Stuart Hess and Mungo Soggot finally got to see the report that caused all the trouble
THE dossier which prompted a government inquiry into rugby and this week’s high court battle between rugby supremo Louis Luyt and Sports Minister Steve Tshwete contains little more than press clippings and court papers.
Documents handed to Tshwete by former Transvaal Rugby Football Union vice- president Brian van Rooyen appear unlikely to trigger Luyt’s downfall.
However, the 500-page dossier does contain the top-secret agreement spelling out the South African Rugby Football Union’s (Sarfu) relationship with marketing company Megapro Marketing – a company allegedly linked to Luyt – in which Megapro’s commission can be up to 25% of Sarfu’s revenue.
The agreement, signed in June 1993, says: “The trust hereby grants Megapro the right to commercially exploit for and on behalf of the trust all rights held by the trust with regard to the marketing of the activities of the national teams.”
When the five-year deal expires, Megapro has the option to renew it for another two years. The document also spells out Megapro’s lucrative commission arrangements. It says: “Megapro shall be responsible for the collection of all money due as a result of their marketing activities.”
Luyt was only given a copy of the documents on Wednesday, following an urgent application to the Pretoria High Court by Sarfu and the Transvaal Rugby Union. Tshwete had previously refused Luyt’s demands for a copy, arguing that the contents should remain under wraps until the ministry checked the allegations.
A task team, headed by sports director general Mthobi Tyamzashe and including tax guru Michael Katz and former judge Mervyn King, has been established to go through the document. A full-blown commission of inquiry into rugby’s affairs hinges on the team’s recommendations.
Sarfu’s annual accounts for the 12 months to September 1996 show it paid R3,5-million to Communication Services International – apparently a subsidiary of Rupert Murdoch’s News Corporation – as a commission for the R2-billion Sanzar deal.
The Sanzar deal was concluded between Luyt and Murdoch in 1995 and gave Murdoch exclusive television rights to all rugby matches in the Southern Hemisphere for the next 10 years.
Administration and finance general manager Ivor Bloom said Sarfu paid nearly R500 000 in commission to Megapro for other sponsorships that were arranged.
The accounts also show that Sarfu spent close to R60-million on golden handcuffs which locked national and provincial squad members into three-year contracts.
More than R33-million was paid to the provinces following the Sanzar deal to enable them to contract provincial players for three years – until 1998.
Another R26,7-million paid to the national squad bought squad members’ loyalties for three years in the face of Australian magnate Kerry Packer’s attempts to lure them to his World Rugby Corporation.
Sarfu’s profit for the year was R18,6- million, which meant it had to dip into its reserves – income accumulated over years – to fund the loyalty payouts, which drained the reserves to less than R6-million, from a previous R20,6-million.
But the organisation, which does not pay corporate tax because it is supposed to be a non-profit organisation, underpinned its figures by claiming nearly R2-million in VAT rebates on the payments to the provinces and its payments from sponsors.
It claimed R4,5-million in VAT rebates from the Receiver of Revenue in 1995, including rebates on the Rugby World Cup.
Documents of a Sarfu meeting last year which were leaked to papers last week showed Luyt’s son, Louis Luyt Junior, stands to earn 10% commission on sponsorship deals he negotiates for the organisation.
One of these deals include Luyt Junior allegedly negotiating to take the South African team to Disney World toward the end of this year – a deal thought to be worth R44-million.
The deal would include the South African national team playing other international sides at Disney World’s new sports complex in Orlando, Florida.
But Sarfu said this week that the decision to pay Luyt Junior commission is supported by its executive. “Why should we discriminate against any person who is successful in securing funds for Sarfu through sponsorships?
“Or is there a problem, merely because it happens to be Mr Luyt Junior?” executive member Tobie Titus said.
Luyt Senior, meanwhile, has threatened to sue the Sunday Times after it published details of the commission last week, and the alleged involvement of other Luyt family members in South African rugby.
February
Link to the day
28 21 14 07
28