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SABC interim board requested investigation — and then found itself the subject of investigation

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John Matisonn is a former senior United Nations elections official, Independent Broadcasting Authority councillor, and long-time political and foreign correspondent. He is the author of Cyril’s Choices, An Agenda for Reform; and God, Spies and Lies, Finding South Africa’s Future Through its Past.

Former 2017 interim board members have been referred by the Special Investigating Unit for prosecution — over a security tender they asked the unit to look into. None of the other 16 cases of possible corruption referred to the unit has been followed up.

All five members of the 2017 SABC interim board appointed to clean out the rot in the SABC have decided to review the final report of the Special Investigating Unit (SIU) on the grounds that it is fundamentally flawed in law and contains material factual inaccuracies. The SIU report itself presents no evidence to justify its decision to refer the former board members for criminal investigation.

As an interim board, we referred 16 cases of possible corruption to the SIU, including this one. Our evidence came from the public protector’s report and the parliamentary inquiry into the SABC, which we followed up with our own internal forensic investigations. We then asked the SIU to investigate this security tender because we received credible information from a whistleblower of alleged improprieties.

We are perplexed that the only case the SIU requires referring for prosecution so far is against us — over a security tender we asked it to investigate. We engaged the SIU in mid-2017 to try to claw back some money lost to the SABC. We are still waiting for them to make criminal referrals on those.

These are the facts about the security tender.

Arriving at the SABC, we found at an atmosphere of constant irregularities. We were regularly pressed to agree to spending we found questionable. Instead, we began a programme of cutting these contracts in a way that saved the SABC about R500-million — halving the annual loss from about R1-billion to about R500-million during our six-month tenure.

We did this by cancelling a TV licensing contract, the Gupta’s New Age Business Breakfast contract, and reviewed irregular appointments, long-overdue disciplinary cases and the Multichoice contract. Some of the companies that lost out took us to court, but we prevailed.

In the case of the contentious security contract, we were aware that there had often been question marks around security tenders when it first came to a sub-committee of the board on 22 June 2017. Three security companies were presented to the sub-committee from management’s bid evaluation committee in order of preference. This sub-committee asked for further information to answer questions they had.

When it came to the full board on 30 June, the acting CEO informed the board that a decision was required that day or the SABC would be without security guards. At that time we were concerned that journalists were feeling threatened, and as a National Key Point, we could not allow the corporation to be without security.

Between the sub-committee meeting and full board meeting, the chair had received information from a whistleblower in the SABC, with credible information that the top company should not be appointed.

We asked the head of the legal department whether we were required to approve the Number 1 company, or whether we were required to examine the evidence and reach a decision as the board. He informed us that the board was not a rubber stamp. It was expected to apply its mind, and appoint the bidder it considered best, provided that it gave reasons which were rational.

The lengthy deliberations were minuted and run across eight closely typed pages. We encourage the SABC to make these minutes public so that everyone can decide if the matter was considered carefully, in the interests of the SABC and in accordance with our legal advice. We support complete transparency.

According to the SABC bid evaluation committee, the scores achieved by Mjayeli and the second-placed bidder, Mafoko Security Patrols, was 99% and 98.87% respectively. However, Mafoko Security had better empowerment credentials that Mjayeli. There was a difference of about R2-million on a five-year contract on price between the parties, with Mjayeli coming in at R183-million and Mafoko at R185-million.

At the board meeting, the full interim board of five members, with the executive directors, interrogated the documents and sought further explanations from the executives. After extensive discussion and acting on the inputs and assurances provided by top management, the procurement and supply chain management team and the head of the SABC’s legal team, the board resolved that it would be in the best interest of the SABC to appoint Mafoko and not Mjayeli.

We took the decision, based on a host of factors including Mafoko’s superior BEE credentials, to award the contract to Mafoko — subject to the requirement that the executives inform Mafoko they must match the Mjayeli contract price. We asked that reductions in security guards be taken from our floor — where we felt the board had more guards than necessary.

Mjayeli elected to apply to the court to review and set aside the interim board decision, as it is entitled to do. For its part, the interim board referred the security contract for investigation by the SIU.

The interim board members have an interest in the final report issued by the SIU, which found that the interim board’s award of the tender to Mafoko was irregular. As a consequence, the SIU recommended that the National Prosecuting Authority prosecute the interim board members, that the interim board members be sued for monies lost as a result of the irregular appointment of Mafoko and that the interim board members be declared delinquent directors.

The members of the interim board have decided to review the SIU report solely to protect their good name and reputation and their dignity. All five of us enjoy wide acceptance and respect in society emanating from our track record over decades of fighting against the unjust and oppressive system of apartheid at a great personal sacrifice.

The report itself is very thin — about 13 pages long. Nine pages are devoted to a summary of the outcomes, introduction, legislative framework and the SABC supply chain management procedure manual. The result of the SIU’s investigation is compressed into two pages and the recommended action against the interim board members is set out in the final two pages.

The major problem with the SIU report is the disconnect between the dearth of investigative information in the report and the far-reaching recommendations made. It is mind-boggling how the president would be expected to apply his mind to institute such invasive action against the interim board members, with dire and irreversible consequences, on so little information.

The second flaw in the report is the referral for criminal prosecution. The Public Finance Management Act provides an investigative process which National Treasury can apply against Board members who are alleged to have engaged in acts of financial misconduct. Hence, it is inexplicable why the SIU ignored this domestic remedy and resorted to an attempt to criminalise the interim board members.

The third flaw is the recommendation that the board members be declared delinquent directors. Our law is settled that to be declared a delinquent director, it must be established that the director engaged in corruption, had a conflict of interest, secured financial gain personally, be guilty of gross negligence and willful misconduct. The final SIU report itself expressly states that no evidence of personal financial gain, conflict of interest and corruption was found. If that was so, then the recommendation that the interim board members be declared delinquent smacks of malice.

The final flaw is the disregard by the SIU that non-executive directors have a fiduciary duty to act in the best interest of the corporation. In terms of the unfettered discretion given to non-executive directors by the new Companies Act and King IV Rules of Good Corporate Governance, it is expected that they fulfil their fiduciary duties with necessary care and skill, diligence and knowledge and not merely rubber-stamp management recommendations. The extensive record and comprehensive discussion reflected in the transcript and the board minutes on the security tender is testimony that the interim board acted in the best interest of the SABC.

Against this backdrop, it is unlikely that the final SIU report will stand the test of judicial scrutiny and the interim board members are confident that their integrity and dignity will be restored.

The interim board, consisting of Khanyisile Kweyama as chair, Mathatha Tsedu as deputy chair, Febe Potgieter-Gqubule, Krish Naidoo and John Matisonn was appointed in April 2017 and served until its term expired on 30 September 2017. DM

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