Internal report slams board squabbles
THE SABC, wracked by infighting between the board and its executive and crippled by a financial crisis, will have to go to court to stop a liquidation order against it in connection with its failure to pay a Johannesburg law firm.
Liquidation order for SABC
The civil action by Barry Aaron and Associates, which is before the Johannesburg High Court, has sparked fears that the cash-strapped SABC’s bigger creditors might also join the “gold rush” to recoup monies owed them by the broadcaster.
Lawyer Barry Aaron told The Times yesterday that he decided to go ahead with an application for a winding-up order after the SABC broke its promise to pay him R450 000 owed to his firm for legal services.
His court action comes amid reports that the public broadcaster is in a financial crisis with a deficit of R700-million.
SABC spokesman Kaizer Kganyago yesterday said the figure had been exaggerated.
“The issue of the R700-million was all reported by newspapers and not by us,” Kganyago said, adding that the public broadcaster would hold a news briefing to clarify the issue.
But unions operating at the SABC insist that they were told by the broadcaster’s chief financial officer about the R700-million deficit.
An investigation by auditors Deloitte on behalf of the department of communications has revealed that squabbles between the SABC board and its executive have crippled the organisation.
Aaron’s application to liquidate the SABC, which was filed on Friday, is due to be heard by the Johannesburg High Court tomorrow afternoon.
He said the SABC owes him money for services rendered between November and January. Aaron represented the public broadcaster in its legal battle with the National Lottery Board over the Winikhaya television competition, which the board wanted scrapped.
“They asked for time to pay me, but it was not going to be all of it.
“They said they were going to pay me [this past Monday]. It seems they may have made a 20 percent payment, but I can say I have not received any money in this regard and it is not reflecting in my bank account.
“I am going ahead with the application for the winding-up order and I am due in court on Thursday,” Aaron said.
Kganyago confirmed that he knew of Aaron’s court action.
“We have communicated to him that we have prioritised his payment and will pay him this week,” Kganyago said.
But unions operating at the SABC said they are concerned that the court case and the broadcaster’s general financial problems might cause other creditors to take similar action to avoid incurring losses.
“When other creditors of the SABC find out about this, there will be a rush from everyone to get their money.
“We have been informed the SABC has not paid most of its creditors and soon the SABC will be liquidated,” said Hannes du Buisson, of the Broadcast, Electronic, Media and Allied Workers’ Union .
“Our concern is that there appears to be no financial discipline in the SABC and, if we continue in this way, there will be job losses.
“We are at a point where we can’t trust the board with the finances of the SABC.”
The broadcaster has blamed its financial woes on the global economic meltdown, but this has been disputed by the union.
“We are not saying this is not a contributor but we are saying it is definitely not the main contributor,” Du Buisson said.
The Deloitte report, a copy of which is in The Times’ possession, paints a grim picture.
The infighting between the board and the executive has put corporate governance at the SABC “under severe strain”, says the report.
“We gained a strong impression from our discussions [with board members and SABC executives] that the board-to-executive divide and degree of mistrust is destructive and counter-productive. It impacts on the efficiency and effectiveness of the board and board proceedings.”
The report, signed by Deloitte director Roy Shough, found that most of the conflict between the board and executive arose over the axing of Dali Mpofu as SABC group chief executive .
As a result of this conflict, non- executive board members “feel they need to become operationally involved” in SABC activities.
The investigation found that the board tends to operate in “crisis mode” — having “to deal with one crisis after the next”.
Deloitte was critical of the shortage of broadcasting and editorial policy expertise on the SABC board: “The lack of non- executive directors with the proper broadcasting industry experience hampers the board’s ability to discharge its accountability in this specialised industry.”
The investigation states that interviews revealed “antagonism and divisive behaviour and spirit” and “ an air and culture of infighting and discontent” and “a culture of mistrust ” .
The report is only the latest blow to the SABC’s embattled board.
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