The SABC has been issued a notice by the Companies and Intellectual Property Commission (CIPC), asking the broadcaster to explain why it believes it is not trading recklessly under insolvent circumstances, according to a report by the City Press.
This notice stated that the SABC’s liabilities exceed its assets by R1.8 billion, preventing the public broadcaster from settling its short-term obligations.
Speaking to the City Press, the SABC’s Neo Momodu said the broadcaster has “completely collapsed”, and attributed its financial ruin to irregular spending by previous management – namely former COO Hlaudi Motsoeneng.
“The SABC would like to make it clear that Mr Motsoeneng was the central figure in the complete financial and governance collapse of the corporation which the current executive management is redressing,” Momodu said.
According to the SABC, a response to the CIPC notice is being prepared, but the broadcaster be forced into business rescue or even be shut down if the CIPC is not satisfied with the company’s ability to continue trading.
Sources at the SABC told the City Press that the broadcaster has previously had to seek aid from Johannesburg mayor Herman Mashaba to continue operating, and its advertising revenue continues to fall as it is unable to afford new shows or pay its TV production houses on time.
The report said the SABC will argue to the CIPC that it is trading with the understanding that Treasury will provide it with a bank guarantee for a loan for its turnaround plan.
CIPC spokesperson Tshiamo Zebediela said the notice issued to the SABC was a proactive enquiry by the commission, and that it may be withdrawn if some form of turnaround strategy is outlined by the broadcaster.
SIU investigation and turnaround plan
Documents obtained by the City Press which include evidence gathered by the Special Investigating Unit show the extent of the corruption at the SABC which has been prevalent since 2011.
In addition to the massive damage done by former chief operating officer Hlaudi Motsoeneng, the evidence suggests that the controversial Gupta family was involved with a major deal for the creation of a new payment system for TV licences.
These problems, in addition to various other questionable deals and contracts created at the SABC since 2011, have resulted in R366 million in civil claims being leveled against the broadcaster.
Recent reports show symptoms of the SABC’s financial collapse, with the public broadcaster expected to run out of money in March 2019.
As part of its turnaround plan, the SABC has begun cutting down on staff, retrenching 981 permanent employees and 1,200 freelancers.
The broadcaster has also been bleeding board members over the past few months, leaving the SABC board with only four members.
The SABC’s turnaround plan will rely heavily on government funding and security, and focus on rectifying the damage caused by corrupt contracts and irregular spending during the Hlaudi era.