SABC: Sihlali's dodgy deals
A report by the auditor general has revealed former SABC chief executive and its legal head signed off a R1,7-billion deal without authority
Former SABC group chief executive Dali Mpofu and legal head Mafika Sihlali signed off the single-largest irregular contract highlighted by the auditor general in his devastating report on mismanagement at the public broadcaster.
The report was released in Parliament this week.
Mpofu and Sihlali eventually left the SABC under a cloud, although the report reveals that Mpofu—who was contesting his repeated suspension by the board—was paid R13,5-million to go away.
The auditor general reported that an environment existed at the SABC “where the ‘tone at the top’ is not appropriate, which in turn seems to have created a culture where management is not focused on public accountability or acting in the best interest of the SABC”.
Mpofu was appointed group chief executive in August 2005. A year later, in August 2006, his friend, fellow lawyer and business partner, Sihlali, was appointed legal and business advisory services head.
Just six weeks into his new SABC job, in October 2006, Sihlali led the charge against M&G Online, which had posted a leaked copy of the SABC’s internal inquiry into the so-called blacklisting scandal.
The South Gauteng High Court dismissed the SABC’s urgent interdict attempt.
In July 2007 Sihlali was back in court applying to gag the Mail & Guardian, this time with temporary success.
The M&G had obtained a leaked forensic report commissioned by the SABC into Sihlali’s alleged financial impropriety. The North Gauteng High Court lifted the gag after two weeks.
The leaked report included information about how Sihlali had outsourced millions of rands in legal work to law firms he was linked to and said there was prima facie evidence of R1,8-million in fraud.
Sihlali denied wrongdoing.
Now it has emerged from the auditor general’s report that in September 2006 Sihlali and Mpofu signed off—without authority—on the establishment of a “technology program management office” worth a staggering R326-million.
The deal included a one-off payment of R7-million, a monthly fee of R1,9-million and a massive project fee of 15% of the capital cost of the project. The fee was estimated to be worth R255-million on an estimated capital cost amounting to R1,7-billion.
The three-year contract related to the management of the SABC’s “digital migration strategy”, designed to convert the broadcaster’s transmission technology from analogue to digital.
The contract, with a consortium led by Siemens IT Services, was concluded despite the board approving only a R10-million, one-year contract that could be renewed annually, based on performance.
According to the auditor general, the SABC’s external auditors reported in July 2008 that the contract was not authorised in terms of Mpofu’s delegated authority and the contract “may be such that the cost exceeds the benefit to be received”.
The auditor general’s report notes that a legal opinion requested by the previous chairperson of the SABC board found that:
- Siemens had been given an unfair advantage ;
- The SABC was not in a position to set aside the contract;
- The group executive committee failed to discharge its duties; and
- Mpofu and Sihlali were guilty of contravening the Public Finance Management Act in signing the contract.
Siemens Southern Africa declined to comment on the auditor general’s report, saying it was preparing a detailed response.
But last year the company denied any irregularities relating to the digital migration project when the controversial contract became part of the allegations levelled against Mpofu by the previous SABC board.
The auditor general’s report indicates the contract was renegotiated several times, most recently in March 2009, for a monthly fee of R1,9-million until the end of 2010, but it is unclear whether the huge project fee has been eliminated.
SABC interim board member Lesley Sedibe said the board was committed to following up any legal contraventions, but would not comment on specifics: “We want to handle this process as responsibly as possible.”
Of particular interest is that Siemens noted last year that the company had partnered local ICT players—including Sedibeng Multimedia Services—on the project.
According to company records, SABC spokesperson Kaiser Kganyago was a director of Sedibeng at the time Mpofu signed the contract with Siemens.
Kganyago could not be reached for comment. Approached for comment, Mpofu told the M&G: “I have referred the matter to my attorneys as I was not given a chance to respond to those allegations.”
He said the quoted value of the contract, R326-million, was “ridiculously exaggerated—a figment of somebody’s imagination”. Sihlali could not be contacted for comment.