to be unconstitutional.

All parties, including the Democratic Alliance, which has publicly disagreed with the practice, have accepted the funds, which are distributed largely in proportion to the parties' strength in each legislature.

The provincial party funding, quietly rolled out in six of the nine provinces since 2008, now runs at a combined total of more than R200-million a year, figures obtained by the Mail & Guardian show.

Ever since the Gauteng Political Party Fund Act was passed at the end of 2007, there has been controversy over the constitutionality of such legislation. But KwaZulu-Natal, the Free State, the Northern Cape, the Eastern Cape and Limpopo have followed suit with similar Acts.

The provincial funding laws have added significantly to the cost of democracy to taxpayers. The R200-million-plus tag comes on top of more than R400-million that the Independent Electoral Commission (IEC) and national Parliament pay to parties for caucuses, constituency offices and other purposes each year.

Parties also obtain funds from membership fees, private donations, and their own investments — as in the case of the ANC's controversial business vehicle, Chancellor House.

Section 236 of the Constitution states that: "To enhance multiparty democracy, national legislation must provide for the funding of political parties participating in national and provincial legislatures on an equitable and proportional basis."

Constitutional experts argue that this means party funding — nationally and provincially — may be legislated by Parliament only.

Increased public funding of parties
In his report at the ANC's Mangaung conference in December, the outgoing ANC treasurer general Mathews Phosa argued for increased public funding of parties but warned: "In terms of the Constitution, the power to legislate in respect of funding for political parties is a matter for the national legislature and the provincial legislatures may be acting outside the Constitution … Despite the potential this creates for legal challenges, provinces continue to allocate substantial amounts directly to political parties."

Figures obtained from legislature secretaries, annual reports and appropriations Bills for four of the six provinces show that their allocations to parties are skyrocketing, rising from slightly less than R100-million in the 2008-2009 financial year to about R205-million in 2011-2012. Including 2012-2013 estimates, the cumulative total for the four provinces — Gauteng, KwaZulu-Natal, the Eastern Cape and Limpopo — comes to more than R850-million. Add in the Northern Cape and the Free State, for which figures could not be obtained, and the total is likely to exceed R1-billion. The Eastern Cape made the largest payouts, dividing more than R98-million in 2011-2012 among the ANC (which received R68.4-million), the Congress of the People (Cope — R14.1-million), the DA (R9.4-million), the United Democratic Movement (R4.7-million) and the African Independent Congress (R1.6-million). This represented almost three times the R36-million paid out when the province first started funding parties in 2008-2009. Gauteng allocated R57-million for the current year, up from R20-million in 2008-2009, followed by Limpopo (R53-million, up from R24-million) and KwaZulu-Natal (R30-million, up from R20-million).

None of the provinces responded to questions regarding the constitutionality of their laws.

A constitutional law expert, Ben Winks of Webber Wentzel, said: "The point of departure in a constitutional state, like the one we have had since 1994, is that all public power, including the power of public spending, must be sourced in the Constitution. Any exercise of public power that is not authorised by the Constitution is invalid."

Winks said that the national legislation envisaged by section 236 of the Constitution was subsequently enacted as the Public Funding of Represented Political Parties Act of 1997, which created a single fund, administered by the IEC, from which funds were paid directly to political parties for national and provincial purposes.

Provincial revenues
​In its division of powers between national and provincial areas of responsibility, the Constitution did not provide for provinces to fund parties. Provincial revenues, he said, "are to be spent on those functional areas, including education, housing and health services, not on the funding of political parties".

Former finance minister Trevor Manuel also reportedly warned provinces in 2009 not to fund political parties from provincial budgets after his department had obtained legal advice.

The treasury spokesperson, Jabulani Sikhakhane, said this week that the Cabinet had in December "asked the ministers of finance and home affairs to review political party funding and recommend changes thereto".

The Gauteng legislature secretary, Peter Skosana, said in reply to questions this week that the province had passed the Act "to represent the interests of all the people and the views of a significant national cross-section of the people".

He said the fund was also to help parties to be less reliant on private donors, which political organisations are not obliged to disclose.

"Therefore, the Act attempts to reduce the dependency of political parties on private funding and thereby reduce the possibility of the subversion of political parties and also the subversion of the legislature itself and of our democracy."

Despite the protests over the apparent unconstitutionality of the laws, the parties have continued to take their share of the funds — including the DA, which has vehemently opposed the practice. No party has referred the matter to the Constitutional Court.

Bobby Stevenson, chief whip of the DA in the Eastern Cape, said his party had voiced its objection when the provincial Bill was proposed but it had been passed by the majority.

"If we don't take it, then the money will go to the ANC and other parties. They will divide it among themselves," he said.

The Northern Cape spokesperson for Cope, Fred Wyngaard, said his party supported the Act and that the funds should be dealt with transparently and accountably.

"As government officials and public representatives, we are not in office to enrich ourselves, but to meet the needs of our people. Political funding largely derives from the state coffer and it is incumbent on us, as honourable members of the legislature and as members of a disciplined opposition, to use our funding to further our political mandate."

The provincial laws appear to be similar, giving wide discretion on how to utilise the funding. The Free State Political Party Fund Act of 2008, for example, states that "money allocated to a political party must be used for the purpose compatible with its functioning as a political party in a modern democracy", which includes "the development of the political will of the people", "bringing influence of a political party to bear on the shaping of public opinion" and "exercising an influence on political trends".

Parties are supposed to submit financial statements and audits to the provincial legislatures, accounting for their expenditure of the funds. The ANC treasurer general, Zweli Mkhize, did not return calls requesting comment and the DA's national spokesperson, Mmusi Maimane, could not be reached on his cellphone. 



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