Documents leaked to the M&G reveal that BopBC is bordering on insolvency. Jacquie Golding-Duffy reports on its status
THE Bophuthatswana Broadcasting Corporation (BopBC), which has for 18 months refused to integrate into the SABC, is begging the North West provincial legislature for funds, warning that it is bordering on insolvency.
Documents leaked to the Mail & Guardian include a typed submission made to the North West provincial legislature executive committee (EXCO) sitting on January 29 1997.
The submission, signed on January 15 1997, is an updated financial report by BopBC’s acting general manager of finance Michael Levitt. He states that it should be “noted that the Bop Broadcasting Corporation is operating in insolvent circumstances”.
However, BopBC acting chief executive Cawe Mahlati this week said it is “incorrect” to state that BopBC is bordering on insolvency, despite Levitt’s submission.
In a fax, Mahlati says certain “byzantine arrangements” were inherited from the past which management has been untangling in order to prepare BopBC for integration.
However, despite Mahlati’s protests that BopBC is not cash-strapped, Levitt’s submission lists “commitments” which BopBC owes for the period January to March 1997. The debts include payroll commitments to contractors (R3,6-million), salaries owing to permanent staffers (R300 000) and bonuses (R1,5-million).
Overseas creditors are owed R11,2-million, the Sandton office rental boasts a bill of R230 000 and Sefalano Employee Benefit Organisation (Sebo) is owed R2,1-million, among others.
Bop Recording Studios occupies premises owned by Sebo. BopBC’s management contract with Bop Recording Studios was inherited from the former homeland government and mandates that Sebo be paid R673 000 per month. Mahlati says the payment was underwritten and guaranteed by the then-Bop government and is binding on BopBC.
In his submission, Levitt says Sebo’s rental “has always been a contentious issue”, adding that the revenue generated by the BopBC studios exceeds expenses if the rental is excluded. Mahlati, in her response to queries by the M&G, agrees that the rental agreement brokered by the former government is uneconomic.
She says BopBC’s management contract for Bop Recording Studios is unsigned. Prior to her appointment, the corporation refused to pay the Sebo rental but the company then instituted an interdict and won. “Upon arrival, I sought to retrieve the judgment court records. To date, I have not had sight of the judgment,” says Mahlati.
In the document, Levitt then states that the total amount required from the legislature is R19,8-million.
He says because of uncertainty surrounding BopBC, advertising revenue has “dropped to a trickle”.
“Should funding not be forthcoming immediately, the Bop Broadcasting Corporation will be unable to meet its payroll commitments for January 1997.”
Mahlati denied that BopBC’s advertising was dwindling, saying that Market Research Africa indicates otherwise. Despite the overall drop in radio listenership, and given the restricted transmission footprint and uncertainty about BopBC’s future, ad revenue is healthy, argued Mahlati.
For 1996/97, BopBC was voted a total grant of R50-million and has applied to the North West legislature for the balance of the grant, which is R20-million. Historically, she says, the homeland broadcaster received a blanket grant of R300-million of taxpayers’ money.
The request for finance is customary and not unusual, argues Mahlati.
Part of BopBC’s financial difficulties also stem from its retrenchment packages which are estimated at being worth R29-million.
The beleaguered organisation was dealt a blow last year when the province’s MEC for finance, Martin Kuscus, froze its funds. No money has been forthcoming since.
Kuscus, at the time, said his decision followed the uncovering of serious financial irregularities which included non-collection of taxes from employees and overpayment of benefits to some managers. Kuscus refused to speak to the M&G this week, saying it is “inappropriate” for him to comment.
However, sources close to Kuscus say he has been gagged, while others argue that the issue of BopBC is a “hot potato which no one wants to be drawn into, not even the Telecommunications Ministry”.
In a second hand-written document in the M&G’s possession , Levitt prioritises BopBC’s cash requirements and says the submission requesting finance is only being prepared provided that BopBC manages to continue operating until the end of March this year.
On the contractors’ employment contracts, Levitt expresses concern that should the contractors not be paid for their services, the ramifications would be serious. “I am of the opinion that if we do not pay the staff, it will have major political and social implications.
“The adverse publicity would be very bad for both the North West and national governments.”
Operating costs and debt, about R1,5- million, include unpaid electricity, water and Telkom bills incurred by BopBC.
On the Sandton debt, he says: “The Sandton rental is subject to an agreement with Old Mutual Properties through JHI. Should we not pay this, BopBC would be sued in terms of the lease agreement which still has five years to run. An effort can be made to get a rent reduction and/or settlement to get out of the lease.”
Then Levitt continues: “Ms Mahlati and I can make every attempt to cancel contracts which have not yet been flighted. Furthermore, possibly we could arrange to pay these in the next financial year provided we give the creditor a bank guarantee or irrevocable letter of credit.
“They will have to be paid ultimately, otherwise the ramifications are too ghastly to contemplate. It would affect the creditworthiness and credibility of the South African government in paying overseas suppliers. I also believe it would have an impact on the SABC.”
On the promised bonuses to staffers, Levitt urges the provincial legislature to prioritise the cash for these bonuses “in view of the negative publicity non-payment will generate”.
He then apologies for the submission not being typed, adding that it was hand- written in the interest of speed.
Mahlati says staffers were paid their bonuses, but some staffers say they have not been paid, among them DJs from Radio Sunshine and some cleaners.
It is understood that Mahlati met SABC chief executive Zwelakhe Sisulu earlier this week to discuss speeding up integration plans but this remains unconfirmed.
BopBC, caught between a rock and a hard place, is no longer digging in its heels against integration as the R93-million needed annually for it to continue operating is unlikely to be forthcoming.
A meeting will be held next week with the postmaster general, BopBC and SABC managements and the relevant unions to discuss the entire integration process, said SABC group services co-ordinator Leslie Xinwa.
Xinwa said the former States Broadcasting Reorganisation Act which was legislated last October has to be studied by the parties concerned, before a date can be set for the final phase of integration into the national broadcasting service.
Xinwa was former chair of the joint integration management committee which paved the way for the integration process to take place in line with recommendations from the Independent Broadcasting Authority and which is contained in the Triple Inquiry report.
The report states that all television studios “should be rationalised to ensure the most cost-effective use” by the National Public Broadcasting Service (the SABC) for “both internal production and as a revenue-generating resource through use by private broadcasters”.
The report also suggests that BopBC’s external broadcasting obligations be assumed by the national broadcasting service and its facilities used for the proposed national broadcasting satellite and external services.