sales
Mungo Soggot
THE new government’s first privatisation deal – the successful sale of six SABC radio stations – took a severe blow this week when the Independent Broadcasting Authority (IBA)conceded in court its decision on one of the sales was invalid.
Counsel representing the IBA, which is fighting claims by Naledi Media Investments that the authority’s decision to sell Radio Jacaranda to a rival bidder was invalid, admitted the decision’s invalidity just minutes after the Rand Supreme Court case had started. The reason, said Chris Loxton SC, was that only four of the five IBA councillors appointed at the time had presided over the decision – councillor William Lane, a lawyer, had been on holiday while the IBA had been making most of its landmark decisions.
Some media lawyers say that if the court ends up agreeing with the quorum concession, it could theoretically leave five of the six sales open to challenge as the IBA decided them without Lane. This would create the potential for havoc among the stations’ new owners. Others say that of the other losers, only the “odd chancer” will seek to reopen other decisions, noting that nobody complained about the lack of a quorum at the time of the hearings themselves and that most of the decisions have been welcomed.
Apart from the status of the other sale decisions, commentators say the case, which is the first legal attack on the IBA, is crucial because any suggestion that the IBA acted improperly could provide ammunition to those in government keen to reduce its independence.
Whether or not the IBA did actually break the rules by taking the Radio Jacaranda decision without a quorum has yet to be decided by the court, the issue having been clouded by the drama that followed Judge Mahomed Navsa’s favourable comments to Loxton on his rapid concession.
Navsa’s comments provided counsel Hiram Slomowitz, SC, who is representing rival winner Newshelf 71, the opportunity to demand the judge’s recusal on the basis of the perception of bias. At the time of going to press the trial was proceeding with a new judge, P Streicher. While Naledi is anxious for a new decision the New African Investments Limited-dominated Newshelf 71 is fighting for the decision to hold.
But it was not just the IBA’s possible errors that were in the spotlight. Before Navsa bowed out, he expressed amazement that government had failed for two years to appoint the three extra councillors the IBA needed to make up a full contingent of eight – if the extra councillors, who were appointed after the IBA’s decisions on the six radio stations, had been in office Lane’s decision to go on holiday would not have been as problematic. Commentators point out government’s failure to act meant no councillor could be sick or on leave without rendering the council inoperative.
Naledi is also arguing that Nail’s company should not have won in the first place.
In written argument filed with the court it says the winning company should have been disqualified because it had a foreign financial interest (from a French company) exceeding 20% – the IBA rules encourage the development of local players. It also argues the French company, Europe Development International (EDI), will effectively control the operation and that an IBA councillor had failed to disclose he had acquainted himself with EDI on a visit to France.
“The decision was arbitrary, capricious and demonstrates the persons who took the decision did not apply their minds in accordance with the requirements of the Act …”
In response, the IBA denies in papers filed with the court that the French company had too high a stake in the winning operation. It said the consultancy services agreement struck between EDI and its South African partners did not boost its financial interest above the maximum 20% allowed.
It also dismissed Naledi’s suggestion that it had breached the rules regulating cross- media control by awarding the staion to the Nail-dominated operation. The IBA apparently granted an exemption from the rules because of the high competition in the Gauteng area. It also favoured the higher black ownership of the winner – 65% versus Naledi’s 45% – and its access to the significant technical expertise of EDI.