1. POLITICAL PARTY FUNDING BILL Presentation to Ad Hoc Committee on the Funding of Political Parties (NCOP)
Date:

2. Outline of presentation
High level overview of the Bill
Process in the National Assembly
Clause by clause summary of the Bill
IEC and Treasury Presentation and Responses

3. High level overview
Section 236 of the Constitution requires national legislation to enhance multi party democracy by funding
political parties participating in national and provincial legislatures
on an equitable and proportional basis.
The current Public Funding of Represented Political Parties Act 103 of 1997 gives effect to section 236
established the Represented Political Party Fund
IEC administers the Represented Political Party Fund
allocation to represented political parties: 90% proportional and 10% equitable

4. High level overview Two Funds Administration of the Funds
Bill retains the existing Represented Political Party Fund which is funded from public money.
Bill establishes a new fund, the Multi-Party Democracy Fund which is to funded from private sources
Administration of the Funds
IEC to administer the Funds
Most of the provisions regulating the Funds is drawn from the Public Funding of Represented Political Parties Act.

5. High level overview
Bill regulates direct private donations to political parties.
It prohibits donations from
foreign governments and foreign persons
except in respect of donations for the purpose of training, skills or policy development
state owned enterprises
organs of state
proceeds of crime
It places a cap on how much any person or entity can donate in a year.
It prohibits donations made to a member of a party, except if the donation is for political party purpose and accepted on behalf of the party.

6. High level overview
Bill requires the disclosure of all donations above a prescribed threshold to the IEC by-
the political party
the donor
The IEC must publish the donations disclosed to it on a quarterly basis.
The Bill states that these disclosure requirements do not detract from the right to access to information under the PAIA.

7. High level overview Duties of political parties Enforcement
The Bill imposes accounting and reporting obligations.
The Bill provides for unspent money from the Funds at the end of the financial year and if a legislature is dissolved or its terms expired.
Enforcement
The Bill gives the IEC monitoring and inspection powers and powers to suspend payments of money and recover money irregularly received or spent.
The Bill gives the Electoral Court the power to review decisions of the IEC and to impose administrative fines.

8. Process in the National Assembly
Public funding for political parties represented in national and provincial legislatures is provided through the Public Funding of Represented Political Parties Act.
On 6 May 2017 the National Assembly resolved to establish an ad hoc committee to inter alia enquire into and make recommendations on funding of political parties in national and provincial legislatures.
There was an extensive public participation process during which many of the current organisations now making submissions made submissions under that process.
On 27 March 2018 the Political Party Funding Bill was passed by the National Assembly and transmitted to the National Council of Provinces for concurrence.

9. Interpretation and Funds
Chapter 1 (Interpretation)
Consists of the definitions of the Bill (cl. 1)
Chapter 2 (Funds)
Establishment of the Represented Political Party Fund (cl.2)
This is the existing fund.
Publicly funded by money appropriated by Parliament.
Establishment of the Multi-Party Democracy Fund (cl.3)
This is a new fund
To be funded by private sources.
How money in the Funds must be invested (cl.4)
Management and administration of the Funds (cl.5)

10. Funds continued Chapter 2 (Funds)
The allocation and payment of money to represented political parties (cl.6)
Section 236 of the Constitution requires that the allocation must be proportional and equitable.
The formula prescribed in the Regulation has been changed from 90/10 to two thirds proportional/one third equitable.
The purposes for which the money from the Funds may be used (cl.7)
The purposes are the same as in the current Act.

11. Direct Funding Chapter 3 (Direct Funding of Political Parties)
Prohibited donations (cl.8)
Meanings of “donations” and “political party” (contained in cl.1)
Foreign governments and agencies
Foreign persons
Organs of state
State owned enterprises.
Proceeds of crime
Donations above a prescribed amount (R5 million)

12. Direct Funding continued
Chapter 3 (Direct Funding of Political Parties)
Disclosure of donations to political parties (cl.9)
All donations above the prescribed threshold to be disclosed to the IEC.
Threshold = R
Prohibition on donations to a member of a political party (cl.10)
Members cannot accept donations, unless its on behalf of a political party and for a party political purpose.

13. Duties of political parties
Chapter 4 (Duties of Political Parties)
Political parties to furnish information to the IEC (cl.11)
How political parties must account for its income (cl.12)
establish bank accounts
keep financial books
submit financial statements to appointed auditors
auditors to express opinion on compliance with the Act
submit financial statements and opinion to the IEC annually
How political parties deal with unspent money at the end of a financial year (cl.13)

14. Enforcement Chapter 5 (Enforcement)
IEC’s monitoring and inspection powers (cl.14)
IEC’s power to issue directions (cl.15)
Power to suspend payment of money to political parties (cl.16)
Failure to comply with the Act
Power to recover money irregularly accepted and spent (cl.17)
Administrative fines (cl.18)
Offences and penalties (cl.19)
Reviews and appeals (cl.20)
Goes to the Electoral Court

15. General provisions Chapter 6 (General Provisions)
Administration of the Funds within the IEC (cl.21)
Separate unit created within the IEC to perform this function.
IEC reporting to Parliament (cl.22)
Funding of represented political parties by legislatures (cl.23)
This clause sets out the only permissible legislative source of public funding for political parties.

16. General provisions continued
Regulations (cl.24)
Made by the President on recommendation of a committee of Parliament: dealing with the prescribed formula and all prescribed amounts.
Made by the IEC: administrative regulations
Repeal and transitional provisions (cl.25)
Repeals the Public Funding of Represented Political Parties Act
Short title (cl.26)
Caters for a phased-in approach as per section 13(3) of the Interpretation Act

17. Schedules 1 and 2 Schedule 1
Maximum permissible fines that the IEC may impose for contravening the Act.
Schedule 2
Contains the substituted set of Regulations.
Only the formula and the prescribed amounts have changed.

18. IEC concerns
Need to separate out its electoral functions from its functions under the Bill
clause 21(1) of the Bill permits the IEC to establish a separate unit within the IEC to perform its functions under the Bill.
Need to apply a phased approach in bringing the Bill into effect
The Short title is drafted in line with section 13(3) of the Interpretation Act, which permits the President to bring different sections of the Act into force at different times.

19. National Treasury concerns
Interface with the PFMA
PFMA applies to the IEC and accordingly its administration of the Funds is regulated by the PFMA
Interface with PAIA
Clause 9(4) of the Bill clearly states that nothing in the section on disclosure of donations in clause 9 detracts from rights given effect to by PAIA
Provincial legislation funding political parties
Constitutional Court has held that this legislation is unconstitutional and invalid
Clause 23(1) of the Bill specifically prohibits national and provincial legislatures from funding represented political parties other than through sections 57(2) and 116(2) of the Constitution, this Bill and the FMPPLA.

20. National Treasury concerns continued
Bill does not provide for smaller parties at local sphere
Section 236 of the Constitution requires funding for represented parties participating at national and provincial legislatures
The Represented Political Parties Fund gives effect to section 236
While the Multi-Party Democracy Fund can be extended to political parties at local municipal level, the Ad Hoc committee in the NA considered that before expanding this Fund’s jurisdiction, the willingness of the private sector to contribute to the Fund should be tested first

21. THE END