SABC Board status inquiry: Day 2

Meeting report

The Chairperson welcomed the members of the SABC Board, some executive managers at the SABC, other stakeholders and members of the media. As explained last week the Committee had urgently decided to carry out an inquiry into the status of the SABC Board in terms of Section 15A(1)(b) of the Broadcasting Amendment Act, 2009. He clarified that the inquiry was not into the individual members of the board but of the board as a collective. It aimed to establish if the board was able to carry out its statutory fiduciary duties in terms of the law, specifically the Articles of Association and the Company Charter. At least nine board members had handed in their resignation but there was some question marks concerning the exact dates and the periods of resignation attached to the resignations.

The Committee had not been pleased when last week five of the board members had not even notified the Committee of their inability to attend the meeting when the inquiry began. It had been irresponsible and unprofessional, especially considering that they were legally bound to respond to Parliament. That kind of behaviour was unacceptable; common courtesy would demand a simple reply. However he was happy that the board members were now present. The Committee had been told by Ashwin Trikamjee in a written letter that had been circulated to members that he was unable to attend due to circumstances beyond his control since he was currently in London. He had further submitted a memo where he expressed his view on the matter at hand. This had also been circulated so that the Committee members could benefit from his ideas. Bheki Khumalo had notified the Committee that he would only be able to make it after 11am and Ms Nadia Bulbulia could only come during the afternoon session since she had a company meeting in the morning. Ms Alison Gilwald had also informed the Committee that she would be a little late.

During the meeting of 18 June, the Committee had instructed the Chairperson to investigate the status of the resignation periods of those board members who had resigned. The Presidency had responded that it had received resignations from the following members: Mr A Trikamjee, Mr B Khumalo, Mr D Golding, Mr A Mbeki, Ms T Tlakula and Ms N Bulbulia. The President had not yet decided whether or not to allow a shorter notice period to those board members who had requested it and the three-month notice was applicable until the decision had been made.

Ms J Kilian (COPE) asked if the Committee could have the exact dates of the resignations so that they could determine when the resignation periods terminated.

The Chairperson responded that he had received a list from the Department and the dates could be verified during the inquiry. Without pre-empting the question there were some uncertainties about a few of the resignations since they had been sent to the Minister instead of the President but he hoped to deal with that later during the inquiry. He continued to say that they had received a letter from Ms N Bulbulia declaring that she had resigned as of 19 June. With that he finished the formalities and opened the floor.

Mr Desmond Golding, SABC Board member, said that he had forwarded an apology to the SABC secretariat stating that he had been unable to attend Thursday’s meeting since he had important duties in relation to the Confederations Cup and the 2010 World Cup. He would have never have disrespected the Honourable Committee.

The Chair responded that they would duly note that but that he did not think that the Committee had actually received the apology.

Mr Andile Mbeki, SABC Board member, added that he too had offered his apology.

Ms Christine Qunta said that as the Deputy Chairperson of the SABC Board she had been asked by board members to lead their delegation. Since the Chairperson of the SABC Board had stepped down she was now the acting Chair. Firstly she wanted to explain the background about not notifying the Committee that they could not attend the first meeting; in fact board members had apologised for this. What had happened was that on Wednesday afternoon at about 4pm of 17 June, the board members had received notification from Chairperson Vadi that they had to present themselves for the meeting the following day. Ms Fadila Lagadien, after communicating with other board members, had contacted the company secretary and instructed her to notify the Committee that board members would not be able to make the meeting and ask that it be postponed. The next morning at 10am when they called, they found that the company secretary was in fact on her way to Cape Town and that the letter had not been written. Ms Qunta then immediately wrote a letter on behalf of the board members that could not make it indicating this and apologised.

The Chairperson asked if Ms Thelma Melk, the company secretary, wanted to reply.

Ms Khanyi Mkhonza SABC Board member, said that she had not been informed of the meeting at all. The first time she heard about it was on the 7 o’clock news that same night. She had actually been in Cape Town at the time, she had not been contacted and that is why she had not tendered an apology.

Mr S Kholwane asked why this was being discussed. There had been a budget presentation scheduled for that day so board members should have known about the meeting regardless. It was agreed in 2008 that all board members should be present at those kinds of meetings. As such the reasons they were giving for their non-attendance did not hold unless they had also been unaware of the budget meeting. If that was the case then the problem was internal to the SABC and had nothing to do with the Committee notifying them of the inquiry at a late stage.

Ms Mkhonza responded that the date for the budget meeting had not been formally communicated to the board.

The Chairperson said that the Committee had notified the company secretary on 9 June.

Ms Melk said that the notice had not come to her. The Portfolio Committee secretary, Ms Noluthando Skaka, had not gone to her but had contacted the Chief Peoples’ Office (CPO).

The Chairperson asked where it had gone from there.

Ms Phumelele Ntombela-Nzimande, Chief Peoples Officer (CPO) of the SABC, replied that it had been sent to the Group Chief Executive Officer’s (GCEO) office at 10am the next day which followed internal communication process and they had evidence to prove that.

Acting Group CEO of the SABC, Mr Gab Mampone, said that with all respect he did not feel that the SABC delegation needed to be defensive. It was clear that there had been a crack in the communication. Normally when he was notified of invites he interacted with the company secretary, but it did not help the situation to point fingers. Mr Kholwane was right. The budget strategy meeting was well known within the SABC. Board members, whether resigned or not, should have accompanied the management to the meeting. It was not known late on the day before; there was no need for this confusion.

The Chairperson noted that there had been a breakdown in communications and at the end of the day it was the company secretary’s responsibility to ensure that information was communicated. This failure of communication was a symptom of the problems within the SABC, but could they please move on with the inquiry?

Mr N Van Den Berg (DA) said that he wanted to repeat his question from last week. What had the main theme of the breakdown been? Was it fighting within the board, was it fighting between the board members and the CEO or the top executive? He would like to hear an answer both from the board and from the executive because they needed clarity on what the crux of the matter was. What had sparked the problem in the first place? It was clear that this situation was not something that had happened over one day but that had developed over a long time.

The Chairperson interjected to state that he would take three questions at a time and then hear the responses.

Mr Kholwane said that when the strategy and budget was presented on 18 June, there had been one item that had been left hanging by the Chief Financial Officer (CFO) and that was the details on the overspending. Before they could proceed they needed clarity about the financial crisis within the SABC. Overall the ANC had outlined five questions that they wanted answered during the inquiry. Firstly they wanted to know the status of the resignation of board members. Secondly they wanted to examine the Deloitte and Touche report pointing at internal systems’ problem within the SABC. Thirdly they wanted to inquire into the problems as outlined by the joint union statement. Fourthly they wanted an indication on the independence of news and the status of Dr Snuki Zikalala after he had resigned. Finally they wanted to look at the financial crisis as a whole. Without delaying the process, he wanted to ask if the CFO could take the Committee through this particular matter.

Mr K Zondi (IFP) read from the memorandum received from Mr Trikamjee that “the present board had been under pressure to step down from its very inception some 18 months ago”. The question was if other members shared this view and if they did, what had these pressures been?

The Chairperson said that they had agreed to look at the finances more in-depth at this meeting and suggested that they parked the issue for now and allowed the CFO to give a full report later. He handed the word over to Ms Qunta.

Ms Qunta said that she would deal with the resignation issue at the end of her comment. The non-executive board members present had asked her to make a statement to the Committee in response of the inquiry and she wanted to read it out. It said

“On Wednesday 17 June 2009 at approximately 1600h the board received the letter stating that the Committee had noted that nine members had resigned from the SABC Board and that the resignations included that of the Chairperson and the Deputy Chairperson. It stated that the Committee wished to inquire into two aspects; being firstly the legal status of the board with its current membership; secondly, whether in the light of the current resignations, the board was still able to perform its statutory fiduciary functions in terms of the Act. The Committee also stated that it would consider oral and written representation in the meeting in order to report to the National Assembly. In view of the late notification, the board was not able to make it last week although two board members did attend. On Friday 19 June an identical letter was issued by the Chairperson to the board members, the only difference being that the inquiry was going to be held on Tuesday 23 June 2009. The Broadcasting Amendment Act No 4 of 2009 was promulgated on 10 March 2009 and provided for the removal of office of members of the SABC Board as well as the resignation of any member. The relevant section for the purpose of this submission was section 15A(1)(b) which read:

“National Assembly may, by the adoption of a resolution recommend the dissolution of the Board if:
i)          it fails to discharge its fiduciary duties;
ii)          it fails to adhere to the Charter; and
iii)         it fails to carry out its duties as contemplated in section 13(11).

Once there has been a resolution adopted by the National Assembly, the President must dissolve the board if the National Assembly recommends the removal of all members.

The SABC non-executive board members who have discussed the matter, have the following concerns: the letter dated 17 and 19 June respectively purport to be an invitation to participate in an inquiry in terms of section 15 A(1)(b). The first concern the SABC Board members have is that like in the case of the first letter of 17 June, the letter of 19 June gives the board members only one day, being Monday, to prepare for the “inquiry”. While the board members have rescheduled most of their appointments in order to attend the Parliament, it is not possible for the board, in such a short period, to do the necessary preparations to make the necessary submissions to the Committee. In the first instance the board would of necessity require independent legal advice on account of the nature of the query contained in the letter of invitation. It is simply not possible to obtain such advice in one day. It is not clear what the intention of the legislature is with regards to the manner in which the due inquiry is to be conducted. Nor does the letter of invitation give any indication of what is expected of board members.

Further questions board members have are the following: what are the terms of the inquiry; what is the nature of the evidence that is required to be placed before the Committee? The board has been very concerned about statements made by members of management to the Committee without any substantiation required by the Committee. What procedure would be adopted to ensure fairness and objectivity? What are the substantive rights of board members and how are those rights to be safeguarded in any inquiry? Board members also have a very real apprehension of bias since its appointment in January 2008. Members of the Committee have both in Parliament and outside Parliament not only made unsubstantiated allegations against board members but have also made it clear that it intends to have the board dissolved as soon as they could. Some members of the Committee attempted to pass a vote of no confidence against the board in April 2008 without any substantial reason for doing so. Related to this concern is the fact that members of the Committee appear to have taken side with some of the members of the group executive of the SABC. As a result the board’s authority has been significantly undermined and remains so undermined especially through the action of certain group executive managers. We do not want to tar all the group executives members because most members are very loyal and extremely hard working and accept the authority of the board. This disruptive tactic by a few group executive members has created an untenable situation where decisions taken by the board were either not carried out, or those group executives who did carry out these instructions and respected the board’s authority were victimised. And we will provide instances of those if necessary at some future point.

In the light of this board members have a very real concern about the fairness and objectivity. While membership of the Committee has changed since the new Parliament came into being this year there is a continuation of the implicit and explicit threat to remove the board from the Committee members. The board members are concerned that any inquiry conducted by the Committee in such circumstances will not be fair. Statements by the Chairperson during the last few weeks seem to indicate that a decision has already been taken to dissolve the board.

On the matter of the basis set out above, we are of the view that the manner in which this inquiry has been convened does not comply with the principles of Administrative Fairness which have been inscribed in the Bill of Rights in the Constitution and further provided for in the Promotion of Administrative Justice Act no 3 of 2004 (PAJA). While we have not had access to independent legal advice, we are aware that section 33(1) of the Constitution provides as follows: Everyone has the right to administrative action that is lawful, reasonable and procedurally fair. Section 3(1) of PAJA provides as follows: Administrative action which materially and adversely affects the rights or the legitimate expectations of any person must be procedurally fair. Both the Constitution and PAJA are applicable to Parliament because it is an organ of state and it exercises the public power in terms of legislation.

The board is completely and fully willing to participate in a properly constituted inquiry that is both procedurally and substantially fair. The board is concerned that findings may be made through a flawed process which is likely to have a prejudicial impact on them both collectively and individually. It is the board’s respectful submission therefore that for the reasons set out above it is not able to participate in the inquiry. Members would be more than willing to participate in future in a properly constituted inquiry, which complies with relevant legislation including the Broadcasting Act, the Constitution and PAJA. With regards to the current status of the board and without prejudice to what we have just said, we want to reassure those Committee members that are concerned about the ability of the SABC to function that, while board members are not able to participate in this inquiry, we want to assure the Committee that the board is currently quorate and until the notice term is served by various board members who have resigned, the board remains quorate. We hope that that will reassure the Committee. Thank you Mr Chair.”

Adv De Lange wondered what kind of legal advice would suggest that PAJA applied to statutory proceedings. In any event the proceeding was constitutional. The Broadcasting Act Amendment allowed for the inquiry as Ms Qunta herself had read in her letter. He wanted board members to explain how they had and would carry out their fiduciary duties. On their last meeting on 4 June the board had appointed Mr A Trikamjee as their acting chair. Why would they do so if they still had a deputy Chair? Although members may have a statutory duty to serve three months’ notice period, it seemed that they did so without attending to meetings or take appropriate actions. Why else had no board meetings been called to solve the current crisis? Ms Qunta had read that the board had been undermined but Adv De Lange wanted her to explain why it should not have been considering the current situation.

Legal advice was of little use in this inquiry since it could not help the board members to explain if the board had carried out its fiduciary duties; only the members themselves knew this. He therefore suggested that the inquiry continued with those board members who wanted to take part and keep their good conscience. They could decide what to do with the others later. Ms Qunta had resigned on 1 April if, as she had said she was, she was a full board member and the acting Chairperson – had she participated in the running of the board since her resignation. Ms Gilwald, as one of the board members who had not resigned, had candidly admitted on 18 June that nothing had been done and the board was dysfunctional. To sum up, he urged the Committee to continue with the inquiry which was completely valid. PAJA did not apply, although of course the rules of fair hearings did, but the proceeding was in accordance with those rules. The inquiry was open, it was recorded and a proper inquiry was constituted.

Ms P De Lille (ID) said that board members had been appointed as individuals and that they resigned as individuals and now, suddenly they had come together to show that they wanted to fight while the public entity SABC was suffering. She asked if board members could speak for themselves and not in a group. Board members had had time to come together to counter the Committee but not to come together and look at the mess that the SABC was in. It was uncalled for! They needed to continue the inquiry, members were accountable to Parliament, and now the Committee needed to try to save what was left of the SABC because board members had destroyed the SABC!

Ms Kilian stated that COPE’s position throughout the process had been concerned to ensure that due process was followed. No one was above law. Cope had asked questions to this effect and had asked for legal advice since, with due respect, Adv De Lange’s legal interpretation remained his interpretation. The Committee had been led to believe that the board was dysfunctional since it was not able to take any fiduciary decisions. But according to her understanding the SABC Act said specifically that the Group CEO was the Accounting Officer of the Corporation and as such, according to the Public Finance Management Act (PFMA), he was to account for the fiduciary duties. Committee members should avoid interpreting legislation to suit their own interest. It had previously been said on record by an ANC member that the non-executive board members had fallen victim to the internal ANC fight at Polokwane. He had apologised and said that it had been most unfair.

That said, there was a serious problem within the SABC. How could it have run into financial collapse? The Committee needed answers! They wanted to know from board members who were willing to answer the questions, what had led to this. Had it been a bloated democracy within the organisation? Why had the staff costs increased so dramatically? How many people had the board appointed and what had their salary packages been? What had the board members done about this? What was the cost to the company in terms of increased staff benefits? Had all those calculations been properly made?  Secondly they wanted to examine the relationship between the board and the Department of Communication (DoC) and the Portfolio Committee. Had the board had the opportunity to interface with the Committee to communicate the shortage of the budget?

Finally, what had been done to ensure that the Group CEO and the other executive members had in fact discharged their fiduciary duties in terms of the PFMA? What steps had the non-executive members taken to correct the issues that were a serious threat to the SABC. It had been very unfortunate that internal fighting in certain quarters had led to this situation. The Committee needed to get the facts on the table. They needed a forensic audit. But it was clear that the problem would not be solved by simply changing the board members. Finally, again the Committee needed to know for sure that PAJA did not apply, what was the Chairperson’s view on this. They needed due process. No institution was above the law.

The Chairperson responded that he was confused. Firstly he wanted to know what Ms Kilian’s lawyer meant when he said ‘due process’ and what the Committee had been doing that did not fall in line with due process. Secondly what was to be made from Ms Kilian’s statement? She had begun by questioning whether the inquiry was following due process, but then she had asked questions to the Committee which indicated that she was continuing the process of the inquiry! What did she want to do? If she thought that something was faulty with the process then she should please point that out so that they could correct it. Ms De Lille had voiced that she wanted to proceed, so had Adv De Lange. What did Ms Kilian want, did she want her questions answered or did she want to change the process? What was her legal advice? He did not see anything unlawful in the process. There had been short notice but the issue had been publicly discussed for weeks.

From the board members he wanted to know if all of them were behind the memo that Ms Qunta had read. If they were, had they met to discuss it, and if so were there minutes of the meeting that the Committee could see? Who was party to the statement? Had Ms Qunta attended the last three board meetings? If she had not and had not issued a formal excuse then according to the Articles of Association she was no longer a member of the board.

Mr Kholwane pointed out that Committee members could discuss Polokwane and the issue of members being forced to run away and form COPE at another time. Now he wanted to focus on the memo that Mr Trikamjee had submitted to the Committee. He had specified that certain instances had led the board to have problems with quorum. That led him to question where Ms Qunta had been. Mr Trikamjee had continued to point out that nine members had resigned and that that rendered the board totally unfunctionable. That was the statement of someone who was supposed to have been party to the statement that Ms Qunta had read out. It further said that resigned members continued to have their fiduciary duty for three months, but that that did not solve the problem of an unfunctionable board. Mr Trikamjee wanted the board dissolved with immediate effect and an interim board appointed. And now the other members were showing a face of unity!

Mr Kholwane agreed with Ms De Lille that they could no longer dilly dally about the SABC. Issues of Polokwane were immaterial. The previous Committee vote of no confidence was immaterial. What was material was that the board had failed to lead. The board seemed to blame the Committee for many of its problems, but board members had resigned due to poor leadership from within. The Portfolio Committee clearly had had nothing to do with that. Further, what was the Committee supposed to do about unruly executive management members? These members were appointed by the board and it was the board’s duty to deal with them. The ANC took note of the legal issues but insisted the inquiry proceeded. The questions emanating from the memo needed to be answered. The issue could not be delayed any further.

Mr Van Den Berg commented that this must be the nicest inquiry because the SABC Board and its executive management had not had to answer any questions. He wanted to ask the board now for the third time: where had things gone wrong? And he wanted different views. What was the relationship of the board and the executive; was there inside fighting? Ms Qunta had spoken about victimisation; who had victimised whom? The behaviour of the SABC members here today was indicative of the problem of the SABC; they were running around in circles. Top management was not able to give staff clear decision and that was why the organisation was walking like a crab.

The Chair said that he sensed that they should proceed and asked Mr Zondi and Mr G Holomisa if they agreed.

Mr Holomisa said that Ms Qunta had objected to participating in the inquiry and some of the Committee members had expressed their view that the inquiry did follow due process and should continue. Could the Committee get Ms Qunta’s response before they decided to continue the inquiry or not.

Mr Zondi agreed and said that some committee members had asked many questions to ensure that the inquiry was fair to both sides and now it was important that the board could have their say.

Adv Tlakula, SABC Board member, said that they felt that they had rights that needed to be protected. They should not have had to come to the inquiry to be surprised. The invitation letter had referred to 15A(1)(b) but what that meant in effect was that it was a full inquiry into the activities of the board. Also, to ask questions without asking for substantiated evidence was not going to give the Committee a full response. Perhaps the Committee should write down specific questions to the board and then board members could answer those questions in a compiled document on what they had done; the challenges they had met and their shortcomings and so on, instead of just sitting in the inquiry answering questions, contradicting each other. If they continued like that, the Committee would not come to a full conclusion about the situation in the SABC.

Ms Makhoza, SABC Board member, said that they were attending the inquiry because they were also seriously concerned about the SABC. She had two primary reasons for being there: firstly the liquidity crisis in the SABC could not be left for one more day. Secondly the looting that was happening at the SABC could not be allowed to continue. That was why the members were there. But they wanted to be treated fairly. When asked a question they wanted to supply all the information, which was what was needed in order for the Committee to make an informed decision about the SABC. Statements made by Committee members in the media had clearly indicated that the process was not fair. The board members were concerned and wanted to express what they had found and experienced at the SABC but they wanted to make sure that they were treated without prejudice.

Ms De Lille suggested that the Chairperson give the board members a short time to discuss amongst themselves what they wanted to do so that the process could go forward.

The Chairperson said that he would consider that, but first he wanted to know if all the board members were attaching their names to the memo read out by Ms Qunta because she had said it was on behalf of the board but clearly Mr Trikamjee did not agree.

Ms Qunta apologised explaining that when she said ‘the board’ she had intended to mean the non-executive board members that were present at the inquiry today: Ms Gilwald, Ms Serobe, Mr Andile, Adv Tlakula, Ms Lagadien, Ms Mkhonza and herself. Issues had been discussed over the phone because it had been very difficult to come together.

The Chairperson said that she should have made that clear from the beginning. She had essentially misled the Committee by saying that she was speaking on behalf of the entire board when she was only speaking on behalf of seven of them.

Mr Nicholson, SABC CFO, said that for the record, he had been unaware of the memo until Ms Qunta read it to the Committee. This was indicative of many of the problems in terms of communication within the SABC. There were two separate boards, the executive and the non-executive. As a board member, if the memo was agreed upon by a majority of the board, he could not distance himself from it. However wanted to note his reservation since he had not engaged with the document.

Mr Khumalo added that as Ms Qunta made clear he had also not engaged with the document. 

Ms Gilwald said that after the meeting on 18 June she had engaged the board and relayed the questions the Committee had raised, in order to prepare them for the further inquiry. Board members had had concerns of the way the hearings were conducted and appealed to the Committee to reinstall some of the dignity to the public process relating to this inquiry and also to the appointment of a new board. About Mr Trikamjee’s memo, she did agree that the board had reached a crisis point and needed further action in order to salvage what could be salvaged of the SABC. Further she pointed out that the board had a collective responsibility. Fiduciary responsibility could not be individually portioned. These issues were complex so it would be more meaningful if the Committee engaged the board members in a way so that they could respond in full. About their functionality, they had tried to get together during the three month resignation period to get some of the most critical issues dealt with and in fact they had considered taking the opportunity of all being together now to take some decisions.

The Chairperson said that he would only recognise board members to speak and Mr Dali Mpofu former Group CEO said that he was a board member and was allowed to speak.

Ms Qunta interjected and said that his employment had ceased and although he had been an executive director, he did not even work for the SABC now. She further said that this showed exactly what was wrong with the inquiry process. The board members were not trying to be difficult but she pleaded that the Committee members would maintain the dignity of the House.

The Chair asked if Ms Bulbulia was supporting the Memo and Ms Qunta responded that she was.

Mr Holomisa said he wanted to give board members some time to talk things over.

Adv De Lange mentioned two things. Firstly the Committee had a statutory obligation to ensure fairness and due process in the inquiry, letting board members having their say. No due process required that questions and answers had to be given in writing. Secondly, in Parliament they had two options; either they could invite members on a voluntary basis or they could subpoena them, which in turn could lead to criminal sanctions. They had tried to avoid the second option. However, as Ms Gilwald had pointed out, they could not wait with this process one day longer. He therefore pleaded that individuals of the board submitted themselves to the process and answered the questions in their own words. Otherwise the Committee would have to subpoena them, although they preferred it if the board members submitted themselves voluntarily. He also suggested that they therefore took a 15-minute recess and then continued with the process.

Ms De Lille agreed to the recess and asked the board if they could engage on the Deloitte and Touche report dated 19 Jan 2008 and the SABC budget presentation of 18 June. These were old documents that the board should be familiar with. The notion that the Committee was going to ask ‘new’ questions was unqualified. Also could the board suggest a solution of what to do while the inquiry was underway?

The Chair adjourned the meeting for 15 minutes.

[Meeting resumed]

When the Committee returned the Chairperson gave the word to the board members.

Ms Qunta stated that the board members were still uncomfortable with the procedural fairness but they would submit information on the financial status of the SABC, but outside the inquiry.

The Chairperson asked if there were any other views.

Mr Mbeki said that they concurred in their will to assist the Committee but that they were being wrought into a technical argument by the Committee and this would be of no help. They had agreed that two of the colleagues would present on the financial situation and then he would make a submission.

Adv De Lange asked if, when they said that they were only prepared to answer questions outside the inquiry, did it mean that they would only participate in the inquiry after being subpoenaed.

Ms Qunta said that as Adv Tlakula had indicated earlier the only reason they did not want to participate was because of substantive and material flaws in the process. Reading from PAJA it said that administrative action that materially affected the rights or legitimate expectations of any person had to be procedurally fair. The fairness of the procedure depended on each case but that the person under inquiry had to be given adequate notice of the nature and purpose of the proposed administrative action and a reasonable opportunity to make a presentation. The board did not think that the Committee had complied with those two things.

Ms Qunta continued that Adv De Lange had said that the Committee was only dealing with the contents of the letter. But then he had said that they were dealing with the inquiry in terms of section 15A(1)(b), which referred to section 13(11) and the Charter of the SABC, so already there was a contradiction. That was the jeopardy they were facing. They did not know what kind of general questions they were going to be asked. Therefore they felt they could not participate in the inquiry. If the Committee wanted to subpoena them it was fine, but all they wanted was adequate time to prepare to fully inform the Committee of the actual issues. They were prepared to provide information on the financial situation on the board today, but they could not for their own protection do so under the inquiry due to issues of liabilities attached to going into an inquiry which was flawed. They were not willing to take that risk. Therefore they were only willing to answer questions outside of the inquiry.

The Chair said that for clarity they would consult the Parliamentary legal advisor, but his understanding was that this would apply to an inquiry into a particular individual member of the board based on misconduct etc. The issues Ms Qunta was raising in terms of PAJA would apply to inquiries into that sort but not to inquiries in terms of 15A(1)(b). In terms of 15A(1)(b) they were inquiring into the board as an institution, as a collective entity. Therefore there were no issues attached to personal liabilities; they were just examining the structure’s ability to carry out its duties.

Adv Zuraya Adhikarie, Senior Parliamentary Adviser, said that what the Chairperson had said was correct. As long as there were no specific allegations but rather looking at the efficiency of the board as a whole on more objective terms, then there was no personal inquiry. Also when Ms Qunta mentioned adequate notice and so on, those were relative concepts, not something that could simple be ticked off a list. If the Committee was asking questions that required consideration, then perhaps the notice had been insufficient, but if the questions were related to past activities of the board that the board should reasonably be able to answer then she was comfortable with the proceedings.

Mr Zondi said that the Committee would regard board members as honourable persons and would not harm their dignity. Everyone should emerge from the process retaining their dignity so that being a member of the SABC Board would continue to be an attractive post in the future. About Ms Qunta’s worry about reasonable notice and adequate time, the overriding question was what would happen in the SABC the mean time if they postponed the proceeding. He was concerned about the day to day happenings in the SABC

The Chairperson mentioned in light of the board’s comments about the Committee’s attitude against the board it needed to be highlighted that this was a new board. About 90% of the Committee was new so the Committee should not be judged on the action of its predecessor. Even if one or two members remained the same the board had no reason to doubt the Committee’s objectivity and he could ensure there were no underlying political vendettas involved.

Ms Kilian wondered if it was possible to proceed noting the position of the individual board members and inquire into the problem without having a threat of possible legal action or challenges that may be brought because of process that followed.

Adv De Lange said that the inquiry into the collective responsibility of the board could only be made in terms of 15A(1)(b) and nothing else. He strongly urged that they did not make a farce out of the proceedings. What did it mean to continue but not within the inquiry? It was inconsequential. There was a serious corporate meltdown at the SABC and now they needed to decide what to do about it. Either the Committee could act in terms of the parliamentary rules or a specific statue, but they could not fudge the issue. Either the board members accounted to the public of South Africa via the Committee or they would have to be subpoenaed to do so. He did not want to be part of the Committee if they dragged out the process. At the moment they were totally siezed by this matter and it had to be concluded. If board members decided to continue with the inquiry then they should do so, if they decided not to then they should be subpoenaed today so that that they could begin tomorrow. Ms Gilwald had been informed on 18 June of how the Committee was going to proceed and what types of questions were going to be asked so the board members should have been prepared. The Committee could not neglect its duty and let one more day lapse. They could not dilly dally any longer. If there were any answers to the questions, could the board members please just give the Committee those answers.

Ms L Mazibuko (DA) said that she did not feel that the board members had said that they did not want to participate but only that they wanted adequate time to prepare. Not all the problems of the SABC could be contributed to the Board, to suggest that would be disingenuous. Therefore questions had to be asked how…

The Chairperson interrupted and said that she had to understand that the executive management were not responsible or accountable to the Committee. They all knew that the problems ran deeper but they also knew that the board was not functioning and they were appointed by the Committee and answered to the Committee. So while dissolving the board would not solve all the problems, it would solve some of them. It was in the public interest that the board members accounted to the institution and the Committee would fail its responsibility to the populace if it did not continue the process. There had been a unanimous decision to begin the inquiry and it had been said that they needed to be bold in their leadership. They were not there to play games. If the SABC had been a private company something would have been done a long time before it was R840 million in debt. So in the interest of the public they had a very serious responsibility to resolve this issue timeously and decisively.

Mr Kholwane said that they were in fact already late in resolving the issue, but that they would be decisive. The inquiry should be continued and questions asked in the first round should be answered. He was still waiting for the CFO Report on the financial status of the SABC. Everyone agreed on the gravity of the situation and one board member had clearly said that the board was non-functioning. They needed a response to this.

Mr Holomisa said that if, hypothetically, the board was committed to assisting the SABC, considering that board members had said that the Committee had been uncooperative since its inception; if the Committee asked members to withdraw their resignations and deal with the issues, would they consider doing so? Because to get the answers the Committee wanted would take long. Therefore the board members, as South Africans with integrity, should consider continuing while the Committee inquired into the problems. This solution would also show that there was no political agenda from any side.

Ms De Lille said that there was another remedy available in terms of section 215 which stated that non-executive members could resign and appeal to the Presidency to shorten the resignation. If this was done they could move on, since it was clear that they all wanted a solution. For legal clarity’s sake, would that mean that they could circumvent the time constraint they were currently facing? Then secondly it seemed that the board was under the assumption that the Committee would ask different question under the inquiry than they would if there was no inquiry. If they confined the question to the Deloitte and Touche report and the budget presentation then perhaps they could even remove the inquiry. But even if the inquiry was removed, they would be asked the same questions. The objective was to find a solution. The board did have rights and they could interpret the law in a different way than the Committee had done and they did need time, but if that was granted what could they do in the mean time to find solutions? She felt like the board almost understood the inquiry as a disciplinary hearing, which it clearly was not. In the end they needed input from the board in order to find a solution.

Mr Van Den Berg said the Committee had a duty to carry out its oversight role and represent the voters of South Africa and the fact that the board members did not want to answer any questions was thus very worrying. The Committee existed to make sure that the job was done. If the board could not communicate with the Committee, he doubted that they could communicate within the SABC. What was happening in the SABC today as they all sat here in a meeting? To really know what was going on, the best option was probably to find a smoking area in the SABC offices and just listen to all the gossip. Other than that he wanted to ask his question for the fourth time.

Ms Kilian said that she had heard the position of the ANC that they felt that the process should continue. COPE’s position was that they should continue to pose the questions but they understood the concerns of the board members about due process. Part of the crisis could probably also be ascribed to sloppy legislation. They needed to go back and look at it in an attempt to write in proper lines of accountability. Ultimately they needed to find the guilty individuals who were defrauding large amounts of public money and not carrying out their duties. Mr Zondi had said that they should treat the board members with respect and she agreed with that. From the old reports it could be seen that members had been very committed, six of the members had also served on the previous board and it was important to appreciate the corporate memory.

The Committee had agreed to investigate the issue and get to the bottom of the problem but they had not agreed to carry out a kangaroo court exercise. Could they proceed and get a response from the CFO and then ask the board members what they would do about the quorum problem they would inevitably face in September. Also it had to be admitted that there had been a serious communications problem between the Committee and the board and it needed to be established to what extent the board had alerted the Committee of the problem. How was it possible that an organisation could in one year overrun their employee benefits by R450 million?

The Chair interjected and said that she was going back into detailed questions. About Ms De Lille’s suggestion, the board could not force people to resign. Also if people had not asked for a shorter resignation period it could not be forced upon them. Looking at the process, there was nothing irregular about it. If answers were given inside or outside of the inquiry should be of no concern. They should answer truthfully and to the best of their ability in either case. Finally, the Committee needed to rule on whether they should continue the inquiry or not. As far as they knew Ms Qunta resigned 1 April 2008 and had not attended any board meetings since then; had she missed three consecutive meetings? They needed to know this to establish if she was a member of the board or not.

Ms Qunta asked if that question was part of the inquiry.

The Chairperson said that he just wanted her to answer the question because it had implications on her status in the board. The Articles of Association stated clearly that if a member missed three consecutive meetings without a due notification, they were no longer part of the board. He had received the meeting schedule for the board from the company secretary and from that it seemed as if she had indeed missed more than three consecutive meetings.

Mr Holomisa interjected on a point of order. The Chairperson had asked the board members if they wanted to proceed and they had said that they did not and now he expected them to proceed anyway.

The Chairperson responded that he understood Mr Holomisa’s concern but that it was important to establish if Ms Qunta was part of the board because if she was not she was entitled to leave the meeting.

Ms Qunta repeated that she needed to know if that question formed part of the inquiry, because they had objected to the process individually and as a group. They did not trust what the Parliament’s legal advisor had said. It was not right that Parliament had the opportunity to consult legal advice when that right had been deprived of board members. She could answer the question factually but not if it was part of the inquiry. She could not decide to answer one of the questions of the inquiry and not the others.

Mr Mhkize said that the inquiry should go on and people could decide whether they wanted to be part of it or not. He did not understand why it was material if it was part of the inquiry or not. The proceedings started on 18 June and they had already gotten some answers. Those answers and any others they would get today would have to form the basis of their decision.

Ms De Lille remarked that Ms Qunta had said that she was the deputy chair of the SABC Board but if Chairperson Vadi had received the information from the company secretary was that not enough to establish if she was indeed a member of the board?

The Chair said that he could do this but that he had wanted to give her the chance to answer.

Mr Kholwane wondered if the company secretary was there to confirm the information.

The company secretary, Ms Melk, answered that Ms Qunta had not been present at any board meeting since she resigned and that there had been five meetings since, out of which one was a regular meeting and the other four were special meetings.

The Chairperson followed up by asking if any formal apology or notification had been received from her.

The company secretary said that she had not been invited because Ms Qunta’s resignation had said that it was with immediate effect.

Ms Magazi (ANC) asked why they allowed Ms Qunta to hold them hostage if she knew that she was no longer a board member. Why was she still there?

Ms Gloria Serobe, SABC Board member, said that Ms Qunta had asked for a shortened resignation period but since it had not been granted, she was a member until July. The board had not had five meetings when they were a quorum. She was feeling exhausted. Could they please get to the business of the SABC’s financial status.

The Chair said that that was the problem. The company secretary said that there had been five meetings and now a board member said that they had not had a meeting. How was the Committee supposed to take them seriously? Did other board members agree that there had been no meetings?

Ms Gilwald responded that the records showed that there had been three meetings and that Ms Qunta had not been present but she did not feel that that exonerated Ms Qunta from attending the inquiry. Could they please proceed, reserving their rights as indicated.

Ms Mkhonza said that this was a flawed process; the Chairperson had concealed documents that could not be checked by board members. The problem with all of the resignations was that some members had resigned to the Minister and some had resigned to the President. When Ms Qunta’s resignation was given to the late Minister and was accepted, the company had taken her out of their records and Ms Qunta had not received notification of any subsequent meetings. Ms Mkhonza rejected that there had been five meetings but since she did not have the document she could not be sure. Also the whole resignation process was flawed since it had not been clear where the resignations should go and how they were accepted.

The Chairperson read out a simple clause of the Broadcasting Amendment Act which stated that a non-executive board member could resign by three months’ written notice to the appointing authority, which was the President. Why would any member resign to the Minister when the statutory responsibility was to resign to the President? There should not have been any confusion to this matter.

Ms Qunta answered that the problem with the resignation process was that there had been no acknowledgements of the changes in the Act. Ms Qunta’s resignation had gone to the Minister because they had not been informed that the law had changed. Only later did the Deputy Minister explain that the process had changed.

Adv De Lange asked what they were doing. They were continuing the inquiry but there was no cooperation from the board members. They could play around. He felt completely and utterly embarrassed by the process so far and he wondered if board members realised how this affected their status and that people would feel a huge dip in confidence for the SABC and the board members. He suggested that they be subpoenaed to a proper meeting where they had to answer all question asked and if they did not, there would be consequences. Saying that they wanted to participate but acting in the opposite manner was a mere PR campaign. This was an embarrassment to the nation and an even bigger embarrassment to the SABC. He could not accept this because he could not account for anything; the board was running wild and so was the Corporation.

The Chairperson said that he understood Adv De Lange’s point but he wanted to rather proceed and ask questions to those who were willing to participate because it would not be fair to subpoena those who were willing to cooperate. So they would adjourn for lunch and reconvene with those who wanted to cooperate after lunch.

Ms De Lille said that due to the debate this afternoon there were some time constraints. About the interpretation of the law; that was what the courts were for and they could not stop anyone from turning to the court so that was where that discussion would probably end up. On the budget presentation, her questions were as followed: there was overspending by 36% in employee expenses, 32% on consulting fees and 168% on other expenses; could the ‘other expenses’ please be broken down? Also the account liabilities were R1.2 million; could that be broken down and accounted for? Current interest bearing loans and borrowing had also increased dramatically from R31 000 to a R501 000 and an explanation was needed. In the Deloitte and Touche report, the statement of responsibility made it clear that what was needed was a forensic audit.

Asked by the Chair to respond, Mr Nicholson (SABC: CFO) said that he had prepared a 110 page report; it was very detailed so it would take a while. Further he wanted to make clear that all his disclosures were in good faith and he did not want to be negatively impacted by them as a director or as an employer in terms of criminal negligence or the PFMA. If he ended up in an enquiry, he should not be held prejudiced in terms of any admissions made today. But he agreed with the Committee that the SABC could not wait any longer.

Ms Morutoa (ANC) wanted to clarify on the allegations of a flawed process, that after 18 June they had asked the company secretary for the documents and they were not ‘undisclosed’ to the proceeding.

Adv Tlakula said that she did not want to leave the inquiry under the impression that they did not want to cooperate. However since there could be serious legal consequences from the inquiry in terms of the Company Act and the Articles of Association, she asked that if they stayed and answered questions could they do so without prejudice.

Mr Golding said that the biggest question was the financial issue. They should take up the suggestion that the CFO make a presentation on those issues and then Mr Golding and the Chairperson of the Finance Committee, Mr Mbeki, could also give their input.

Mr Mbeki said that they should consider the issue of the submissions, the issue being mainly that once the invitation was made in terms of the law and called an inquiry, it immediately assumed a legal status. And one could not be selective in applying the law. One of the requirements of an inquiry was to put the issues in front of the respondents and the letter of invitation did do that, saying that it was going to inquire into the legal status and continued functionality of the board. The board could get very technical on issues like that, but that would be a shame for the House. He agreed with Mr Golding that as the Chairperson of the Finance Committee, he could make a submission, but perhaps he should make his submission now because he might not come back after lunch. As representatives of the South African citizens, if they took stock of what had happened so far it was clearly a crisis. The board members had resigned and recommended that the resignations were immediate. They had been honoured to have served the SABC, but the centre was no longer holding. It was in the best interest of the SABC and the South African citizens that something was done and it was up to the House to acknowledge the problem and to make the appropriate decision. When people tendered their resignation, the cooperative chemistry disappeared. The board required a re-ignition and it required the House to use its discretion to achieve that. Members who had resigned could have their resignation period shortened for example. But if the House continued to be technical, then it would be a shame because it defeated what they were trying to do.

Afternoon session
As the board reconvened the Chairperson pointed out that the National Assembly debate was at 4.30 so the meeting needed to end at 3.30 or 3.45 at the latest. The inquiry would continue and he would take one question and then turn to the board for an answer. They needed clear questions and a clear focus.

Mr Kholwane opened and said that Andile Mbeki had previously said that the centre was no longer holding. Trikamjee had also alluded to that. Did other board members agree?

Ms Qunta responded that she first of all reserved her right. About the functionality she thought there were two aspects. Firstly did they meet quorum? Yes, they did; since the Chairperson had stepped down she was the acting Chair, and her period of resignation would run until 21 July. So the board could function from a legal/technical point of view. However there was also the question whether they could function on a practical level. Without the sufficient logistical support from the executive management, no board could function. But that was not an insurmountable problem, the board meetings could be held and decisions taken and at the same time the Committee should take steps to fill the vacant positions.

Mr Van Den Berg pointed out that the other board members’ facial expressions had been very informative while she made her statement. Then he said that they all knew his question by now since he was raising it for the fifth time. Perhaps the executive could give their position on the board. What problems had arisen due to the board hampering the group executive?

Mr Sipho Sithole, SABC Head of Group Strategy and Risk, attempted to answer but Ms Qunta interrupted him and said that he was not part of Group Executive Management but that he was merely appointed by the group executive.

Mr Van Den Berg said that it did not matter if he technically was not Group Executive Management, as long as he was senior management working with the board.

Mr Sithole said that he did sit in the Group Executive Committee in the SABC. He wanted to read from a memo written by Dali Mpofu who was the Group Executive at the time. It was written on 18 March 2008 to Ms Mkhonza. The heading was Board/Executive communication / relationship guidelines and role clarification. It said

 “Dear Chairperson,

I raised the above matter with you at our first meeting on 10 January 2008 and at the board induction meeting on 29 January 2008 and also in my first board report for the board meeting which was held on 6 March 2008. Since then this matter has been raised very sharply in meetings with the group executive. There is a strong feeling that if we do not attack the issue of role clarification at the earliest possible occasion and while the board is still new, the organisation will pay a very heavy price indeed. In addition there are several recent developments that render the proposed engagement to be critical. I have been asked to please request that we urgently convene a board/executive workshop in order so that both sides may raise their concerns. This request is motivated by a feeling on the one hand that the relationship between the two structures is fast deteriorating in the three-month life of the board. On the other hand it was their collective view that a reiteration and clear articulation of the ground rules will result in a suitable and improved inter working relationship for all concerned, the main beneficiary being the SABC itself.

The possibility of starting the first full fiscal year of this board on a positive clean slate presents a great opportunity. The SABC is constantly under unjustified external attack and this is likely to continue and even intensify in the foreseeable future, especially as we are moving towards the 2009 elections. It will be difficult to address these matters when there is an actual crisis on our hands. Therefore it is preferable to pre-empt and put all the issues and concerns on the table so that we can be better prepared to deal with the many crises that will inevitably be thrown our way by several detractors. The SABC already represents a very stressful working environment and as a leadership core we have a primary responsibility to decrease the stress-levels for all. I therefore humbly and earnestly repeat my request in the regard that I have been mandated to do so. I hope that this request will be received favourably and in the positive spirit that it is intended.”

Mr Sithole continued that he wanted to read this to answer Mr Van Den Berg’s question of when the problems began, and as he could see from the memo, the issues had been present as early as ten days after the board’s inception. The board’s behaviour was not due to ill disciplined managers. The Committee could check the attendance record of the so-called ‘group of seven’. Management was mostly very hard working and he suggested that the Committee investigate his department so that they could see that there had been action taken to engage the board but that the board always refrained from doing so. He had requested a business planning strategy meeting with the board in July 2008 but the meeting only happened one year later in which Ms Qunta had said ‘Oh finally we are getting a strategy presentation’. Three months into their time, the board had diagnosed the SABC and although they had the know-how, the board was arrogant, rude and uncooperative. There were several good board members but now was not the time to single people out. The centre was not holding.

Ms Phumelele Ntombela-Nzimande, Chief Peoples Officer (CPO) of the SABC, said that it pained them as executives to sit in front of the Committee; they did not want to say these things, but it was part of their responsibility for the corporate communicator. The information she got from the board secretariat had been that Ms Qunta had resigned with immediate effect. It had been her duty to pass that information on, which she had done, but now it hade been made clear that Ms Qunta was still on the board. The PFMA demanded that senior management had to intervene if any information passed was incorrect to their knowledge and as such they were liable for the misinformation. This was just an example of how difficult the time with the board had been; the information constantly changed. No manager had disrespected the board but they did tell the board that there had been a serious corporate governance break down. They had performed all their duties but the board often intervened in the management functions.

Also, the board had called on the advice from persons up to two levels below her, instead of asking her, which meant that they did not receive the best quality of information and advice. One example was that she was deliberately excluded from appointing the Chief Operations Officer (COO). When the candidate the board had chosen was presented to the late Minister, it was said that information they had was not indicative enough of the candidate’s strengths in Corporation wide skills. The board ended up appointing the candidate in spite of this but the appointment was reversed, R8 million in court costs later. The executive was supposed to advise the board on how to carry out their fiduciary duty but was not allowed to do so.

A second example was that of the opening up of international news bureaus. Again, when the budget news team presented their plans to the executive, six of the senior managers had said no. However the news team had then gone straight to the board which approved their proposal against the group executive’s advice. And at the current moment they were busy closing down some of these bureaus. The country and its citizens did not deserve this. The Deloitte and Touche report showed that the board was not capable of acting as a group; they might have the individual skills but they were not able to collectively carry out their duty and they had also undermined some of the processes. It had taken the COO one year to get the ear of the board to present their strategy and at that time the board was not even quorate.

Mr Dali Mpofu, ex Group CEO: SABC) said that Mr Van Den Berg’s question was probably the only question that needed to be asked in order to determine if the board was able to carry out its fiduciary duties. From a legal position it was enough to establish this in order to dissolve the board. As the Parliament legal advisor had said this was an objective test, surrounding facts were immaterial. If all the members had ended up in the Intensive Care Unit and therefore could not carry out their duties, it meant that the board had to be dissolved. A dissolved board did not necessarily mean that the board was blameworthy.

The rest of the problems at the SABC were not due to the financial crisis and it was not due to an industrial relations crisis, but it was due to a leadership crisis. The board had not been able to fulfil the demands of the Articles of Association or the Broadcasting Act as a collective. The key issue was that of interference. The executive could ask for a meeting until they were blue in the face and they would still not get an answer. Another letter sent on 16 April had proposed a meeting to address the memo that had been published in the Sunday Times which painted an incorrect picture of the SABC and in which two board members had made anonymous comments. The letter had stated that the issue would most probably cause irreparable harm to morale within the executive, other senior management and staff, not to mention other stakeholders and the public. The executive said that it wanted to take action to prevent further damage and suggested an urgent meeting. That had been another cry for communication that was kicked out.

This Portfolio Committee had been criticised [about their comments about the SABC Board] but common sense said that if the board leaked a sensitive memorandum then how could they be trusted not to leak other information. The vote of no confidence had been sufficiently motivated. If this vote had just been accepted they would not have the crisis they had today. That did not mean that it was easy to say to your bosses that they should step down. In May 2008 they had marched to the Union Buildings and requested President Mbeki that the board had to step down. Nobody was better placed than the executive to note the board’s incapability. Also it had to be put on record that in his personal court case, the judges had ruled that the board members had acted in anger and that the conduct of Ms Mkhonza fell short of the standard required of a director of a company. It did not display the required honour or integrity. Moreover the court had ordered that the court costs be punitive, which was very unusual and only ordered if the judges strongly disliked the case.

This was the third indication that the board had to be dissolved; first from the Portfolio Committee, then the executive and now a judge. The judgment had been appealed. One of the board members, Mr Golding, had been against this decision and asked the board if they would have chosen the same course of action had it been their own money. Subsequently the appeal had also been ruled in Mr Mpofu’s favour and now the SABC Board had to pay the punitive court costs for the appeal as well and another three judges had noted the board’s incapability. It was time to act now to rescue the sinking institution. It was the jobs of ordinary workers and their children who ultimately had to pay the price as their employer deteriorated.

Mr Golding, SABC Board member, also wanted to confirm that the centre was not holding. Mr Mpofu had been more than correct when he noted that the personal relationships were at the core of the problem. Some of these had accumulated historically and it was time to speak about them frankly. It had not been easy working on the board. Some of the hard working board members who were committed to the institution had often found their decisions undermined and unexecuted.

Where did the financial crisis come from? His extensive background in credit had led him to say that the financial situation at the SABC was in a crisis at the first meeting in 2008.  Profit had gone down and costs had increased. The asymmetry of costs had caused several problems. One example was that at the end of  financial year 2008, the profit had declined from 72% to 64%. At this time the revenue was showing an upswing due to the bull market, but the real profit in March 2008 had been 45% compared to 122% the previous year. At the same time the costs had increased dramatically from R769 million in 2004 to R1.35 billion in 2008.

Mr Golding had made this assessment of SABC’s financial situation at the first meeting, but when he had tried to address the issues, he had been ignored. That had been the most frustrating part of sitting on the board and that had also ultimately led to his resignation. What was driving the cost increases was the consulting fees that had risen from R134 million to R227 million in one year. To sum up, the Corporation was losing market share, their profit was going down and their costs were increasing, including money spent on expertise and on external skills. This was a clear indicator of the asymmetry since if the external contracting costs were going up, then this cost should be offset by a decrease in internal staffing costs.

He was happy to say that without the intervention of the board the situation would have been even worse. It had been an unattainable situation. A budget was planned with a R600 million deficit, without having a financing plan, which was required by the PFMA. As such the board had rejected the budget in total and it  was later revised. Ms Serobe had for example been very upset that the organisation did not have a financial plan. The financial management gambit was completely off. In addition to rejecting the budget, the board also instated austerity measures with a turnaround strategy, but the team in charge of implementing it did not step up to do what it was supposed to. He had personally worked on the turnaround committee but the lack of chemistry meant that issues were ignored, which put a strain on the organisation itself and that was why the financial crisis had occurred.

Another issue that put strain on the organisation was that commitments were entered into without contracts. The board instituted disciplinary actions for that kind of behaviour and also for instances of budget overspending. Other factors were wastage and inefficiencies and the loss of sport rights. Of course there was also the strategy that the organisation had, which had been approved by the previous board, and this needed to be changed to ensure that the organisation could develop. There were risk management strategies instigated by the new board and it could without a doubt be concluded that the board had carried out its fiduciary duties. Now a new body needed to reignite the Corporation and ensure that the Corporation was in fact turned around. In doing so, it needed to make sure that the turnaround plan was aggressively implemented; that staff costs were cut; that the corporate government rules were adhered to; that the conceited staff members who were raping the Corporation were gotten rid of; and that a new financial model was implemented.

Ms Serobe said that the history of the SABC showed that the Corporation was in trouble because of the public broadcaster’s mandate growing, resulting in a need for increased funding, but in fact the funding had decreased. She had been the on the Audit Committee and had been the Chairperson of Finance Committee. In the presentation of the budget in March 2008 the board had been mortified due to a number of reasons. Firstly there was a R600 million deficit budget which did not have an accompanying funding plan. Secondly the cash flow figures in the budget were negative and therefore a cash flow plan was needed but not presented. Thirdly the projection of a 16% revenue increase in a climate where general growth figures were around 10% was very ambitious.

In light of the above the board had not been able to accept the budget. The board members wanted to work with the management to produce the new budget. By means of a combination of executive and non-executive board members effort, they ended up with a R200 something million profit by getting rid of luxury spending but also some of the necessary spending. In the fourth quarter it was clear that they were facing a R1 billion loss. All the fears they had had in June had materialised. When the board presented to the Committee in November, they wanted to share their worries about the forecast with the Committee, but it was the last thing the Committee wanted to hear, it was too excited about the Broadcasting Amendment Act and showed very little interest in other issues.

The board had responded to the increase in employee costs of 70% year on year. There was an effort to unpack the figures. Two months later the increase in staff costs had been brought down to 36%, which was better but still inappropriately high. Looking at the head count, the Corporation had hired 563 persons in one year, which was equivalent to the staff of one large company. It turned out that that figure was incorrect due to an executive manager’s mistake and was subsequently brought down, first to 348 and then finally 248 new staff members. This was still outrageous considering that the company was in a crisis. The austerity plan was developed in cooperation with the management. There were unpaid producers and no executive could answer why this was. To add R75 million to a pension fund that already had a huge surplus was a luxury that only companies that could afford it, should pursue. When the board realised that this was happening it was immediately stopped on 4 June when they had had a full meeting with a quorum. They also looked at local and foreign content and renegotiated the contracts. As a Chairman of the Audit Committee she could also share that the loss of revenue due to the sports arrangement had ranged from R300 to 500 million. To sum up, the board had been in control of what had been happening in the SABC but it could not control who resigned and who was appointed and what was happening in terms of the quorum. As it stood the board would face quorum problems in September and it was the Committee’s duty to ensure that this was sorted out.

Mr Bheki Khumalo, SABC board member, said that the saga of the SABC was like a Shakespearean tragedy filled with honourable people showcasing good attributes but who, through a flaw in their characters, made mistakes that ultimately destroyed them. As a board they had executed their financial duties as best as they could. It had been clear in March that the situation was not sustainable and they needed to arrest the biggest cost drivers which were news and current affairs. To this effect they had addressed the issue of risk management where Ms Gilwald and Mr Sithole had worked together successfully to establish the 20 biggest risks. When it was clear that the SABC was R800 million in the red, the board had discussed the financial issues for several hours and then decided to address the nation and let them know that the SABC had serious cash flow problem.

On another note the fight with Mr Mpofu should never had happened. He had himself written to Ms Mkhonza that Mr Mpofu had not been treated fairly by the board. It was clear that no one could run the SABC without the cooperation of the management, in this case specifically the so called ‘group of seven’ executive managers. The board and the management had to work on their relationship. It was like a marriage, the relationship would not be good unless both parties worked on it. It had therefore been an unnecessary and time consuming fight. On the other hand the management also needed to come to the party and he supposed that Mr Mpofu would be reinstated since it was in the best interest of the SABC although that was an issue for the new board.

Finally the key issue was to address the cost drivers: where were they and how could they be brought down. This was not an impossible endeavour. Look at, for example, Transnet. It had been down by R883 million in 2007 and had reported a R1 billion profit in 2009. To achieve a turnaround the SABC operating model needed to be restructured. The SABC needed to be more aggressive, it could no longer be structured like an old parastatal; it did not work in the modern economic climate. If there were no change in the financial structure then the crisis would continue. Also an interim board had to be instated as soon as possible. The SABC could not be run by fighting the state in any of its elements. The SABC required independent, objective directors within the organisation, running the news independently and professionally, but it had to be made sure that the organisation cooperated with the state. He agreed with Mr Golding and Ms Serobe that they had carried out their fiduciary duties in a satisfactory manner but they had erred in their relationship with the management. If it had not been for the fight with the management, they would not have been sitting here today.

Advocate Pansy Tlakula, SABC board member, said that she regretted the day that she accepted her position on the board. When she accepted her position she thought she was appointed to make a contribution to the functioning of an independent institution and to deal with the freedom of expression in Africa. One of her areas of expertise was what it constituted to be a public broadcaster. She thought that as a country, compared to the rest of Africa, they had a shining example of what a public broadcaster should be. But she never had the opportunity to do that because the organisation was riddled with problems when the board was appointed. Political interference was one of the things that should not have been allowed to occur and it should be ensured that it did not happen again. They had inherited a financially ailing institution and they had to try very hard to carry out their fiduciary duty, and all along there had been a political pressure to remove the board. Sitting on the board had been one of the hardest things she had had to do. She did not say that they had not made mistakes and likewise management had made mistakes. The management had decided to get the board out and that is how they ended up where they were. The fiduciary responsibilities needed to be worked at, although there were standards such as the King Report, but issues of roles and responsibilities were something that needed to be worked on internally and not simply written into the rules.

Ms Charlotte Mampane, acting COO: SABC, said that as a new board member one should not simply look at the balance sheet and make one’s decisions but one should make sure that one understood the context. It would take a while to understand the SABC and its finances. For this matter to be understood properly they needed an independent forensic study. On the issue of the declining profitability, the management and the previous board had noticed that things were going in the wrong direction in 2006 and had embarked on a strategy to address the funding gap and so on. So those issues were present before the board was, and so were the strategies to deal with the issues. Unfortunately those strategies were never implemented because the board interrupted the process.

Further it had to be said that some of the crisis was due to the SABC mandate, which was out of the management’s and the board’s control. She had been part of the team that had presented the R600 million deficit budget and the deficit had been due to the DTT mandate and News International. Those mandates invariably led to increased employee and other, costs. One could look at the mandate for local content for example. As the mandate increased the costs also increased. Therefore what was needed was an independent study of what was really happening within the SABC.

Mr Nicholson, CFO: SABC, begun by saying that on 18 June he had been very upset to hear some of the allegations made to the SABC. Addressing his fellow board members, he said that it had been a brutal year and he felt both empathy and sympathy for them. Addressing what Ms Serobe had said about the budget and the lack of a funding plan, the normal course of action was to first have a budget and then based on that apply for funding. However it was clear that the board had received an old rusty car which they subsequently proceeded to drive off the cliff. He was speaking for himself from his heart and against his own best interest. It had to be said that they had lost sight of some crucial issues, one of them being the strategic projects. It was the strategic projects that never flourished. They were too busy running around and hitting each other on the head to focus on what was important. An R800 million deficit did not lie. It was clear that there was a major problem.

On the other hand, if South Africa wanted a public broadcaster it had to be prepared to give it more funding. It also needed better management, better governance and better efficiency. He wanted to state that they had presented to the board that there had been problems - ever since July 2008. That had led to the strategy project development between management and the board, which had resulted in the development of the austerity plan. However, after that, there had been an issue of a non-delivery of these strategic projects.

When it came to issuing a forensic report, from personal experience, he believed that if there had been one thing that had been abused badly with shocking consequences within the SABC, it was the internal forensic audits. These audits represented an extremely stressful experience for the persons involved and it created an environment of internal distrust that suited other people’s interest but that definitely did not serve the interest of the SABC. The way they approached a number of things had to be cleaned up. The SABC needed a team relationship between management and the new board that was built on mutual trust and transparency instead of a predicated belief that the SABC management was filled with self-serving crooks. There were people within the SABC that had done wrong and they should go to prison for what they had done. He was ‘bloody angry at this mess’ and they should not deceive each other.

Mr Andile Mbeki, SABC Board member, said that he was speaking as a youth activist on behalf of the young persons of the country. He would like to see that South Africa protected the organs of the state, like the SABC, so that they could later in life be proud of the institutions they had. Today much had been said and the Committee now had to make a decision that was in the best interest of the country. He appealed to the Committee that they considered what knowledge he had in terms of an institutional memory. He had worked for the SABC for six years and had also worked for the previous board and he was entirely committed to steer the organisation in the right direction.

The board had previously experienced being invited to the Portfolio Committee to present on substantive issues but instead of paying attention to the presentation the Committee had pre-prepared questions that was entirely off the subject of the presentation. Most of the issues that had been raised now were not new; the Committee should in some instances be ashamed of itself for not paying full attention to the presentations that had dealt with those issues.

Secondly he wanted to say that they as a board and management had made mistakes, but most issues were due to technicalities. Moving forward, could the Committee please lead by example? Today eight hours had been spent, but on the basis of the agenda, the meeting could have been conducted in ten minutes if they had stuck to the issues in front of them. He therefore appealed that they should apply their minds and be consistent to the issues with which they were dealing. As South Africans they were committed to make the SABC work. One of the reasons that he personally resigned was because of the surrounding activities and he thought that it was in the best interest of the country to overhaul the organisation.

Ms Khanyi Mkhonza, former SABC Board Chairperson, said that she considered herself one of the most fortunate persons in the country right now because at least she had gotten honest feedback that she took very seriously. Most leaders would not get that kind of feedback - whether the feedback said they sucked or not. While she may have been a bad leader she could not be faulted on not speaking the truth. The communication problem outlined by management was actually not a problem of communication but a problem in that management disagreed with the responses they got and chose an opposite route. Eighteen months down the line, she wanted to say that the board, since its inception, had never really had a chance. They never had a chance in front of the Committee since they faced them in March last year. And no one had spoken up about this. The Committee they had presented to last year had not even been interested in what the board had to say but instead asked questions that did not even deal with the SABC.

Even though she sucked as a leader, the fact was that management had never subjected itself to the authority of the board and that was why they were where they were today. She took responsibility for her weak leadership skills but because of the political climate in the country, they had never had a chance. If they were to appoint a new board would they give them a chance? Since the board was announced in December 2007, there had been unsubstantiated calls on them to step down due to their belonging to this or that political grouping. But the fact was that they did not belong to any political grouping! They had been treated like fifth class citizens since the board was announced. Except for the cost factor, the reason for the crisis was political and what needed to be made sure, was that this did not happen again. If it did where were they going as a country? Those were the real issues.

On the issue of costs, the SABC was a content organisation and that needed to be addressed. At the last meeting there were concerns about the PSL rights, and later the rugby rights and so on and they had lost all the rights. They needed to have policies about what rights were going to be purchased.

The Chair said that it was clear that they would not finish that day and they should decide what the next step should be. He appreciated the candid statements by the board members and suggested that they reconvene at 10am the next morning. Mr Harry Matabathe from the DoC was invited to speak as the shareholder on the problems within the SABC and he wanted the board to be present for that. There were also more issues that needed to be discussed.

Ms Qunta said that what she had feared this morning had in fact happen as there had been unfounded allegations. Although some people had come prepared, reading from documents, the board members had not had a chance to prepare to answer such allegations. She did not want to return tomorrow to face the same jeopardy and she wanted the Chairperson to safeguard their rights and limit the range of things they were required to answer. She also wanted to say for the record that she was in fact a board member.

Mr B Manamela (ANC) said that they should accept written submissions that board members or management wanted to be considered by the Committee.

Adv De Lange said that he thought that they had decided on 18 June that all the documents that were referred to should have been handed to the board. That needed to get done properly now after the meeting.

The Chairperson ended by saying that they had sent the relevant documents to the company secretary.

Ms Serobe said that factually board members did not have the documents.

The Chairperson ended off by stating that they would make the documents available again but that the breakdown in communications within the SABC was unacceptable and Mr Mampone really had to deal with that problem. The meeting was adjourned until 10am the next morning.