/ 22 October 2014

SABC reports irregular expenditure of R3.3bn

Playing it safe: Ongoing political pressure and leadership crises at the SABC prevent staff from finding the confidence to take risks and innovate. Photo: Delwyn Verasamy
Playing it safe: Ongoing political pressure and leadership crises at the SABC prevent staff from finding the confidence to take risks and innovate. Photo: Delwyn Verasamy

The SABC has reported an irregular expenditure of a whopping R3.3-billion in the financial year that ended in March 2014, up from the R100-million that the public broadcaster reported in the previous financial year. The irregular expenditure of R3.3-billion is almost half of the corporation’s overall spend of R6.6-billion over the period. 

While MPs were outraged by the irregular expenditure, the explanation from the public broadcaster left them even more baffled. The SABC’s acting chief financial officer James Aguma admitted to Parliament’s oversight committee on communications on Tuesday that in its 2013/14 annual report the SABC had disclosed R3.3-billion in irregular expenditure, but he explained that only R990-million of that amount was incurred in the current year. 

Aguma said R1.36-billion was incurred in 2013 and R1-billion in 2012. Aguma also admitted that in the previous year, about R100-million was disclosed as irregular expenditure. He explained that as part of the qualification in 2013, the auditor general had cautioned the SABC by saying that its disclosures of irregular expenditure were incomplete, meaning that there was evidence that the SABC had disclosed less than what it should have. 

Aguma said this year, they set out as part of an audit action plan, a team that went and looked through previous contracts, tenders and so on to try and identify this irregular expenditure. 

“Members will realise that irregular expenditure and wasteful expenditure by its very nature is not something that is going to be disclosed openly because the public finance management act has a prescription that people who incur this expenditure may not be very comfortable with those prescriptions.” 

Aguma said this was more so because some sections of Public Finance Management Act state that there would have to be some disciplinary and other remedies for the people who breach that law. 

Historical lack of mechanisms
He suggested that an auditor or a manager responsible for internal controls would have discovered this. Aguma blamed the irregular expenditure on a historical lack of mechanisms to discover such irregularities at SABC. 

He said historically, the broadcaster did not have the mechanism to discover these and that the policy framework was weak to pick some of these issues. He said the SABC had gone back and investigated some of its contracts and tender, and this had led to the surge in the numbers that are being disclosed. 

Aguma explained that the root causes of the irregular expenditure had to do with sports broadcasting rights, where negotiations to broadcast a game or tournament would be negotiated until the last minute and fees would keep rising for those who have an interest in broadcasting the game. 

The SABC’s policies were not in line with the laws of the country, he added. Issues around companies and their tax clearance certificates had over the years also contributed to the irregular spend. 

Aguma said the corporation’s previous accounting officers would have to account on this front. 

Defending the payment
Meanwhile, SABC board member Ronnie Lubisi, who heads the board’s audit committee, defended the payment of golden handshakes to executive staff that left the corporation recently. He said the current SABC board had no choice because when it was appointed in September 2013, some of the cases had been dragging for years. Lubisi was responding to a question from Democratic Alliance MP Gavin Davis about the R13-million paid out to two executive staff who recently departed the SABC. 

The 2013/14 annual report of the SABC tabled in Parliament early this month revealed that former group chief executive officer Lulama Mokhobo, who resigned in February, was paid just over R8-million for 11 months of service. 

The amount included a basic salary of R5.3-million and R2.2-million for expenses and allowances. Former head of news Phil Molefe received R4.8-million, which includes a basic salary of R3.5-million and R733 000 for travel and allowances. 

“We had an issue whether to drag the cases further and not fill the position. That is why some of these high positions were not filled. We had to make business decisions to settle some of these cases,” explained Lubisi. 

He said the board had very good grounds of making those decisions before adding: “It’s a pity that the SABC is a public broadcaster and we have to justify these things to the public.” Lubisi said it should also be noted that in some of the payments, it was not necessarily correct that the entire figure given in the annual report was a golden handshake, some of the payments were for leave days and other things which should be paid for when staff leave an organisation. 

Lubisi vowed that there would be improvement in the next financial annual report, as the SABC’s audit committee has mandated the internal audit to audit the corporation’s targets on a quarterly basis, to ensure there is evidence to support the achievements or results. The SABC has received a qualified audit from the auditor general for the 2013/14 financial year.