Department of Sport & Recreation Audit outcomes: Auditor-General presentation, Boxing SA & Department Sports and Recreation 2012/13 Annual Reports and current progress, in presence of Minister

Sports, Arts and Culture

08 October 2013
Chairperson: Mr M Mdakane (ANC)
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Meeting Summary

The Auditor-General South Africa (SRSA) firstly outlined the audit outcomes for the Department of Sport and Recreation (SRSA) and its entities, Boxing South Africa (BSA) and the South African Institute for Drug-Free Sports (SAIDS). SRSA had achieved an unqualified audit opinion, with findings related to strategic objectives and misstatements on financial statements which had been corrected. Although the Department had changed its strategic plan, it had been audited on the old plan. AGSA was confident that SRSA could achieve a clean audit with commitment to the new strategic plan. There had been 104 targets, but 48 were not achieved, partially due to new priorities. The BSA had moved from a qualified to unqualified audit opinion, but of major concern was that the financial statements received contained no pre-determined objectives, and there were no performance information to audit. Irregular expenditure amounted to R101 767, and the R1.4 million irregular expenditure recorded from the previous year had not been condoned. Of major concern for BSA was the fact that there was no adequate and reliable corroborating evidence to explain variances between planned and actual targets, and the Framework for Managing Programme Performance Information was not followed. Another concern for BSA was the suspension of the Chief Executive Officer and the resignation of the Board Chairperson. The SAIDS had achieved an unqualified audit opinion, but with findings related to performance information. Serious challenges included several misstatements on financial statements, which cumulatively created a problem, and non-compliance with supply chain management procedures. There was no internal audit function of the entity, no processes were in place to prevent irregular expenditure, and 42% of reported targets were not consistent with those in the strategic plan. However, it was indicated that the Minister had committed to 26 actions in an action plan, and of these 16% had already been implemented, and 84% were in progress. Performance information was not actually audited, but was discussed with the entities and included in the management letter; BSA was disclaimed, and SRSA and SAIDS were both qualified in respect of performance. In answer to Members’ questions, AGSA said that progress had been made and there was no reason why SRSA and its entities should not be able to achieve a clean audit, provided the recommendations were followed. The Committee noted its awareness of the challenges confronting BSA, but also knew that there were processes in place to restructure tournaments and improve revenue collection, as well as negotiations with National Treasury.

The Minister of Sports and Recreation, Mr Fikile Mbalula, introduced the Annual Report briefing by summarising that the aim of the Department was to maximise access, development, and excellence at all levels of participation in sports and recreation, and to improve social cohesion and nation building in South Africa (SA). The National Sports and Recreation Plan (NSRP) provided details of the three core pillars of implementation: an active nation, a winning nation, and an enabling environment. The NSRP was costed at about R10 billion, but should help to boost South Africa’s sporting results to those in line with the population, income and high levels of excellence already in a number of sporting codes. To realise the vision, sport and recreation in general - and school sport in particular - should be adequately resourced. A key component of the NSRP was a Transformation Charter and Scorecard and the appointment of an Eminent Persons Group in 2012 helped the Department to fast-track some elements of transformation. The Minister assured the Committee of the Department’s passion, focus, vigour and zest to change the face of sport and recreation in South Africa. The President had emphasised sport as a unifying and nation building tool. The Nelson Mandela Sports and Culture Day had been hosted, with Department of Arts and Culture, on 17 August, showcasing sports and music, generating money for the Nelson Mandela Children’s Fund and the Nelson Mandela Children’s Hospital Trust. The SRSA was intending to introduce amending legislation of the Sports and Recreation Amendment Act, the Combat Sports Bill and the Boxing Act. A boxing indaba in September 2013 had focused on the interests of the boxers, and how to turn boxing around. It had resolved that government should increase its budget and funding of the amateur boxing arena to identify natural talent that could be elevated to the professional arena. Women boxing would be prioritised and treated as a special project by the national and provincial departments of sport and would be fully funded through the provincial grant. Members commented that there seemed to be a problem in that money allocated to municipalities for sporting purposes was not used for such, and emphasised the importance of elevating women in sport, physical education in schools, underutilised facilities in schools, and transformation in sports.

The SRSA Director General then briefed the Committee on the Annual Report. SRSA took the decision to focus on one federation per year, and the efforts for Tennis SA in the 2012/13 financial year were described. In the following year, the focus would be on basketball. Various partnerships were being considered towards improved implementation of the NSRP. The Council for Scientific and Industrial Research (CSIR) was particularly involved, by doing an audit of sports facilities to discover the gaps. The biggest challenge would be finding the R3.8 billion per year to implement the NSRP, and this financial year’s resources were skewed because South Africa had picked up the hosting of the 2013 Africa Cup of Nations. The SRSA had supported 1 424 amateur athletes through the academy system, and 15 242 athletes within a structured development programme. The framework for the Mass Participation Conditional Grant was reviewed. The National School Championships allowed 3 272 learners (of whom 21% were children with disabilities) to participate in nine sporting codes. The Minster’s School Sport Bursary Fund was implemented and 14 talented learners were identified to benefit. Challenges identified by the Department included a court case instituted by a boxing promoter, which was still pending, delays in filling vacancies because it had taken longer to draw up the new organogram, and the fact that only 68, instead of 70, federations could be financially supported as the remainder did not comply with minimum qualifications to receive funding., whilst only 13, instead of 50, projects could be monitored because of delays in submitting required documents by sporting bodies. It had been unable to identify talent scouts, and was now training individuals. Particular achievements included full compliance with World Anti-Doping Agency stipulations, hosting of nine provincial youth camps, and registration of 15 662 schools, almost four times the number projected, to participate in school sport leagues. On the international front, the SRSA Deputy Minister was elected Chairperson of the Executive Board of the United Nations Office of Sport for Development and Peace. From December 2013 to March 2013 one national sporting facility should be opened each week. Closer collaboration was sought with the National Lottery, to align its projects to the SRSA’s plans, and the SRSA would be focusing on one of the World Cup stadiums every year, to enable sustainability and revenue-creation. Impact assessment was being researched by students and the CSIR was reviewing the NSRP and National Facilities Plan. Work of the SRSA was evidence-based. Highlights of each of the programmes were given.

Members stressed the importance of assessing the impact of the Department’s work on communities, asked about support to Netball SA and women’s sport, and called for clarity on the bursaries awarded. They asked about school sport, the relationship with the Department of Basic Education, and the roles of provinces, urged better public awareness of sporting heroes, and asked for detail on the 2 179 educators trained and how physical education at schools was being handled. The Chairperson requested that some other questions asked not be replied to at this meeting, as the issues had been aired previously, including citizens’ access to sporting facilities, facilities at schools that were no longer used, community halls unsuitable for sport, evaluation of federations, and use of the quota system.

The Acting Chairperson and Chief Financial Officer of Boxing SA presented the Annual Report of this entity,  noting that the indaba had resolved that all provinces needed to set up associations by the end of December 2013, and by the end of February 2014 a national association to promote interaction between boxers, managers, promoters, trainers, officials and BSA would be established. The basis of the emphasis of matter in the audit report, namely the pending case, was explained, and the Committee was assured that strategic planning and performance management documents were being addressed, with better planning of targets that lay within the capability of BSA. BSA estimated its financial needs, to comply fully with the Act, at R35 million, but it was currently struggling to perform with revenue of under R10 million. It aimed to increase sponsorships. It had managed to appoint a permanent Chief Financial Officer and was setting up a functional internal audit committee, and attending to the concerns of the Auditor-General. The Chief Executive Officer had been suspended, due to his admission that he had failed to disclose a conviction involving dishonesty, which would have prevented his being appointed to his post. Broadcasting rights had been negotiated, and the basis for them was described. The current system had been investigated as anti-competitive by the Competition Commission, and in future dates would be negotiated by BSA itself. Some of the resolutions from the Indaba were further explained, and the Department noted that the pending legislation was complex, as it aimed to cover a number of other codes also, but was in the process.

Meeting report

Auditor-General South Africa briefing on audit outcomes of the for the 2012/13 financial year for Department of Sport and Recreation
Mr Musa Hlongwa, Business Executive, Auditor-General South Africa, said the Department of Sport and Recreation (SRSA or the Department) aimed to transform the delivery of sport and recreation by ensuring equitable access, development and excellence at all levels of participation and to harness the socio-economic contributions that could create a better life for all South Africans.

The organisational structure of the Department was illustrated on page 3 of the briefing (see attached document). Specific concerns of the Auditor-General (AGSA) that related to management were the overall vacancy rate, which had increased from 17% in the previous year to 28% in the current year, the senior management vacancy rate, which increased from 22% in the previous year to 30% in the current year, and the fact that two positions in senior management were vacant for more than 12 months.

The Department was tasked with a total budget of R1.063 billion. The five programmes for SRSA covered administration, sport and recreation, mass participation, international liaison and events, and facilities coordination. There was, finally, underspending of 0.9%. Transfers to public entities were included in the Sport and Recreation Programme, which formed part of the SRSA portfolio, overspent the allocated budget by 49.9% for Boxing South Africa (BSA) and 16.3% for South African Institute for Drug-Free Sport (SAIDS).

Mr Abrie Adendorff, Senior Manager, AGSA, thanked the Department and its entities for the cooperation and good working relationship during the audit. The Department achieved an unqualified audit opinion with findings related to strategic objectives, and misstatements on financial statements which had been corrected. It was taken into consideration that the Department changed its strategic plan, but it was audited on the old plan and if the Minister and the Director-General of Sport and Recreation committed to the new strategic plan, the Department should achieve a clean audit for the 2013/14 financial year. With regard to the pre-determined objectives, indicators were not verifiable and the reported performance information as a whole of sport support services and mass participation were materially misstated due to the cumulative effect of numerous individual immaterial uncorrected misstatements in the targets relevant to the selected programmes. Of the total number of 104 targets planned for the year, 48 were not achieved during the year under review.

BSA’s financial statements moved from a qualified opinion to an unqualified opinion, but there were some major concerns. The financial statements received from BSA contained no pre-determined objectives and there was no performance information to audit. The Chief Financial Officer of BSA had a major task of addressing these challenges, which were recorded in the audit report. Irregular expenditure amounted to R101 767, and the R1.4 million irregular expenditure recorded the previous year had not been condoned. Receivables amounting to R838 660 and payables amounting to R228 673 had been written off, in terms of a board resolution dated 18 January 2013.

The major concern for BSA was the finding of no adequate and reliable corroborating evidence that explained variances between planned and actual targets, whilst another was the and non-adherence to the National Treasury Framework for Managing Programme Performance Information (FMPPI).

SAIDS achieved an unqualified audit opinion with findings related to performance information. Serious challenges included the material misstatements on financial statements, which were corrected and non-compliance with supply chain management procedures. There was no internal audit function in the entity and there were no processes put in place by management to prevent irregular expenditure. A total of 42% of the reported targets were not consistent with the targets set out in the approved strategic plan.

Mr Adendorff gave an overview of the findings the Departments and its entities, related to their supply management processes, human resources, information technology controls, financial health, and material misstatements to financial statements. He highlighted the material misstatements to financial misstatements as of serious concern, and the overview also provided root causes and recommendations to address those findings. Page 20 provided an overview of performance related to leadership, financial and performance management, and governance. BSA showed there were interventions required for most of its drivers of internal control, but the entity lacked the capacity to initiate interventions.

Other reports showed that the transfer of funds to the Khanyisa Community Development Educare Centre was in the finalisation stage at conclusion of the audit and was expected to be resolved in 2013/14.

The Minister had committed to 26 actions in an action plan that was submitted to the Auditor-General during the 2012/13 financial year and at the conclusion of the audit 16% of those actions had been implemented and 84% was in progress.

Mr Adendorff explained that an audit opinion on performance information was not included in the audit report, but it was discussed with the entities and was included in the management letter. In regard to performance, SRSA achieved a qualified audit opinion, BSA achieved a disclaimer opinion, because no performance information was provided, and SAIDS achieved a qualified audit opinion. Another major concern for BSA was the suspension of the Chief Executive Officer and the resignation of the chairman of the BSA board.

The Chairperson asked what the overall projection was to the progress and status of the Department and if the Department could achieve a clean audit opinion in two years’ time.

Mr Hlongwa replied that the Department had made progress, compared to the last four years, and he could not see any reason why a clean audit could not be achieved. The same could be said for SAIDS and BSA if the recommendations were put in place and the findings were addressed.

The Chairperson asked if there were systems in place to ensure that the Department and the entities would not be in a worse position the following year.

Mr Musa said there was very little chance that there would be no improvement next year.

Mr Alec Moemi, Director General, SRSA, said the audit findings were reflective of the status of the Department and its entities and the Department had, prior to this meeting, indicated to the Committee that there were serious challenges within BSA. There were processes in place to address those challenges through restructuring tournament processes and promoters’ regulations, and this would enable BSA to collect total entitled revenue for the first time. Negotiations with National Treasury were under way to increase the resources allocated to the entity and the Department would consult with the Auditor-General regarding the turnaround strategy. The process had been slow and the surface had just been scratched on what needed to be done within the Department and its entities. BSA achieved disclaimed audit opinions for the two years prior to this one, but had moved to an unqualified opinion, which had been the objective of the Department.

The Chairperson thanked AGSA for the presentation, and also thanked SRSA for its input. He reminded SRSA that if it wanted money, it would have to provide evidence of the impact it had on society, and performance management information would provide such information to the Committee.

Mr T Lee (DA) said that at last year’s meeting it had also been said that BSA would be a better functioning entity by the following year. BSA was established to serve the interests of boxers yet the boxers were not being helped by BSA. The vacancy rate had increased from 17% to 28%, with many senior management posts vacant, and he asked why the rate increased and when these vacancies would be filled. He also asked that the Committee to be provided with a breakdown of the qualifications of the people employed by BSA.

The Chairperson said the Auditor-General gave its findings on the entities, identified the areas of concern and gave the Committee the information that was needed.

Mr Moemi said the projection that BSA would function better, was based on the assumption that funding would improve and that the funding would be well managed.

Mr M Rabotapi (DA) likened BSA to a baby that was being taken care, but was not appreciative of the care. It was a catch 22 situation between either lack of funding and corruption.

Mr M Dikgacwi (ANC) said BSA and the Department were present to address all the issues, and suggested that this be done after their scheduled presentations.

The Chairperson excused the AGSA delegation and gave the opportunity to the Minister of Sport and Recreation South Africa, Mr Fikile Mbalule, to address the Committee.

Foreword by the Minister on SRSA Annual Report 2012/13
The Minister said that SRSA set an agenda for sports and recreation in South Africa. The aim of the Department was to maximise access, development, and excellence at all levels of participation in sports and recreation, and to improve social cohesion, nation building and the quality of life of all South Africans. It was acknowledged that there were gaps in putting this vision into practice, and the 2012/13 Annual Report (AR) highlighted the achievements of the Department to address those gaps. This process was initiated by the National Sports and Recreation Plan (NSRP), which was the end product of more than ten months of broad consultation with relevant stakeholders. The nucleus of the NSRP provided details of the three core pillars of implementation: namely, an active nation, a winning nation, and an enabling environment. These pillars were underpinned by transversal issues such as transformation, and utilising sport as a tool to achieve national and global priorities. The 2012/13 AR took stock of how far the Department had progressed in the second year of adoption of the NSRP. The Department was marching in unison with all other players towards the fulfilment of the objectives of the National Development Plan (NDP) Vision 2030.

The NSRP had been costed, and would be presented to National Treasury for endorsement, and thereafter to Cabinet. Cabinet would have to budget an amount of approximately R10 billion towards fulfilling of the objectives of the NSRP. It was fulfilling to learn that the NSRP had been anchored in the heart of the NDP. The transformation vision for sport in the NDP for 2030 was that participation in each sporting code should begin to approximate the demographics of the country. In essence, this meant that South Africa’s sporting results should be those expected of a middle-income country with a population of about 50 million and with historical excellence in a number of sporting codes. For this vision to be realised, sport and recreation in general, and school sport in particular, should be adequately resourced. Communities were expected to organise sporting events, leagues, championships, and generally look after the sporting facilities once they were installed or developed. As a result, SRSA, together with the Department of Basic Education (DBE) hosted a successful National Schools Championships and the NDP recommended that this should be expanded so that all schools developed and maintained infrastructure for at least two sporting codes. As the NSRP and NDP stated, the best place to instil changes in lifestyle and behaviour was at school. To this end, a number of strides were made regarding status of physical education, access to sport and recreation, facilities and support.

One of the key components of the NSRP was a Transformation Charter and Scorecard. The baseline of transformation in South African sport needed to be determined and the appointment of an Eminent Persons Group (EPG) in 2012 helped the Department to fast-track some elements of transformation and effected some change. Because of the importance of transformation for the future of South African sport, it was imperative that SRSA delivered on this focus area. SRSA was consolidating internal capacity which would be provided to national federations and other sporting bodies through the increasing capacity of the EPG to assist national federations to implement the Charter and to accurately complete the scorecard. The national federations would be subjected to a transformation review to monitor progress. It was against this backdrop that SRSA would provide secretariat support to the EPG and produce quarterly national federation transformation progress reports, based on their interactions with the South African Sports Confederation and Olympic Committee (SASCOC) and the national federations. It was envisaged that this key project would require a permanent secretariat staff in 2013.

The Ministerial Advisory Committee on Recreation (MACR) was hard at work in assisting SRSA to actualise the essence in recreation and as a result, over the medium term, the Department would develop a single governance framework for recreation in South Africa to strengthen the delivery of recreation programmes. It was envisaged that these programmes would not be institutionalised but would be community initiatives driven by educational and public driven promotional campaigns.

The Minister said that, even despite the minimum resources SRSA received for the year under review, the Department had scored 90% out of 100% and showed passion, focus, vigour and zest through the ‘force of commitment’ to change the face of sport and recreation in South Africa.

In the State of the Nation Address, the President reasserted the strategic focus for the year ahead and placed emphasis on sport as a unifying and nation building tool in the country. On 17 August, SRSA, together with the Department of Arts and Culture and other entities, hosted the Nelson Mandela Sports and Culture Day. FNB Stadium had hosted a rugby and soccer match, followed by a music festival that showcased both national and international artists. The programme attracted more than 52 000 people and 2.5 million viewers followed the celebrations on television. This programme generated funds towards the Nelson Mandela Children’s Fund and to the Nelson Mandela Children’s Hospital Trust to boost the legacy of former President Nelson Mandela. In order to find solutions that would strengthen the Department and the broader sports and recreation sector, SRSA would approach Parliament with the Sports and Recreation Amendment Act, the Combat Sports Bill and the Boxing Act. The support and guidance of the Committee could never be over-emphasised and the Committee would be informed of the progress.

The Minister noted also that on 28 September 2013, SRSA hosted the national boxing indaba, and at the heart of these deliberations was the interest of the boxer and the intention to turn around boxing in South Africa. A number of resolutions were adopted. For the next two months all provinces would be on a report-back campaign that would inform all boxing stakeholders about the outcomes of the indaba. The indaba resolved that government should increase its budget and funding of the amateur boxing arena to identify natural talent that could be elevated to the professional arena. Women’s boxing would be prioritised and treated as a special project by the National and Provincial Departments of Sport and would be fully funded through the Provincial Grant.

The Minister would find resources and funding to promote grassroots boxing development through use of the Provincial Conditional Grants and the Lottery. The Ministry would continue its intention to sign broadcasting rights with different television channels. By the end of February 2014 the establishment of the National Boxing Association would be finalised and led by SRSA, whilst government would continue to work with civil society to create an enabling environment and infrastructure in communities. In pursuit of transparent and accountable governance, the objective of the Department was to inform Parliament and the people of South Africa of the progress made. The Director-General would provide an overview of the activities by SRSA.

Mr Lee asked for the opportunity to ask questions now, as some of the Committee members had travelled around the country and had an idea of what was happening on the ground, and some of the issues related to the speech the Minister had just given. He noted that the Minister had said that SRSA afforded opportunities to communities, but the feedback from municipalities did not reflect that, as that feedback did not prioritise the development of sport and recreation. The vision the Minister spoke about was difficult to achieve, because the money allocated to municipalities for the development of sporting codes was in fact used for other purposes.

The Minister said the Department had been quite vocal about this issue and measures had been put in place that the Director-General would cover during the Annual Report presentation. There was awareness of prioritising sports and recreation, but not all departments viewed sports and recreation as a value adding aspect of community development.

The Chairperson agreed and said if the basic needs of these municipalities were not being met, it would be difficult to prioritise sport and recreation development.

Mr M Dikgacwi (ANC) said the Nelson Mandela Sports and Culture Day was a very good initiative, but female sports should also come to the fore. BSA had been lambasted, but it must be remembered that the entity did not have the resources nor the capacity to address the shortcomings. He asked where the R10 billion would be sourced from, because all the initiatives the Minister raised required money, and what the progress of the EPGs were in relation to monitoring transformation.

The Minister said the cost of the tickets for the Nelson Mandela Sports and Culture Day were under-costed, because it was a fundraiser that promoted social cohesion. The Springbok rugby team was the big crowd puller, but interest also depended on the opposition team. The developmental nature of the initiative was important, because in future women’s football could be a curtain raiser, or any other female driven sport. The Department was working on resourcing EPG; it had approached the Olympic Committee (SASCOC) and briefed it on the terms, and EPG would create a report that would assist to drive transformation and would even inform of the problems in the process of transformation. The aim was integrated access and equity.

Mr Rabotapi said he had a slight problem with quotas and believed people needed to be given opportunities based on merit.

The Minister said there was a big debate around South Africa of how ‘merit’ should be defined. The Department focussed on creating an environment that would give everybody capable the opportunity for access and equity. There could not, however, be a winning nation with mediocrity.

Mr Moemi said because of the conflicting feedback regarding quotas, the Department had harmonised the quota system with dimension 2 of the scorecard. A recently published article on transformation in sport had been debated by stakeholders.

Mr Lee pointed out that the Department spent nearly 100% of its budget, but 47% of the targets set by the Department had not been achieved. The money spent should correlate with the budget, since achievement of targets required money.

Mr Gert Oosthuizen, Deputy Minister of Sports and Recreation, said the 104 pre-determined target outcomes for the year (of which 48 were not achieved) was a result of the successful sports indaba that happened midway through the year, when the NSRP was adopted, so that the pre-determined outcomes had to be amended. Although the Department had needed to side-line some of the targets to prioritise others, there had nevertheless been good achievements.

Ms G Tseke (ANC) questioned the engagement of the Minister with MECs, pointing out that some of the regions in Mpumalanga and Limpopo did not get any support from the Department. During a visit to eThekwini the Committee saw the way community halls were modelled and built, not to host weddings and funerals, as was happening in other provinces, but instead to accommodate an indoor sporting code, and there were continuous collaborations with schools and the hosting of these sporting codes. MECs should be lobbied to incorporate this way of modelling community halls, to serve a developmental purpose. Many rural areas’ halls were primarily used for hosting funerals.

The Minister said there were community clubs and tournaments that the Department should support, and did not know why the provinces did not support or invest in community sport development initiatives. He could not talk on behalf of the MECs, but this was a focus area. The Committee, in its oversight function, raised such areas as well as those on which the Department had good achievement. The feedback the Department had received from different sporting codes had been good, especially those codes that were not ordinarily televised or where there had never been any interest shown previously.

Mr S Mmusi (ANC) asked what strides the Minister was making with regards to physical education in schools, since that could not be determined during the Committee’s oversight visit.

The Minister said SRSA would have achieved more if the SRSA and Department of Basic Education (DBE) had worked better together. The SRSA wanted to see two teachers at every school to focus on a sporting discipline. The backdrop of development was school sport. In private schools, where participation was compulsory, this did not necessarily lead to learners having a future in sport, but their attitude and competitive spirit were better, as proven by the results. If compulsory sport participation was enforced in public schools, the recurring question of black players in the national rugby team would be addressed, because the players in the national rugby team could be traced to approximately 20 schools in the whole of South Africa. The same could be said for cricket. Children not attending those feeder schools tended not to make it to the national rugby or cricket teams.

Mr Lee said there was a national agreement between the Minister of Education and the Minister of SRSA, and those types of agreements should also extend to the provinces. The Committee had concluded that if something major was to happen in sport, it would likely happen in Free State, for that MEC’s attitude, work ethic and administration showed that this province was working for this country and could be used as an example of how the rest of the country should operate.

The Minister emphasised that MECs needed to perform, but the governance system afforded them semi-independence. They could agree on the systems, but there was no way of enforcing it. The observations by the Committee in regard to the provinces and the MECs would be raised.

The Chairperson said the issues of transformation and physical education in schools were important issues and collaboration with the DBE should be prioritised.

SRSA Annual Report 2012/13
Mr Moemi said that although other federations continued to receive their normal financial allocations and were provided with the usual support, a focus federation was granted additional funding and general support to enable it to achieve its key priorities. The focus for this year was Tennis South Africa. This federation had already been supported to host the Soweto Open and would continue enjoying increased attention until the end of the financial year. Through hosting of the Soweto Open, there had been developmental clinics hosted throughout the year. Next year, basketball would be the focus federation, and the Department was planning a university challenge competition and the R10 billion would contribute to the development of basketball.

In evaluating the human resources (HR) required to implement the NSRP, it became evident that the current structure of SRSA was inadequate and the Executive Authority thus directed the Department to commence with an organisational review process to address shortcomings in the current organisational structure. This would be finalised in the 2013/14 financial year. The Department had resolved that no vacant posts would be filled during this process, but the organisational review had taken much longer than anticipated and the vacancy levels had increased. To close the skills gap, top management decided to rotate Directors in September 2012. Following the rotation, the Department had seen new energy and ways of approaching the challenges at hand.

Various partnerships were being considered towards improved implementation of the NSRP. In September 2012 SRSA engaged the Council for Scientific and Industrial Research (CSIR) to partner SRSA towards the implementation of the NSRP. CSIR was assisting the Department with an audit of sports facilities, with a view of determining where the gaps were. The Department had, through the partnerships, developed norms and standards, which stated there should be at least one local sports facility for every 4 500 people. E-Thekwini approached the Department and asked for assistance and was the first metro to align its plans to the NSRP. Cape Town had been moving at a fast pace and would be next to comply with the NSRP, although the Nelson Mandela Bay Metropolitan Municipality seemed to be struggling.

The biggest challenge of the NSRP was the R3.8 billion per year it would cost to implement the plan. This financial year, there was a distortion on the SRSA budget because of the 2013 Africa Cup of Nations (AFCON), and with the budget cuts that would be imposed by National Treasury, the Department budget was seriously constricted.

Structures and committees were established to support the preparations for the successful hosting of the AFCON 2013 Championship during January and February 2013, and SRSA successfully facilitated SABC becoming the host broadcaster for AFCON 2013. The Post Graduate Development Programme was launched in December 2012, and a call for persons to register on the National Sports Volunteer Corps Programme was published, and enthusiasm for the programme had seen many registered. Slides 11 to 13 gave an overview of projects that were successfully organised by SRSA. Mr Moemi highlighted the ‘Big Walk’ that had over 5 000 participants, and the ‘Sport in the Struggle Exhibitions’, that celebrated struggle icons who used sports as a strengthening tool, at museums in all nine provinces. A media announcement on the Basketball National League was made and a review of the club development approach was completed with the related concept document submitted for approval.

The Department supported 1 424 amateur athletes through the academy system, which the Department hoped to increase drastically, and 15 242 athletes were supported within a structured development programme. Next year, for the Nelson Mandela Sports and Culture Day the Department was planning to play England in four different codes. It would be a ‘super weekend’ with rugby, soccer, netball and cricket matches to be contested during the weekend.

SRSA was the transferring department of the Mass Participation Conditional Grant. The framework for the grant and related allocations were reviewed, in conjunction with the provinces, to assist with the achievement of the SRSA vision and the implementation of the NSRP. Through the conditional grant 334 permanent and contract jobs were created and 2 179 educators were trained to deliver school sport programmes. There was a lack of capacity to effectively monitor the implementation of the conditional grant in the provinces. This aspect therefore needed strengthening, and the exit strategy required careful consideration. The National School Championships were hosted and 3 272 learners (of whom 21% were children with disabilities) participated from 10-15 December 2012, in nine sporting codes. The Minster’s School Sport Bursary Fund was launched and implemented and 14 talented learners were identified by the codes to benefit from this bursary. Slides 19 and 20 gave an overview of challenges that hindered the total roll-out of school sport, which included the absence of skilled personnel, weak community sport structures, inadequate support and participation by most parents, and absence of facilities in rural schools.

Mr Moemi stated that the unachieved targets should be viewed in light of the fact that the Department had many new targets that were not pre-determined yet that had to be prioritised.

He summarised the SRSA work during the year, divided into five programmes:

Programme 1: Administration
All nine targeted collaborative agreements were signed with the provinces related to AFCON 2013. The Department scored three in terms of the Management Performance Assessment Tool (MPAT) rating instead of four as targeted. All the targeted 11 institutional reports were managed and produced. Slides 25 and 26 gave an overview of the strategic executive support and slide 27 spoke to communication and information events and projects. The Department was defending itself against law suits which the SRSA deemed necessary to defend. The legal action against BSA named the SRSA as the third respondent, and the Department was committed to winning the case, because it would set a terrible precedent should it be found in favour of the applicants.

SRSA was taking more than three months to fill posts because of verifications of qualifications, the availability of panel members, and security clearances. However, SRSA developed and implemented seven, instead of the five targeted policies. 141 employees, just short of the target of 150, were trained, mainly in generic skills. It took 20 days less than the targeted 40 days to resolve disciplinary cases because the Department did everything in its power to resolve all disciplinary cases as soon as possible. In regard to financial management it took on average 30.7 days to process payments, against the target of 30, and there were challenges concerning the supporting documentation and quality assurance issues.

Programme 2: Sport Support Services
Financial support was given to 68 of the targeted 70 national federations, because some federations did not comply with the minimum requirements for qualification to receive funding. Only 13 against the target of 50 projects were monitored and evaluated, because there were delays in transferring funds to the sport bodies due to their non-submission of required documents. This also impacted negatively on achievement of 100% compliance to the Service Level Agreements of some of the bodies. The Department had since increased its targets and would continue the monitoring and evaluation of projects. The Department had struggled to identify talent scouts, and had initiated training of individuals as talent scouts, as well as implementing stringent measures to assess talent on a scientific basis. These measures would also assist talent to be recognised at provincial level. The Department achieved a 100% success rate with regards to compliance with the World Anti-Doping Agency (WADA) stipulations.

Because of the nature of the programme, it was difficult to determine the exact numbers of participants. SRSA achieved 68%, against the target of 100%, regarding its responsibility as documented in the Mass Participation and Sport Development Grant Framework, due to delays with the finalisation of conditional grant business plans caused by lengthy consultation processes. The calculation of the pre-determined targets needed to be revised, as well as measuring of those targets. Nine provincial youth camps were held, in all provinces except the North West. For school sport, 15 662 against a target of 4 000 schools were registered and supported to participate in school sport leagues. The target was exceeded because the league programme registration campaign created a higher demand. The Department did not have the revenue for the increased number of registered schools, but the National Lottery had supported the Department and some sporting codes were dropped to stay within the budget.

Programme 4: Internal Liaison and Events
The Department had taken a bold approach to international liaising and the SRSA Deputy Minister had been elected the Chairperson of the Executive Board of the United Nations Office of Sport for Development and Peace (UNOSDP). The Minister visited the National Basketball Association (NBA) in New York and signed an agreement with the NBA to set up a NBA Africa office, which had been done. Major work had gone into the 2012 London Olympics and the Department convened the first municipal conference on sports and recreation and a number of resolutions were adopted.

Programme 5: Facilities Coordination
Consultations were done on the consolidation of the National Facilities Plan and from December 2013 until March 2014 one facility would be opened every week.

Mr Rabotapi interjected t point out that the National Lottery had already invested in and built a number of sports facilities that were not properly utilised, and asked what the Department’s plan was.

Mr Moemi said this was a challenge for the Department, since the National Lottery had not aligned its plans with the NSRP. The Department had met with the National Lottery Board in the previous week and presented on the priorities of the SRSA. The Sports Distribution Agency would be presented with the National Facilities Plan and the norms and standards. The Department had proposed financial collaboration with the National Lottery. Although there had been difficulties in the past, the Department and the Sports Distribution Agency had created rapport through financial and logistical support. The establishment of a facility in a community had been done without public participation or input, as opposed also to the Department’s system where smaller wards should initially focus on the establishment of mainstream sporting facilities and bigger wards could have other or different facilities. At this point, only the Moses Mabida stadium was sustainable, while the other stadiums built for the 2010 Soccer World Cup had only been sustained with cash injections from government. The cost of hosting events at those big stadiums was prohibitive and they were mostly used to host international concerts. Moses Mabida stadium had a big social park with tourism attracting activities that generated revenue that sustained the stadium. However, by contrast the stadium in Polokwane, which was a relatively small city, drained resources that could have been utilised better elsewhere. The Department aimed, with the new grant, to focus on each stadium every five years to create revenue generating options.

Slides showed graphs that illustrated employee composition, compensation and staff turnover rate. Mr Moemi stated that the lowest entry level for the Department started at level 5, because the Department had high qualification expectancies, and thus the staff were fairly well paid.

The final slides dealt with the financial statements, which had already been dealt with by the AGSA.

The Chairperson said the Department would be allocated money, which was then spent on various projects, but he wanted to know what the impact of the implementation was, and if the impact was scientifically researchable. When the term of the Committee ended in 2014, there needed to be a conversation on the impact the SRSA had on society. This Department would be measured not only by how it accounted from a financial point of view, but on how it affected the communities through its spending of the budget.

Mr Moemi said this was his second year with the Department, and he had made a commitment that within the first three years of his term, the Department would be brought into compliance with the General Recognised Accounting Practices (GRAP) for good governance, and the rollout of the NSRP. Years four and five would focus on the successful implementation of the NSRP and the Department would by then be a well-oiled machine. The Department had transferred more than half of its allocated budget - R170 million - to sporting federations. The Department was left with R180 million which, through partnerships, stakeholders and strategies could be inflated to implement many of the high revenue aims. Community sport development should be initiated by provinces, and the processes that had been put in place somewhat regulated the spending of provinces. The Department sourced impact assessment topics from the staff, and this list of topics was given to students, who chose topics for research purposes, which would be funded by the Department. The CSIR was doing a review of the NSRP and the National Facilities Plan, but CSIR would undertake the main review of the NSRP after seven years. The Department had international partnerships with international stakeholders on the Mass Participation Programme in school sports and relied on their technical advice. The work of the Department was evidence-based, as was illustrated by the research the Department did before the 2012 London Olympics to extend financial support to those athletes who were medal contenders. Only three out of nine provinces budgeted for sports and recreation, and if the money was not transferred and regulated to those provinces, there would be no sport at all.

Mr Lee said it seemed the budget allocation for SRSA would become less and less because of budget cuts as the years progressed, unless something was done. He believed that money from the National Lottery should be given to the Department, to augment what it already had and to assist with achieving its objectives. Mr Lee said he attended the funeral of a great rugby player during the past weekend, but it was noted that little information was available on him, illustrating the point that the history of South African sporting legends needed to be updated.

Mr Lee referred to the conditional grants allocated to provinces, and asked why the Eastern Cape had not been sanctioned, like the North West province, for non-compliance. He asked why only 14 bursaries were awarded and asked why whether these bursaries were for tertiary or higher education, and from which provinces these individuals were drawn.

Mr Moemi said the bursary targeted high school learners to support learners who were assessed as talented at the National Championships and from next year the bursary recipients would also be decided from the Provincial Championships. The recipients were placed in sport focussed schools rich in history. There was also a postgraduate development programme at tertiary level with six participating universities with sport faculties. The Department wanted to fund 30 postgraduates, but only 14 complied with the criteria and represented all provinces except the Northern Cape.

Mr Lee felt that the Department must do a lot more for netball, and basketball was also not so popular in South Africa. There was always talk about what should be done for women in sport and it seemed there were some issues in netball that should be addressed. He asked the Department to meet with those involved in the sport of netball to address some of the issues. He said the netball team was currently ranked fourth in the world and first in Africa, and the netball administration would really appreciate it if the Department could accommodate them.

Mr Moemi confirmed that the Department had approached Netball South Africa to offer support with development and coaching issues, and formed an agreement. Netball was the first focus federation and was still classified as an amateur sport, because it had no professional league. Its particular budget had been R800 000 and the Department elevated this to more than R3 million, plus a special allocation for school sport. The Department offered Netball South Africa R10 million and asked for proposals as to how the money could be spent. Netball SA had proposed a grand slam, but the proposal was rejected because the entity was in real debt in excess of R3 million. The Department instead had decided to pay off this debt, and had assisted Netball SA to improve its Africa ratings because it could not break into the top five. The Department approached the International Netball Association for a points-awarding competition and the African Diamond Challenge was created, which saw the top African teams coming to South Africa to compete. Netball South Africa was given R8 million and it had gone on to win the tournament, beating Malawi for the first time. The organisation wanted the African Diamond Challenge to be hosted every year but the Department disagreed, saying that other African countries should have the responsibility and the cost of hosting the competition every four years, and Netball SA was not happy with that decision.

The Department had proposed a Netball Professional League (NPL) but from the start there were problems. Netball SA wanted to own the league and the teams and offered some valid reasons, but the Department felt it could own the league, but not all the teams. Netball SA wanted its existing board and CEO to serve on the league, and it would have created conflict of interest. The issues dragged on for months and the Department started negotiations for the basketball league, which went swiftly. Netball SA had willing sponsors, but investors also wanted to invest their money in a sure venture. The Department hired an independent entity to assist in the negotiations with Netball SA. It was eventually decided that Netball SA could own the league and the team for two years, but after two years needed to look at selling the franchises because investors needed to make money. The challenge now was the fact that when negotiations first started, the amount required was R20 million, but this had since escalated to R52 million. The Department needed the National Lottery to assist in this regard. The Department realised the sacrifices that netball players had to make and how much more difficult it was for the players to travel and compete without the big financial rewards of other sporting codes. The Department also acknowledged the good transformation policies of Netball SA, and said everything else was in place, and the league would be established once the financial kick-start from the National Lottery was received.

Ms L Mjobo (ANC) referred to slide 8 on the Minister’s appointment of a National Implementation Committee (NIC) and asked what the time frames for the Committee were.

Mr Moemi said the NIC was a permanent committee and was accountable to the Director-General.

Ms Mbojo also noted that the Department trained 2 179 educators and asked from which provinces these educators were. She referred to slide 24 and asked how the Department’s projects would target people with HIV/AIDS because of the confidentiality issues.

Mr Moemi responded that the teachers represented all the provinces and these teachers were selected for training by the different federations and not by the Department.

Ms G Tseke (ANC) agreed with Mr Lee’s remarks, and said the Department had promised support for Netball South Africa and that the NPL would be launched, but it seemed the Department was not supporting netball as promised. She urged the Committee to meet with the Department and Netball South Africa to address any issues. The 62 vacant positions were quite high and needed to be filled especially in light of the high unemployment rate and she asked if the Department had people with disabilities in their employment. The Auditor-General mentioned the transfer of funds to the Khanyisa Community Development Educare Centre and she asked what the progress was, since it had been an ongoing issue which had affected the audit outcomes of the Department in the past.

Mr S Mmusi (ANC) said it was reported that citizens’ access to sport and recreation activities increased annually by 5%, but wanted to know what informed the percentage, where it happened and with what facilities. Page 29 of the AR stated that, through conditional grants, 1 240 997 individuals were provided with access to participate in sport and recreation by various provinces. He said it seemed like a generous statement and asked which provinces and what sporting codes the Department was referring to. At an oversight visit by the Committee in a rural area, it was proposed that a sports field be built and smaller facilities be built around it and he asked the Director-General if it was in line with what was previously discussed, and if the Department could not address the issue of facilities at schools that had become ‘white elephants’, such as tennis courts. If North West province was non-compliant and forfeited the conditional grant, the people of the province were the ones that would suffer the consequences. He asked if the Director-General could not approach the province to see what could be done about the situation.

Ms M Dube (ANC) asked if the two teachers that were needed to focus on the sporting disciplines per school would be appointed, or whether existing teachers would be trained to fulfil those needs. She referred to the practicality of the rollout of facilities and asked for clarification whether this pertained to schools or community areas where these facilities would be built. She referred to the way local government approached sports and recreation and said communities often had no idea what would be built, where and for what purpose and asked if the Department had concrete plans that would answer these questions.

Mr Moemi replied that a mixture of both initiatives would be employed. The SRSA, in collaboration with the DBE, had decided that physical education needed to be removed from Life Orientation and would be taught as a standalone subject. Mr Mohamed Surty, Deputy Minister, DBE, had said it was practically impossible to reintroduce physical education because it would cost approximately R4 billion. SRSA believed it was affordable, particularly since the country was currently investing heavily in health treatment, but not in prevention. Lifestyle issues such as obesity could not be addressed without addressing sport and recreation. Schools would need teachers who loved sport and sport development, as well as fully qualified physical education teachers. The focus of the rollout was the sharing of the facilities. Schools would be prioritised, but facilities on school property would be open to communities.

Mr Dikgacwi said there was a small municipality in Gauteng, Westonaria, which did even better than e-Thekwini. He said the Committee and the Department should raise the issue of getting more money with National Treasury, because government expected the Department and its entities, BSA and SAIDS, to perform better. He asked if the Department had space for people to be employed. If the scorecard had been used, he asked how many federations had been evaluated and what the results were. The Freedom Front had said if the quota system was imposed in the Blue Bulls rugby team, it would stop support of the team. He asked what the programme for the appointment of the Deputy-Minister was and if the Department had the budget for the programme.

Mr Moemi said the Department created a reporting template for all federations which was fully aligned to the scorecard. The EPG would score federations based on the information provided. The Department did not have the money or the capacity to do all federations at once, but had prioritised federations, one at a time. The Department did not deviate from the NSRP and the Committee would be informed of the scores of the first five federations by the end of November. There had been great support for South Africa’s participation in an international forum. The case of Lance Armstrong alerted government that legislation needed to be strengthened and the WADA slogan was being campaigned via the UNOSDP Forum.

The Chairperson stopped the Department’s feedback at this point, saying that most of the questions that Members asked had been repeatedly dealt with at previous meetings. Other questions pertained to the administrative guidelines of the Department and really had no bearing on the meeting. The Department, the Minister and the Director-General had addressed all these issues before and these were minute details.

Boxing South Africa (BSA) presentation
Ms Muditambi Ravele, Acting Chairperson, BSA, said the entity received a lot of financial and human resource support from SRSA.

Ms Ravele highlighted the mandate of BSA and said the synergy that needed to be created between professional and amateur boxing would be better achieved in light of the boxing indaba that took place. Out of the indaba came the resolution that all provinces needed to set up associations by the end of December 2013, and by the end of February 2014 a national association needed to be established that would promote the interaction between association of boxers, managers, promoters, trainers, officials and BSA.

The objective of BSA was to effectively and efficiently administer and regulate professional boxing, to be a leading sporting code in South Africa and a world class boxing authority. This could be made possible if all systems were put in place as decided at the boxing indaba, with the requested financial support, as well as being able to get the revenue that the entity was entitled to.

The basis for the emphasis of matter highlighted in the audit report related to the case of the boxing promoter, Branco Milenkovic v BSA, which had to do with to the signing of a Memorandum of Understanding with the South African Broadcasting Commission (SABC), and the case was still pending in court. BSA appealed a case between Branco and the boxer, Vusi Malinga, brought against BSA, and this matter was concluded, but management was unable to estimate the probable revenue in the event of the claim being found valid on the pending case. The legal action against BSA on unpaid rental and the irregular expenditure would be dealt with by the Chief Financial Officer.

She noted that a disclaimer opinion on performance information was obtained as no annual performance report was presented for audit purposes. The entity’s strategic planning and performance management documents were being addressed now, and the internal audit committee had advised that the targets set by the entity exceeded its capacity and financial ability. The resolutions made at the indaba would also address the issues that spoke to the measurability, relevance and reliability of information.

The BSA expenditure analysis showed depreciation in employee costs, finance costs, and general expenses as compared to the 2011/12 financial year. The grant received from SRSA totalled approximately R5 million, which the entity estimated was not enough because some promoters did not clear correct figures, but this should be corrected in the future. Sanctioning fees of R1.5 million and license fees of R473 450, with the grant, made up the revenue that assisted in managing the entity. The amount presented to the Department as ideally needed to manage the entity totalled over R35 million, yet it was currently being managed on less than R10 million. The R35 million was based on what BSA was expected to deliver, according to the Act.

The organogram of the organisation showed vacant positions for a Director of Communications and Marketing, a Chief Financial Officer (CFO), and a Human Resources Manager, because of a lack of revenue. BSA had appointed a CFO and a Human Resources Manager recently and, and was debating whether the Director of Communications and Marketing should not be outsourced to save money. After the indaba there had been very good media support, and interest from companies to help with increasing revenue.

The main goals of BSA included the generation of additional revenue through acquiring sponsorships, the appointment of a permanent CFO, and the establishment of a functional internal audit committee to improve governance within the entity, which had now been established with assistance from SRSA. The entity aimed to address sustainable revenue streams, with assistance of SRSA, to have broadcasting rights vested in BSA, so it could negotiate with broadcasters for the rights of small promoters and women. BSA would map the future of boxing in South Africa through convening the National Boxing Indaba to look at an overall turnaround strategy. It would be filling significant posts. Monthly progress reports were submitted to the Chief Executive Officer (CEO) that addressed the findings in the 2011/12 AGSA management report to obtain a clean audit report.

The Chairperson thanked Ms Ravele for the presentation and said the entity set an example to have a female chairperson. He hoped Ms Ravele would be able to host a professional fight in the near future.

Mr Lee said he knew about the pending Act. He had submitted a Private Members Bill two or three years ago, and was told the reason it could not be entertained then was because the Bill was likely to be presented to Parliament within six months. It was now almost three years later, and nothing had been seen.

Mr Kgosiemang Mosupa, Chief Financial Officer, BSA, noted that he had only been in this position for three months and the biggest challenge to the financial and governance issues was leadership. The audit queries could be traced to the non-adherence to National Treasury guidelines, and the human resources issues in the entity. The irregular expenditure can be traced to the lack of supply chain management procedures for which information was gathered and a report would be put together to present to the board, with the aim of recovering the money. There was lack of information regarding the root causes of the irregular expenditure recorded in the 2011/12 financial year recorded. The entity should allow for systems to be changed to improve processes. The way the sanctioning fees were being declared was not satisfactory, and an independent way needed to be developed to verify the amounts cleared by promoters.

The Chairperson said that, in light of the CFO’s three month appointment, it was difficult to assign accountability, but next year the Committee would be able to assess the progress on these matters. The Committee had an understanding of the challenges within BSA, but believed the entity could be turned around, with the support of the BSA team, SRSA, and the Committee. The entity would be allowed time to make the necessary changes to ensure that mistakes did not recur. It was hoped that in approximately five years the entity would be producing the same calibre of quality boxers that were produced in the past.

He asked the Director-General of SRSA to speak to some of the resolutions that emanated from the indaba.

Mr Moemi said he would first speak to the issue of the Chairperson of the board of the BSA and the Chief Executive Officer (CEO). The Chairperson of BSA had resigned and informed the Minister of his decision, saying he believed he had done his part in achieving the objective of the entity to obtain an unqualified audit opinion. The Minister accepted his resignation, and Ms Ravele was appointed Acting Chairperson. The current BSA board was supposed to have seven members, but the members could still form a quorum. The question was whether the Minister should dissolve the board, or appoint new members to serve out the remainder of the term, and he had chosen to do the latter. Processes were therefore in place to fill the three vacancies.  Once the term of the board had ended, the process would be started afresh.

The CEO had been suspended by the board, which had taken the Department into its confidence prior to the suspension. The Boxing Act prescribed that if a person had been found guilty of a criminal offence that involved dishonesty, such a person could not hold office as a CEO. The onus had been on the CEO to disclose convictions in the appointment process, which he did not, but in court he admitted he had a criminal record that involved dishonesty. This offence involved being an accomplice to theft, by being in the possession of a stolen motor vehicle. Due process would be followed and the outcome of the hearing was awaited.

Mr Moemi then spoke to the issue of the amending legislation, raised by Mr Lee. The Bill, which was complicated, was referred back to the State Law Advisors for a second time, because it was not properly written. The Bill would not only regulate boxing, but all combat sports, many of which had never been regulated before, so there was a need to research, include and regulate this aspect properly. A new regulatory body would be introduced that would not only regulate boxing, and by the time the Bill was introduced, the framework and systems should be in place for the new body, to expand on the Bill. A major resolution was that the existing BSA and its staff would be built upon for growth, until the new body took effect. Another resolution was to bring back provincial boxing commissions. The current Act provided for the establishment of commissions to whom the board would delegate some of it power and functions, and currently those functions were being decided on. The question of establishment of an association that looked after the interests of professional boxers was resolved. The boxing regulations under the Act were to be strengthened. The legal department would start drafting the regulations document. All the resolutions from the indaba would be included in the regulations, so the regulations would be a key document in the turnaround strategy of BSA.

An important issue was the broadcasting rights, which was a major breakthrough for developing promoters and boxers, and the collection of revenue for the entity. Last year, for the allocated 30 days for broadcasting boxing, 16 days had been allocated to Branco Milenkovic. There were two major promoters, Branco Milenkovic and Rodney Berman, and one major trainer, Nick Durandt, in boxing in South Africa. The two promoters made millions, while Nick Durandt, in all fairness, did not develop talent but trained already-made boxers. A good trainer like Manny Fernandes, who developed and trained boxers, did not earn very much money for his efforts. When boxers challenged for a title fight, they had to change stables to get a chance to fight, because it was a cartel-like setup. Promoters made money through broadcasting, sponsorships and the crowds that were attracted, but anyone who was not Branco Milenkovic or Rodney Berman would never be able to organise a fight at Monte Casino. This had been reviewed by the Competition Commission for anti-competitive behaviour, since the smaller promoters were not afforded space and were left to organise matches in town halls or community halls, where the setup was not conducive for a boxing match. The dates were no longer be negotiated by boxing promoters, but by BSA. Some dates would be allocated for development tournaments and boxing, and when televised broadcasting was involved, it would generate significant revenue for boxing development. There would be dates reserved for rural tournaments. The remainder of the available dates would be for premium tournaments, where promoters would submit bids and would be evaluated, with the opportunity to negotiate the rates with the broadcaster themselves. This would be done under a prerequisite of ‘full disclosure’, because the agreements with the broadcaster needed to be transparent to BSA. This process was developed to prevent deception, because it had become clear during the audit process that one promoter under-declared to BSA. He had stated he received R3 million from the broadcasting rights, and the percentages to the boxers and BSA were calculated on that R3 million. However, it was subsequently discovered the promoter received R13 million. This resolution was negotiated by BSA at the indaba, through threatening a full forensic investigation, at which the promoters relented. The breakthrough would not only ensure that boxers would get paid well, it would also influence their pensions and all involved would get what they were entitled to. Branco Milenkovic had tried to interdict BSA from signing of the broadcasting agreement with the SABC, and this would be legally contested. The Department was prepared to launch a forensic investigation into promoters’ past dealings. The Minister and the Department were fully committed to the case.

The Chairperson thanked the Department for its time and input, which had given the Committee a better idea of the functioning and status of the Department and its entities, and wished the Department well with its endeavours.

The meeting was adjourned.

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