Bop Broadcasting’s latest audit has revealed major financial discrepancies, reports Mungo Soggot
The Office of the Auditor General has rejected the Bophuthatswana Broadcasting Corporation’s 1997 accounts after uncovering possible fraud involving millions of rand, widespread mismanagement and a breakdown of its financial systems.
In a report signed off on July 21, the finance watchdog said it could not check most of the corporation’s key expenditure, including R30-million in programming expenses, and revealed that most of the corporation’s records had collapsed.
The audit report, which covered the financial year to March 1997, says management discovered a fraud racket involving at least R656 000 – “with a possibility that it could be in excess of R1,7-million”.
It said the racket was run by the corporation’s overseas creditors’ clerk, who mailed bank drafts to accomplices in the United States.
The cheques siphoned out of Bop Broadcasting were cashed at a New York bank. The report said the clerk and been arrested and her scheme was being investigated.
The auditor general’s probe also uncovered an extraordinary pension scheme in which the corporation invested R8,5-million, and channelled the monthly annuity instalments into an endowment policy which only assured a former finance director.
The report noted that the commission for this transaction was earned by the wife of a senior employee at Bop. It also emerged that the cash value of the endowment policy was ceded to Multichoice, the pay-TV company, as part of a deal to flight Bop TV on its satellite system.
“The corporation no longer needs this guarantee since the agreement with Multichoice was cancelled and the channel capacity is no longer utilised by the corporation.
“However, this investment cannot be called up by the corporation and the corporation has thus far had no success in cancelling or changing the beneficiaries of this endowment policy,” the report said.
The auditor general said Bop had operated without a board during the financial year under review, the management having been left in the hands of its chief executive officer, Cawe Mahlati.
It said the corporation’s internal audit system had collapsed, leaving fraudulent and unauthorised transactions undetected.
Examples of fruitless expenditure detected by the auditor general included the acquisition of an accounting system worth R2,2-million which was never installed.
Bop had also failed to recover loans from staff amounting to more than R500 000, and had not submitted tax returns.
Bop was incorporated into the SABC this year. An SABC representative said this week that its board had not been alerted to the damning report, but was “very concerned” about the state of Bop’s financial systems and had already dispatched independent auditors to peruse the accounts before it was fully absorbed into the SABC.
Mahlati said she had “naturally” seen the report but would only discuss it – and anything else – in writing. Many staff have been retrenched or put on to monthly contracts. Only a handful have survived the incorporation into the SABC.
Mahlati has clashed with employees over the retrenchments and over disputes surrounding pension pay-outs.