They failed to provide audited financial statements
- The Electoral Court has ordered a number of political parties, including the ANC, to pay administrative penalties for failing to provide audited financial statements to the Electoral Commission.
- The court heavily criticised the parties for not opposing the case or filing papers to explain why they had failed to comply.
- The African Independent Congress, African National Congress, African Transformation Movement, Congress of the People, National Freedom Party and Pan Africanist Congress of Azania were all fined R40,000.
- A large number of registered parties who do not have representatives in Parliament were also fined.
On 10 May, the Electoral Court in Bloemfontein ordered a number of political parties to pay administrative fines of R10,000 and R40,000, for failing to provide audited financial statements to the Electoral Commission of South Africa (IEC) in terms of the Political Parties Funding Act (PPFA).
The ANC, ATM, COPE, NFP, AIC and PAC were ordered to pay administrative fines of R40,000. These parties did not oppose the case or file papers at the Electoral Court to explain why they had failed to comply with the act. This was heavily criticised in the judgment written by Judge Lebogang Modiba.
What the Political Parties Funding Act requires
In terms of the Political Parties Funding Act, which came into effect in 2021, every registered political party must keep records of their income, such as private donations and membership fees. Any donation which exceeds R100,000 must be disclosed to the IEC. Any donations which exceed the R100,000 threshold are published by the IEC on a quarterly basis. These requirements also apply to independent candidates.
The act also states that every registered political party must appoint an "accounting officer" to keep proper records of all the money that the political party receives and ensure the party complies with its disclosure requirements.
When a political party is represented in Parliament or a provincial legislature, they become entitled to funds from the IEC to contest in the elections. The amount of money a party may receive from the IEC is based on the size of their representation in the national assembly and the provincial legislatures.
The act also requires every party to appoint an auditor who must provide an annual opinion to the IEC regarding whether the political party has complied with the requirements of the act.
Although the act does not expressly impose this requirement on unrepresented political parties, in 2021, the IEC published regulations that every registered political party, irrespective of whether the party is or is not represented in Parliament or a provincial legislature, must provide an annual audit opinion to the IEC.
According to the regulations, the party's accounting officer must submit the party's records and financial statements to an auditor no later than three months after the end of the financial year.
The accounting officer must then provide this information and the audit opinion to the IEC no later than six months after the end of the financial year.
An accounting officer who fails to do this will have committed an offence in terms of the act.
The act also states that the IEC can take steps against a political party that fails to comply, and may request the Electoral Court to impose an administrative fine or to suspend funding from the IEC.
Political parties fail to comply
After the act came into effect, the IEC held workshops to inform the political parties about their duties. During the workshops, some political parties argued that the duty to submit audited financial statements every year was too onerous. This mainly came from political parties not represented in Parliament or any provincial legislature.
The IEC sought a legal opinion, which confirmed that it was compulsory to submit audited financial statements and failing to do so would contravene the act.
In 2022 and 2023, the IEC sent reminders to several parties and issued them with directives to submit their financial statements.
After the audited financial statements were still not submitted, the IEC started proceedings in the Electoral Court.
Electoral Court proceedings
The political parties that the IEC cited in the Electoral Court fell into two categories: political parties who are represented in Parliament or provincial legislatures (the first to sixth respondents) and political parties not represented in legislatures (the 486 other respondents).
Judge Modiba, delivering the Electoral Court judgment, said the disclosure requirements were to ensure that voters could make an informed choice and to prevent corruption, because private funders could pressure the party to further their private interests.
The court remarked that it was "concerning" that respondents in the case did not provide any explanation as to why they had failed to submit audited financial statements.
"It is important that political parties are dealt with firmly, to buttress the importance of meeting their statutory obligations", the Electoral Court said.
The court said that it was justifiable to impose a larger fine (R40,000) on represented political parties because they had more resources and received funding from the IEC. They could hardly argue that they could not comply because of financial constraints.
"Non-compliance by registered political parties is aggravating because these parties receive funding under the Funding Act," said the judge.
Several of the non-represented political parties did argue that they had no funds to hire an auditor and that they were unfairly required to provide audited financial statements in the same way as represented parties.
These arguments were rejected by the Electoral Court. Judge Modiba said a lack of funding was not a sufficient reason, because the act [read with the regulations] expressly states that every registered party is required to provide audited financial statements. The Electoral Court did not have any power to excuse a party from not complying.
The IEC conceded that the act does not distinguish between represented and unrepresented political parties. But the Electoral Court found that this was irrelevant because none of the unrepresented political parties had argued that imposing the same requirements was unconstitutional.
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Parties that were registered but unrepresented in legislature were fined either R10,000 or R40,000.
"Having regard to the effort the Commission took to raise awareness on the obligations of political parties in terms of the Funding Act, there is no justification to their claim that they are not aware of the provisions," the judge said.
"Ignoring the Commission's efforts and not offering any explanation for non-compliances to this Court displays utter disregard for the noble objectives of the Funding Act and the rule of law." The court fined these parties R40,000.
Other unrepresented parties that submitted that they had failed to comply because of "alleged financial challenges," "non-functionality as political parties" and "failure to appoint an auditor" were fined R10,000.
The Electoral Court did, however, find that an administrative fine against one of the unrepresented political parties, Our City Masters (OCM), was not justified. This was because OCM had filed affidavits with the Electoral Court explaining the steps they took to comply with the Act. OCM also attempted to comply with the substance of their duty to provide audited financial statements and said they intended to deregister as a political party.
The Electoral Court found that there would be no purpose in imposing an administrative fine on the OCM because they were in the process of deregistration. This also meant that the prospects of OCM repeating the same offence did not exist, the Electoral Court said.
The Electoral Court ordered each party to pay their own costs.
