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ActionSA has, today, announced legal action against the IEC for its flip-flop on its initial commitment to investigate the over R150 million Ezulweni debt settlement agreement as well as announcing new complaints to the IEC against the EFF and MK. 

The decision to take these steps arises out of an increasing concern that the Party Funding Act is being rendered meaningless by non-adherence to the provisions of the Act, legislation that places the onus upon a party to self-declare and the reality that the IEC is not set up as an investigative body.

To point out just how serious the problem is, the IEC recently took political parties to court (including the ANC) for non-submission of audited financial statements which is the only safeguard against a party not disclosing a donation. The court imposed a fine of R40 000 on these parties, while parties like ActionSA spent double this figure on auditors to achieve a clean audit outcome three years in a row.

The ANC and Ezulweni

Following the two-line statement issued by the ANC in December 2023 that the Party had settled the debt with Ezulweni Investments, ActionSA has been in a protracted battle with the IEC to investigate this matter purely on the basis that there is no way the settlement can be lawful in terms of the Act: 

1.    A market-related interest from 2019 would have to have been levied, making the likely debt in excess of R150 million.

2.    The settlement could not legally be discounted by more than R15m. 

3.    The ANC only had R10 million in disclosures in the quarter under question in which the settlement was concluded and had been in financial distress unable to pay salaries for striking workers.

4.    Any donor paying an account more than R100k would have to be declared as donation in kind – no such declaration was forthcoming.

5.    The settlement would require a minimum of 10 donors to settle account with disclosures and no such disclosures were made.

It is necessary to observe that ActionSA has discovered that Ezulweni Investments is a registered vendor to at least one municipality in KwaZulu-Natal where it has been awarded tenders. A real concern exists that the real terms of this debt settlement may well involve South Africans footing the bill for this settlement. 

ActionSA’s efforts to engage the IEC to investigate this matter eventually led to correspondence from the IEC in March 2024 confirming that they were handling the matter in terms of the Act and no further communication has been forthcoming. This is despite regular attempts from ActionSA to gain progress reports head of a 29 May election in which South Africans had the right to know the full picture of party funding when they voted. 

Yesterday the IEC’s legal team responded to a letter of demand reversing their earlier position and claiming now that there is no prima facie case to investigate. 

ActionSA’s legal team will now proceed to initiate a two-part legal action: 

Firstly, to obtain the record of decision from the IEC to assess the rationality of their decision.

Secondly, if necessary, to challenge the rationality of the decision to decline the investigation.

It is important to observe that the fundamental principles of administrative law require that the exercise of public power, in this instance by the IEC in relation to this matter, be subjected to the scrutiny that affords a litigant the right to assess how that decision was made and, where necessary, challenge the basis upon which the decision to refuse to investigate was made. 

The EFF and MK Complaints

ActionSA has initiated a new set of complaints that were issued to the IEC yesterday in relation to the EFF and MK parties on the basis of the self-evident fact that their disclosures do not substantiate their campaigns. 

In the case of the EFF R3.5 million was disclosed since the start of the 2022/2023 financial year in the context of an election in which the EFF is estimated to have spent over R100 million on stadium events alone. 

Perhaps even more absurd is the disclosures by the MK Party which, since its registration, managed disclosures of less than R400 000 in the context of an election in which it emerged as one of the most well-funded political parties and speculation of foreign funding. 

ActionSA contends that the IEC is not only the only institution in government empowered to investigate these matters, but that the IEC cannot wait for a party to self-incriminate before its legal obligations in terms of the Act kick in. If a political party demonstrably runs an election campaign that patently and so substantially exceeds its disclosed means of funding the campaign, then the IEC must investigate. 

ActionSA will follow the process with the IEC relating to the complaints filed against the EFF and MK parties and will keep South Africans appraised of the IEC’s responses to these matters. 

South Africans have the right to vote with the full knowledge and transparency of how parties are funded, and it is necessary for these steps to be taken to ensure that right does not exist only on paper.

Issued by ActionSA National Chairperson Michael Beaumont