Funding parties - A necessary evil

David Welsh writes amid the cacophany over Harksen.

Even a casual glance at the causes of political scandals in the established democracies of the developed world shows that the great majority ensue from donations to parties or to individual politicians. South Africans know that only too well from the row over allegations that fugitive German financier Jürgen Harksen donated substantial sums of money to the Democratic Alliance.

Think back, in a broader context, to the controversy that shrouded German Chancellor Helmut Kohl, the open questions still surrounding President Jacques Chirac of France, some dubious gifts that have dogged even the squeaky-clean Tony Blair of Britain, and, most recently, donations by Enron board members and executives to political parties in the USA. Sex scandals, though far more titillating, are badly beaten into second place.

There are difficult issues to decide in regulating party funding. Clearly, fighting an election is expensive, and parties in all democratic states are virtually obliged to raise money from private sources, even if the state does contribute.

The problem is that donors, whether corporate or individual, do not make these contributions out of the goodness of their hearts or for reasons of political idealism. They expect a return; and returns can take several forms: favourable consideration of any industry's needs or special concerns or, conversely, a hope that a donation will serve as a kind of insurance policy against harsh, even discriminatory, treatment.

Particularly in the USA, there is a long tradition of wealthy donors being rewarded with ambassadorships, posts in the administration, or other grace-and-favour positions. In the UK large donations were traditionally the royal road to peerages, knighthoods and other democrations. No other British prime minister in the last century managed to do such a roaring trade in ennoblements as Lloyd George - but, in fairness to the British, the practice of peerages-for-sale has been substantially cleaned up.

There is clearly a strong prima facie case for strict supervision and regulation of all forms of political donation. The problem is how to do so. As the American experience of seeking to limit the size of donations shows, the problems of enforcement are great, and wily operators have been able to find their way around controls with relative ease. Whether recent legislation, initiated after tireless efforts by Senator John McCain, will prove any more effective remains to be seen.

In South Africa there are no restrictions on raising funds for parties from private sources, domestic or foreign. Apart from such private funding, the Public Funding of Represented Political Parties Act of 1997 makes provision for the funding of parties on a basis that is proportional to the size of their representation. In a single-party dominant system such as is emerging here, obviously the lion's share of state support goes to the ANC.

At first glance proportionality appears the most equitable way of distributing the funds. But there are two serious problems: first, it consolidates the main recipient's hold on its majority, enabling it substantially to outspend potential challengers; secondly, state funding makes no allowance for what parties can raise from private sources which may be, and invariably is, substantially greater than anything the state can provide. It may be impossible (and undesirable even to attempt) to provide level playing fields for electoral contestants, but huge inequalities in the amounts available are surely undesirable.

Take the case of the ANC: in her book The Anatomy of a Miracle Patti Waldmeir records that prior to the 1994 election Nelson Mandela solicited R1 million from each of South Africa's 20 biggest corporations, 19 of whom complied. No doubt most deemed it prudent to succumb to Madiba's persuasiveness. It is impossible to state categorically that this was the largest amount in corporate donations ever raised in our electoral history, but I suspect that it may have been.

Far more, however, has been raised by the ANC from foreign sources since 1993. According to the DA, in its response to allegations that Mr Gerald Morkel, the DA mayor of Cape Town, had received funding from a shady German financier, the ANC has received US$ 240 million and £8.6 million from foreign governments between 1993 and 1999. These generous benefactors include nasty dictators like Abacha, Gaddafi and Suharto, a dubious democrat in the form of Mahathir Mohamed of Malaysia and non-democrats (perhaps the most charitable description) like King Fahd of Saudi Arabia and Sheik Zaid bin Sultan anNahayan of the United Arab Emirates. Also on the list were two substantial tranches (in 1993 and 1994) paid by the Taiwanese government, clearly in a futile attempt to dissuade the ANC from reneging on Mandela's undertaking not to withdraw recognition from Taiwan.

The ANC has not audibly denied that these payments were made. The amount, DM 99 000, said to have been given to the DA by Jürgen Harksen, the German financier, is paltry in comparison. Mr Harksen may well be convicted of all manner of financial shenanigans both here and in Germany, but, one may be sure, he is not in Abacha's or Gadaffi's league as an abuser of human rights.

An interim enquiry set up by the DA has found no evidence of improper behaviour by Mr Morkel. But investigations continue. More significant at this stage is the DA's swift reaction to the alleged scandal immediately the allegations surfaced, upholding the most important principle in these matters: transparency.

The question of foreign donations is a tricky one. Does it invade a state's sovereignty, even if the government of that state is the beneficiary? Perhaps not, although it may suggest the donor's attempt to 'buy' a favourable foreign policy.

Attempts to ban all foreign funding, as the Nationalist government tried in the days of apartheid, are unlikely to succeed. Money is nowadays so mobile and so easily capable of being laundered that efforts to monitor inflows would almost certainly fail. But there ought to be a legal requirement, inserted into the Electoral Act, that all donations above a certain amount (R10 000, R20 000?), whether foreign or domestic, should be made public knowledge.

Transparency must be the aim; but it comes at a cost. What about the corporation or wealthy individual who would be embarrassed at being publicly named as a donor to a particular party? Shareholders, employees and clients might object; and if the donation went to a party other than the ruling one the corporation might reasonably fear that it would be disadvantaged in its dealings with government.

As the pessimists say, for every solution there is a problem. This problem poses an insoluble dilemma. But in a democracy surely transparency should trump other desiderata, such as privacy?

At all events, the question of funding has become a pressing one. Consideration ought to be given to a broad-based, non-partisan investigation of best practice in other democratic states.

The issue underlines the importance of a free press and hard-nosed investigative journalists. If parties are reluctant to part with the names of their donors, and transparency has yet to be required, it will be up to the press to dig out the information. In all of the scandals mentioned in the opening paragraph it was the press that played major roles in sniffing out the embarrassing information.