SABC Board status: preparation for inquiry

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Communications and Digital Technologies

16 June 2009
Chairperson: Mr I Vadi (ANC)
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Meeting Summary

This was an extra-ordinary meeting called at short notice to discuss the status of the South African Broadcasting Corporation (SABC) Board in terms of the Portfolio Committee’s duty to oversee any executive organ of state falling under it. Eight out of the twelve members of the SABC Board had resigned, including the Chairperson and the Deputy Chairperson. This had resulted in a meltdown of the SABC Board since it could not meet, take decisions or attend to the business of the day. The meeting was thus intended to provide all political parties with the opportunity to reflect on the current situation and to determine how to proceed. In addition to the dysfuntionality of the board there were also additional issues within the SABC such as vacant senior managerial positions, disputes with the trade unions and severe cash flow problems.
Parties agreed that ideally they should come to a consensus on how to resolve this national crisis. Although concerns were raised about the fiduciary mismanagement, the political interference into the SABC and the implications of a SABC strike during the Confederations Cup, it was agreed that the most pressing issue was to ensure that the SABC had a functional board which could be held accountable as soon as possible. The options in doing so were outlined as either replacing the vacant posts, dismissing the remaining four members individually or to dissolve the board as a collective and appoint an interim board. The latter option was favoured by the ANC as it would be the quickest way to ensure the functionality and accountability of the SABC Board.

Since there was a regular Committee hearing scheduled with the SABC Board for the next day the members agreed to use that hearing to make an inquiry into the legal status of the board and its ability to carry out its duties, although it was not decided on how to proceed after the inquiry in terms of dissolving the board or appointing new members to the vacant posts. A letter to the SABC Board members was drafted to prepare them for the upcoming inquiry in terms of new Section 15(A) of the Broadcasting Amendment Act. A worry was raised about the attendance of the resigned members and it was clarified that all but one of them was still under the three month resignation period and they were thus obliged to attend. The letter was agreed upon by the Committee.

Meeting report

 

The Chairperson opened the discussion and acknowledged that the Committee had a tight programme to follow since there was a Government Communications and Information System budget debate scheduled for the afternoon and he realised that Members would want to prepare for it. He thanked everyone for coming at such short notice to this extra-ordinary meeting of the Portfolio Committee which had been called in terms of the parliamentary rule which stated that the Portfolio Committee must maintain oversight over any executive organ of state falling within its portfolio. The Committee had called the meeting in terms of the parliamentary rule which provided that it may monitor, investigate, inquire into and make recommendations concerning any such executive organ of state or institution. Most members would have remembered that at the very first meeting of the Committee where the Chairperson was elected, Mr Van Der Berg (DA) had made a statement expressing his concerns at the development within the South African Broadcasting Corporation (SABC) and he had appealed for the Committee to prioritise the matter so that it could find a way forward both in terms of its internal work and also in order to provide guidance to the National Assembly.


Today’s meeting was called precisely to deal with this matter. The Department had been asked to place on record how many resignations that had been received by the Minister. Their document signed 15 June confirmed on that day that seven members of the board had resigned from their positions since March 2009. The implications of this were that the board did not have the required quorum and could consequently not take any business decisions. In addition to that both the Chairperson and the Deputy Chairperson had resigned, and one of the conditions of the quorum stated that in order for decisions to be taken either the Chairperson or the Deputy Chairperson had to be present. In common terms the situation would be considered a meltdown of the SABC Board, since the board could not meet, take decisions or attend to the business of the day.

Considering that there had been seven resignations in the same number of days, it had been appropriate to call this extra-ordinary meeting, intended to offer all the political parties an opportunity to reflect on the current situation and to determine the best way to resolve the crisis. It was fair to say that such a crisis was essentially unanticipated when drafting the Broadcasting Act and its Amendment. A situation where so many board members, including the Chairperson and the Deputy Chair, had resigned had not been imagined. Moreover, the current situation was a crisis in more than one aspect. Not only was the executive structure completely hamstrung, but in addition several senior managerial positions in the SABC were vacant and had to be filled, the corporation was experiencing a serious cash flow problem and trade unions were threatening to go on strike action. During an informal meeting held with the unions the previous day, they had informed the Chair that they had serious grievances regarding the non-implementation of an agreement that had been signed by the SABC Board, the SABC and the union, resulting in unfulfilled salary expectations and so on.

Certainly Parliament could not be blind to these kinds of things; a very grave responsibility was resting on the shoulders of the Committee to give decisive leadership and to create some stability at the SABC. If they had to take drastic action they had to be bold and courageous enough to do so. What the Committee could not do was to sit on the sidelines and expect the problems to resolve themselves. The indications were that progress had not been made and in fact it seemed like the crises had deepened.

The Chair shared his appreciation of the fact that most (at least the major) parties were represented and acknowledged the presence of party leaders Patricia De Lille (ID) and Musi Zondi (IFP) as well as General B. Holomisa (UDM) and others who were not regular members of the Committee. He thanked them for having joined the session. Also, an email had just been received confirming that Mr Ashwin Trikamjee had resigned from the board on 15 June, resulting in a total of eight out of 12 resigned members. With that the Chair opened the floor for contributions and comments.


Discussion
Mr S Kholwane (ANC) thanked the Chair for the opportunity to meet in the Portfolio Committee so that all the parties’ views on the issue of the SABC could be expressed. It was crucial that all parties attended the meeting since the SABC was a matter of national interest, due to the broadcaster’s duties to the people of South Africa. The SABC was moving towards a state of paralysis and the ANC was especially worried in the light of the reports from the Independent Producers Organisation threatening a blackout. This was a big concern due to the country’s current hosting of the Confederation’s Cup during which it had to show its competency and ability for the upcoming World Cup. As indicated by the Chair, the Parliament could not sit on the sidelines, but needed to ensure that the Committee looked into the legislation to discern what solutions were available in dealing with this serious crisis, where seven or eight of the board members had resigned. The ANC wanted to take advice from other parties and make sure that a consensus was reached when deciding on this matter in order to best serve the public and the SABC and create a long-term solution. As the Chair said in his opening, the DA in the previous meeting had raised this matter sharply and it almost seemed as if they ‘had a crystal ball revealing the future’.

Mr M Zondi (IFP) thanked the Chair for having called the meeting and for having provided strong leadership during the past week and over the weekend and acknowledged that he fully agreed with the issued documents which had recorded the Committee’s opinion on the important issues of the SABC. It could not be allowed that the SABC went into oblivion. It was a critical organisation when considering the hosting of the Confederation’s Cup and the World Cup and the Committee needed to do everything in its power to sort out the issues with the SABC Board and management. He also wanted to be advised as to what possible ways to proceed were available from a legal point of view. Would it be possible merely to condemn the remaining members in order to start afresh appointing a new board? Time constraints had to be recognised; due process required notifications and other such matters which were time consuming. Keeping within the law it was crucial that the issues were addressed as quickly as possible. A national inquiry should also be initiated so that it would be clear what had happened inside the SABC to cause this crisis; something so grave could not have happened had there not been structural problems. This all needed to be done in order for the Committee to practise its required oversight.

Ms J Kilian (COPE) referred to the Broadcasting Amendment Act and asked what the Committee’s legal possibilities were and wondered if there were any legal advisors present. She agreed that a due inquiry into the conduct of the board members was needed; considering the SABC Board’s long history of legal action, counteraction and finally the reinstitution of the SABC Chairperson. The last thing that was needed was for Parliament to contribute to the already considerable legal costs incurred. Thus due process had to be followed at all times. Following on Mr Zondi’s initiative, she asked if the current vacancies could be filled as part of an interim board because if the Committee was to dissolve the board it needed to commence an official inquiry. The position of COPE was that the Committee had to be aware that the mismanagement of funds had come a long way. Members who had resigned already during the election period had expressed severe concerns about the financial management by the board. A thorough judicial investigation was needed to find out what had gone wrong. Signs of the grave financial mismanagement must have had been there; costing had not been done in time, certain bureaus were opened abroad that should not have been and so on. Finally, it had to be stated that COPE was aware that the last four or five members that had resigned had been under political pressure to do so. Three of them were directed to resign by the Luthuli House and the fourth member by the Communist Party in Braamfontein. In light of this, although the Committee needed to take action it was important that it was ensured that the SABC did not come under further political pressure.

Ms P De Lille (ID) stated that Minister Sipiwe Nyanda had said that he was looking to the Parliamentary Processes to pass a motion that would dissolve the current board. The Independent Democrats would certainly support such a process. However it was important for members to ask themselves how the parliamentary processes had failed to prevent this situation in the first place and how the Committee would fulfil its responsibility and accountability so that it could be ensured that something like this would never happen again. Secondly, a forensic audit was needed so that those persons who had defrauded public money were held accountable. It was also important to hold an inquiry into the board to which the former CEO Mr Dali Mpofu would also be welcome. It was crucial that the interim board was made up of non-political appointments and that the independence of the SABC was put first. The ID also wanted to see a concrete repayment plan concerning those producers and companies that had not yet been paid by the SABC since the non-payment threatened the future of the country’s fledgling production industry. About the meeting the Chairperson had had with the unions, the ID supported the notion that the previous agreement should be implemented. A compromise of the screening of the Confederation Cup, with the whole world’s eyes on South Africa, was not permissible. Finally the ID wanted to clarify the current status of the previous CEO, Mr Mpofu. Was he to be reinstated or did he have to be bought out of his contract with money that the SABC did not have?

Mr Holomisa (UDM) was concerned at the fact that relevant SABC representation was not present at the meeting to disclose why so many members of the board had resigned. The Director General or the acting Director General had not provided reasons why the crisis had occurred yet many points had been raised in the media. He would have liked the Chair to briefly take the members through the preliminary report on the SABC submitted to the Chair so that all members could make an informed decision. Points had been made on both the political independence of the SABC and on the financial mismanagement; it needed to be clear what the principal issue was.


The Chair responded that it was unfair to get the Director General to respond, the appointing authority in this instance was the President and any person who had resigned had therefore had to write a letter of resignation to the President and the Committee was not privy to that information. However what was important for this meeting was to get written information from the Ministry, who acted as the shareholder of the SABC, about the exact status of the resignation of board members. If the House felt that it was important to get copies of the correspondence between the Presidency and the resigned board members, such a request could be made and it would most probably be granted.


Mr Van Der Berg (DA) commented that the situation at the SABC was not something that had happened overnight, but that had developed over a ‘long long long’ time. The mismanagement and inefficiency had run over years. He agreed with Mr Holomisa that the two main issues were financial mismanagement and political interference but thought that the financial mismanagement was the principal issue. It was questionable how large amounts could have been spent on furniture and refurbishments when there was not enough money to pay producers and other debtors related to the core business. The SABC had an important role to play in a democracy, ensuring that the people were correctly informed in an unbiased manner. A misinformed population was a dangerous population. It was agreed that merely to replace the board would not help; the problems ran deeper than that. The Committee had to provide leadership in this situation. In that respect, allegiance to the work of the Committee was more important than party allegiances.

Mr Van Der Berg said that he was proud to be a member of this particular Portfolio Committee since it had done a lot of important work in South Africa. He thus urged all parties to come together and ensure that the mess at the SABC would never occur again. Looking at the issue of political interference, this was not a new phenomenon. It had been going on since the days of the National Party and seemed to still be happening. Finally he pointed out that another major issue was the South African people’s loss of confidence in the broadcaster and he wondered what kind of implications this might have on the willingness of the people to support the broadcaster by paying their TV licences. The disillusion of the people was not only with the board but also with management. There had been an increase of senior management of 111% in a year some time back so clearly it could not be that there were not enough managers to look after the operations.

Mr J De Lange (ANC) said that this was a clear case of a corporate governance meltdown. In terms of the Broadcasting Act, the SABC Board was supposed to comprise of 12 non-executive members and three executive members (Chief Executive Officer, Chief Financial Officer and Chief Operational Officer) as appointed by the President on recommendations of the National Assembly. The Act then interestingly made the entirety of the board the Accounting Officer, which in usual circumstances would be the CEO. The other key problem was that Section 13(10) of the Act, in an unusual manner prescribed the quorum of the board as comprising of nine members of the board including the Chairperson or the Deputy Chairperson. The structure that was legally prescribed thus rendered the current board, although still legal, dysfunctional since it did not have either a Chairperson or a Deputy Chairperson. This in turn meant that the board could not make any decisions. So the principal issue was not political interference or financial mismanagement but the fact that legally the board could not function.

However, Mr De Lange said, the Act did not prescribe what needed to be done in situations where the board was dysfunctional. What the Act did do was to outline a few options. The first option, available if all members had resigned, was to appoint a new board, but at the current moment not all members had resigned. Moreover, those who had resigned were still on the board for about an additional three months since this was their period of resignation. A second option was to simply fill the vacant posts, which in this case was almost the entire board, but this would take at least two to three months since posts had to be advertised, followed by public hearings and so on. This was not feasible option since if this was the route taken it would mean that the SABC could not take any business decisions in the mean time. The final option, and the only one really available, was therefore to act in accordance with newly amended Section 15A made to the Broadcasting Act earlier this year. According to this Section, the Committee had two options: either the board could remove individual board members due to misconduct or inability to perform their duties effectively following a disciplinary hearing; or it could dissolve the board collectively following an inquiry where all issues were heard in public and where the board would have to answer how they thought they would be able to govern while not meeting the quorum. This was the option favoured by the ANC. The board should be called to a hearing, including all the resigned members, hopefully including Mr Mpofu, so that as much information as possible could be made available to the Committee.

Mr J De Lange continued that once the board was called into an inquiry, the Committee had three grounds on which to dissolve the board. It could be dissolved on grounds of failing to discharge its fiduciary duties, failing to adhere to the charter or a failure to carry out its duties in terms of Section 13(11) which in turn referred back to Section 6(2) that the Authority had to monitor and enforce the compliance of the Corporation with the Charter. Time wise, if the Committee wanted to take charge of the situation and ensure that there was someone accountable this was the only option. A budget hearing meeting with the SABC Board was scheduled for the next day and the Committee should therefore take advantage of that and send a letter to the Board asking them to use part of that hearing for the purposes of Section 15A, “Resolution for removal of a Member, Dissolution of the Board and Appointment of interim board” and then see whether that hearing would enable the Committee to make a decision or not. This would ensure due process was followed where the persons involved would be given a chance to explain themselves. This was crucial since at the last public hearing with the board it presented its books and everything seemed to be in order and now, a few months later, there were reports that the SABC owed R800 million. Although this had to be dealt with, it was not the priority for the next couple of weeks. What needed to be done was to ensure that an accounting structure was put in place and this could be done by appointing an interim board of five members who could stay on for a maximum of six months. This would create stability, accountability and ensure legality, further it would give the Committee time to do all other inquiries, such as issuing a forensic audit and so on.

General Holomisa stated his support for the motion and asked how the Committee could ensure that all the board members would be present the next day, it was crucial that their ability to attend was verified. Other than that this seemed to be the best way to proceed. The Committee could not dive into the crisis without the relevant facts.

The Chair responded that attendance should not be a major problem since even those who had resigned were still obliged to attend since they had not finished serving their resignation periods. Only Mr Peter Vundla, who resigned on 15 April, would not be required to attend.

Ms Kilian asked if the Chair could then make sure that the Committee had access to the resignation letters so that they could see if any specific concerns had been expressed.

Ms L Mazibuko (DA) wanted to clarify how the resignation period of three months affected the fulfilment of the quorum requirements. If the Chair and Deputy Chair were still serving then surely the board was still functioning from a legal perspective. If this was the case was it not a possibility to simply fill the vacant posts instead of dissolving the board and appointing an interim one. She was concerned that the appointment of an interim board, since it was appointed without public hearings and so on, could be politically influenced. It needed to be clear who was in charge of appointing the interim board, on what grounds the appointment would be based, whether the Committee would be involved in such an appointment and to what extent the process would be open to the public. The point was taken that stability was needed, but if the board members were serving for an additional three months this should give the Committee enough time to fill the vacancies.

The Chair responded that Ms Mazibuko was right in one respect, namely that the board would have nine members during the resignation period, but since it had neither a Chairperson nor a Deputy Chair, it nevertheless failed to meet the quorum. Under these circumstances the board could not meet at all. About the appointment of the interim board, since this was a very urgent process, there was no public process and the responsibility fell on the Committee to process names which would be forwarded to the National Assembly. If the names went through there, the President was obligated to appoint the members within ten days.

The Chair took the point on the concerns of political appointments but felt sure that the members of the Committee were all responsible enough to realise the gravity and urgency of the issue at hand and would not want to politicise the issue but to rather appoint those with the best skills to resolve the crisis at the SABC, which as had been pointed out during the meeting, did not end with the board. This would create the needed breathing space to commence the appointment of a new board. The process was thus in the hands of the Committee which needed to find the five interim members if it did agree with the resolution appointed by the ANC, and members should start thinking about suitable candidates.

Mr Holomisa interjected that he was under the impression that the next day’s hearing was to be used to get a full briefing from the board and that only thereafter would the Committee look at how to proceed. However the Chair made it sound as if a decision on how to proceed was already agreed upon.

The Chair understood Mr Holomisa’s point but said that he simply wanted to present a forecast of what would happen if the Committee chose that particular route, in order to answer Ms Mazibuko’s question.

Ms De Lille wanted to know more about the structure of the next day’s hearing. Could Advocate De Lange perhaps explain which issues could be raised, was there perhaps a specific list of issues or a specific form to the inquiry? If so the members needed to be informed so that they could prepare for the hearing.

Mr B Manamela (YCL) pointed out that the crisis was mainly the board’s lack of quorum. To have members explain why they had resigned and whether or not they were under pressure to do so would not help to resolve the crisis. The Committee had to focus on making the board functional. Even if all operational issues (such as threatened strike action, non-payment of directors and so on) were understood after tomorrow’s meeting the members first priority remained to create a proper structure following due process. The members’ responsibility was to ensure that in the following months the SABC could make the decisions it needed to make.

Ms M Magazi (ANC) pointed out that one of the issues that needed to be dealt with was the structure of the Committee’s approach in the hearing the next day. The Committee needed to look at the articles of the association, the performance of the board and the other honourable members. It had been seen in the past three months that members of the public had been calling on the board to step down due to managerial and operational problems and from a technically point of view the board was bankrupt. Those were the issues that the Committee should start the discussion the next day.

Ms R Morutoa (ANC) excused herself for being in a hurry and asked the Chair if it was possible with the Chair’s assistance, for the Committee to agree and proceed in accordance with ANC’s proposal.

Mr De Lange responded to Ms De Lille’s question and said that Section 15 A b) regarding the dissolution of the board was very wide. According to Mr De Lange the Committee should focus on the board’s dysfunctionality which was the real problem. However there was a whole host of other issues such as the fiduciary duties which members should have fulfilled in good faith but which they clearly had not for some reason or another. The normal procedure in cases like this was to write a letter telling the board what issues the Committee was going to engage them with. From there on it should be decided in what direction the inquiry should go. If the dissolution could be made after the hearing it would, if it could not the Committee would have to discuss what other ways it had to come to finality. The ANC would have also have liked more time but the problem was that the longer they waited the more board members’ resignation periods would lapse, resulting in the Committee being able to get less information, and information was crucial to make a legally correct decision.

Ms De Lille wanted to clarify if the inquiry would go back only to the time when the current board had been instated. In her opinion the situation at the SABC before that time had seemed to be fine.

Mr De Lange answered that irrespective of the previous situation, legally they could only inquire into the period during which the current board had been in place.

Ms Kilian asked if it was possible to get previous reports from the SABC including their financial annual report, since this would be useful especially for new members. She was aware that the Chair and the Deputy Chair were appointed by the President and wondered whether in a situation like the current one if the appointing body remained in charge of appointing a new Chair and Deputy. Also she wondered if the Committee should not review some of the legal provisions of the SABC to avoid a repeat of the current condition where the board was entirely check mate.

The Chair answered that the President did remain in charge of appointing a new regular Chair and Deputy but with the interim board he did so on recommendation of the National Assembly. He wondered if the meeting could be brought to a closure and gave the final word to Ms Mazibuko.

Ms Mazibuko wanted to go back to the issue of the three-month resignation period because she felt as if members were being told that appointing an interim board was the best option, without having thoroughly investigated other options such as replacing the resigned members. She did approve of the proposal to go ahead with the inquiry but wanted to know if the board did remain quorate, could the President insert a Chair and Deputy into the existing board.

The Chair responded that he did not want to open that debate now. Perhaps it was best if all members went back and thought about this and perhaps also the DA should get their own legal advice since they might have a different perspective to that of the ANC, which was fine. Then after the hearing the next day, if there was no agreement, the different proposals could be put in front of the Committee which would then decide.

Mr Kholowane agreed with the Chair that it was important to conclude the meeting and that the main thing was that members agreed on the inquiry for the next day. Further deliberations could take place after the hearing and he was hoping for the maturity of the other side to see the broader issues.

The Chair said that the legal people had prepared a letter that he wanted to put to the House because they had to write to the board very shortly and the Chair wanted to get the wording right. It said:
 
“Dear Members of the SABC Board,

The Portfolio Committee on Communications, having noted that eight members have resigned from the SABC Board and having noted specifically that the resignations include that of the Chairperson and the Deputy Chairperson of the board, wishes to inquire into the legal status of the board with its current membership. Board members are requested to attend a hearing scheduled for tomorrow at 2 pm with the view also to address the Committee on the status of the board and show whether in the light of the resignations it can still fulfil its statutory and fiduciary functions. The Committee will consider oral and written presentations from the board members at this meeting, in order to report to the National Assembly accordingly.”

The Chair then asked if it captured what the Committee was trying to say.

Adv De Lange said that although he wanted to keep with the spirit of the letter it was important to clearly state that not only was the fiduciary duties to be examined but also the legal status of the board. Also it had to mention the specific legal sections that would be considered; when meeting the next day, it was important for board members to know that they were being inquired in terms of Section 15A. The letter should thus be broadened to include that the inquiry would be on the board’s fiduciary duties, duty to adhere to the charter, and its legal status.

The Chair asked if the Committee was in agreement with that and they were.

The meeting was adjourned.

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