SABC fat cat coins it

Rudolph Muller

Rudolph Muller is the editor at MyBroadband and covers telecoms and broadband news. Rudolph comes from an academic background, but left the University of...

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The SABC’s chief financial officer received annual and retention bonuses of more than R600000 in December. And at least 125 senior managers at the broadcaster pocketed R18-million in bonuses.

This is despite the broadcaster facing its worst financial crisis after announcing this week that it is set to post pre-tax losses of R784-million.

The SABC’s chief financial officer Robin Nicholson had his R211000-a-month contract extended despite being at the centre of a forensic probe that recommended he face disciplinary charges.

Early last year, following an internal probe, Nicholson was named in a report by auditor Deloitte & Touche for allegedly flouting regulations in the Public Finance Management Act while awarding a tender.

Months later his contract was extended for three years by board chairman Kanyisiwe Mkonza.

A few weeks ago, Nicholson was grilled by parliament’s communications portfolio committee over the parastatal’s finances.

In December he pocketed just under half a million rand as part of his annual bonus and a further R100000 retention bonus.

Nicholson is further alleged to have surrounded himself with “an army of consultants”, costing the cash-strapped broadcaster tens of millions each month.

On Friday he dismissed most of the claims made against him.

He said bonuses were the prerogative of the board and had been drastically reduced in December.

He refused to discuss how much he got but said that, as part of his contract negotiations, he received a retention bonus of R38000 a month.

He said the R100000 he received was part of back pay from earlier in the year.

Regarding the forensic report into his conduct, Nicholson said it pertained to the development of a television production management system.

“The board considered the report. They applied their mind to it and no charges have been put to me.”

He said the matter related to a tender for which he received authorisation from the finance committee of the board — but which he forgot to take to the full board — for an amount of R15-million.

“Having said that, I actually ended up saving the SABC at least R200-million after completion of the first phase of that project.”

It has been a week of high drama at the SABC, marked by the leaking of another Deloitte & Touche report, commissioned by communications minister Ivy Matsepe-Casaburri, that revealed the full extent of the bitter infighting among board members and management.

Several insiders interviewed this week laid the blame for the financial debacle firmly on Nicholson, saying he was being rewarded for supporting the board in their battle against axed chief executive Dali Mpofu.

They said the past year had been highlighted by wasteful expenditure and lax financial control systems.

In the past 12 months, it has emerged that:

1. Board members travelled first class to the Beijing Olympics at a cost estimated to run into millions;
2. At least R40-million was spent on legal fees as the SABC lurched from one crisis to another. This was despite a damning internal audit report compiled in 2007 that showed how R15-million — or double the legal department’s entire budget — was wasted on fees;
3. Many millions are spent on the use of consultants, with one international company alone pocketing around R1.5-million each month ;
4. At least R300000 was spent on a full-time bodyguard/driver for board chairman Mkonza, who also used an SABC vehicle. Mkonza did not answer queries about this on Thursday but it is understood that she has stopped using these services; and
5. The budget for the news department had been overspent by R80-million, with millions each month going towards a satellite feed for an international news service that was launched in Washington last week.

On the use of consultants, Nicholson said his office only used one — an independent risk evaluator who had been used for about five years — at a cost of R50000 a month.

“We have, in fact, been lauded by the Treasury for having someone independent verify things.”

He said the SABC had also outsourced work to accounting firm Accenture to run a support centre at a cost of R56-million over three years.

Asked if this could be considered wasteful, Nicholson said: “It went to the board. We engaged them and we are finalising the service agreement. No questions or red flags have been raised to my knowledge and I seriously don’t see what the issue is.”

On Thursday, Nicholson, acting CEO Gab Mampone and his senior management team, and Mkonza and fellow board members put on a united front and blamed the global economic crisis and a downturn in the advertising market for the SABC’s financial losses.

Mampone announced a slew of drastic measures to “monitor and stop unnecessary spending”.

He denied any wrongdoing by management or the board, saying “external factors” led to the broadcaster being in the red and surviving on overdraft.

He said at least R400-million of the R784-million in losses was attributed to the loss of advertising revenue from multinational companies, adding that the SABC derived at least 86% of its revenue from advertising.

Expenses for the 2009 financial year were R5.5-billion, up R1.2-billion from the previous year.

Mampone said on Wednesday the Treasury had been asked for assistance in obtaining a guarantee.

Nicholson said on Friday that the SABC “can be brought to profitability”.

He said it had been hit by, among other things, the recession and the credit crunch, a loss in advertising revenue, the under-performance of SABC3 which saw a drop in revenue of at least R300-million, the escalation in the cost of sports rights and foreign content, and creditors wanting early payment.

“It could have been managed better,” he admitted.

Mampone and Mkonza announced several cost-cutting measures, including the clampdown on foreign trips with employees also having to downgrade from business to economy class on flights.

Mkonza will travel to England this week to meet the BBC’s board of trustees. SABC spokesman Kaizer Kganyago could not confirm whether she would travel first class or not.

The ruling ANC, meanwhile, has been desperate to get rid of the board and last year even passed a parliamentary vote of no-confidence in it.

Most members of the board are seen to be close to former president Thabo Mbeki, who appointed them in December 2007.

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