SCORPIO — THE YELLOW CARDS AT SAFA, PART TWO
PwC quit, twice, and Safa millions questionably and possibly unlawfully supported Jordaan & Hluyo
Safa’s auditors PricewaterhouseCoopers (PwC) resigned in 2019, and again a year later, saying the ‘risk’ of dealing with Safa was just too high — a fact kept quiet and out of public knowledge ever since. In addition, a Scorpio probe found at least R14-million in Safa funds paid in a questionable and possibly unlawful manner to or for the benefit of the association’s president, Danny Jordaan. An additional few Safa millions appear to have benefited CFO Gronie Hluyo and the Safa team doctor.
Scorpio can reveal that Safa’s auditor PwC fired the football association twice as a client due to “risk” the auditor was not willing to bear – a fact that has been hushed up.
In July 2019, PwC is said to have verbally indicated to Safa management that the auditor was ill at ease with rape allegations against president Danny Jordaan and severe infighting over the 2018 Safa elections, Safa insiders told Scorpio. PwC was apparently particularly perturbed by the way in which presidential hopeful Ace Ncobo claimed to have been physically threatened during the 2018 election run-up, then walked out to leave Jordaan to stand unopposed as presidential candidate and made a big stink about it with Fifa.
A number of Safa delegates visited the PwC offices in 2019, pleading with the auditor to stay on, a person with direct knowledge of the negotiations told Scorpio.
PwC reluctantly agreed to stay put, signed off on the 2018/19 Annual Financial Statements (AFS) but then resigned for the second time, months later in March 2020.
Safa then, in around October 2020, appointed a small East London outfit named Sondlo Chartered Accountants Inc, which signed off on that financial year’s statements.
Safa management has gone to great lengths in recent years to pretend that all is well and that the loss-making association is financially sound.
The pretence fools no one, of course. Mainly because the money seems not to end up where it is supposed to. Banyana Banyana recently refused to play a friendly against Botswana, seemingly over a lack of finances including equal pay and questions about where $1-million from Fifa to prepare the team for the Fifa Women’s World Cup actually ended up. The Motsepe Foundation had to jump in and open its purse for Banyana. Bafana Bafana players also threatened to strike ahead of their latest Morocco match because of unpaid salaries.
Further, whispers of imminent retrenchments and staff restructuring to cut down on administrative costs emanate from the office of Safa president Jordaan. That, of course, is while Jordaan’s national executive committee (NEC) is now about 48 members strong – the largest, it is argued, on the continent, and one of the biggest in the world. Each is duly remunerated with honoraria, flight tickets and accommodation around the country – a highly contentious issue among the administrative staff. And this is despite Fifa’s decade-old directive, dated 12 July 2012, to urgently reduce the number of NEC members.
Nothing better explains what seems to be questionable management at Safa than the hard numbers.
A breakdown of all Safa expenses listed in the association’s annual financial statements shows 19% of the money (almost R47-million) was spent on our national teams. Football development in the country received 13% (about R31-million) of the available funds and 15% was spent on competition and leagues (about R36-million).
Totalling just under R114-million, the money spent on actual soccer is still less than the 49% (R117-million) that went to administration and governance. Included here is the upkeep of the NEC. This is, of course, if we take the annual financial statements as gospel, which some Safa insiders argue are not entirely trustworthy. A number of NEC members are now asking for proof that funds allocated to teams, competitions and leagues actually ended up in the designated hands.
The first and second PwC resignation letters referred to above – which have been kept a secret and of which no mention was made in the association’s subsequent annual financial statements – seem to give credence to some NEC members’ calls for an independent forensic audit.
In a carefully worded first letter dated 10 July 2019, then PwC director Pule Mothibe wrote:
“PricewaterhouseCoopers Incorporated’s risk management policies and procedures provide that we, from time to time, perform client and engagement acceptance procedures on existing clients, to evaluate whether, as a firm, we are accepting an appropriate level of risk in continuing with a particular engagement or client.
“Following recent developments, we have performed such updated assessments, and regrettably, have determined that we have no other option but to resign as auditors of SAFA with immediate effect.”
PwC declined to comment or provide details of their resignation and the exact nature of these “recent developments” Mothibe referred to.
The second letter, dated 16 March 2020, repeats the history of the contentious issue and states:
“Regrettably, in accordance with our firm’s risk management policies and procedures, we remain of the view that resignation as auditors is appropriate and that we are unable to continue as auditors of Safa with immediate effect.”
Auditors resigning before their term expires is a notorious red flag pointing at the operations of the involved entity – akin to an adverse finding.
Safa insiders say the “recent developments” that frightened PwC away may also link to issues around the 2019/2020 financial statements and the question of material losses reported in the 2018/2019 financial year.
To date, Safa NEC members claim the 2019/2020 financials were never presented to the Safa congress. A current senior manager in the administrative office and six current and former NEC members expressed their worry to Scorpio about the validity and accuracy of the financial statements. The current senior administrative manager outright claimed that “the books are cooked” – a claim the source could not back up with facts. It is worth a mention though, seeing that Safa management sourly referred to such claims in its 2021/22 AFS.
In Safa’s latest AFS, the chair of the audit and compliance committee Bennett Bailey referred to a “so-called investigative newspaper” which questioned the presentation of the AFS and the “unfortunate” “ongoing onslaught on Safa”. According to Bailey’s letter published in the AFS, the auditors could find no trace of fraud, financial misstatements or misappropriation of assets.
In direct contradiction of Safa’s AFS and supportive of the call for an independent forensic audit, former CEO Dennis Mumble, too, in a confidential report titled “Governance Challenges at Safa” and dated May 2020, claimed a number of “fundamental misstatements of fact” and “clear violations of the Companies Act and the King Code of Corporate Governance” in draft 2017/18 and 2018/19 AFS documents that may “constitute reckless trading”.
These examples support the suggestion that, at least inside Safa, there is a perception that the books are being cooked. Jordaan has consistently and vociferously denied all related allegations. Unfortunately, Jordaan seems to be in question, too.
Equally troubling as their money worries, Safa insiders said, are unexplained funds seemingly paid to or for the benefit of Jordaan, longtime CFO Gronie Hluyo and team doctor Thulani Ngwenya. These claims are partly described in criminal complaints against Jordaan and Hluyo, laid at the Hawks by Mumble, Safa national executive committee member Malesela Mooka and Lucas Nhlapo, former vice president and former chair of the Safa audit and risk committee. After a year of dithering, Jordaan submitted a warning statement to the Hawks in May 2023. Hluyo declined to do so in August 2022, NPA spokesperson Mthunzi Maga told Scorpio.
A Scorpio probe into Safa spending on Jordaan and Hluyo found there may well be reason for worry. When informed and questioned about Scorpio’s findings, both replied in June with an incoherent lawyer’s letter, marred by factual mistakes, which seemed to deny wrongdoing.
In Safa’s financials, Scorpio found about R4-million in unexplained, questionable and large amounts seemingly marked for the benefit of Jordaan. It is unsure whether these amounts – effected between January 2011 and May 2018 – were paid for his benefit or into an account Jordaan manages. Jordaan refused to offer clarity.
These include R189,450 on 28 May 2018, marked as “Danny Jo”; R214,678.05 on 15 May 2015, and another R484,211 on 26 April 2014, both marked as “President”; and R951,575.03 on 17 March 2011, R1-million on 10 February 2011 and R1.5-million on 11 January 2011, all three marked as “Danny Jor”.
The payments seem to coincide roughly with Soccer World Cup games and may well be entirely innocuous. The questions then include whether these payments were authorised by Safa’s NEC – of which one NEC member claims especially the 2014 and 2018 payments were not authorised – and whether it is wise for a cash-strapped association to spend this amount on its president.
Jordaan’s claim of a “President’s Discretionary Fund” is just as awkward and perhaps more serious. Especially since no mention of such a fund is ever made in official documents, nor in the audited financial statements.
Mumble has described the fund as “non-existent”, and said Jordaan in one instance tried to force him to make payments “from his (non-existent) discretionary fund from which [Jordaan] paid certain funds to people who approached him for support”.
Mumble continued: “During this exchange [Jordaan] shouted loudly – and very embarrassingly in the presence of all around the table – that he was the President of the Association and I should just do what he asked me to do. Angrily, I shot back that he could be President all he wanted, but if there was no money, there was nothing we could do!”
A second instance where this mythical “discretionary fund” as well as Hluyo’s adoration for Jordaan is on record, appears in an internal Safa email from Hluyo to Safa finance manager Vincent Mokoena, accountant Manisha Gokal and former CEO Gay Mokoena, dated 26 March 2020.
The email is titled “President’s Discretionary Funding: Donation to Mr. Jack Maluleke”.
Maluleke is an NEC member and Bafana Bafana’s technical committee chair.
Hluyo wrote: “Mr. Jack Maluleke and his family seemed to have contracted the Covid-19; so the President, in his wisdom, is donating R30 000 (net) to Mr. Maluleke. May you please process this payment to be included with this week’s payments.”
The above is also an example of allegations of Jordaan using Safa money to “buy” NEC members who, in turn, are supposed to protect and shield him from scrutiny. Loyal troops are also handy at the voting station.
The total paid from the unicorn fund due to Jordaan’s “discretion” is unsure and can only be calculated during a forensic audit.
The Safa financial statements additionally seem to support a number of complaints against Jordaan. In the “foreign exchange section” of Safa’s financials, Scorpio found at least R2.8-million paid to New York-based legal firm Arnold and Porter LLP between December 2016 and September 2018, often marked as “Dannyjordaan Leg”, “Dr Danny Jordaan Legal Service” and “ZAR”.
There are large amounts of additional legal fees in Safa’s financials that cannot be tied to Jordaan with certainty, which are therefore not included in this report. These are worth a mention, though, seeing that former CEO Mumble wrote in his confidential report that an estimated R10-million in legal fees were paid on behalf of Jordaan for matters which, according to Mumble, were for the private benefit of Jordaan and not for the benefit of Safa. These will include R1.76-million in legal fees to local firm of attorneys Nortons, paid from 12 December 2015 to April 2017. According to Mumble, Jordaan argued that Safa had to foot the bill. Mumble, however, is of the opinion that these fees were for Jordaan’s pocket as it had been on private matters and “came at a tremendous cost to the association, whose cashflow was already severely constrained”.
Eleven payments totalling just over R1-million, paid to Grit Communication between November 2017 and December 2012, to iron out the creases in Jordaan’s public persona during the height of former ANC MP Jennifer Ferguson’s rape allegations, are also confirmed in the financials. The last payment of R40,250 in October 2018 was to Badger Security Services for bodyguards for Jordaan during the earlier 2018 Safa elections.
The payments to Grit Communication and Badger Security Services were included in Mumble’s criminal complaint to the Hawks against Jordaan, because Grit Communications and Badger Security Services were “irregularly appointed by the President”.
In May 2023, Jordaan submitted a warning statement to the Hawks about these charges.
Read more in Daily Maverick: Safa president Danny Jordaan submits warning statement to the Hawks after financial misdemeanour claims
Hluyo, too, as well as team doctor Thulani Ngwenya, seemed to have received funds that should at least be revisited and questioned.
Between 2011 and 2018, Scorpio traced at least R1,673,203.90 paid to or for the benefit of Hluyo.
Five payments of R800,000 were effected to Hluyo from August to September 2011. These payments were marked “Trsf to Hluyo CC” and “Trsf to Hluyo Card”.
Four payments marked “Trf to Hluyo Card” were effected between 2016 and 2018, of which the lion’s share was paid on 18 September 2018 (R500,000) and 28 September (R300,000).
Between 2013 and 2018, Scorpio traced R8.3-million marked as “Nngwenya”, “Ngwenya Hotel” and “Trf to Ngwenya”.
When questioned in March about these payments, Hluyo answered: “…let me haste to state that the payments which you referred to as having been made to me or my benefit were not paid to me or benefitted me. The card you refer to is a Safa Credit Card which is allocated to [me]. We have some Safa credit cards which are allocated to few employees, incuding (sic) Dr. Thulani Ngwenya, and these cards belong to Safa, are necessary for running the business of Safa and are used solely for Safa business transactions, like flight and accommodation bookings for our teams, medicines and medical equipment, etc. When funds are transferred into these cards, it is for the sole purpose of utilising the cards for Safa business transactions. So I have never received any payments from Safa into my personal credit card or bank account other than my salary.”
When Scorpio invited him to share his allocated credit card’s bank statements with Daily Maverick, Hluyo remained silent to this day.
The explanation sounds hollow and must be questioned. It is clear from the financials that there is no regularity to the money flows – neither in frequency nor in amount. Why would the CFO and the team doctor pay for flight and accommodation bookings for the soccer teams? Or for medicine and medical equipment? It also doesn’t explain why one payment is marked “Ngwenya Hotel”, which may suggest that this was rather a large payment for Dr Ngwenya’s personal stay at a hotel.
The yellow cards at Safa are numerous and have been stacked up for at least a decade. And they’re not about to go away. DM