- When the Bakgatla Ba Kgafela traditional council financed a pay-TV channel in 2014, council chair Kgosi John Pilane promised it would create jobs and "change the face of broadcasting".
- Now a forensic investigation suggests Pilane was conflicted from the start.
- It also shows how the council forked out nearly R100-million to keep Siyaya TV afloat.
- For more financial news, go to the News24 Business front page.
More evidence has emerged suggesting leaders of the Bakgatla Ba Kgafela abused their position to support ill-considered investments of the tribe’s mineral wealth – seemingly to the benefit of private players.
In 2012 a start up, Siyaya Free to Air TV, partnered with Bakgatla Ba Kgafela (BBK) in a deal that was sold as a great boon for the North West community.
Traditional council chair Kgosi John Pilane promised it would create local jobs and "change the face of broadcasting".
But instead it turned the traditional council, which is supposed to safeguard the community’s financial interest, into what amounted to the TV station’s personal ATM.
The traditional authority, via its wholly owned Bakgatla Ba Kgafela Strategic Investment Company (BBKSIC), advanced R99 054 271.01 to Siyaya without any clear repayment dates and without any mandate from the community.
The financial injection allowed Siyaya to secure a pay-TV licence, but more spectacularly R75-million of the amount was intended for securing broadcasting rights from the South African Football Association (SAFA).
In August 2014 SAFA and Siyaya announced a six-year R1 billion deal for exclusive rights to air the association’s properties, which includes the national teams, from May 2015. This was almost 10 times what the SABC was paying.
But Siyaya TV never took off and the deal was cancelled, leaving unanswered questions about what happened to the tribe’s money. Siyaya survived to establish the Moja Love channel carried by DStv.
The Bakgatla Ba Kgafela traditional council owns substantial stakes in mines, property and tourism ventures, but has been dogged by leadership battles and allegations the community’s resources were being abused or mismanaged.
Commission of inquiry
In 2016 the Premier of the North West established the a commission of inquiry to look into these and other claims.
The commission, chaired by Advocate Sesi Baloyi, arose from the community’s dissatisfaction over the administration of their financial affairs by Kgosi John Pilane.
It was also tasked with resolving disputes around his position as head of the South African branch of the tribe, which straddles the border with Botswana and by custom answers ultimately to the paramount chief in Mochudi.
Baloyi delivered a scathing report in 2019, finding that John Pilane held virtually unchecked sway to conduct business with the tribe’s enormous assets.
The report noted, "From the evidence, it is apparent that he has excluded the Traditional Council from the administration of the commercial activities and assets of the community and includes only his nephew, Kagiso Pilane [and] does not account to the TC and to the community about the administration of the affairs and assets of the community."
Baloyi reported that BBK acquired a 40% share in Siyaya Free to Air TV, seemingly at an eventual cost of R35 million, noting, "We did not find evidence of consultation with or approval of the transaction by the community."
The report also revealed that Siyaya TV incurred losses of just over R24 million between the period of 2011 to 2016. This excluded the figures for 2015 as those records weren’t available.
According to the commission, these losses were funded mainly by BBKSIC, the company that ran most of the BBK traditional council’s subsidiaries, including its partnership with Siyaya TV.
It added that "there is no evidence that any of the other shareholders [in Siyaya] provided any funding in the relevant period".
Premier acts - Kgosi reacts
Baloyi recommended the North West Premier instruct John Pilane to resign, appoint an administrator to take over the affairs of the traditional council and appoint forensic investigators to follow up on the flow of funds earned in the name of BBK – and how all that income was supposedly applied for the benefit of the community.
In December 2019 Premier Job Makgoro announced the appointment of an administrator, Phineas Tjie.
An acting Kgosi was also named, but John Pilane has launched review proceedings to set aside the commissions' report in its entirety and to set aside the appointment of the administrator and the acting Kgosi. (The matter was argued earlier this month in the North West High Court and judgment has been reserved.)
This is the latest legal battle in John Pilane’s decade-long campaign to protect his position and powers.
As land activist and attorney Wilmien Wicomb has written, "Evidence presented [at the commission] showed how Chief Pilane used the community’s wealth (R47 million in legal costs in one year) to recruit the best legal representation to get every legal challenge by community members kicked out of court, and how he obtained interdicts against those attempting to organise resistance."
In April 2021 the provincial department of cooperative governance and traditional affairs went ahead and appointed a private investigation firm, the iFirm, to conduct a forensic investigation into the flow of the BBK funds as suggested by the commission.
The iFirm has now produced its first report, focusing on the Siyaya transactions, which throws new light on the tie up with BBK and on the loan.
The investigation has laid bare how Siyaya TV seemingly took advantage of the traditional council who were the minority shareholder but covered most of the costs through BBKSIC.
It also suggests Pilane was conflicted from the start.
When the TV station approached BBK’s traditional council in 2012 seeking investment for their venture to obtain a broadcasting licence, they had already appointed Pilane, as a director in 2011.
At the time of Siyaya TV’s approach, Pilane was also the chairperson of the council which would approve or decline the proposal.
AmaBhungane found no evidence that Pilane declared his relationship with the TV station before approving, along with the other members of the council, the resolution to invest in the company.
Pilane responded through lawyers Cliffe Dekker Hofmeyr, who denied "any allegations (or insinuations) of wrongdoing on our client's behalf".
The law firm is one of two, the other being Werksmans, who were named in the Baloyi Commission as entities that the traditional council, "Pilane in particular" used to administer monies through accounts held and controlled by the law firms, which Baloyi viewed as circumventing the act that governs the handling of the financial affairs of traditional authorities.
The commission found Pilane had "established, or authorised the establishment of a web of companies to conduct business on behalf or in the name of BBK".
The North West Traditional Leadership and Governance Act 2 of 2005 states that all traditional authority monies must be held in a specific account, referred to as the D-account, where government has oversight.
According to the act, the opening of a separate account (to deal with BBK’s financial affairs) needed to be approved by the premier first - after he has established that there were sufficient controls and financial systems.
In his testimony at the commission, Pilane admitted that they had not received such authorisation from the premier.
Baloyi recorded that, according to Pilane, he did not have confidence in the management of the D-Account because the account does not segregate monies per community.
Regarding the loan agreement reached in 2014 between Bakgatla Ba Kgafela Strategic Investment Company and Siyaya Free to Air TV, Pilane’s lawyers told amaBhungane:
The commission found that Pilane was "singularly involved with commercial activities conducted on behalf of or in the name of Bakgatla Ba Kgafela".
It added, "Of the members of the traditional council, Kgosi Pilane has chosen to involve only his nephew, Kagiso Pilane, in matters pertaining to commercial transactions with third parties."
The R15 million repayment saga
Kagiso Pilane’s role came to the fore in March 2021 when a lawyer from Fluxmans acting on behalf of Siyaya wrote to Kagiso seeking to repay R15 million to the Bakgatla Ba Kgafela Strategic Investment Company.
According to a reconciliation provided by the lawyers, Siyaya by that date still owed R92 million of the R99 million loan from BBKSIC and had last made a payment in 2017. The reconciliation made no mention of any interest calculation.
BBKSIC’s previous account at Nedbank had been closed in 2018 already and the Siyaya lawyers asked Kagiso to furnish them with BBKSIC's new bank account into which payment should be made.
BBKSIC ceased to be operational in 2018 as all its workers were retrenched. The last two executive directors resigned from their post on 1 June 2020, the same day Kagiso took over as its sole director.
In their March 2021 letter to Kagiso Pilane, Fluxmans had copied in the BBK administrator.
Administrator Tjie was clearly alarmed at the prospect of R15 million of the tribe’s money potentially being dissipated, given that Kagiso was now the sole director of BBKSIC and had defied an order from the premier to resign from all positions he held in BBK companies (as recommended by the Baloyi commission).
The administrator obtained an urgent provisional interdict stopping the payment, but when the matter was finally argued he was unsuccessful in his bid to have Siyaya TV pay the money into the D-account.
On 18 May 2021 the court ruled that the premier had no authority to override the Companies Act and there was no evidence that Kagiso Pilane’s directorship of BBKSIC was invalid.
As a result, a payment from Siyaya was made to an FNB account in the name of BBKSIC opened four days after the original March 2021 letter from Fluxmans (proposing the R15 million repayment).
After the payment, the administrator wrote a letter to Kagiso Pilane requesting him to provide a detailed account of any payments made out of the account as well as a detailed reconciliation of loan repayments made by Siyaya to BBKSIC and the outstanding balance.
These were not forthcoming, given that Kagiso has apparently taken the view like his uncle John that the appointment of the administrator is invalid.
Kagiso did not respond to amaBhungane’s questions, but he was copied in on the responses from Cliffe Dekker Hofmeyer on behalf of John Pilane.
CDH refused to disclose how much is still owed, telling amaBhungane:
Siyaya TV chief executive Aubrey Tau, through the channel’s spokesperson, defended the company’s dealings with the Bakgatla.
"In their capacities as shareholders of Siyaya, various parties (including the Bakgatla company) advanced resources, including capital/loans (‘advances’) to ensure that Siyaya’s working capital requirements were met," he said.
"The advances are regulated by agreements entered into between such shareholders and Siyaya. Siyaya continues to repay the advances to its shareholders and to duly complies with its contractual obligations."
The reconciliation of Siyaya’s loan repayment proves otherwise.
Even though BBKSIC’s loan agreement with Siyaya TV didn’t have a fixed amount of how much should be repaid monthly, it stated repayment would be through "60 monthly equal" instalments. Siyaya didn’t follow that process; instead, repayment was haphazard and nothing at all was paid between July 2017 and February 2021.
"Siyaya continues to repay the advances to its shareholders and to duly complies with its contractual obligations," Tau said, without directly responding to why the payments have been haphazard.
Tau claimed, "We are not aware of any breaches of contract or disputes arising from agreements entered into between Siyaya and its shareholders. We can confirm that approximately 80% of Siyaya’s loan obligations have to date been repaid."
He did not provide any evidence to back up this assertion.
Tau denied the R15 million lump payment made in 2021 was because of the findings of the Baloyi commission, adding, "We understand that the commission’s findings have been taken on review and that they are suspended pending the outcome of the review."
"Siyaya does not want to involve itself in and/or be dragged into the personal affairs of its shareholders,” Tau said. "Accordingly, Siyaya is not in a position to answer and/or account on any issues relating to its shareholders and matters relating to BBKSIC, Bakgatla Ba Kgafela and the administrator."
While BBKSIC money kept Siyaya afloat, its own workers were not so lucky.
According to Caroline Makgale, a former employee, there was no such unwavering financial support for a raft of workers in the BBKSIC group who were summarily dismissed, allegedly without any consultation.
Makgale, who gave evidence at the Baloyi commission, said the BBKSIC board of directors decided in about mid-2017 to close down BBKSIC and its subsidiaries.
Aggrieved employees set up a workers’ committee, which she chaired.
Makgale claims that the only explanation the workers got for their dismissal was a generic memo that said they were not getting any funding and "therefore will not be able to pay any salaries".
These dismissals – a plan to retrench more than 1500 employees was put in place – happened while BBKSIC was still owed millions by Siyaya TV via the 2014 loan, which at that point (in mid 2017) simply stopped being serviced.
There is no evidence that BBKSIC took any steps to recoup the money.
Makgale told investigators that when the workers approached the traditional council about their dismissal and claims that there was no funding for BBKSIC – that situation appeared to be news to the council as they said there was enough money to sustain the company.
Makgale said when the workers’ committee had a meeting with John Pilane he "was arrogant" and told them he was the one overseeing all the business and that the Traditional Council "knows nothing on the money affairs of Bakgatla".