How campaign funds are regulated

Dear Corruption Watch, As we head into national elections, I would like to know how public money allocated to political party funding is accounted for. Is it subject to the auditor-general’s scrutiny in the same way as all public funds are? And is there a requirement for the books of a political party to be audited and for that audit to be made public? — Voter Dear Voter The integrity and merit of some campaigns is something many South Africans are concerned about. There are laws and regulations designed to guarantee that public money used to fund political campaigns is well accounted for.

To ensure accountability, parliament enacted the Public Funding of Represented Political Parties Act in 1997 to regulate and monitor the use of public funds by political parties. It authorises a party to use the funds for any purpose compatible with its functioning as a political party in a modern democracy.

The Constitutional Matters Amendment Act 15 of 2005 set up the Represented Political Parties Fund to provide this funding to parties. The Independent Electoral Commission administers the fund.

Regulations allow the IEC to allocate money to parties according to a formula that takes into account the proportion of members a party has in the National Assembly and provincial legislatures. Ninety percent of the fund is allocated in this manner; the remaining 10% is divided among the provinces in proportion to the number of seats each party holds at provincial level. The ANC, as the ruling party, has the largest number of seats and therefore receives the bulk of the money.

To limit the misuse of funds, the act prohibits funding for any unauthorised purpose, such as establishing a private business or providing income to anyone in parliament or in office in government.

To hold political parties accountable for the monies allocated to them, they are required to deposit all receipts from the fund in a special bank account, at the same time identifying a party official or office bearer as the accounting officer for that account. The accounting officer is responsible for ensuring that the party complies with the act; keeps separate books of accounts for each financial year; prepares a financial statement within two months after the end of the financial year; and sees to it that the books and statements are audited by a qualified auditor and the auditor’s report is submitted to the IEC within three months after the end of the financial year.

The auditor’s report must express an opinion on whether or not the funds were all used for authorised purposes.

The auditor-general may audit the party’s books, records of accounts and financial statements in relation to the funds. The IEC is also empowered to appoint auditors to review the party’s books, account records and financial statements, and may suspend the allocation of funds for any noncompliance with the act, reinstituting them only when satisfied there will be future compliance.

In all, R92.9-million was allocated to parties for the 2009 elections. This has increased to R114.8-million for the 2014 elections, although parties receive similar allocations from parliament every year and not just during elections.

Several readers have queried the issue of private funding, which is almost entirely unregulated and will be the subject of future columns.