South Africa’s New Party Financing Laws Have a Major Flaw

New party financing laws in South Africa are welcome, in the wake of blatant state capture under President Zuma. But University of Sussex PhD researcher Albertus Schoeman argues that they fail to address two issues that are key to understanding South African politics: intra-party contests and patronage.

In January 2019, South Africa finally passed its Political Party Funding Act (2018) after waiting almost a year for President Ramaphosa’s signature. Conveniently, this ensured that the law would not come into effect before the May election. Meanwhile, a second bill that will supplement the law and compel parties to regularly publish records of party donations is under review. The hope is that the necessary capacity and systems will at least be in place for the 2021 local election.

Together the laws will require political parties to maintain and publish records of party donations exceeding R100,000 (£5,200) and will limit single donations to R15 million (£782,000) in a given year. They also prevent parties from accepting donations from foreign governments or agencies other than for training and policy research purposes and from accepting “a donation that it [the party] knows or ought reasonably to have known, or suspected, originates from the proceeds of crime”.

The laws are a welcome development for a country that has long struggled with corruption and is currently investigating “state capture” under the blatantly corrupt leadership of former President Zuma. He and several members of his administration stand accused of selling their influence and handing out government contracts in exchange for kickbacks. The laws are long overdue, but while this is a step in the right direction, they still have several limitations.

For instance, donors can circumvent the law and avoid reporting donations by giving multiple amounts under the R100,000 mark by donating through “straw donors” such as family members, employees or shell companies to obscure the source. Equally, there are concerns over whether the Election Commission of South Africa (IEC) will have sufficient capacity to effectively monitor compliance with the law and punish infractions, since this represents a major expansion of their current function.

While these limitations are concerning, a far more serious flaw lies in the laws’ failure to regulate internal party elections.

In a system where the African National Congress (ANC) has dominated every election since 1994, internal party dynamics are just as important as contests between parties and internal party contests also involve high levels of spending. While it is difficult to estimate how much parties spent in the 2019 election owing to the lack of transparency, some have estimated it to be as high as R2 billion (£103 million) with the ANC spending an estimated R1 billion (£52 million).

By comparison, President Cyril Ramaphosa’s campaign allegedly spent over an estimated R400 million (£21 million) to secure his position as president of the party, and consequently president of South Africa. Reports indicate that his main opponent spent just as much and possibly more.

More concerning still, is that this figure is known only because of leaked emails between Ramaphosa and his campaign manager which came out after the Public Protector (state ombudsman) investigated a claim that Ramaphosa misled parliament by denying knowledge of a donation by the former CEO of Bosasa – one of companies at the centre of investigations into state capture. While there’s no evidence of wrongdoing or illegality in the campaign, some of the revelations have raised important questions around the influence of money in South African politics and called into question the integrity of a president who campaigned on an anti-corruption platform.

Other than the campaign’s links to the corruption-accused Bosasa, one leaked email includes the name of a shipping tycoon linked to the notoriously corrupt arms deal for which former President Zuma is standing trial. Further, there have been suggestions that some party activists who supported his campaign were rewarded with cabinet positions while some donors were allegedly rewarded with positions in state-owned enterprises.

Questions also swirl around the issue of vote-buying, with one of the campaign’s biggest expenditure items logged as back payments of membership dues – necessary for ANC members to vote at the party conference. Perhaps the strangest story to emerge is that about campaign payments made to two parliamentarians who are members of the opposition Economic Freedom Fighters; these have yet to be adequately explained.

Although none of this is necessarily illegal, the lack of transparency around campaign donations and spending means that there is no way of limiting the influence of money in politics and ensuring that no illegality takes place. These types of intraparty contests take place on all levels of government and often, winning a party leadership position comes with a government position. The new laws are unlikely to stop corruption or to break the link between campaign support and the allocation of key government jobs, which come with power to influence the distribution of tenders. Regulating donations to political parties is somewhat irrelevant when senior positions in the ruling party and government are decided by intraparty contests outside the scrutiny of these laws.

Until internal party elections are regulated in the same way as contests between parties, political financing will continue to lack transparency and represent a major corruption risk. As it stands, the contest for the highest office in the country remains largely unregulated.

How corrupt are politicians?

The word ‘corruption’ is being frequently used in US political exchanges at present, and in the UK Jeremy Corbyn has taken this as a theme of his general election campaign. Is that because politics is more corrupt, or is the term simply being used more by politicians? Robert Barrington, Professor of Anti-Corruption Practice at the Centre for the Study of Corruption, argues that over-use of the word risks de-basing the currency and opening the door to greater corruption – which reinforces the urgent need to improve defences against political corruption.

“Let me tell you, I’m only interested in corruption,” Trump said. “I don’t care about politics. I don’t care about Biden’s politics…. I don’t care about politics. But I do care about corruption, and this whole thing is about corruption… This is about corruption, and this is not about politics.”

President Trump has taken to describing his enemies as ‘corrupt’ – notably presidential hopeful Joe Biden and his son, but more recently ‘corrupt politician Shifty Adam Schiff.’ Meanwhile, Mr Biden says ‘Donald Trump has presided over the most corrupt administration in modern history’ .

Former candidate Hilary Clinton now describes Trump as a “corrupt human tornado”; and not long ago, he was saying she “may be the most corrupt person ever to seek the presidency.” During Mr Trump’s time in office, a variety of others have been called corrupt, and fire back with the same accusation. We should also remember that he campaigned on a promise to “drain the swamp” with all the unspoken implications that carries about years of unethical behaviour in Washington, which clearly resonated with the electorate.

This is not new. For years, politicians across the world have been accusing each other of being corrupt, often with good cause. But in the US, it seems there are two things happening in tandem: the more frequent use of the term ‘corrupt’ as an allegation, and a genuine debate about whether there is more ‘corruption’ in politics, or people are acting more ‘corruptly’ – not just the existing ‘swamp’ that Mr Trump had previously identified, but an additional layer of corruption introduced through the addition of his own Presidency.

In the UK, by contrast to what is happening in the US, corruption has – to date – seldom been an accusation from one mainstream national politician to another.

But although not yet mainstream, the notion of corruption is also seeping into the British political discourse. Twitter is awash with voices calling Boris Johnson and members of his cabinet like Priti Patel corrupt, and many others besides. Most significantly, Jeremy Corbyn has taken the notion of a ‘corrupt system’ – in which he includes the ‘establishment elite’ – as a centrepiece of his general election campaign.

Towards the political fringes in the UK, it has been common for both the distant left and the distant right to describe the establishment as corrupt; and there is plenty of comment on social media criticising, for example, Mr Farage’s approach to parliamentary expenses, personal financial gain from Brexit and running election campaigns as corrupt. But to have senior mainstream politicians describing each other as personally corrupt is a line that has yet to be crossed.

The Prime Minister is, however, now regularly accused by critics of lying, something that itself would have been almost unthinkable only a few years ago – a line that was effectively crossed in the Brexit campaign. They claim Mr Johnson is not just being misleading or economical with the truth, but an out and out liar. In fact, a ‘reckless liar’ according to the Shadow Foreign Secretary, more kindly described by his predecessor David Cameron as ‘leaving the truth at home.’ Lying is not the same as corruption. But they have things in common: not least, that when senior politicians push out the boundaries of a system that pre-supposes politicians will not lie or act corruptly, we see that the institutional defences against such behaviour are much weaker than we might have hoped.

Does it matter? In one sense, using the word corruption might be just like any other political insult, and may just be written off as part of the rough and tumble of political life, a new insult that can be co-opted while it still has the power to shock. In another sense, it may have some deeper ramifications. Here are three observations:

1. Still a big insult. Calling someone or something corrupt seems to be about the worst thing you can say – it has echoes of a very basic meaning, the idea of a rotting carcass. Definitely a step further than ‘crooked’, another favoured Trump epithet. It is not simply accusing someone of breaking the law (or lying) – as corruption research often tells us, a lot of corruption, particularly in politics, is surprisingly legal. There is something about using the word corruption which seems to give the message ‘it is self-evidently wrong such that I don’t need to elaborate further.’ In a wider sense, that has echoes of the UN Convention Against Corruption (UNCAC); although widely denounced as having been ineffective in practice, UNCAC has 140 State signatories all signing up to the principle that corruption is a bad thing. There is global consensus on this. So when one politician calls another ‘corrupt’ they are in effect accusing them of violating a global norm, as well as being a rotting carcass and possibly acting illegally. That’s quite a satisfying amount of accusation packed into a single word.

2. Debasing the currency. Precisely because ‘corrupt’ is still a big insult, it is tempting to use it. Inevitably, the more and the more loosely the word is used, the less powerful it becomes. This risks debasing the currency in a way that opens to door for more people to behave more corruptly in reality. Here’s how that would work: if the electorate comes to believe that all those standing for election are loosely corrupt, because they all accuse each other of being so, voters might as well disregard the corruption factor and vote for a candidate on other grounds such as economic competence. That seems to have happened already in some countries, such as Brazil and (potentially) the US. The consequence of de-basing the power of the word ‘corrupt’ may therefore be that it leads people to disregard corrupt behaviour in making electoral choices. Assuming a fear of being labelled corrupt has a deterrent effect, this normalisation of the concept that all politicians are more or less corrupt thus removes a key deterrent within a system that relies to large degree on established norms and personal integrity.

3. Perhaps politics has actually become more corrupt. Alongside the greater frequency of allegations is the possibility that there is also more corrupt behaviour. There is a genuine question over whether President Trump’s is ‘the most corrupt administration in modern history.’ For those who are interested, the Global Anti-Corruption Blog from Harvard University has been tracking this; and closer to home, Prof Dan Hough of the Centre for the Study of Corruption (CSC) has an analysis of ‘The Winter White House’. The accusations about Mr Trump are not just that he is corrupt himself – but that he has also corrupted the system around him by introducing other figures who are themselves either corrupt or happy to defend and facilitate his own approach – an approach generically described by Harvard professor Lawrence Lessig as ‘institutional corruption.’ In the UK, this territory is so far more contested: while Mr Corbyn describes the UK as having a ‘corrupt system’, his predecessor Tony Blair responds ‘I can take you to countries whose systems are corrupt. Ours isn’t.’ In the UK, we might be seeing the forerunners of corruption seeping into our political system, and not just into the discourse. This is perhaps not as blatantly as in the Trump administration, but certainly a number of political conventions, or norms, are being broken left, right and centre, and behaviour that even recently would have been cause for censure or resignation is now being overlooked or rigorously defended by those who are prepared to support it in the cause of a greater (usually Brexit-related) goal.

There are therefore two things going on here at the same time:
1. Political discourse uses the term corruption a lot more. This has implications, regardless of whether it is reflective of more actual corruption.

2. Politics may also in reality be becoming more corrupt; politicians are certainly flouting established norms and unwritten rules a great deal, and this trend seems to be happening around the world.

What should be done? In the US, we can see that the system of checks and balances to abuse of power is under severe strain. By one interpretation, Mr Trump is operating within the rules and not doing anything that others have not done. Another interpretation is that he is exploiting every loophole to the limit, stretching an already vulnerable system to breaking point, and skirting the edges of the law all along the way: mostly for personal benefit and not to serve the public interest.

Looking at the US makes it all the more concerning that the UK’s own national Anti-Corruption Strategy makes hardly any mention of political corruption. Perhaps what seemed less obvious when the Strategy was written a couple of years ago has now become rather more pressing. For example, a recent blog from CSC’s Director Prof Liz David-Barrett highlights the urgent need for the UK to revise its approach to conflicts of interest.

The conclusion is simple. Many trends in the US come to the UK, and it looks like this one will too. At minimum, this means getting used to seeing lots more allegations of corruption amongst senior politicians, and being prepared to work out the difference between allegation and reality. At worst, it means that lots more individuals who are elected to public office will feel able to act more corruptly. Democracy may take this course: yet we can prevent the abuse becoming too damaging by making sure there are some robust defences. At present, as in the US, the UK’s defences are too weak. If they are not strengthened soon, we may have missed the boat.

Strengthening electoral accountability is crucial in tackling corruption in the Western Balkans

In another take on flawed electoral accountability, Albana Shehaj (Postdoctoral Researcher at the Center for European Studies at Harvard University) argues that corrupt politicians are too easily able to use state resources to buy off voters. We should focus our efforts on constraining their ability to strategically allocate the spoils of corrupt office.

Tirana, Albania’s capital. Credits: Vladimir Tkalčić (CC BY-NC-ND 2.0)

Corruption has been a tenacious staple in the post-communist transition of the Balkan states and remains a grave threat to the region’s democratic consolidation. Corruption is substantial, frequent, and pervasive across the Western Balkan states of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia, with Transparency International Corruption Perceptions Index 2018 (CPI) scores ranging from 36 in Albania and North Macedonia (out of 100, where 0 is most corrupt and 100 least) to Serbia’s 39. That is considerably lower than Western Europe’s average CPI score of 66 and below the world’s average score of 43.

Whether presenting itself in the form of bribery, clientelism, embezzlement, or organized crime, corruption has consistently maintained its presence in the Western Balkans and increasingly permeated the very institutions established to control it, including law enforcement, the judiciary, legislature, and the presidency (Transparency International). In the case of Albania, the involvement of former Interior Minister Saimir Tahiri in a drug-trafficking network operating on both sides of the Albanian-Italian border points to the extent to which corruption permeates the country’s highest political and administrative structures. Albania’s current President, Ilir Meta also shares a political past marked by several allegations of official misconduct.

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The chronic vulnerability of the Western Balkans makes the region a key target for human trafficking

Human trafficking by local and international criminal syndicates came to the Balkans during the wars in Bosnia and Herzegovina, Croatia and Kosovo during the 1990s. Tanya Domi (Adjunct Professor of International and Public Affairs at Columbia University) argues that an integrated approach is necessary to curb criminal activity and mitigate harm to migrants as they find their way to a new life.

One of the most notorious human trafficking cases in the Balkans involved a sex trafficking ring in Bosnia and Herzegovina (BiH) that was covered up by the leadership of the UN Mission. In 2001, an American police monitor serving in the UN Mission blew the whistle on a group of Americans serving in the International Practices Task Force (IPTF) Mission: she was summarily terminated for reporting the crime.

I broke this story and approached Bosnian newspaper Oslobođenje, the longest operating daily newspaper in BiH, which agreed to publish it. The horrible irony of these crimes was underlined by the fact that they occurred in Bosnia, where women bore the brunt of a brutal war that known for the mass rape of Bosniak women as a tool of ‘ethnic cleansing.’

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North Macedonia’s experience in trying to dismantle state capture: policy must be backed by research

Writing about North Macedonia’s experience in addressing pervasive grand corruption as exposed by leaked tapes in 2015, Misha Popovikj (Institute for Democracy Societas Civilis, Skopje) argues that efforts to dismantle state capture should be preceded by a thorough diagnosis of the problems.

Protesters in Skopje, April 2016. The demonstrations over widespread corruption eventually led to the fall of VMRO-DPMNE’s decade-long rule. Credits: Vanco Dzambaski (CC BY-NC-SA 2.0)

Back in 2015, European Commission adviser Reinhard Priebe and his team of rule of law experts arrived in North Macedonia amidst a political crisis. That same year, the Macedonian political opposition had revealed audio recordings carried out illegally by the secret police, and uncovered mass corruption and abuse of office. Priebe’s task was to provide the European Union with a quick assessment and recommendations on urgent reform priorities in relevant areas – corruption in the judiciary, politicised administration, media clientelism, and the uneven playing field in electoral competition.

In June 2015, he delivered a document that set future benchmarks for assessing the readiness of the country to start the EU accession process. Shortly afterwards, a group of NGOs begun transforming these recommendations into specific reforms. The idea was to set a ‘Blueprint‘ – a guide of sequenced changes achievable within 12 months. The Social Democrats, then in opposition, vowed to include these recommendations in their reforms should they win a majority in the 2016 elections.

Widespread aspirations to join the EU provided leverage to these proposals. Priebe’s recommendations were, in essence, new conditions set by the European Commission for accession. The Blueprint reforms were backed by foreign embassies in the country.

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In Kosovo, journalists and civil society beat organised crime by getting more organised

Recent elections in Kosovo saw the opposition defeat long-standing incumbents, electing a new generation with fresh talent and integrity. Jeta Xharra (Balkan Investigative Reporting Network) explains the role that civil society played in making it happen.

Vetëvendosje (LV), winners of the biggest share of votes at Kosovo’s October 2019 election (balkaneu.com).

It is a rare moment in the recent history of Kosovo that I can report that the narrative of civil society, investigative journalists and anti-corruption activists has won, against the narrative of those who we exposed.

Usually we tell our story, we probe, reveal, prove, document, publish, broadcast, file complaints, and we get read, seen, talked about, commented on. But there it ends. It is rare that our anti-corruption narrative becomes mainstream and brings about change.

This is because the opposing narrative, that of the state, has a bigger budget, more power, more police, more prosecutors, more judges, more spin-doctors on their side and more paid ‘journalists’ who toe their line. And the state usually plays the nationalist card to further capture the public imagination.

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Can the European Union tackle corruption and state capture?

While the EU is far from a silver bullet, Dimitar Bechev argues that it is still a badly-needed ally in strengthening the rule of law in the Balkans. But for enlargement to make good on its original promise, the EU should take a robust stance and call out egregious cases of corruption. 

European Union Balloons, by Jonatan Svensson Glad (CC BY-SA 2.0)

When it set to enlarge in the 1990s, the EU brought forward three promises to Eastern Europe. First, delivering prosperity which would narrow the gap with the advanced countries in the West. Second, cementing peace and stability in a historically volatile part of the Old Continent at a time when Yugoslavia went down in flames. Third, Europe was all about good governance and the rule of law. Post-communist societies needed external help and encouragement to consolidate independent judiciaries, establish robust anti-corruption agencies, depoliticize and upgrade the civil service, foster a vibrant NGO scene and media capable of holding the powers to be to account.

When the EU enlarged in 2004, the prevailing sentiment was that this third goal had been fulfilled. Central Europe (Slovenia included) and the Baltics met all the benchmarks. Romania and Bulgaria, on the other hand, were an entirely different kettle of fish. While they did make it into the Union in 2007, the accession treaties empowered the European Commission to monitor judicial reforms and issue regular reports, as during the pre-accession period. The so-called Cooperation and Verification Mechanism (CVM) meant to give the EU leverage to take care of “unfinished business”.

In parallel, lessons learned from the Romanian and Bulgarian case fed into the design of accession negotiations with the Western Balkans: Croatia and, later on, Montenegro and Serbia. The much-discussed Chapters 23 and 24 (addressing the judiciary and the rule of law) offered a means to maximize pressure on governments to meet EU-set benchmarks in rooting out corruption in high places, not a trivial goal given the difficult legacy bearing on former Yugoslav republics as well as on Albania.

What has happened in the 15-odd years since? The record is at best chequered. The former star pupils have turned into the EU’s worst headache. Back in the day, one could simply write off Bulgaria or Romania as the outliers. But when Hungary and Poland have become textbook examples of state capture through dismantling the very checks and balances that make democracy worthy of its name and ensure transparency and accountability of decision making, it is painfully clear that the vision of Europeanization is in dire straits.

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