Mandatory transparency in political party funding could jeopardise South Africa’s democracy

In a case brought before the High Court, the organisation My Vote Counts argued that the Constitution requires political parties to disclose their private funders. Although the ruling party, as well as all opposition parties, for different reasons, opposed this case, the court agreed with My Vote Counts and ruled that Parliament must amend the Promotion of Access to Information Act to ensure this funding transparency.

In principle, this is a laudable outcome. Reality, however, presents one that is far less welcome.

Section 1(c) of the Constitution provides that the supreme law of South Africa is the Constitution and the Rule of Law. The Rule of Law is widely accepted to mean an aversion to arbitrariness. Any discretionary power put in the hands of government, making it possible for officials and politicians to base decisions and rulings on whims and prejudices influenced by their own self-interest, must be strictly circumscribed and limited.

Parliament, as a rule, has not adhered to the Rule of Law. Research conducted by the Free Market Foundation has found that essentially all legislation, with few notable exceptions, violates some or other principle of the Rule of Law. Virtually all legislation bestowing discretionary power on government does so without effectively circumscribing that power, meaning decisions are unpredictable and entirely subject to the opinions and passions of the empowered official.

Here is a thought experiment to illustrate the problem:

‘A Neoliberal Party’ is in government. ‘Blue Sky Industries’, however, has been donating millions of rands to the ‘Socialist Party’, the opposition, because its founders and directors agree with the socialist ideology. Blue Sky Industries’ main business is to produce a certain good for which they require an operating licence issued by the Director-General of Industry, a Neoliberal Party member. The Director-General has the discretion to revoke, or not renew, a licence if he believes this to be “in the public interest”. With the funding of political parties no longer anonymous, what are the chances that Blue Sky Industries will continue funding the Socialist Party, knowing that the Director-General of Industry, a person on whom the company is completely dependent for an operating licence, is a diehard Neoliberal Party member?

The problem, in principle, is not that political party funding should be transparent, as surely it must be. In vibrant democracies, such as the United States of America, businesspeople are often open about which political party they support, and indeed transparent funding is mandated by law. The problem is excessive discretionary powers being vested in government and, thereby, opening a door to all kinds of corruption and abuse. This is unfortunately a problem not shared between the United States and South Africa, and why mandatory funding transparency could prove disastrous in the latter, but not the former.

This is not a problem confined to the current ruling party. The same would apply if any other party were in power. The problem lies squarely with Parliament’s compulsive disregard for the Rule of Law and its penchant for bestowing excessive discretionary powers on officials and politicians.
With funding of political parties now mandatorily required to be transparent, parties that may be in opposition to government will have a tougher time securing funds. Companies that depend on some kind of government licence, permit, or contract are likely to be more circumspect when choosing where to spend their money.

Before we seek transparency from private funders of political parties, we need to insist on strict adherence to the Rule of Law from Parliament. Without it, democracy in South Africa is in grave danger.

Martin van Staden is Legal Researcher at the Free Market Foundation