What's the fuss over the sweet deal for the 'New Age'?
Everyone's talking about the "New Age" business breakfasts and if it's alright for parastatals to fund it. What's the real problem with this deal?
Questions are being asked about the sponsorship agreement between the New Age for its business breakfast events and the parastatals that funded it.
And while the sponsorship of public speaking events are common, the fact that considerable sums of money have come from state-owned enterprises, together with the cosy relationship between President Jacob Zuma and the powerful Gupta family that owns the New Age have cast it in a sinister light.
Sponsorships from entities such as Transnet are reported to have exceeded R1-million per breakfast. This is outside of the R792 delegates paid for a seat at a table. Industry insiders' comments, that such events could cost between R280 and R350 a head, has also not helped matters.
The number of guests at these breakfasts varies depending on the speaker. For a lesser known premier or minister about 200 people might attend, whereas events featuring Zuma could draw up to 1 000 people.
This would put the costs of hosting a event such as the business breakfast at around R350 000 for a well-attended gathering.
But if reports are to be believed, the New Age netted in the region of R1-million in sponsorship for each event.
According to City Press, Eskom paid R7.2-million for six sessions and Transnet paid R17.5-million for 18 sessions, while the South African Broadcasting Corporation (SABC) televises the breakfasts live on SABC2 for free.
It also pointed out that Telkom, which is partially owned by the state, paid R12-million towards 12 sessions in the 2012/13 financial year or over a million rand for each session it sponsored.
Both Transnet and Eskom have said that the deals made good business sense because exposure at the breakfasts helped to build their brands. The SABC meanwhile said that the deal to broadcast the breakfasts was a "win-win" situation as it provided the broadcaster with content.
Transnet's chief executive Brian Molefe is reported to have said on radio that such sponsorships are not unprecedented.
"At the Business Day when they do it, they get a sponsorship of R800 000 for a breakfast. But they do not get the coverage the New Age gets through its television time,” he said, according to the New Age.
Mike Sham, director of Front Foot, an events management company that was involved in marketing and managing aspects of the event last year, said he did not think there was anything untoward in holding such breakfasts, as many media organisations host similar events.
"It's no different than when [another media organisation] calls up a person to get them to speak at an event. Every business leverages their advantage," he said.
"The fact that the New Age got a lot of sponsorship out of it, well I'm trying to get a lot of sponsorship out of everything, you guys [the Mail & Guardian] are trying to get sponsorship out of everything. I'm not going to be a hypocrite and condemn it," he said.
For Sham, who defended the event as a useful opportunity for the public to engage with government officials, said the question was why monopoly companies, such as Transnet and Eskom, would need to advertise.
"The real question is what is the value of a parastatal like Transnet, which has a monopoly, sponsoring anything?” he asked. Sham also said that he thought the criticisms levelled at Democratic Alliance leader Helen Zille in the past day or two were misplaced.
Zille/New Age spat
Zille on Monday released a statement saying she was pulling out of a planned appearance at a New Age business breakfast after learning about how it was funded.
Zille said that she was under the assumption that the events were funded by the newspaper and ticket sales.
But the New Age responded that Zille was being disingenuous and was guilty of “double talk”.
The paper pointed out that Zille thanked a Telkom representative for sponsoring one of the breakfasts at which she was a speaker. It also published a video clip of the speech.
"Helen Zille being put on the spot was not a 100% correct. She would have had absolutely no idea of the sums of money of the sponsorship. I was involved in those events and I didn't know the sums of money involved. How was she supposed to know? How were any of those ministers?" Sham asked.
It is true that sponsorships of such events are common. But the debate over the ethics of a parastatal sponsoring an event has been muddied by the relationship between President Zuma and the influential Gupta family, which owns the New Age.
The Guptas are known to be family friends and business partners to the Zumas. Zuma’s son Duduzane serves on several boards with members of the Gupta family, and Zuma's wife Bongi Ngema heads the communications and marketing department at JIC Mining Services, which is majority-owned by the Guptas.
In 2010 the Mail & Guardian reported on concerns over the relationship, when business delegates who accompanied Zuma on a trip to India complained of the time Zuma spent alone with the Guptas and businessman Lazarus Zim.
The links between Zuma, the Guptas and Zim was again highlighted in 2011 story concerning Telkom’s sponsorship of the New Age’s business briefings. At the time, Zim was both the chairperson of Telkom and also a shareholder in and director of the New Age.