SABC’s R5 billion hole

The auditor-general has blasted the SABC for failing to bring anyone to book for blowing more than R5-billion in irregular expenditure.

The Times has obtained a confidential report that reveals a litany of failings that the SABC’s acting CEO, James Aguma, neglected to mention at yesterday’s presentation of the corporation’s financial results in Johannesburg.

Aguma sought to downplay a loss of R411-million for the 2015-2016 financial year, up from R395-million last year.

He blamed the modest government subsidy, the SABC’s public-service mandate – which includes the requirement that it broadcast in all 11 official languages and screen sports events that “yielded negative returns” – increasing post-retirement costs and the global economic slowdown.

Sports broadcasting rights alone had cost the SABC R573-million, he said.

The SABC had net assets of R2.7-billion, a cash balance of R881-million and had posted a net loss of R411-million.

“The question of us being insolvent is out because our assets exceed our liabilities,” he said.

“It’s sustainable. There’s no creditor who hasn’t been paid.”

But the auditor-general’s “final management report” to the SABC, dated August 15, red-flagged the broadcaster’s financial viability.

“Overall, the results of the above financial indicator evaluation is assessed as ‘red’: (unfavourable, intervention required),” the report said.

It highlighted that irregular expenditure of R5.1-billion “identified in the current and previous year, was not investigated to determine if a person was liable for the expenditure”.

The report revealed that the SABC had awarded 71 contracts worth R150.7-million to “close family members, partners and associates of officials”.

The SABC was “still not collecting the majority of TV licence fees” and collection rates “continue to decrease”, the report said.

“Investments need to be made in improving controls to increase collections,” the report said. “These improvements will be limited by the current cash-flow constraints.”

Aguma blamed the R5-billion in irregular expenditure on “missing records”.

“The challenge across government is records management,” he said. “Is it my fault? I’m not sure. Is it exco? I’m not sure. But we have a strategy to deal with it.”

During the presentation he listed the broadcaster’s achievements.

“We shall take the opportunity to boast for once,” he said, saying that the SABC played 65% local content on radio, compared with the target of 40% set by the Independent Communications Authority of SA.

Nine of the SABC’s radio stations were rated as in the top 10, audit qualifications had been reduced and the broadcaster had won several awards during the year under review.

“The SABC’s financial statements are becoming more reliable and the awards are streaming in,” he said.

Hlaudi Motsoeneng, newly appointed group executive for corporate affairs, said the SABC had tried in vain to dissuade the auditor-general from giving the broadcaster a qualified audit because of irregular, fruitless and wasteful expenditure.

“On this one, the R5-billion, we tried everything to influence them but we could not win the battle. They said: ‘On this one, no, we are giving you a qualification’.”

He stressed that the auditor-general was satisfied with the SABC’s contention that it was financially sustainable.

“We related to [the auditor-general] our strategy and they were comfortable with it. We demonstrated to them that we are financially sustainable,” he said.

The SABC was “not in the business of profit”, said Motsoeneng. “We are in the business of making sure we service our audience.”

This week Motsoeneng was controversially reappointed to his old job as group executive for corporate affairs. He takes over from Bessie Tugwana, who had been in the job for seven weeks and who has been moved to a project management unit in Aguma’s office.

Motsoeneng is not expected to take a salary cut for what is effectively a demotion. The annual report said his salary rose from R3.8-million to R4.2-million in the past financial year.

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