Crucial ruling on intra-party disclosures
Concourt gives Ramaphosa a year to redraft the executive ethics code concerning donations
The constitutional court on Tuesday confirmed a high court ruling holding that the executive code of ethics is unconstitutional in that it does not compel members of the executive to disclose donations made to campaigns for positions within political parties.
In a unanimous judgment, which began by noting “politics and money make disquieting bedfellows”, the court found the code falls short of the constitutional and statutory dictates of accountability and openness.
“The exclusion from disclosure of donations for internal party elections undermines the Ethics Act and the conflict of interest regime essential to promote transparency and to deal with the pervasive corruption bedevilling us,” the court found.
The order has prospective application and was suspended for 12 months to allow President Cyril Ramaphoasa to remedy the defect.
In its current form, the code obliges members of the executive to disclose donations from which they derived a “personal benefit”. The court agreed with the applicant, the Amabhungane Centre for Investigative Journalism, that this allowed politicians to contrive funding to flow to them in such a manner that they need not declare it.
“On that approach, the disclosure obligation can be easily evaded by the member of the executive through the setting up of a separate legal entity to collect donations to support the campaign, and by an armslength relationship with that entity by ensuring that they exercise no control over the funds and do not receive it directly. This would plainly undermine the constitutional and statutory obligations outlined.”
The need for transparency must be understood, the court added, in a political context where the need to combat corruption was urgent.
The constitutional challenge was brought by Amabhungane when it applied to intervene in the review battle around the report of the public protector on donations to Ramaphosa’s CR17 campaign for the presidency of the ANC, with the apex court noting that the matter followed a “circuitous” route.
Ramaphosa prevailed in the review litigation. The high court found that there was no obligation on him, as the code stands, to disclose donations to the campaign because there was no evidence he derived “personal benefit” from the funding. It set aside now-suspended public protector Busisiwe Mkhwebane’s finding that he had misled parliament.
The court held that Amabhungane’s challenge was compelling but dismissed it as not having been properly raised. The apex court disagreed and sent it back for the merits of the attack on the code to be considered.
It did so while dismissing Mkhwebane’s appeal, and Tuesday’s ruling penned by justice Steven Majiedt stressed it was not in conflict with the outcome of the review rulings and could not fault the reasoning of the high court when it concluded that disclosure had hinged on personal benefit derived.
Amabhungane had argued that “personal benefit” was an impermissibly vague determinant of when the need to disclose arose.
Advocate Wim Trengove, appearing for the president, had countered in the high court: “We all know what a benefit means. The fact that the application of the rule might be complicated does not make it vague.”
But the court rejected this, finding in December that there was no clarity as to how a “personal benefit” could be defined, save for the obvious instance where the money is given directly to the politician in question, or placed at his or her disposal.
The apex court noted that section 6(4) of the code imposed a narrower obligation in the form of “benefit of a material nature” than the Ethics Act did in section 2(2)(c) where it speaks of “any financial interest”, and that the difference could be neatly illustrated by the CR17 campaign.
Given the way the campaign was structured, the court said, it could hardly be counted as a benefit of a material nature to the president.
Once a campaign for a party position is launched with the backing of the candidate in question, he or she agrees to benefit from funding to that campaign, and hence a financial interest arises.
“It matters not that the office holder’s funding campaign is run through a separate entity and is not controlled by the office holder or that the office holder is ignorant of the identity of those who have given, so long as the benefit is accepted, it is a financial interest that is subject to disclosure.”
The partial obligation to disclose was not sufficient to meet statutory or constitutional requirements.
The apex court accepted the argument by counsel for Amabhungane
The constitutional challenge was brought by Amabhungane over the report of donations to Cyril Ramaphosa’s CR17 campaign
that the standard for transparency on political funding set in its My Vote Counts judgment should be brought to bear on the code to curb the influence funders could exercise over office bearers.
In the 2018 judgment, the court said that allowing leeway in disclosing funding to political parties undermined the right to free political expression through voting.
“This court held that the right to access to information, read with the entitlement to exercise an informed right to vote, implicitly demanded that information on the private funding of political parties and independent candidates be recorded and made reasonably accessible to the public,” Majiedt wrote.
“As I read My Vote Counts II, this court plainly established the constitutional standard of transparency. It appears to me that ‘any financial interest’ must be interpreted broadly to include all donations.”
The real questions were: who was the source of the funding, and who benefited from it, personally or otherwise.
The court placed the obligation to amend the code accordingly on the president.
Ramaphosa did not oppose the constitutional court application for confirmation, but as the respondent he was ordered to pay the costs in line with the principle that costs follow the outcome.