Boxing South Africa on its Annual Report 2011/2012

Sports, Arts and Culture

10 October 2012
Chairperson: Mr M Mdakane (ANC,)
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Meeting Summary

Boxing South Africa briefed the Committee on its Annual Report for the 2011/2012 financial year. In as much as the Committee appreciated the briefing, Members were at the outset disappointed by the absence of the BSA CEO Mr Moffat Qithi and the Board Chairperson Mr Ngconde Balfour. Both had prior personal commitments which they had to attend to. Members were concerned that each year the BSA received a qualified audit report from the Auditor General’s Office with the same shortcomings being identified. What would make this year different? The Committee was to learn that a new Board had been formed in 2011 and that major changes were taking place.

Boxing SA had received a qualified audit opinion. The problem was the changes could not be reflected in the current annual report under consideration but would only appear in the annual report for 2012/2013. This was because a great deal of the work had been done after the 2011/2012 annual report had been compiled. In as much as BSA wished to do more its major constraint was a lack of finance. A lack of financial management and the filling of vacant posts were some of the issues the new Board had to contend with. The Committee had to be content with the assertion by the entity that improvements were being made and that the proof thereof would be reflected in its annual report for 2012/2013. The bottom line for the Committee was that the interests of boxers had to be looked after and that boxing in the country should grow. 

Meeting report

The Chairperson stated that the Committee was aware of the challenges faced by Boxing South Africa (BSA) as outlined by the concerns raised by the Auditor General’s Office in the entity’s Annual Report. The Committee needed to be informed what the state of affairs at BSA was and that same issues should not recur year after year.
He also welcomed Ms Sumaya Khan, Chief Operating Officer and Mr Makoto Matlala, Chief Financial Officer in the Department of Sport and Recreation (SRSA) to the meeting.

Boxing South Africa (BSA)
Boxing South Africa briefed the Committee on its Annual Report 2011/2012 and was represented by Mr Mandla Ntlanganiso a member of the BSA Board and Ms Devrani Moonsamy a financial accountant from BSA performing the duties of a Chief Financial Officer. Mr Ntlanganiso at the outset apologised for the absence of the BSA CEO Mr Moffat Qithi and Board Chairperson Mr Ngconde Balfour. Both had prior personal commitments which they had to attend to.

Ms G Sindani (ANC) asked what the reasons were for the CEO and BSA Board Chairperson not being present in the meeting.

Mr Ntlanganiso reiterated that both had personal commitments which they had to attend to. He would brief the Chairperson on the reasons for their absence.

Mr T Lee (DA) reacted that it was not only for the Chairperson to be briefed about the reasons for their absence but members as well. When had BSA been invited to brief the Committee?

Mr Lichakane
Phori, Committee Secretary, replied that BSA had been invited four weeks prior to the present briefing.

Mr M Dikgacwi (ANC) pointed out that when the Committee was preparing its Budget Review and Recommendation Report the BSA had also not been part of it. The accounting officer of BSA needed to be present.

Mr Lee said that the issue was not just about money but also about looking out for the interest of boxers. If issues within BSA remained as they were how could they look out for the interests of boxers?

Ms Sindani felt that it was time to be harsh and to turn BSA back and not continue with the briefing. The accounting officer needed to be present. The situation was unacceptable.

The Chairperson said that members raised valid points about senior persons from BSA needing to be present in the meeting. He felt that the briefing should nevertheless go ahead as planned and if need be a follow up meeting could be scheduled.

Mr
Ntlanganiso agreed to communicate the sentiments of the Committee to the management of BSA.
The briefing would be done in two parts the first was undertaken by Mr Ntlanganiso and the second on BSA’s financials would be done by Ms Moonsamy.
The first part of the briefing proceeded. The mandate, vision, mission and values of BSA were touched on. The timeous appointment of the new board of BSA on the 28 August 2011 and the timeous submission of its strategic plan and all quarterly reports were some of the achievements highlighted. Even though top management at BSA was not yet fully resourced a positive was that advertisements had been placed to fill the vacant chief financial officer (CFO) post.
The following challenges were identified:
●SRSA grant was not adequate to meet legislative requirements
●There were no financial resources available to finance strategic projects as per Strategic plan 2012-2017 and strategic posts. (e.g Baby champs, training, rural development, infrastructure development e.t.c)
●Representation in international conventions to leverage BSA’s presence in the world and continent
●Provincial and local government support with the exception of Eastern Cape (EC) and Kwazulu-Natal (KZN). (Western Cape (WC) not interested at all)
●Private strategic partnership with corporate sponsors


Discussion
Mr M Rabotapi (DA) asked when BSA had been established. He asked why there was no support for boxing in the WC. What attempts was BSA making to encourage boxing in provinces not mentioned in the briefing document?

Mr Ntlanganiso replied that the new BSA Board had been formed on 1 September 2011. In essence the Board had only been in office seven months into the 2011/2012 financial year. Some of the issues reflected in the Annual Report were a legacy from the old Board. Seven months might be a short time but drastic changes had taken place at the BSA. Board members were responsible for different provinces. It was his responsibility to handle the WC. EC and Gauteng were doing good work on boxing. Other provinces were being engaged. Movement was taking place.

Mr Lee being from the Western Cape said that he would look into the matter as to why boxing was not getting support from the province. He pointed out that when one looked at the track record of BSA over the last ten years it seemed that BSA always seemed to be in the red. The same issues reared its head year after year. It was as if members were speaking in a vacuum.
Addressing the SRSA he noted that BSA was dragging them down. The BSA was part of the reason why the SRSA had received a qualified Auditor General’s Report. He reiterated that the issue was also about looking after the interests of boxers.  

Mr Ntlanganiso responded that BSA’s strategic plan spoke to the welfare of boxers. The problem was that the South African National Boxing Association (SANABO) was under administration. With whom should the BSA discuss the issue of boxers? Hopefully SANABO would resolve its problems and the dialogue with BSA would continue.
BSA had also embarked on a roadshow which included boxers, trainers and managers. All these persons were encouraged to form associations within their fields with a national federation at the top. Work was being done but funding as usual was the issue.

Mr G MacKenzie (DA) pointed out that the mandate of BSA spoke about leadership but yet leadership was lacking. Why was the memorandum of understanding with the South African Broadcasting Corporation (SABC) not signed yet? Boxing could not grow if matches were not broadcast. The sport needed exposure.

Mr Mackenzie further commented that the Annual Report reflected that the CEO had received a salary and a bonus. If BSA was losing money why was this so? BSA received its normal grant plus an additional R8m from SRSA. And there had been a reduction in expenses in the amount of R 1.3m. So there were extra funds and good things were happening. He noted that the Annual Report did not reflect schools development.

Mr Ntlanganiso replied that the SABC should have signed the memorandum of understanding with the BSA on 28 September 2012. The BSA Board had adopted the memorandum of understanding and had sent it to the SABC to be signed. The BSA was waiting on the SABC.

Mr Dikgacwi pointed out that BSA’s mandate spoke about ensuring effective and efficient administration. Was it taking place in reality? What was being done about the decline in boxing? Boxing was taking place in Paarl, George and in Robertson so it was happening in parts of the Western Cape. The Annual Report also reflected that the BSA only achieved 40% of its targets. Were the targets set by BSA perhaps unrealistic? Should BSA set realistic targets?

Mr Ntlanganiso responded that the BSA had established committees in order to meet its mandate. The 2012/2013 Annual Report would reflect the positive changes that had taken place at the BSA. The problem with trying to meet targets was that resources were required to do so. If resources were available targets would be met.

Mr Lee was disappointed that the BSA had not formed its audit committee when other committees had been formed. He felt that the SRSA could also respond on issues if they were able to do so.

Mr Ntlanganiso said by the end of November 2012 the BSA would have a fully functional audit committee.

The Chairperson stressed that the Auditor General’s Report contained factual information. The BSA should perform in terms of its mandate. The BSA Board only having been in existence seven months at the time of the Annual Report was something to take into consideration. The BSA contended that the positive changes would be reflected in the 2012/2013 Annual Report- the Committee would have to wait and see.

Ms Sindani referred to the 78 boxing tournaments held throughout SA and asked whether these tournaments covered all provinces. The Annual Report did not reflect all the provinces. Even if no tournaments were held in a province it should still be reflected in the Annual Report as zero. What kind of support was lacking in boxing?

Mr Ntlanganiso answered that with regards to development in provinces inter-provincial licenses were granted so that for example a promoter could promote anywhere in SA and not only in his province. BSA needed to engage with SANABO on the issue. It had to be remembered that sport was a provincial competence. Provincial sports departments had to work with sports federations. For example in the EC boxing received a R1m grant from the province. Gauteng was another province where funding for boxing was not a problem. Development should not only end at amateur level. Provinces should be part of development programmes. The EC was a good example. 70 to 80% of SA’s boxing champions came from the EC. A more uniform approach was needed across provinces.

Ms Khan explained that the SRSA had increased the grant to BSA from R2m to R5m. Financial support was also given to BSA in other areas. The SRSA had also increased the human resources support to BSA. One of the SRSA’s directors had been seconded to BSA. Five interns had also been seconded to BSA on a full time basis. The SRSA’s own audit report assisted BSA with audit control. Prior to the establishment of the new board, the Minister of Sport seconded two senior managers to the board of BSA. They were however later on only required to attend board meetings if invited to do so by BSA. The Minister of Sport facilitated meetings between BSA and the SABC that boxing tournaments should be aired on television.

Ms Sindani stated that despite boxing receiving no support from the province in the WC tournaments were held nevertheless. 

Mr Ntlanganiso responded that in the WC promoters went ahead to host tournaments on their own. In the EC promoters got support from the province. More support was needed from government and the private sector.

Mr Rabotapi asked what efforts BSA was engaged in to encourage the rest of the provinces to develop boxing.

Mr Ntlanganiso noted that other provinces were a work in progress. The BSA engaged with the respective premiers’ offices and provincial departments. Work with the EC, WC and KZN was already started but the other provinces were going to be engaged. Provincial managers were given packages to speak to sports bodies in their respective provinces. The intention was to have boxing in all nine provinces.

Mr Dikgacwi said that it did not matter that the BSA Board had only been in existence for seven months, it was BSA’s responsibility to sort out issues. It was BSA’s baby.

Mr MacKenzie commented that Mr Ntlanganiso had mastered the art of shadow boxing. It was unfortunate that the current Board had inherited the legacies from the previous board. The 2012/2013 Annual Report hopefully would reflect an improved state of affairs. It should state what the problem was and how it was solved. There should be full accountability.

Mr Ntlanganiso responded that there was accountability hence the briefing. Plans were in place but there were nevertheless shortcomings. Shortcomings would be dealt with but support was needed from the Committee. Nothing happened overnight.
He added that there was a fully functional structure which spoke to the mandate of BSA.

BSA Presentation continued
Ms Moonsamy continued with the second part of the briefing dealing with the financials of the BSA as contained in the Annual Report. She stated that if some of the top posts in leadership, financial management and performance were filled it would address some of the issues outlined by the Auditor General. Part of the reason why the BSA was in the red was because no audit committee had been formed yet and the post of Chief Financial Officer was vacant. Both these issues were however being addressed. Performance of the BSA was impacted upon because the new Board was using the strategic plan of the old board. The issue was about information. The new Board would have a new strategic plan for the period 2012- 2017.
Regarding the issue of the CEO’s bonus Ms Moonsamy explained that when she had joined BSA in January 2011 none of the staff was paid according to Department of Public Service and Administration (DPSA) salary scales. The staff of BSA was now on the scale. Everybody was entitled to benefits and a 13th cheque. The bonus referred to was actually a 13th cheque.
The Committee was given a breakdown of figures for BSA’s revenue estimates. All additional funding was used to fill in gaps for day to day expenditure and fill significant vacant posts. There were no approved funds available to meet strategic objectives. Members were also given specifics on why there were qualifications on certain things and the action taken to remedy the matter. Matters of emphasis were also elaborated upon. The Committee was informed on where the BSA fell short on legal requirements, the reasons why they fell short and also the plans of action that had been taken.
She went on to state that the position regarding BSA’s creditors had improved and that the deficit had come down.

The Committee was provided with a breakdown of areas of expenditure for BSA. Expenditure on employees had increased by 28% due to staff benefits and appointment of the CEO. Assets had depreciated by 35% due to assets having reached the end of their useful lives and were no longer in use. Finance costs had come down by 88% due to the settlement of long outstanding creditors. General expenses had decreased by 24% due to the adoption of conservative spending patterns. The total drop in expenditure of 17% reflected the effect of proper financial management and administration.
Some of the sources of revenue for BSA were the SRSA grant, license fees and sanctioning fees. Members were shown an organogram of the BSA organisational structure.
She ended of the briefing by highlighting BSA’s main goals for the MTEF period. They were to generate additional revenue from sponsorships, the appointment of a permanent Chief Financial Officer of which the shortlisting was already taking place, the filling of vacant posts  and lastly to have clean audit reports.

Discussion
Ms Sindani asked that if the post of CFO in BSA was vacant who was performing the work of a CFO. How was BSA able to operate without a CFO? She emphasised that financial information that had become available after the Annual Report had been compiled should be forwarded to the Committee. The Committee could not wait for it to appear in the 2012/2013 Annual Report. She wished to confirm that BSA was awaiting responses from their suppliers in order for the status quo to change. How long would the process take?

Ms Moonsamy explained that the SRSA CFO and a Mr Singh (SRSA) had been seconded to sit in on BSA board meetings. BSA needed people at top management level. It was correct that the SRSA had provided interns to assist at BSA. At present she was carrying out the duties of a CFO. There was a human resources consultant being used until the human resources post was filled. Posts could only be filled if funding was in place. The post of CFO would be filled before the end of 2012.
Board members were paid per attendance to meetings. The rates were in terms of a DPSA directorate. The figure was at present R2 754 per meeting per board member. The Chairperson of the Board was paid R3 000 per meeting. The rates changed annually.
She explained that promoters had been asked to respond by the 31 October 2012 whether or not BSA owed them money or whether they owed BSA money. If no response was received by 31 October 2012 then it would be assumed that BSA did not owe them money and they did not owe BSA money. The process was put in place to be able to write off creditors and debtors.

Mr Dikgacwi pointed out that the Auditor General seemed to highlight the same problem areas within the BSA Annual Report year after year. The Committee did not see an improvement and yet some of the problems were not that major. It was simple things.

The Chairperson took from what was presented that the situation at BSA was to improve and the improvements would be reflected in its next financial year. He noted that the Auditor General had said that BSA did not pay its service providers on time. This seemed to be the trend throughout government departments.

 Ms Moonsamy conceded that there had been late payment. The problem with paying late was that interest accrued. BSA had received its funding per quarter and sometimes the process of the grant was delayed. As a result the reality was that there were literally no funds in BSA’s bank account. The SRSA was now making grant payments in two halves hence there would be no more late payments. 
 
Mr Mnusi noted that in the EC the approach to boxing seemed to work. Could it not be used as a model for the rest of the provinces?

Ms Khan said that it was an option that would be looked into.

The Chairperson concluded by saying that it seemed that BSA would have an unqualified audit report the next financial year. It was important for the Committee to see that BSA had a clean or unqualified audit report.

The meeting was adjourned.

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