In a representative democratic system such as South Africa’s, the cardinal principles of public finance apply. Among these is the ‘… principle of responsibility and accountability of the elected political representatives to the taxpayers for the collection and spending of taxes and other income’ (Gildenhuys 1993:55). The funding of established political parties is also covered by such principles, which serve as the bedrock of public finance. More than three decades ago, it was argued that public finance rested on administrative efficiency, among others (Prest & Barr 1985:147). In other words, public income and expenditure require administrative efficiency to enable a system of government to function optimally, and this applies in the allocation of funds to institutions such as political parties. Thus, they are reasonably expected to account for the expenditure of the money allocated to them by Parlement by producing annual statements and reports that national and provincial legislatures and other interested and affected bodies could then subject to rigorous scrutiny; this should be no different from the requirements enforced on other public entities that receive such allocations from National Treasury.

However, recent published research on party funding suggests that political parties’ finances are not far from scandalous (Mataković & Petak 2015). According to Pinto-Duschinsky (2002:69), political party finances include ‘money to be spent on direct political purposes such as campaign expenses, costs of maintaining research, engaging in political education, voter registration and other functions’. Thus, in the past 5 years, the Electoral Commission of South Africa (IEC)’s allocations to all political parties represented in the National Assembly and provincial legislatures have been increasing both in response to inflation and proportionally, reflecting changes in the number of parties in Parlement.

Table 1 shows that the IEC has distributed from the public purse in excess of R575 million (1 US dollar is approximately equal to 15 SA rands) in the last 5 years. This is a significant sum, fully justifying demands that its recipients be subject to an annual audit as a way of improving accountability in the broader public sector. Of course, political parties are quick to champion the cause of transparency and good governance in the interest of democracy when someone else’s spending habits are being scrutinised. They are less keen to have their own finances subject to similar scrutiny. To emphasise the point: an audit should be done in all instances where funds are received or allocated from the public purse, as this would increase transparency and encourage public confidence in these institutions. It is also hoped that this disclosure and scrutiny of the way these public funds have been used may also encourage the parties to become more principled and ethical in their personal administration.

Agreeing with this view, Primo (2013) emphasises that political parties should reveal their funding sources and how they have spent their monies. Furthermore, the civil society group Right2Know Campaign (2015) argues that if political parties’ finances are not fully shown, this promotes the use of the ‘secret space’ between politicians and their financiers, which undermines democracy. In South Africa, the debate about who funds political parties has come to the fore because political parties have failed to reveal all the sources of their funds, encouraging Ellis (2000:52) to state that this culture of secrecy needs to be counteracted with the implementation of far more transparent systems. However, this is easier said than done, as the country never experienced a democratically reviewed public financial system before 1994. When the country finally adopted democratic systems in 1994, there was very little time for the newly legalised parties to familiarise themselves with the principles of accountability in a democracy, principles that underpin effective public financial administration. This probably accounts for some of the post-democracy controversy the country has encountered whenever the idea of regulating political party funding has been raised.

Robinson and Brummer (2006) stress that a lack of transparency in any government sector undermines the national government’s efforts to promote the implementation of sound governance principles; furthermore, it is fundamental to the South African systems of governance that any and all public organisations should be subject to public scrutiny. In a study conducted by Rowbottom (2016) investigating corruption, transparency and reputation, it was found that there is an increasing level of concern about political parties’ finances and the exercise of undue influence on them. Thus, the funding of political parties is a problem as this is beyond the jurisdiction of current regulations (Kotze 2004; Pinto-Duschinsky 2002). Of course, more specifically, the effective regulation of political funding might also uncover information that could compromise politicians’ credibility (Gilbert 2012). Thus, in compliance with regulation, political parties would be expected to regularly disclose and identify their sources of income and financial support received from legal (and illegal) dealings (Gilbert & Aiken 2015:153).

As numerous scholars have argued:

Such transparency is intricately linked to accountability. In a more specific sense, accountability requires organisations to disclose their financial statements and include all pertinent data (Li, Song & Zhang 2014). Although the South African political parties do not fully disclose their financial information (Maphunye 2017), Kahl and Belkaoui (1981) argue that disclosure serves as an important means of communication between the users of the funds and their suppliers or donors. The importance of financial disclosure is such that, in general, it is the one area that needs greater regulation (Potter 2015). Political party funding in South Africa is largely free of regulation, and globally some argue that mandatory disclosure is an appropriate form of regulation to shape the organisation’s financial reporting (Franke & Zhang 2016). Nevertheless, it remains only as a hope that mandatory disclosure might reduce corruption (Potter 2015). Whether this would be sufficient, however, is debatable and we need to tread with caution here, given relatively recent claims that ‘[m]any people believe that widespread political corruption exists in South Africa’ (Lodge 1998:157). Such claims were based on an earlier Institute for Democracy in South Africa (IDASA) Public Opinion Survey as well as figures from the World Value Survey. In the light of the more recent ‘state capture’ events, the situation has not apparently improved.

Full disclosure presupposes accountability and transparency, based on a widely shared code of ethics (Jordan et al. 2017). Disclosure increases efficiency (Leuz & Wysocki 2016), and it is essential to accountability as it reflects compromise-free adherence to the rules of governance (Nelson 2001).

According to Zhang (2015), full disclosure is arguably one of the most important institutional features that shapes accountability, while a policy of radical disclosure encourages transparency (Kasekende, Abuka & Sarr 2016). Full financial disclosure requires that all material information has to be disclosed in the financial statements (Ball, Jayaraman & Shivakumar 2012; Leuz & Wysocki 2016). In a study examining the value and relevance of International Financial Reporting Standards’ (IFRS) mandatory disclosure requirements, Tsalavoutas and Dionysiou (2014) found that mandatory full disclosure encourages more transparent financial reporting patterns. Further, Wehner and De Renzio (2013) found that there is a direct and significant relationship between budgetary disclosure and financial transparency. However, Berliner (2014) maintains that politicians have many reasons to resist transparency and this has been particularly evident in the South African political environment. A key reason is the probability or fact that some funders demand anonymity as they are directly linked to and/or are beneficiaries of government expenditure projects. It is thus ‘difficult’ for South African political parties to adopt and maintain policies that advocate financial and operational transparency. Similarly, as the country’s legislated requirements are somewhat deficient, and rarely enforced, opposition parties are also currently not obliged to reveal their sources of funding, and this calls into question as to their independence and objectivity.

Despite the widespread acceptance that political parties are autonomous organisations, exempt from running their affairs in accordance with the country’s legislated financial frameworks, there is nevertheless an enormous need for them to disclose their financial information. Notwithstanding the annual reviews produced by the country’s Electoral Commission on political party funding, individual parties’ disclosure of their financials is still viewed by many interested users of financial statements as being of great importance to transparency and accountability, and far more informative than the limited information disclosed in the IEC’s annual reports (IEC 2016). Compared with the probable costs of the actual activities and functions hosted by political parties during their electoral campaigns, the Electoral Commission’s annual reports reflect a substantially smaller financial turnover and thus a lower disclosure threshold on the part of registered parties. In order for any worthwhile information to emerge from these reports, full financial disclosure is necessary (Schneider & Scholze 2015). Clearly, the preferred or best option is full financial disclosure because it provides all the information that is subject to audit. Moreover, while a full audit might be ‘inconvenient’, the central purpose of an audit is to enhance the credibility and the public image of a political party by demonstrating their ability to comply with corporate governance frameworks in South Africa.

One of the main responsibilities of any public agency is to be accountable to the people whom it serves in terms of legislation governing public institutions in South Africa. Despite the apparently ubiquitous academic focus on governance within political parties (and the interest has spread way beyond academia), many of the debates about issues arising from political party funding stem from the discovery (or suspicion) of corruption (Bryan & Baer 2005). Governance is seen from both a public perception and a business perspective in politics and policy studies as serving as a form of accountability and responsibility framework that has the authority arising from being enforceable under the country’s laws. Over the past two decades, discourse on good governance in South Africa has increasingly occurred in the party political and public spaces, especially since the governing party recalled former President Thabo Mbeki and replaced him with Jacob Zuma at the party’s 2007 national conference in Polokwane. In the midst of the ongoing governance debates, public accountability has been acknowledged as a central issue, but it still remains an incomprehensible concept to the majority of rank and file members of political parties (Van Belle & Mayhew 2016). Thus, there is justification for the view held by supporters of good governance that politicians talk about the right things but prefer to do the opposite (Daily Maverick 2017). Arguably, if appropriate legislation existed in terms of which political parties’ finances were managed and regulated in compliance with legislation similar to, say, the Non-Profit Organisation Act 71 of 1997 (which requires, in terms of Section 17(1)(a) that ‘every registered non-profit organisation must, to the standards of generally accepted accounting practice – keep accounting records of its income, expenditure, assets and liabilities’), transparency and credibility would be significantly enhanced. Such mandatory compliance would place a significant responsibility on the parties to account for all transactions and require the preservation of supporting vouchers, records of subscriptions or levies paid by its members, income and expenditure statements, balance sheets and accounting officer’s reports for the prescribed accounting periods (RSA 1997).

The legal process for the establishment of political parties in South Africa is described in Section 19(1) of the Constitution, under the Bill of Rights. Accordingly, political parties are required to register with the Electoral Commission in order to operate and to participate in the elections (see the Electoral Commission Act 51 of 1996, ss. 15–17). These provisions prescribe the Electoral Commission’s registration requirements and pre-conditions, which include divulging their names, symbols or emblems, abbreviations or acronyms, and constitutions, among others. Only after these have been received and scrutinised will the political party be issued with a formal proof of registration certificate. According to O’Regan (2010), in most circumstances political parties are viewed as voluntary associations in South African law. A voluntary association is characterised by separate legal personality, perpetual succession (where the changes in the identity of its members do not affect its existence), the ability to own property apart from its members and the lawful pursuit of gain or profit for itself or its members. However, political parties are obviously different from ordinary and apolitical voluntary associations: political parties are uniquely focused on maximising political influence and their operational methodologies are largely informed by their ideological underpinnings, politico-historical origins and present-day party political dynamics that are in turn heavily influenced by the political preferences of their (senior) members.

Public interest in political parties stems from the notion that the public and political parties are interlinked and that they rely on each other for survival (Norris & Van Es 2016). Thus, on the platform of public interest, the importance of the audit (if clean) is that it offers confidence in the financial affairs of political parties. Such confidence underpins and enables the development of trust and accountability between the public and political parties, and their policies and activities. Admittedly, there is a tenuous link between these two variables, as can be seen in the recurring and often violent community flare-ups (usually labelled ‘service delivery protests’) and other public demonstrations during which community members vent their frustration and anger at unaccountable public representatives such as local government councillors. South Africa’s proportional representative system may be responsible for this malaise as the public representatives are seen as accountable to their political parties, rather than to the communities whom they have been directed to serve.

Despite the importance that public interest places on it, accountability is hard to come by in such a political environment (Chelimsky 2007). In the South African context, requiring that an audit be undertaken for accountability purposes and to increase the public’s confidence in a political party is often difficult to achieve, partly because of the quality of financial literacy among members of the political parties that would be subject to such audits. Norris and Van Es (2016) state that political party finances worldwide vary greatly in quality and reflect the different national attitudes and levels of public interest in accountability.

Auditing political party finances might reduce public concerns and speculations regarding large and improper donations that the public often perceives to have been given for unethical and anti-democratic purposes. Interestingly, there is not a single political party in South Africa that has ever publicly discussed and/or disclosed its financial viability, nor have the results of an audit of a political party officially been made public, which is in stark contrast with the situation regarding audits of government departments and institutions. As a matter of speculation, it would be very interesting to see how political parties cope with a similar level of accountability and whether this would improve their accountability to their constituencies.²

Political parties’ formally audited financial statements would add a degree of truth and transparency to the electoral process: there is nothing quite like making the audit reports and financial records of parties available to public scrutiny to change their behaviour. Besides increasing the electorate’s confidence in political parties, such statements also facilitate decision-making as they demonstrate the levels of financial and fiduciary competence of the parties. Based on this, the public could decide on a basis of fact whether to continue to entrust the political parties with the handling of the nation’s finances. Indeed, in South Africa legislation regulating the auditing profession and processes is robust enough to increase public confidence significantly. Such legislation includes the Public Audit Act 25 of 2004, which gives the Supreme Audit Institution (the Auditor General South Africa [AGSA]) the right and obligation to audit the finances of public entities and government departments, thereby ensuring the application of the principles of transparency (RSA 2004). Again, passing legislation requiring political parties to comply with auditing legislation pertaining to government (political parties would be audited and required to fully disclose their finances) is one approach that could enhance public accountability and improve governance within political parties. The current state of affairs is such that only the portion of political party funding that comes from the Electoral Commission is audited by the AGSA. Political parties are thus complying with the letter of the Electoral Commission’s regulations by appointing a registered auditor to audit their books and records of account for monies allocated to them from the fund, in terms of the provision of the Represented Political Parties’ Fund Act (Act 103 of 1997, Section 6.)

Overall, however, as is the case in trying to define and act in ‘the national interest’, the concept of ‘the public interest’ is equally difficult to quantify and act upon, especially in the case of political parties and their funding in South Africa.

According to the Independent Electoral Commission (2016), political parties may be funded by both public and private organisations and individuals. While the funding received from the IEC is well regulated and easily defined, there are no regulations whatsoever guiding the private funding of political parties. It is obvious that regulation increases good governance, as it enhances transparency. Gherghina and Volintiru (2017) point out that healthy political finances, if strictly regulated, can be equally healthy for a political system. It is thus somewhat ironic that, while all political parties are able to comply with Section 6 of the Represented Political Parties Act of 1997 (which requires political parties to act in an accountable and transparent manner with regard to the funds allocated to them by the IEC), these political parties are unable to extend the process to cover their ‘private’ funding and its uses.

The research methodology employed in this article includes content analysis and a review of recent literature on the topic. Although content analysis is considerably different from other qualitative methods of data collection and analysis, its advantage is its ability to support various research methods. Thus, content analysis may be used either in qualitative or quantitative research contexts (Elo & Kyngäs 2008). However, its strength is that it gives attention to the meaning (Hsieh & Shannon 2005) or interpretation of phenomena. It is a detailed method, and its procedures examine words and phrases and content meaning in most forms of communication (Downe-Wamboldt 1992; Hsieh & Shannon 2005). The objective of this article is to analyse the content of media reports during South Africa’s past two election cycles (2014 and 2016) with respect to issues pertaining to party funding, in order to determine and examine the trends. South Africa’s fifth post-apartheid national elections were held during 2014, and its fourth local government elections were held in 2016. During these two election cycles, much was said on the funding of parties by a variety of role players, political parties and members of the public. Thus, this article tackles the following key questions:

Given that all of the above issues have been addressed in media reports, newspaper articles and other formal media statements, the employment of the content analysis approach as a research method was deemed appropriate. The next section of this article examines the main themes identified in various media on political party funding in South Africa.

In one online media article, the question asked by political commentator Judith February was: who is funding South Africa’s political parties, and why do South Africans not know about this? (Daily Maverick 2016). The implied statement was that most of the political parties’ expenses are not reflected in their public records.

Another recent article, this time in the national weekly, the Mail & Guardian (2015), appeared under the headline ‘Sources of party funding to remain private – court rules’. It was reported that a local non-profit organisation, My Vote Counts (MVC), ‘has called on all political parties to start working on legislation that would force them to disclose information about their funding’. Clearly, as this issue had already progressed through the court system, it suggests that civil society organisations are attempting to exert more pressure on political parties to reveal all their funding sources. However, in terms of current legislation this cannot be compelled, and as South Africa’s political system is dominated by a single party, the governing ANC, it is in their interest that the system remains unchanged, thus improving their results at each major election. Thus, as long as the ANC retains a convincing majority in Parliament, it can continue to reject and defeat opposition votes to reform party funding practices and legislation.

According to the ANC’s former head of elections during the recent local government polls, Nomvula Mokonyane, the ANC spent R1 billion on the 2016 local government elections (Daily Maverick 2016), an embarrassing revelation that the newspaper later denied. Another civil society watchdog, Corruption Watch (2016), also recently raised concerns that financial information from political parties and individual candidates was not being disclosed to the public. This also indicates that pressure is mounting from civil society and is echoed by other role players in the greater election arena, who increasingly question the status of political party funding in South Africa. Whether, and to what extent, such pressure will actually disturb the status quo and result in tangible action from Parliament is difficult to determine. However, the regular expression of such concerns in the country’s national discourse might also indicate a slowly maturing democracy in which individuals and civil society associations are seen to be participating in issues of national and/or public concern.

South African political parties are only publicly accounting for their income and expenditures with respect to the grant received from the Electoral Commission. Of much greater significance is the requirement that political parties’ audited financial statements are supposed to form part of (or contribute data to) the annual reports prepared by the Electoral Commission. Thus, a review of the reports emerging after the 2016 local government elections suggests that the spending trends of political parties were high. Thus, Table 2 presents the IEC’s spending allocation per represented political party for the past 2 years (list is alphabetical).

While the above data reflect the official positions of parties with respect to their use of IEC allocations, recent investigative journalist revelations show that the ANC spent a reported R1bn (IEC allocation for 2016: R75.6m) in the recent local government election campaign, the DA spent R350m (IEC allocation for 2016: R27.6m) and the EFF spent just less than R10m (IEC allocation for 2016: R10.3m) (News24 2016). The formula for calculating the percentage increase is as follows (TutorVista.Com 2017): Formula for %increase=Current year amount−Previous year amountCurrent year amount×1001[Eqn 1]

There was an increase of 4.17% in 2013, 6.07% in 2014, 5.47% in 2015 and 4.67% in 2016. The average annual increase is 5.10%. Thus, these increases are approximately in line to cover the cost of target inflation set by the South African Reserve Bank at 6%. The increase in the amount spent was consistent with the increase of the represented parties from 2015.

It remains our contention that full disclosure financial reporting enhances good governance, and by extension, it forms part of ongoing efforts to improve public governance and accountability in political party finances. Obviously, a mandatory requirement of full financial reporting disclosure may affect political parties’ supporters’ preference for confidentiality, should they disclose their sources of funds. From the point of view of political parties, a possible negative outcome of such disclosure could be the loss of current or prospective support from influential members afraid of publicly endorsing one (or many) political parties.

Yet, such disclosures would further inform the wider voting public and prospective party members about the influence being exerted on parties’ activities and financial health by wealthy supporters; the outcome of such transparency on prospective supporters is difficult to predict with any certainty. Thus, while full financial disclosure is undoubtedly highly informative (Hassanein & Hussainey 2015), the more formal but less informative disclosures under the IEC’s present system offer very little insight into the workings of individual political parties (Carvalho, Rodrigues & Ferreira 2016).

On 28 March 2014, political analyst Judith February told Talk Radio 702’s John Robbie that ‘… the secrecy [surrounding] funding for political parties should be scrutinized as a matter of urgency to allow transparency …’. In another interview with the same radio station, Maphunye noted:

Notwithstanding the fact that many researchers hold similar views regarding party political funding, Berkowitz (2013) argues that ‘it is crucial for political parties to receive money [from the state] to finance their campaign, policy research and general administration’. Phosa (2012) warns that while political parties need funding to operate, they would not take money from the criminals as this may lead to corruption and abuse.