Pay back the money: Iqbal Survé says the thought of Independent Media collapsing gives him sleepless nights. (Delwyn Verasamy/M&G)
Media boss Iqbal Survé is seldom far from controversy. He now finds his world closing in, with Public Investment Corporation (PIC) executives this week disclosing that it is considering liquidating his media group to realise R1.5-billion it is owed by the Survé-linked Sekunjalo Independent Media.
Survé also faces a R4.3-billion claim brought by the PIC to reclaim money it had invested his Ayo Technology Solutions before its listing on the JSE in December 2017.
Survé has disputed the suggestion that R1.5-billion is owed to the PIC by Sekunjalo Investment Holdings, saying that the company has never requested a loan from the state-owned asset manager.
But industry observers say that while they carry no torch for Survé, the loss of a major media group such as Independent, which has its origins in the 100-year-old Argus company, would have a devastating effect on the country’s media landscape.
Independent publishes 20 newspapers and nine digital publications including The Star, the Cape Times and I’solezwe lesiXhosa. It employs 1 500 people, has three million online users and a readership of six million, according to the Sekunjalo website. Sekunjalo also owns
Allied Publishing, the largest distributor of print publications in South Africa.
Observers criticise the way Survé has sometimes used these publications, which have had a history of editorial independence, as proxies for his personal wars and agendas, but say the loss of the group would be a blow to a free media landscape.
“It would not be a loss to see Dr Survé lose control over them [Independent], but a devastating blow if all these titles and their newsrooms were lost,” said professor of journalism at the University of the Witwatersrand, Anton Harber. He said that the daily papers and online publications owned by the media company play an important role in communicating events happening in many of the country’s cities.
“At a time when issues of city governance and local service delivery are of paramount importance, these city newspapers have a crucial role to play. It is of the utmost importance that at least some of them be saved and revived, whether in print or online. Without them, our major cities and their citizens will be poorer and weaker,” he said.
The executive director of the South African National Editors Forum, Kate Skinner, said the collapse of Independent due to liquidation would be a negative development, considering that a number of journalists could lose their jobs in an industry already reeling from cuts. She said there would be a reduction in the number of stories distributed daily because of the broad reach of the media company.
“If Independent is liquidated then the different media publications may be sold off separately … It is difficult to see one investor buying the whole operation. A single investor would need very deep pockets and a long term vision,” she said.
Former SABC board member and veteran journalist Mathatha Tsedu echoes similar sentiments, saying that Independent’s publications communicate essential information to a wide range of people. But he said Survé’s acquisition of the media company had turned into a “nightmare” because the publications have lost their editorial independence..
“The disappearance of any means of communication would be a disaster. One would hope that whatever PIC may end up doing would mean the removal of Iqbal and his crowd around the publications, and that other people who reinstate editorial and ethical values would emerge,” he said.
Survé has spoken about what the collapse of Independent may mean. “This gives me sleepless nights,” he said in April this year in response to a question about what the effect of its possible collapse would be.
He told the Mpati commission— which investigated alleged impropriety at the PIC — that the media company has been operating in a difficult environment, resulting in its poor performance. He attributed the poor performance of the company to lack of advertising, declining circulation and increased competition.
Circulation of Independent’s flagship isiZulu newspaper Isolezwe ngeSonto has fallen 20%, from 65 013 in 2018 to 51 992 in 2019. The Star news also experienced a drop, from 72 375 in 2018 to 71 692 in 2019, according to the Audit Bureau of Circulations of South Africa.
Independent’s declining financial position has meant that it has been unable to service a loan it received from the PIC, which manages investments on behalf of the Government Employees Pension Fund (GEPF).
On Tuesday PIC head of legal services Lindiwe Dlamini told Parliament’s finance committee that the state-owned asset manager had sent a letter of demand to the Sekunjalo-led consortium, requesting that it repay the loan it gave to the group to acquire Independent in 2013.
Despite the correspondence sent in May, the funds have not been recovered by the PIC and “we are now looking at liquidating the company,” Dlamini said.
Survé responded by threatening to sue the PIC for “bewildering” statements made by Dlamini. He claimed Sekunjalo is not tied to any debt from the asset manager. He has accused the company of mixing up Sekunjalo Investment Holdings with Sekunjalo Independent Media, which is a different juristic entity.
“Failure to do so [retract statements] will see Sekunjalo exercise its right to not only institute a damages claim against the PIC, but also against Ms Dlamini in her personal capacity,” Survé said.
Dlamini also told MPs that the PIC was looking at taking necessary action against Ayo, following media reports that the company is siphoning funds offshore — something that Ayo chair Wallace Mgoqi has denied. In May the PIC launched a court application to retrieve the R4.3-billion it invested in the company.
The PIC said in a statement: “The PIC’s claim is based on two alternative causes of action, which are misrepresentation[s] on the part of Ayo when the transaction was concluded and the principle of legality.”
Survé has denied any wrongdoing, telling the inquiry in April that the dealings between the Sekunjalo Group — which includes Ayo and Independent Media — were above board.
In the past two weeks, Survé has also had to deal with the Financial Sector Conduct Authority (FSCA), which conducted a search and seizure operation at the Sekunjalo Investment Holdings offices in Cape Town. The FSCA said the raid was conducted in relation to alleged “market manipulation” and possible contravention of the Financial Markets Act by Ayo.
Survé has described the events of the past two weeks as being “designed to cause maximum harm to Sekunjalo and [himself]”. The PIC refuted claims that it was involved in the FSCA’s raid, saying Survé’s statements attempting to link it to the raid are “factually misplaced, opportunistic, flawed and deceitful”.
In September 2018, the Mpati commission heard that Sekunjalo had not serviced the loan and owed the PIC R1.35-billion, resulting in the GEPF writing it off. The funds were extended to Sekunjalo Independent Media in 2013 for the acquisition of the then Irish-owned company.
Survé told the commission that R1-billion of the deal was funded by Chinese consortium Interacom Investment Holdings; R850-million came from the PIC and R150-million was funded by the Sekunjalo Group.
The transaction provided the PIC with a 25% stake in the media company, with the remainder of the shares being held by Interacom and Sekunjalo Independent Media.
Survé told the Mpati commission that, without the support of Sekunjalo Investment Holdings, Independent Media is not in a position to repay the loan.
Thando Maeko is an Adamela Trust Business Reporter at the Mail & Guardian