SABC tunes out to Parliament’s spending claims
A payment schedule shows that the broadcaster rushed through several payments to lawyers and production firms in November and December, writes Stephan Hofstatter
Shortly before the festive season, top executives at the SABC quietly authorised suspect contracts and forward payments worth millions of rand.
A payment schedule shows that several payments to lawyers, production companies and other service providers were rushed through in November and December.
Infonomix — a company the SABC isn’t supposed to do business with because its tax affairs aren’t in order — was paid more than R5m upfront on December 12 to redesign seven websites as part of a five-year contract. Audit firm SekelaXabiso started work nearly three months before it signed a contract with the SABC. It also sent proforma invoices to the SABC before a formal contract was signed.
Former SABC chief operating officer Hlaudi Motsoeneng’s lawyer Zola Majavu was paid R1m; Nigiza Horner Attorneys, which handled a slew of questionable labour dispute cases for the SABC, was paid R1.2m; and Mchunu Attorneys, the firm that cleared Motsoeneng of wrongdoing despite damning findings by former public protector Thuli Madonsela, was paid R1.8m.
That SABC executives, including the public broadcaster’s acting chief financial officer Audrey Raphela, pushed through these payments while Parliament’s ad hoc committee was holding public hearings into mismanagement at the corporation, is surely no coincidence.
It might have been the last chance they had before a new interim board puts a stop to this madness.
When the committee released its interim report on January 27, the failure of a dysfunctional board to hold executives to account for signing questionable contracts loomed large.
Acting CEO James Aguma and Motsoeneng were singled out several times in the report for "abusing their power and committing the SABC to [contracts worth] millions of rands".
Government departments and state entities regularly authorise so-called deviations. This means normal procurement rules that ensure value-for-money public spending, such as a competitive bidding or a three-quotes system, are bypassed.
However, Treasury rules on deviations are pretty strict. There must either be a real emergency, such as a natural disaster, or proof that only one company is capable of providing a particular service.
Excuses cooked up regularly include major sporting events, the 2010 Soccer World Cup was a particular favourite and needing to deal with audit queries. But neither can ever justify a deviation for the simple reason that they are foreseeable. The Treasury rules out using bad planning as an excuse.
Many deviations at state-owned entities such as the SABC, Eskom and SAA would not bear close scrutiny for the simple reason that they are corrupt. They are designed to enrich the officials who authorised them — or their friends, relatives and political masters — by bending the rules to contract goods or services at vastly inflated prices that often aren’t needed or even delivered.
It remains to be seen whether the SABC’s payments fall into this category.
One of the priorities for a new interim SABC board to be appointed after Parliament’s ad hoc committee wraps up its work at the end of February will be to scrutinise any new contracts that bend the rules.
It is also likely that a Memorandum of Incorporation approved by Communications Minister Faith Muthambi will be scrapped. It stripped the board of its oversight powers and reduced it to rubber-stamping executive decisions — in effect handing full control of the SABC to Motsoeneng and Aguma.
This included hiring and firing executives and even senior journalists and approving suspect deals. It also gave Muthambi the power to bypass Parliament in removing board members who refused to do her bidding.
All of this will make it much harder for SABC executives to continue as though it was business as usual.
Rushing through a new batch of suspect contracts and payments at the same time that Parliament is hauling them over the coals for a slew of similar deals in the past three years is an
act of breathtaking arrogance and expedience.
As a source with direct knowledge of the SABC’s Christmas spending splurge says: "They are busy sorting out their pensions. They know the party is coming to an end."
So far the SABC appears to have buried its head in the sand about these new disclosures of an irregular spending spree. Spokesman Kaizer Kganyago won’t comment at all and Raphela isn’t returning calls or answering text messages.
This is no minor matter and affects all taxpayers who have grown wary of footing the bill for government bailouts of mismanaged state-owned enterprises, even if the SABC if currently largely self-funded through licence fees and advertising.
Despite loud public protestations in the past year by Motsoeneng and Aguma that the SABC is "financially sustainable", a voluminous paper trail shows that the broadcaster’s financial fortunes have plummeted under their watch.
Some of the details are now beginning to emerge since the inquiry. The SABC has gone from making a profit of R641m under Aguma’s predecessor Lulama Mokhobo to a R411m loss in 2016. Cumulative irregular expenditure has ballooned to R5.1bn and cash reserves have plummeted to well below operational needs.
Matters are likely to get a lot worse before they get better. Internal financial documents show the SABC is planning for a loss of R1.1bn in 2018 as costs rise and revenues decline with its shrinking audience share.
The parliamentary report warns of a "looming financial crisis" at the broadcaster with "mismanagement" and flouting of governance rules, laws, codes and conventions including disregard for decisions of the courts (rendering) the SABC potentially financially unsustainable.
"The corporation may be at risk of becoming technically insolvent," the report concludes.
In many ways, the SABC inquiry, chaired by Vincent Smith, has restored public confidence in Parliament’s ability to hold the executive and the state entities it oversees to account. That Muthambi and Motsoeneng — both regarded as close to President Jacob Zuma — have come under sustained attack
by all parties lends depth to this confidence.
However, the latest financial scandals at the SABC make it clear that the taps are still open.
Unless urgent action is taken to staunch the flow of irregular payments and prefer criminal charges against those benefiting corruptly, the inquiry’s promises to clean up the SABC will ring hollow and amount to little more than grandstanding.
In an earlier version of this story we reported that audit firm SekelaXabiso started billing the SABC before its nine-month contract worth R9.8m was signed on December 23. SelekaXabiso has pointed out that these were pro-forma invoices as opposed to tax invoices, which were submitted on 18 January.