SABC board faces the axe over Hlaudi

2016-10-02 06:01
Hlaudi Motsoeneng (Felix Dlangamandla, Netwerk24)

Hlaudi Motsoeneng (Felix Dlangamandla, Netwerk24)

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The SABC’s current board is likely to be dissolved on Wednesday because of its decision to reappoint former chief operating officer Hlaudi Motsoeneng in an executive post, said Jackson Mthembu, the ANC’s chief whip in Parliament.

It is the first in a series of steps announced by the ANC, which will be taken to combat corruption at state-owned enterprises, after extensive consultations that the party held with its branches following its embarrassing performance in the local government elections.

“The reappointment of Motsoeneng is nothing more than disrespect for the Supreme Court of Appeal’s ruling,” Mthembu said.

At a media session in Pretoria on Friday, ahead of a three-day conference of the party’s national executive committee, Mthembu assured City Press that the portfolio committee on communications would hold an urgent meeting on Wednesday to discuss Motsoeneng’s reappointment, where it would dissolve the SABC’s board. Parliament will then confirm the committee’s decision after the recess.

The committee will also properly consider the report Public Protector Thuli Madonsela produced on Motsoeneng for the first time since it was released in February 2014. The report has not been properly considered by the committee.

Motsoeneng was the acting chief operating officer when the report was released, but was appointed permanently six months later.

SABC finances

Highly placed sources, including current and former employees at the broadcaster, told City Press this week that the loss of R411 million recorded in the SABC’s 2015/16 annual report released on Thursday – the second largest so far recorded – was a direct result of two deals made by Motsoeneng, now head of corporate affairs.

The Auditor-General’s report attached to the broadcaster’s financial statements suggests that the SABC had suffered a R5.1 billion pile of irregular expenditure.

The portion attributed to the latest financial year – up to the end of March this year – is R441 million.

At the same time, the historic balance of old irregular expenditure was adjusted upwards by about R1.7 billion, with no explanation.

In 2013, the SABC produced an annual report claiming virtually no irregular spending. The next year, its annual report suddenly noted irregular spending to the tune of R3.4 billion attributed to the preceding three years.

SABC spokesperson Kaizer Kganyago said the SABC “obtained qualifications from the auditors on the fair presentation of the disclosure of irregular, fruitless and wasteful expenditure from 2011”.

“The plan to address the audit findings automatically required the SABC to start with 2011 records and determine the amounts of irregular, fruitless and wasteful expenditure for each year up to 2016, and allocate the amounts accordingly. The R1.7 billion refers to amounts discovered in 2016 that relate to a period between 2011 and 2014,” Kganyago said.

Sources who did not wish to be named told City Press that it was the SABC’s deals to broadcast a news channel on DStv and to secure the rights to Bafana Bafana matches that had most heavily affected the public broadcaster’s finances.

This week, City Press confirmed the extent of the alleged irregularity around the news channel deal brokered by Motsoeneng when he was acting chief operating officer. These are:

  • That he had no board mandate to negotiate the July 2013 MultiChoice deal; and
  • That the full interim SABC board never approved it, nor was it signed off by the SABC’s legal division.

Despite this, the deal was pushed through and, for his efforts, Motsoeneng is to receive an annual R5.7 million bonus after tax for each of its five years for securing the deal.

Kganyago denied this, saying that “the deal was approved by the board after due processes had been followed” and that the bonus was a confidential matter.

Last week, City Press reported that Motsoeneng had already received the first R11.4 million of the bonus or commission.

In 2013, the SABC said the deal was advantageous for the broadcaster as it would retain all revenue from advertising on the news channel. Yet it still has basically no advertisers, using house ads in the meantime.

The SABC’s total loss on news was R876 million and the broadcaster this week said: “Factors that also contributed to the organisation’s financial performance include expenditure incurred on unforeseen events of national interest [and] investment in mandated sports and other events yielding negative return – sports rights: R573 million; production costs: R187 million; and the cost of news: R876 million.”

Kganyago said the SABC’s cost of running the news room was aggregated. The news operation as a division will always run at a loss because regulations by the Independent Communications Authority of SA prohibit the SABC from seeking sponsorship revenue for news. In the financial report, it is apparent that news carries the highest number of employees (1 048, or 25% of the workforce) at a cost of R876 million. This implied that, at a minimum, the SABC would have to raise the same amount of revenue to break even.

Safa deal

Another large loss made by the SABC was owing to Motsoeneng’s securing of rights for national soccer matches from the SA Football Association (Safa), which had become a matter of personal pride to him when the SABC lost them.

Motsoeneng’s public hostility with the rights holders, Siyaya Free to Air TV, say sources, led to particularly punitive negotiations.

Independent sources this week confirmed that Motsoeneng brokered a deal for Safa rights on a ministerial level and that the SABC ended up having to pay R200 million for rights to national matches.

Kganyago said the costs of rights are high and all broadcasters, including the SABC, are price takers.

“The losses are not only attributable to Safa rights, but to all rights acquired, whose costs in most cases outstrip the revenue generated. Please ... take note that a significant number are priced in foreign currencies, which introduces exposure to forex risk,” he said.

Read more on:    anc  |  sabc  |  jackson mthembu  |  hlaudi motsoeneng

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