Safa’s finances in disarray

Less than a week after South Africa was awarded the 2010 World Cup, questions are being raised about the financial stability of the South African Football Association (Safa).

Safa’s national executive committee (NEC) has not produced any financial reports since June 2002, when the books showed that the country’s soccer controlling body was more than R2,5-million in the red. The organisation’s constitution requires the NEC to produce annual financial statements at an annual general meeting (AGM).

No AGM has been held for 23 months and regional affiliates are becoming concerned that Safa may be bankrupt. Mwelo Nonkonyana, president of Safa in the Transkei, the biggest region in the country, said the regions had been silent about these issues because they were mindful of the negative impact they would have had on South Africa’s chances of winning the 2010 bid.

But Nonkonyana is now in no mood to spare the rod.

‘My suspicion is that they must be in the red. We want the NEC to convene a special congress before an AGM. We want Safa to properly account for its finances. We want to know about the money borrowed from individuals. Are we bankrupt? What is the problem? We could not raise these things before the 2010 announcement.”

Earlier this year it emerged that one of Safa’s three vice-presidents, Irvin Khoza of Pirates, had given at least R4-millon as a personal loan to Safa. The Premier Soccer League (PSL) books also show that the league had loaned Safa R4,6-million — an amount PSL boss Trevor Phillips says has now been written off.

Khoza stepped down from his role at Safa after the controversy surrounding the sacking of national coach Shakes Mashaba before this year’s African Cup of Nations in Tunisia.

That Safa is experiencing some serious cash-flow problems is reflected by the fact that it has failed to give regions their annual grants in full.

Instead, there have been stop-gap payments. Regions used to get their money quarterly but they say now they wait until such time ‘as we get it”.

Nonkonyana is also concerned about communication between the 21-member NEC and the regions on matters such as the firing of Mashaba.

‘They told us they were going to call us soon, it has been ‘soon, soon’ since then. The date has come and gone.”

Safa is also at loggerheads with the regions for appointing Deloitte to audit its books. Nonkonyana says the reason is that Deloitte are Safa’s in-house auditors.

‘First of all you will notice that the auditors were the same firm that was commissioned by the NEC — without us — to restructure Safa. That compromised their independence. The constitution says financial statements need to be prepared by independent auditors. There is no way we can accept internal auditors to audit our books,” says Nonkonyana.

When asked why Safa has not held an AGM or produced financial statements since 2002, president Molefi Oliphant blames a dispute with the South African Revenue Service over amounts totalling R21,1-million — part of which involves Safa’s failure to deduct PAYE from players between 1994 and 1998.

He points out that in 2002 Safa made a surplus of close to R13-million, but he ignores the fact that this merely reduced a R25,5-million loss from the previous year.

It appears that Safa continues to operate on private loans and money from sponsors — who keep advancing more funds without asking any probing questions. The sponsors seemed reluctant to speak, maybe mindful of upsetting the apple cart now that the financial spin-offs of hosting the World Cup beckon.

Chris Couchman of Coca-Cola said guardedly: ‘We sit down with Safa after each tournament and we reconcile costs against budgets and make sure all payments are made.”

Asked whether he was not concerned that Safa was unable to account to the sponsors through audited statements every year, he said: ‘As sponsors we cannot be involved in the running of Safa. We give money in good faith.”

One of the recommendations made by the Pickard commission — established in 1996 to investigate allegations of corruption in South African soccer — was that since NEC positions were honorary its members should not be remunerated. The 2002 financial statements indicate that R3 887 598 went into the pockets of the NEC that year.

In 1999 the then general manager of Safa, Dennis Mumble, spoke of plans to reduce the size of the NEC, citing inefficiency as one of the reasons. ‘The NEC is very big, and up until now there had been no job description for most of the executive. At operative level a lot of work is done, but unfortunately there has not been a proper directive from the top.”

Besides Khoza’s resignation, nothing has been done in the intervening five years to reduce the size of the NEC.

Article 12 of Safa’s constitution, says: ‘The Executive Committee shall meet at least once every two (2) months and minutes of such a meeting will be distributed to the members of the committee within 14 days. Members of the association should get a summary of decisions and within 21 days members of the association should get minutes of the meeting.”

Other than this the constitution contains virtually nothing about its financial controls other than that audited financial statements (if any) must be presented to an AGM. The constitution is silent on the details of the financial statements, their format or penalties for reporting or missing deadlines. Since Safa is not a Section 21 company it is not subject to the provisions of the Companies Act, which would oblige officials to produce annual statements.

Safa is a voluntary organisation, regulated by its constitution. Therefore, the NEC is in breach of its constitution and general principles of corporate governance.

Nonkonyana blames inaction by regions for the lack of good governance: ‘We are not vigilant as regions. [Former Safa boss Stix] Morewa was a good administrator but because we were not vigilant we destroy our own colleagues by not making them accountable.”

Morewa was removed by the Pickard commission for accepting a loan from a marketing company that Safa was negotiating a contract with.

The president of the Northern KwaZulu-Natal region, Kenneth Lebenya, said: The only statement we have received from Safa recently is the one in which they told us about [new national coach Stuart] Baxter’s appointment. I am like you, asking questions. I can’t give you an answer.”

World Cup bid chief Danny Jordaan, who remains CEO of Safa although he stepped aside to concentrate on the bid, estimates South African football to be worth about R350-million. Add to that the bid figure of R150-million and its value shoots to R500-million.

The question, however, is whether hosting the World Cup can help improve the administration of football in this country.