Picture: VELI NHLAPO
Picture: VELI NHLAPO

SABC CEO Madoda Mxakwe says his team inherited an organisation in financial ruin stemming from years of disregard for internal controls and governance processes.

Testifying at the state-capture inquiry on Tuesday, Mxakwe described a dire situation at the public broadcaster, which is technically insolvent, overburdened by staff salaries, and drowning in irregular expenditure.

The SABC remains the only source of news and commentary for millions of South Africans. It has asked for a R3.2bn government guarantee to stay afloat and to pay off some of its debt, but its bid for funding has so far been unsuccessful, largely due to its failure to meet some of the Treasury’s conditions.

“The SABC is technically insolvent. We run an organisation where every single month employees are very depressed. They don’t know whether they will be able to get their salaries. Every month, R265m is dedicated toward paying salaries. Once we have done that, we have absolutely nothing left,” Mxakwe told the inquiry. 

“The strategy we have put in place has already begun to show positive green shoots. The biggest question that needs to be asked, politically, is: are we the right people? In the past 10 years, the SABC has not been profitable. Only in 2011 to 2014 there was a certain level of profitability. The only reason why is because there was low investment in content. The business of broadcasting is about content. The content drives audience and audience is linked to generation of revenue. In 2016/2017, the year where we made huge losses, was the year where we made huge investments in content.”

Mxakwe said there was previously a “complete disregard” for SABC policies and processes. From their internal investigations, 186 cases of wrongdoing were found.

There was also a “huge lapse when it came to internal controls and governance processes”, he said.

“Disciplinary processes had to be enacted in every case concerned. We have to do what is right for the SABC. We’ve been subjected to a lot of backlash as a result of this. Every single case needs to be dealt with in line with our internal processes. We are dealing with all of those cases, but at the same time we are strengthening internal corporate controls.”

SABC had R4.98bn in irregular expenditure as at March 2018.

“Those irregular expenditure figures date back to 2012. Year-on-year, there is an increase in this. There was a blatant disregard for the supply chain processes of the SABC. The payments of certain contracts without having a proper contract in place [for example],” Mxakwe said.

“Deviations were deliberate because they were not in line with the criteria when it comes to emergencies for sole sourcing. There was a practice of ensuring that management would then  go through a request for [a] quotation rather than going through a competitive process.”