SCORPIO — THE YELLOW CARDS AT SAFA, PART THREE
Secrecy cloaks 2010 Fifa World Cup Legacy Trust after Danny Jordaan may have been caught in a lie
Safa president Danny Jordaan may have been caught spinning a yarn over the administration and winding down of Safa’s 2010 Fifa World Cup Legacy Trust worth half a billion rands. Consequently, the financials of the depleted trust, intended to be a self-sustaining source of football funding over the long term, are now cloaked in secrecy.
Safa killed its golden goose worth half a billion rand in less than 10 years.
The 2010 Fifa World Cup Legacy Trust was birthed in 2011 as a $100-million Fifa pledge for South Africans to continue reaping the benefit of hosting the 2010 Fifa World Cup. At the then exchange rate it meant Fifa paid a total of R450,762,816 into the Legacy Trust in 2011 and 2012.
The Legacy Trust was “intended to be a self-sustaining source of funding over the long term”, the Legacy Trust background paper explained.
“The strategy has been to protect Fifa’s initial investment into the Trust, investing the interest generated from this amount.”
Noble. And a pipe dream.
During its lifetime and as recorded in Legacy Trust minutes and a Legacy Trust financial report dated February 2021, the trust received about R160-million in interest and paid out just under R547-million in grants. Expenses paid since 2012 totalled an eye-watering R58.6-million.
By February 2018, Legacy Trust trustees discussed an “exit strategy” and winding up of the near-depleted trust, Legacy Trust minutes show. And just like that, by the end of 2021, the “self-sustaining” trust had left less than R5-million in the bank – allegedly utilised to “wind up the trust”.
Safa scored a number of yellow cards in the matter. Apart from the questionable management of a supposedly self-sustaining trust, there are now questions on whether the trust money actually ended up where it was designated to flow, whether Jordaan misled the Safa NEC and whether half a billion rands were spent on programmes that ultimately benefited South African soccer in the long term.
This is the story of how the Legacy Trust was questionably shut down after it was managed out of its funds. It is a story that straddles dubious financial management and possibly unlawful actions, and it is an initial attempt at piercing the deliberate cloak of secrecy thrown over the Legacy Trust’s operations and winding down procedures.
Safa president Danny Jordaan stood before the Safa NEC on 2 October 2021 and announced that the 2010 Fifa World Cup Legacy Trust was to be dissolved. Jordaan told the NEC “he was instructed by Fifa to remove” all the South African Legacy Trust trustees, except one, while Fifa would keep two of its representative trustees to initiate the winding down process.
The Safa NEC consequently, and on the word of Jordaan, accepted the “Fifa instruction”. Clive Grinaker, described by people opposing Jordaan as the president’s right-hand man, would remain as the sole South African trustee. Elvis Shishana, Ria Ledwaba and Obakeng Molatedi were removed as trustees. We know all this because former Safa vice-president Shishana described what happened in a lawyers’ letter to the Master of the High Court.
Nineteen days later, Fifa trustee on the Legacy Trust, Federico Addiechi, fired off a distress flare of an email that seems to suggest Jordaan lied to the NEC: “While Fifa’s feedback is still pending, we would like to express our surprise and concern with the decision to remove the three SAFA representatives from the Trust, including the Trust’s Chairperson [Jordaan] and longest-serving member.”
Addiechi’s mail seemed to indicate Fifa never gave the “instruction” to remove the trustees, as claimed by Jordaan.
Addiechi’s email continued, saying that Fifa’s legal team was assessing the Safa decision in order to offer advice.
“Irrespective of that analysis, however, SAFA’s decision is worrisome and sheds a very negative light onto the more than ten years of work and impact of the 2010 Fifa World Cup Legacy Trust”, Addiechi then stated.
“Accordingly, Fifa’s expectation is for SAFA to revert that decision and for the three members (and in particular the Chair) to continue their functions until the soon-to-come dissolution of the Trust.”
Addiechi warned that the route Safa – based on Jordaan’s word – embarked upon “would send a very negative message that would damage the reputation of the Trust, its members and its work”.
This time neither Jordaan nor the Safa NEC ensured that “Fifa’s expectation” was met. In fact, it seems that Addiechi’s letter was never formally tabled in front of the NEC.
Addiechi’s email is worth the read, so we publish it here in full:
Safa met a number of Scorpio’s questions, including whether Jordaan lied to the NEC, with a somewhat panicky public press release titled “Enough is enough – SAFA” in which the association’s press office plays at being a victim, but never gets so far as to answer any of Scorpio’s questions. When questioned, Fifa remained mum, except to assert that the process was lawfully handled.
Nevertheless, the yellow card held up by Addiechi leaves the reader with a number of questions. Before we consider these, a fuller picture of events leading up to Addiechi’s email and those after it is needed.
About six months before Jordaan announced “Fifa’s instruction”, the Legacy Trust trustees met for the last time. It was decided that the trust must be dissolved because only R45-million was left. Of this, R40-million was to be paid out to Safa as a grant and distributed to the Women’s Super League, local football associations, Men’s Regional League, Women’s Regional League and the High Performance Centre in Johannesburg. R5-million was to be left in the bank to wind down the trust. A former trustee told Scorpio that a chunk of this R40-million seems to have been redirected elsewhere.
Importantly, Shishana’s lawyers’ letter claims, the trustees left the meeting with the understanding that they would meet again in two weeks to finalise the dissolution of the trust and that “the trustees would be granted access to all bank statements in order to satisfy themselves regarding the validity of all transactions made by the Trust during its existence”. This was particularly to ensure that the money was distributed as approved by the trustees.
Delay upon delay was recorded and Joe Carrim, general manager of the trust, did not reply to a number of inquiries, Shishana said.
According to Shishana, “some of us were quite surprised” when Jordaan announced the “Fifa instruction”. Grinaker, it is believed, was left on the trust as Jordaan’s proxy.
All subsequent efforts by the trustees, particularly Shishana and Ledwaba, to have eyes on the Legacy Trust financials were in vain, to the point where Shishana wrote the mentioned lawyers’ letter to the Master of the High Court. A second trustee broadly confirmed Shishana’s version. By now an acrimonious fight has broken out about the trust’s financials and the NEC has duly taken sides, which makes for hot-tempered WhatsApp reading.
Jordaan’s yarn that he has allegedly spun around the trust has in the meantime frayed, but seems to have ultimately been a successful strategy.
A cloak of secrecy hangs around the Legacy Trust financials and specifically smothers the question of “where did the money go?”
The trustees’ bitter complaints, the NEC infighting and forensic investigator Bart Henderson’s recent high-level overview report, which includes the Legacy Trust, have put Jordaan under pressure. In answer, Safa’s press office duly released a barrage of revealing press releases about “malicious” and “vicious attacks” – while farcically refusing to answer journalists’ questions.
The press office also scored an own goal trying to explain away its members’ worries. Upon careful consideration, however, this explanation is rather a clear attempt at obfuscating the truth. According to Safa, “the Chief Finance Officer of Fifa attended all Legacy Trust meetings. Ernst & Young submitted unqualified audited financial statements for every year of operation of the Trust, and they were approved by all trustees without exception up until the final financial statement.”
Safa’s press office pretends to have answered the question of, “where did the money go?”
Jordaan’s henchmen did not.
Instead, Ernst & Young is abused as a veneer of credibility. The mere presence of the Fifa CFO at relevant meetings also has no bearing on where the money ultimately ended up.
The problem with Safa’s retort about “where did the money go” is best explained by an Afrikaans proverb which loosely translates to “between the hand and the mouth, the porridge falls on the floor” (Tussen die hand en die mond val die pap op die grond.)
Ernst & Young audited the Legacy Trust’s financial statements for every year – the audit focuses on what the spoon has scooped up from the Legacy Trust bowl. So between the bowl and the spoon, according to Ernst & Young, the porridge checks out. (The Fifa CFO was informed about what the spoon would scoop up from the bowl. The Fifa CFO cannot account for more than that.)
But the actual question Safa’s press office is dodging is this: What happened with the porridge on its way to the mouth? Meaning, what happened to the money after the “pay” button was pushed? Who received the money, and how was it disbursed? Did all of it end up where it was supposed to, or did some of the funds get… lost?
In other words: “Where did the money go?”
Despite all its pretentious indignation and explanations, Jordaan’s Safa has not answered this question.
To pierce the cloak of secrecy thrown over the Legacy Trust’s operations and winding-down procedures, and to determine whether soccer in South Africa benefited as much as it should have from the Legacy Trust, a thorough independent forensic audit is needed.
There are, however, a number of yellow cards about the massive total of R58.6-million in Legacy Trust expenses incurred between inception and closure of the trust that can be explored here.
Recorded under “operating expenses” in the Legacy Trust financial report is the item, “salaries”, by far the largest expense, at almost R38-million. For clarity: salaries are 65% of the trust’s total expenses.
“Accounting” and “audit fees”, recorded as two line items, were R9-million and R1-million each. “Professional fees” cost the trust R6.1-million – this seemingly includes architect’s fees for the problematic Technical Centre/Fun Valley project (another Safa yellow card Scorpio will touch on in a follow-up of the Safa Yellow Cards series).
“Office supplies” and “travel and accommodation costs” were acquired for R1.25-million and R1.3-million. “Telephones”, “advertising and branding” and “advertisement tender” were recorded as R321,602, R370,810 and R211,876. Three equally odd items include “catering services” (R145,535), “general expenses” (R8,671) and “gifts” (R13,598).
Keep in mind that the trustees had no other job than to hold meetings to consider applications by Safa to pay out money to the association. The general manager of the Trust, Joe Carrim, had to, well, manage the trust. (The expenses line item “interest and penalties” that cost the trust R25,209 rather raise the question whether Carrim did a thorough job.)
The professional fees are described as a service in planning Safa’s Fun Valley asset. Surely an expense for Safa’s purse?
Then, the Trust paid for office supplies of more than a million rands?
How many phones do you buy and phone calls do you make to total R321,602?
Catering services at R145,535 – did the trust throw a caviar party?
Gifts? Who did the trust management buy gifts for?
Each of the above expenses line items raises important questions: were these expenses a priority; was this the best use of the “living trust” rands; were these expenses more important than, say, football kit and training for kids in Mamelodi; did these expenses contribute to the longevity of soccer in South Africa; and, ultimately, did the money actually end up where it was said to have gone?
Fair questions. Especially when considering that a number of the Legacy Trust’s trustees, former and current Safa NEC members, as well as founders and members of regional football academies are complaining openly and in confidence to Scorpio that the Legacy Trust’s grant funding totalling R547-million may not have ended up where it was intended to go.
The matter of the Legacy Trust’s paid grants is one to be answered by a thorough forensic investigation – a call that Safa management seems to be vociferously against. DM