Hearings: Auditor General, ICASA, Public Protector

Meeting report

The Chairperson welcomed representatives from the SABC, the Auditor General (AG), the Independent Communications Authority of South Africa (ICASA), the Public Protector, parliamentary legal team, the media and the public. The programme would hear presentations from the Auditor General, ICASA and the Public Protector.

The Chairperson said that on the afternoon of 6 December he had been informed that the SABC board chairperson, Prof Mbulaheni Maguvhe, had filed to appeal Judge Desai’s findings. The Chairperson was unaware that the court had given its findings and he was not aware of the reason for an appeal. Following that, the Chairperson consulted senior counsel who advised that even though there was no court order prohibiting the inquiry to continue, the Committee should consider putting the proceedings on hold while they explored the appeal. Parliament should see to it that the court finalised the appeal with the utmost urgency. The Chairperson has asked senior counsel to urgently get the appeal finalised so that the Committee could continue with the inquiry.

The Committee had issued a summons for documents from the SABC that they thought important for the inquiry. The response that the Committee had received from the SABC legal team in a letter indicated that the documents requested would not be made available because disclosure of documents would negatively impact the commercial interests of the SABC. Only three documents were received, another three documents were claimed not to be in the SABC’s possession and could therefore not be made available.

The Chairperson looked to the Committee and said that their legislative powers must be exercised without apology when they conduct oversight. In light of the development, if the Ad hoc Committee did not achieve anything else, they had to send a message to all South Africans that Parliament was allowed to hold all people accountable and that consequence management needed to be handed out where it was due.

The Chairperson opened the floor for Members to raise their points.

Mr J Mahlangu (ANC) said that the Committee was on board to pursue the appeal as urgently as possible.

Mr Mahlangu said that he found it odd that Parliament was denied documents on the basis that they would affect the commercial interests of the SABC and it was difficult to understand how the SABC did not have certain documents in their possession and could not account for them.

Mr Mahlangu said that traveling costs had been incurred to come to the inquiry in Parliament that day. He proposed that the Committee have a closed meeting to come up with a plan for the way forward before continuing with the business of the day.

Ms P Van Damme (DA) said that she did not agree with counsel that they halt the proceedings of the Inquiry until the appeal was finalised. The Committee should continue with the work and not be delayed by those who intended to halt the process.

Ms Van Damme said that the Committee was been disrespected by Mr Maguvhe who wished to halt the inquiry until the court appeal was finalised.

Mr N Singh (IFP) said that they should respect the rights of every person as enshrined in the Constitution.
He said that Committee should follow the advice of senior counsel and halt the proceedings until the court appeal was finalised. By the same token, he agreed with Ms Van Damme that the Committee should not be held at ransom by those wishing to halt parliamentary processes.

Mr Singh said that the non-submission of documents was completely unacceptable considering that the state had authority over the SABC.

Ms J Kilian (ANC) agreed with Mr Singh that it was unacceptable for a public broadcaster monitored by the state and audited by the AG to refuse to submit requested documentation to the Committee.

Ms Kilian said that some of the documents not given to the Committee did not even qualify as hindering commercial interests. The ad hoc committee was entitled to conduct due diligence and therefore have the documents made available to them.

Dr M Khoza (ANC) agreed with Mr Mahlangu and said that the Committee needed to have a closed meeting as Members to propose a way forward.

Dr Khoza said that there was a problem in South Africa with the personification of state institutions.

Dr Khoza said that the Committee could not conduct its oversight duties without having the necessary documents, and the Committee would have to consult with the parliamentary legal team on how to proceed with obtaining the requested documents.

Mr L Mokoena (EFF) suggested that the Committee continue with the work of the inquiry since they did not have any court order prohibiting them. He said Prof Maguvhe was acting in his personal capacity and halting processes of Parliament with a court appeal since there was no board backing him as he was the only remaining member. It was rebellious of Prof Maguvhe to withhold documents from the Committee that belonged to a body that belongs to the public.

Ms F Loliwe (ANC) said that having a closed Committee meeting was necessary to iron out important issues and she appealed to the Chairperson to provide that space for the Committee.

Prof N Khubisa (NFP) said that the SABC was a public broadcaster and it operated in the confines of broadcasting legislation and the SABC Charter. It was therefore in the public interest to ensure sanity within the SABC and prudent for the Committee to delve into what was going on at the SABC and address the issues. Parliament had the duty of conducting oversight. Parliament appointed the board of the SABC and therefore their actions could not be stalled by anyone. He said that it was clear that it was not the SABC halting the inquiry but Prof Maguvhe acting in his personal capacity.
 
Mr M Waters (DA) said that there was no public order prohibiting the inquiry from proceeding and they should therefore continue.

Mr Waters asked in what capacity Prof Maguvhe was appealing the court – as the board, or in his personal capacity? And it was evident that it was in his personal capacity.

Mr Waters said that Act 15(1)(a) of the Broadcasting Act gave Parliament the right to dissolve the board and the Committee owed it to the public and to the SABC to dissolve the board. He said it was unheard of in his 17 and half years as an MP that documents were been withheld from Parliament by a state institution.

Mr H Chauke (ANC) thanked the Chairperson for the work he had done in briefing the Committee and said that they should continue with their work. He also agreed that the Committee should meet in private and set the way forward so they deliver a report without anger or any emotions. He requested that the SABC submit the documents to Parliament without any hassles or legal cases.

The Chairperson indicated that to have the open session was deliberate and purposeful in the interest of transparency and having everyone know the work of Parliament. However, he agreed that the Committee should move to a closed room to discuss the way forward and would be back no later than 10:30am with a decision on how to proceed.

[The meeting adjourned and resumed at 10:37am]

The Chairperson said that in consultation with their legal advisers, the non-presentation of documents was not negotiable. The Committee wanted the documents and they instructed their legal team to go to the highest courts and pursue the documents requested.

The Committee also decided that Parliament would not be deterred from doing it oversight duties. There was no legal court order preventing them from their task.

The Committee had not prepared any documents in Braille as per the request of Prof Maguvhe, and the documents from the Office of the Public Protector and the AG should have already been presented to the accounting officer in due time before the Committee meeting. The lack of Braille would not be an impediment.

The Committee took the decision to look at the presentations from ICASA, the AG and the Public Protector because those were presentations that would have been made available to the public at one point or another.

The meeting was adjourned until 11:00am at which point the AG would present followed by lunch and finally a presentation from ICASA and the Public Protector.

[The meeting adjourned and resumed at 11:06am]

The Chairperson said he had been consulting with the legal team of Prof Maguvhe and was seeking the guidance of the Committee. Prof Maguvhe was not in possession of the presentations from ICASA, the Public Protector and the AG in Braille and that it might jeopardise proceedings and compromise him.

The Chairperson was awaiting a response on how long the translation into Braille would take.

The Chairperson said that all other documents that the Committee had sent to Prof Maguvhe had been sent in Word format to allow him to do the translation into Braille, according to the Board’s request. The Committee had not received a request contrary to that until at 11:00am when the meeting was scheduled to resume.

Mr Singh said that the most important thing was the AG audit report – and that was made available to the SABC Board and the Committee prior to the inquiry.

Ms Van Damme said that the Committee should take serious action about the requests from Prof Maguvhe since they were pathetic and intended to further stall the inquiry.

Mr Mokoena said that in light of the fact that a request had been made to the Committee by the SABC to provide all documents in Word format so that they could convert them into Braille, Parliament had done its work and complied. He said the legal team of Prof Maguvhe was not taking Parliament seriously.

Dr Khoza said that sometimes people self-sabotage themselves, and besides that, the inquiry process would eventually happen. Audit reports were also readily available on the internet and everyone had access to the documents. It was not reasonable for Prof Maguvhe’s legal team to expect the Committee to tolerate their recent behaviour.

The Chairperson said that the Committee had received an email from Ms Theresa Geldenhuys, SABC Company Secretary, acknowledging receipt of requested documents from the Committee in Word format to be translated into Braille by Prof Maguvhe’s team. The Chairperson said that was the end of that discussion and the inquiry would continue as scheduled.

Presentation by Auditor General of South Africa (AGSA)
Mr Eugene Zungu, National Leader: Audit Services, AGSA, introduced his team comprising of Ms Muller and Mr Buthelezi, who would be presenting.

As Ms Muller began her presentation, Prof Maguvhe along with the SABC entourage walked out of the inquiry without any reason given to the Committee for their departure.

Ms Alice Muller, AGSA Corporate Executive: Audit, said that for the last three years, AGSA had issued a qualified opinion to the SABC. Prior to that, in the 2013 financial year, the SABC had been issued with a disclaimer. When conducting an audit report, AGSA looked at three areas; financial statements, reliability and credibility of performance information, and compliance element that the entity was subject to.

Financial statements that were free of “misstatements” and if the performance reports were reliable and credible and if there were no noncompliance issues noted, then AGSA would issue a clean audit report. When an audit report was unqualified rather than clean, this meant that with its financial statements the entity was doing well but there were some challenges noted with performance information and compliance matters. Qualified opinions were issued when any areas in the financial statements were either not accurate, valid, or complete. A disclaimed audit opinion meant that AGSA could not get enough information to determine if the information provided was right or wrong, and they would therefore withhold an audit opinion.

Ms Muller said that in the case of the SABC, for the last three years, AGSA had issued a qualified opinion. In the 2012/2013 financial year the SABC was issued a disclaimed audit opinion and it then worked toward improving. The entity was still qualified.  

Mr Promise Buthelezi, AGSA Audit Manager, said that in terms of its financial statements, the SABC had received a qualified report for the past three years but it was important to recognise the progress made. In 2013/14 financial year there had been eight paragraphs related to the qualification, and in 2015 the issues had reduced to three, but with the exception of the implication related to TV licences, it was two issues. The control environment of the SABC was still weak and most of the progress made in the entity was through engaging consultants. The issue with consultants was that the sustainability of the internal control was not there.

The amounts shown in the financial statement were not credible or a true reflection. The AGSA qualification of the financial statement was based on the inadequate disclosure of irregular expenditure which was not showing in the statements. There were also issues picked up with regard to records management. 

Irregular expenditure had a closing balance of R5.1-billion for the current and previous year.  The nature of irregular expenditure that was disclosed related to past experiences where original tax clearance certificates had not been provided or payments were made to suppliers without any contracts on record. There were also weaknesses in their contract management with suppliers. There were issues also where Supply Chain Management (SCM) processes had not been implemented, such as the incorrect evaluation of criteria for evaluating bidders or the minimum number of quotations required before a bid was awarded were not obtained, and this impacted on the principle of fairness.

AGSA’s process of monitoring compliance was interlinked to the auditing of financial statements. In most cases of noncompliance reported, this was linked to the financial statements. The number of non compliance matters talked to the significant challenge of the control environment of the SABC such as the absence of basic daily control which translated into a negative audit opinion. Of the financial statements submitted in the last three years, most of them were corrected through the auditing process of AGSA.

There were issues with asset management, expenditure and revenue management linked to TV licences.

Once an entity had received notice of irregular expenditure, the next step was for the entity to investigate those cases and improve before the next financial statements.

For the last three years the AGSA had issues with the reliability of the performance information reports of the SABC. If solutions had been implemented as outlined in the AG’s report, then changes would be evident.

AGSA had done their own assessment which was interlinked to their findings in the financial statements of the SABC.

Looking at the accounting authority of the SABC, which was the board, there were vacancies and many challenges which translated into difficulties in conducting effective oversight.

The internal control environment was rated ‘green’ meaning that the SABC was doing what they were supposed to do but they were advised to implement the recommendations based on the findings in the AG’s report.

The performance management system had not been implemented even though it was crafted. This had resulted in the 2016 financial performance receiving a ‘red’ rating. For the last three years however, the entity had received a qualified report as far as their day to day operations were concerned. Interventions were being implemented but not very effectively and there should have been more improvements.

The root causes where instability and vacancies in key positions, AGSA recommendations not been effectively implemented, lack of consequences for those responsible not implementing audit action plans, and poor record management systems. On the recommendations about the root causes, the SABC was slowly improving. The AG recommended stability in the governance structure, improving daily and monthly controls, and effective performance management systems that hold everyone accountable.

The root causes of the poor control environment in the SABC were: instabilities and vacancies in key positions; the action plan not being effective as far as irregular and fruitless and wasteful expenditure were concerned; lack of consequences for not implementing the action plan; issues reported in previous audit reports not addressed properly; poor record management system in order to support financial and performance information such as the lack of consequence management system for noncompliance. As part of AGSA’s recommendations about the root causes, the SABC was responding to some of the root causes identified such as the need to fill vacancies with people who had the necessary and competent skills required; ensuring that financial statements and performance information were reviewed and ready; ensuring an effective record management system especially in supply chain; stability in the governance structure providing oversight; action plans being implemented; improvement of daily and monthly control in terms of daily transactions; and an effective performance management system to ensure that everyone is held accountable.

Discussion
The Chairperson asked AGSA if it was correct for the Committee to interpret that Prof Maguvhe as the board chairperson and Mr James Aguma, as the Acting GCEO, upon signing and agreeing to financial responsibility of the audit documents, that they had read the documents and understood them.

Mr Zungu responded that that assumption was correct. They had accepted responsibility on behalf of the board by virtue of their signatures on the documents.

Ms Van Damme asked which entity would be held responsible for the financial management of the SABC, whether it was the CEO, COO, CFO or the Board.

Ms Killian asked which sections of the PFMA apart from section 51 dealt specifically with public entities where there was a board and the fiduciary responsibilities of that board, as well as their role in ensuring prudent financial management. What relevant treasury regulations did National Treasury have for state owned enterprises?

Ms Kilian asked if the AGSA had assessed if the SABC had complied with the Broadcasting Act prescripts.


Mr Singh asked if the content of the auditor’s management letter to the auditee was privileged, or if the management letter could be made be made available to the Committee,

Mr Singh said that there were audit committee reports, risk committee reports, internal audit reports and skills audit reports, and that he was sure AGSA would have seen those reports and had possession of them. He asked if they could make those reports available to the Committee.

Mr Singh asked if the AGSA was aware if any action was taken against any SABC official who had transgressed the PFMA regulations and if they were satisfied with the consequence management taken.

Prof Khubisa asked if there were any discussions with the SABC about the audit report. He asked with whom AGSA had interacted with at the SABC about the awarding of tenders without contracts.

Responses
Ms Muller replied that the SABC had been in an ongoing process to determine who was responsible for the irregular expenditure and how consequence management would be carried out. The process of determining irregularities was not done and identifying who was responsible was a challenge.

Ms Muller replied that they had not audited the full compliance with the Broadcasting Act. AGSA only audited what was relevant to financial management.

Ms Muller replied that management letters were a tool used to confirm the factual report of findings, and the tools remain in the management letter that if not attended to would lead to an qualified report. It was privileged information between the auditor and the auditee.

Ms Muller replied AGSA did not keep audit risk reports. They only had active participation in those meetings with the SABC audit risk team.

Ms Muller replied there were numerous engagements between AGSA and SABC senior management. The audit process could not be carried out in silence but it needed to be engaged with the SABC.

Ms Muller replied that due to the instability in the leadership of the SABC, it was difficult to conclude that action taken or consequence management was a direct result of their audit reports.

Follow up questions
Dr Khoza said that there could have been areas where the AG could have picked up critical issues. She asked if the AG could expand on what the underlying audit qualifications were.

Dr Khoza asked if the AG had possibly picked up major transactions involving primary assets of the SABC in the form or records and archives. The Committee needed to understand the rationale behind the sale of the archives of the SABC and why certain individuals had been given bonuses.

Dr Khoza asked AGSA to provide the figures for payments that were given without contracts.

Mr Mokoena said that with regard to the irregular expenditure, the body that was responsible for monitoring these was unfortunately the one being investigated by the Committee. Mr Mokena asked if the AG had received an indication of what those irregular expenditures were.

Mr Mokoena asked if the AG could indicate the gravity of irregular expenditure and fruitless and wasteful expenditure, and which would have crossed the legal line to the point where someone could be prosecuted.

Mr Mokoena asked for clarity as Ms Muller had said that the SABC was supposed to install two financial offices and if they had not complied, what the reasons were.

Mr Mokoena asked to what extent AGSA’s recommendations were implemented and whether the effectiveness of the implementation of the recommendations could have impacted SABC’s dismal decline.

Mr Chauke asked if the AG had met with the SABC board to share the audit findings. And having done that exercise, they would have arrived at a plan of action to address the findings. He asked if there was a commitment to address the audit findings by the board.

Mr Chauke said that if there was no capacity in the SABC to deal with these matters, then there was no leadership to carry out the task.

Mr Chauke asked if there was ever any instance that AGSA was asked to provide the AG’s report in Braille.

Mr Mahlangu asked if the AG engaged with the SABC in person or via email. If the SABC had lost the documents requested by the Committee or did not have them in their possession, then the AG should have them and they could be made available to the Committee.

Mr Mahlangu asked which areas of the SABC had been audited and which had not.

Mr Waters asked if the AG was prevented from conducting their audit due to the withdrawal of documents by the SABC.

Mr Waters asked for an opinion from the AG whether an entity such as the SABC should have those requested documents in their possession.

Response
Ms Muller replied the SABC should be able to provide the documents requested by the Committee. The SABC had the management letter in its possession since it was given to them by AGSA both in hard copy and in soft copy via email.

Ms Muller replied the financial statements were audited on a sample basis and not everything was looked at. Conclusions are made based on samples.

Ms Muller replied that the Office of the Auditor-General did not attend SABC board meetings. They only attended the audit committee meetings and interacted with the board through that channel.

Ms Muller replied that the audit action plan was given to the audit committee but there had been no revised action plan this year since the audit committee had not sat down for a meeting yet.

Ms Muller replied the SABC had engaged consultants to deal with the audit findings and they were wary of deterioration once the consultants were released from their contracts with the SABC.

Ms Muller replied that it was not necessarily two financial offices, but rather two financial reports.

Ms Muller replied that the AG had identified instances of irregular expenditure that were reported but should not have been there. The same was recorded for fruitless and wasteful expenditure and it was therefore difficult to determine what the irregular expenditure was for.

Ms Muller replied that tenders had to be approved by the board and only they could give an indication of tenders awarded without contracts.

The Chairperson asked if it was true that the company had not complied.

Ms Muller confirmed and said that R141 million in SABC expenditure could not be accounted by means of documents.

Ms Van Damme asked who was ultimately responsible as the accounting officer of the SABC.

Ms Kilian asked if the AG was able to audit the progression and salary bonus system and if there was anything irregular there.

Mr Singh repeated his initial question about whether any action was taken in the last three years by the SABC about consequence management.

Dr Khoza said that she assumed that the reason responses could not be given clearly was because of the difficulty in getting documents from the SABC.

Ms Muller replied that ultimate responsibility was with the board since they were the accounting officer.

Ms Muller replied the board had implemented policies and performance contracts but they had not been effected. She explained that any salaries adjustments were approved at board level.

Ms Muller replied there were a number of disciplinary processes happening within the SABC and she was not sure if it was as a result of the PFMA findings by the AGSA.

Ms Muller replied the audit committee was not able to sit because of the absence of an SABC board.

Ms Muller replied it was correct to assume that it was difficult to provide a response because documents were withheld.

The Chairperson repeated an earlier question about whether it was ever required for the AG to provide presentations or documents in Braille.

Ms Muller responded that it was never required for them to provide documents in Braille.

The Chairperson said that the Committee secretariat was inquiring into the possibility of having the witness statements translated into Braille for the meeting continuing the following day.

The Chairperson said that he was not aware what the consequences would be of the SABC board leaving the Committee meeting.

Afternoon session
Independent Communications Authority of South Africa (ICASA) on the report on the SABC
Ms Nomvuso Batyi, ICASA Councillor, stated that ICASA is established in terms of legislation as mandated by the Constitution which requires an independent body to be established to regulate broadcasting. Under the Electronic Communications Act (ECA), ICASA is directed to ensure that regular news services, programmes on political, national, regional and local importance are broadcast. Under the Broadcasting Act four requirements are placed on the programming of the SABC:
- Reflect attitudes, opinions, ideas, values and artistic creativity of SA;
- Advance dissemination of ideas;
- Provide for a wide range of audience interests;
- Reflect accuracy and fairness in news that deal with matters of public interest.

The SABC has an extensive obligation under its universal service mandate, including:
- Obligation to provide coverage to 100% of the population;
- Obligation to cater to all SA languages particularly marginalized ones;
- Obligation to cater for minority groups, children, women and person with disabilities.

ICASA is obliged to force and monitor compliance of the SABC Charter under section 6(2) of the Broadcasting Act which mentions:
- Contribute to democracy, development and nation building;
- Safeguard the cultural and political, social and economic fabric of SA;
- Ensure plurality of news and information;
- Provide a wide range of entertainment and educational programmes.

Currently, SABC content is regulated by Regulation 2006. SABC 1 and 2 are monitored on what they are supposed to have as local content: 55% and SABC 3 35%. As of March 2016, a newly published regulation provided that the SABC within 24 months increase local content to 90%. Methodology for monitoring is determined by programme time.

ICASA received a complaint about a media statement made by the SABC on 26 May 2016 that it would not broadcast footage of destruction of public property during protests as the SABC believed broadcasting it was an act of encouragement. On 24 June 2016, the Complaints and Compliance Committee (CCC) made its finding on the complaint and on 11 July 2016, ICASA endorsed the recommendation. The crux of the recommendation was:
(a) For SABC to publicly withdraw its media statement which it had made on 26 May 2016.
(b) The withdrawal must be retrospective to 26 May 2016.
(c) The SABC board chairperson must confirm in writing to the CCC within seven days that the ICASA endorsed resolution has been adopted.

On 20 July 2016, the SABC confirmed that it would abide by ICASA’s ruling. However ICASA never had footage of it making such a statement publicly. Ms Batyi said that this was important. To date, there has been no proof of withdrawal in line with decision (c) but that the SABC has repeatedly shown that it has not implemented the resolution. ICASA took the following enforcement measures:
- Communicated with the attorneys of the SABC who have filed the matter with the Constitutional Court. ICASA’s attorney never received any communication that the ‘protest policy’ was withdrawn in a public manner. Importantly, ICASA was told that a culture of censorship continues in the SABC news room.
- Made the information available to the complainant.
- ICASA has laid criminal charges against the SABC in terms of section 17(e) ICASA Act.

Discussion
Mr F Mokoena (EFF) asked how ICASA deals with complaints. Are you only reactive or are you proactive too? There was a story in the news in 2015 where an SABC board member was complaining that the board had taken a resolution not to broadcast material showing certain political parties and this was executed for a certain period of time. This is contradicting the Broadcasting Act. Did you receive a complaint of this nature? If not, how do you deal with such situations?

Ms P Van Damme (DA) congratulated ICASA for taking action against the SABC. Can you talk to us about how the 90% local content decision was made and did you consider the drop in advertising revenue and the fact that SABC owed many royalties to local artists and have you considered the ensuing drop in listenership and viewership? The reason for asking this was because Mr Motsoeneng is on record saying “that the 90% decision was taken in 10 minutes during a SABC committee meeting”. He was quoted further as saying, “I said by 12 midnight, local music should be played. They asked me how and I said that that was not my business and for the first time in my life, I switched off my cell phone that day. The 90% was in the interest of the public not the SABC”.

Mr N Singh (IFP) asked whether there is a need for ICASA to be consulted on the 90% local content ruling. There is no policy on this 90% rule and there is reason to believe that no due consideration was given to the decision.

The Chairperson said that the reason for SABC not providing the requested information to the Committee was that the information would negatively impact on the business interests of the SABC. He requested comment from ICASA.

Dr M Khoza (ANC) asked whether in terms of the Act, a person convicted of an offence was liable to a fine not exceeding R1 million and what effect this could have on the SABC. There appears to be a serious problem with consequence management within the SABC. Have you explored the possibility of identifying individuals within the institution? Regarding the ‘protest’ policy, what process was followed when making this decision? I expect that ICASA engaged with them on how research was done and what their decision was based on. Have you received a complaint about the sale of the SABC archives? This speaks to the heritage of the country and educational aspects and this cannot be left without ICASA probing the matter, which goes back to what Mr Mokoena was saying.

Ms F Loliwe (ANC) asked why ICASA waited three months to institute charges when the timescale is seven days.

Mr H Chauke (ANC) asked for details of the criminal case and what type of criminal case was laid. On the costs, he asked why so much money was spent taking the matter to court to enforce decisions.

Ms J Kilian (ANC) asked if ICASA had seen whether a board decision had been taken and what evidence was presented before the decision was made. The Broadcasting Act is clear that if the SABC wants to act, it must follow certain procedures and in terms of section 6 of the Act it states that ICASA must monitor and enforce compliance with the charter by the SABC. Why is it that there must be a complaint? Is it not your normal responsibility to monitor compliance? The public broadcaster must comply with our constitutional values and the body to ensure this is ICASA. What guarantee does the Committee have in future to know that you will monitor compliance?

The Chairperson cited section 8(j) of the Broadcasting Act on the objectives of the Corporation: “to establish and maintain libraries and archives”. How does this reconcile with the selling of the archives.

Ms Batyi responded that ICASA is proactive in that, if licence-holders are non-compliant ICASA provides them with a certain period of time to comply. ICASA is stricter during the election period and is proactive in this regard. We listen to the record and hire election monitors. ICASA is also proactive on local content quotas, sporting and news. ICASA sets the minimum for local content and was engaged on an 18 month process coming up with the local content percentage. We spoke to local broadcasters and SABC. We look at the advertising revenue and audience. I cannot speak as to how the 90% was arrived at as this was a commercial decision by each entity. When we determine local content quotas, we do not dictate how to do so. If a radio plays specific music, ICASA will measure the radio on that specific music played. ICASA has an exemption provision under which a broadcaster can apply. ICASA holds the broadcaster liable, not a specific person. In 2014, ICASA picked up a newspaper article relating to the archives. There were various communications between the SABC staff responsible for executing ICASA decisions and ICASA. We try best to give adequate time to resolve the matter before drastic measures are taken. The case instituted against SABC holds the board accountable; this is required in terms of the Act. The most powerful person in a broadcaster is the station manager who reports to ICASA as to the progress of implementation. The court costs to ICASA are not a clear figure at this point in time. In recent years, ICASA has picked up the archives as an issue and two national radio stations which were non-compliant.

Mr Willington Ngwepe, ICASA Chief Operating Officer, stated that the archives matter was referred to ICASA and it made a decision that the matter was a non-referral in 2014.

The Chairperson interjected wanting clarity as to whether the COO asserted that the selling of archives was placed on hold because it was a non-referral? If so, the question still remains whether the selling is in contravention of section 8(j) of the Broadcasting Act? So why is a referral necessary? It is not whether it has been referred or not; but whether it is in contravention or not.

Ms Van Damme asked whether ICASA has communicated with the Minister of Communications. On her last interaction with the Minister, Ms Van Damme said that the Minister stated that the SABC has complied with the ICASA ruling. What is the Minister’s role?

Mr J Mahlangu (ANC) asked when a criminal charge is laid against an entity, who is targeted? The ICASA councillor raised the question of compliance and it appears that each station has its own compliance. Lotus FM plays Indian music. Mr Mahlangu said he has received complaints that the decision of 90% local content is causing the station to suffer. How have you dealt with this complaint?

Mr Singh stated that the concern with Lotus FM is that there is not enough local content to suit the criteria. Has the fact that SABC has only one board member impeded your ability to receive answers from them?

Ms Kilian asked whether section 5(b) of the Broadcasting Act was complied with? Any deviations from policy must be submitted to ICASA. Have you received such amendments by the SABC? You have not received any confirmation in writing from the SABC about the ‘protest’ policy. The Broadcasting Act is clear about ICASA’s responsibility in ensuring compliance and the archives are also a component of the charter.

Mr Chauke asked what the frustrations were around the issues of authority in matters of obstructive non-compliance and how this impacts opening a criminal case. ICASA is not being specific but rather just referring to the SABC generally.

Mr Ngwepe stated that when the matter of the archives arose it was presented as an exclusive arrangement between the SABC and the buyer. Second, the agreement constituted a merger and should therefore involve the Competition Commission. Representations were made to ICASA who in turn made findings and presented this to the Competition Commission that made a finding based on this. The Broadcasting Act was not pronounced on in this case.

The Chairperson requested either a ‘yes’ or ‘no’ answer to his question on whether the selling of the archives contravenes section 8(j) of the Broadcasting Act. He required ICASA to pronounce on the matter as it is the only authority which the Committee can hold accountable. Specificity is necessary because the Committee’s mandate is to determine whether the SABC board had complied with its fiduciary duties. If the board cannot carry out its duties as such, it would give the Committee a clear view as to what needs to be done. ICASA is the body expected to monitor compliance. There was a transaction and did this transaction in your view constitute non-compliance. The Committee must be competent to defend its report which will be written and subject to all sorts of criticism which it anticipates.

Ms Batyi stated that having looked at section 8(j), there is no proof to determine whether the SABC is failing to maintain an archive and ICASA is not in a position to answer. ICASA has not engaged with the Minister although a copy of the judgment had been sent to the Minister. We have not received complaints regarding Lotus FM. The beauty around local content is that the broadcaster chooses the percentage from its content. The fact that there is a shortage of SA Indian music compels the broadcaster to seek local Indian music. Lotus FM has experienced certain challenges.

Ms Batyi replied about section 5(b) of the Broadcasting Act, the ‘protest’ policy and the 90% content policy has no written policy and in terms of the latter there is no obligation to do so. ICASA has received some other policies subject to a CCC inquiry which will be held on 9 December. SABC has appointed regulation specialists, therefore, depending on what the matter is, ICASA writes to the relevant person and holds that person accountable. ICASA has cited the SABC board chair as this is the person held liable in law. The original Bramley SAPS case number is CAS534/11/2016 but the matter was transferred to Brixton police station, case number CAS519/11/2016.

Dr Khoza said she was concerned about the responses received from ICASA. She emphasised that ICASA needs to hit where it matters. The archives were a matter of importance and she was not satisfied with the response. If ICASA is to regulate in the public interest, SA is building its heritage and the SABC is not only a commercial entity but a public one.

The Chairperson stated that the purpose of ICASA appearing before the Committee is to add value to the report rather than accounting to the Committee.

Mr Mokoena said his question had not been answered. There was a news article in the papers citing members of the SABC board who said that the board had taken a decision not to broadcast certain political parties during the 2016 elections. Mr Mokoena said that he did not receive a direct complaint. Did ICASA get a complaint? If not, did you hear about it and what then did you do about it? The toothlessness of ICASA is a discussion on its own.

Ms Van Damme asked, after the charges had been laid, whether measures were in place to determine continuous compliance.

Mr Chauke supported Ds Khoza stating that her question had not been answered. Further processing of this agenda item needs to be assessed, and invite Multichoice.

Ms Kilian did not understand how ICASA could assert that there was no need for a change in policy to be submitted in writing to it, when section 6(5)(b) of Broadcasting Act requires it. She emphasised that over the years public corporations have been personified around individuals rather than procedure and that detail is necessary for the implementation of legislation.

Ms Batyi responded that they had charged the CEO of the SABC in terms of the Act. When ICASA dealt with the matter of the archives, it was a factual finding, and focus was placed on the two issues raised, specifically, on matters around competition concerns. ICASA never looked at it from the perspective of the Committee. When doing the election broadcast regulations, political parties raised concerns about not being broadcast and ICASA has dealt with this during that time. ICASA has certain obligations in terms of the Broadcasting Act to determine compliance. The local content policy has not been written.

The Chairperson requested a legal opinion from the ICASA attorneys on section 8(j) of the Broadcasting Act.

Public Protector briefing on 2014 report on SABC
The Public Protector, Ms Busi Mkwebane, briefed the Committee on the findings and remedial action and the status of the remedial action on the Public Protector Report When Governance and Ethics Fail, based on allegations of maladministration, systemic corporate governance failure, and irregular appointment of Mr Hlaudi Motsoeneng which was lodged in 2012. A provisional report was compiled titled The Blame Game in September 2013 to which comments and reports were invited in terms of section 9 of the Public Protector Act. After receipt of responses, the final report was issued on 17 February 2014. The SABC board was directed to implement a number of recommendations made by the Public Protector. Key findings include:
a) Appointment of Mr Motsoeneng: appointment was irregular. The board was to initiate disciplinary action against Mr Motsoeneng and Ms Lulama Mokhobo. This was partially implemented. Whilst the SABC did institute disciplinary proceedings against Mr Motsoeneng, it only did so after a court order compelling it to do so. There was malicious non-compliance during the disciplinary action as key witnesses were not called and important evidence was not produced.
b) Fraud: Mr Motsoeneng had committed fraud in misrepresenting that he had matric. This is improper and dishonest as envisaged in terms of section 6(4)(ii) of Public Protector Act.
c) Filling positions: the Minister was required to take urgent steps to fill the vacancy with a suitably qualified person. This was not implemented and Mr Motsoeneng was appointed as permanent COO. This was set aside by the courts after the Democratic Alliance had challenged the appointment.
d) Appointment of Mr Sully Motsweni and salary increments: this was irregular. Board must recover any wasteful and fruitless expenditure spent on irregular salary increments. This was not implemented.
e) Appointment of Ms Gugu Duda: Appointment as CFO was irregular.
f) Other irregular expenditure: Mr Motsoeneng engaged in other irregular expenditure due to legal settlements for unnecessary termination of contracts. The board was to issue a public apology to complainants and any employees who suffered prejudice. This was never implemented. Mr Motsoeneng irregularly increased the salaries of employees leading to a salary bill increase of R29 million. This equated to financial mismanagement and maladministration. Recommendations were that the board ensures that the human resource process on the creation of new posts and salary increments be reviewed. This was never implemented.

Ms Mkwebane said there were corporate governance deficiencies within the SABC and the Minister of Communications was unduly interfering in the business of the SABC. The Minister was supposed to institute disciplinary proceedings against Mr Themba Phiri, this was not done. The Public Protector had also convened a meeting with SABC board chairperson, Ms Ellen Tshabalala, on 14 February 2016 informing her of the remedial actions. However, Mail & Guardian published an article in which it quoted the board chairperson saying that Mr Motsoeneng would be retained as the SABC COO. The SABC employed a firm of attorneys to respond to the report which result in a 97 page response by Mncunu Attorneys. Further correspondence from the board chairperson requested indulgence from the Public Protector to review the findings and recommendations before implementation. Minister Faith Mathumbi had also refused to meet with the Public Protector, until a subpoena had been issued. On 22 August 2014, the SABC sent correspondence to the Public Protector with its purported implementation plan. On 11 November 2015, disciplinary proceedings had been implemented against Mr Motsoeneng and concluded on 5 December 2015. Later the prosecutor was replaced and the disciplinary proceedings commenced without calling key witnesses and presenting important evidence.

Discussion
Mr Singh stated that the Constitutional Court has already pronounced on the binding nature of the Public Protector’s recommendations, and asked what the Public Protector’s take was on this. Do you consider a single member standing, the board?

Mr Mokoena stated that there is a difference between implementation of remedial action and a disciplinary inquiry. This is an undermining of the Office of the Public Protector. Given that the SABC has defied everything that the Office of the Public Protector has recommended, what are the next steps?

Mr S Swart (ACDP) stated that there are different elements to non-compliance. The Minister had incorrectly applied the sub judice rule, which resulted in delays. The very telling information about the disciplinary action, made available and not used, and the replacement of the prosecutor and failure to call key witnesses, this is a useful and insightful comment on the deficiencies of the disciplinary process.

Ms Van Damme inquired into the follow through process, stating that the DA has been a proponent in challenging the SABC’s failure to implement the remedial action. How often do you follow through with the Report?

Ds Khoza stated that the ANC has become clear on the decision to clean up state institutions. That is why the Committee wants to know from the Public Protector whether she has engaged the Minister as to how the Minister will take the matter forward.

The Public Protector, Ms Mkwebane, responded that the Office of the Public Protector was of the view that the remedial action had been defied. The SABC took 25 months to take the Office of the Public Protector on review because the SABC was unhappy with certain utterances of the previous Public Protector. The Public Protector agreed with the Committee that a situation cannot be allowed where there is non-compliance with remedial action. Picking and choosing which remedial action to implement is also an indication that the Office of the Public Protector is being undermined. The next step is to ensure that the Office of the Public Protector follows up on the judicial review of this. In the answering affidavit, the Office of the Public Protector has illustrated the abuse of the powers of the Public Protector. The key challenge with the Office of the Public Protector is financial constraints. The Minister has not been engaged. There are several other departments from which complaints of non-compliance have been received. At the back of the Report of the Public Protector there is a timescale within which compliance must be fulfilled. The SABC implementation plan was merely justifying the issues. After the lapse of the timescale in the Report, the Office of the Public Protector follows up with letters, phone calls and liaising with executive managers.

Miss Loliwe asked what needs to be done.

Mr Chauke asked whether the Public Protector checked the manner in which decisions were taken for the purposes of judicial review. When you submitted your report to the SABC Board was it in Braille?

Mr J Mahlangu (ANC) stated that there is a myriad of fraud actions reported in the same Public Protector Report. Are all these actions subject to review? He would have thought someone had laid a criminal charge in the intervening period.

Mr Mokoena was worried about taking the decisions of the Public Protector on review. In terms of the SABC, at what stage of the board’s existence was the decision made to take the Public Protector’s recommendations on review? What is the role of the Minister? The Minister has impeded the ability of the Public Protector to carry out its functions.

Mr M Waters (DA) stated that the Minister is as much in contempt as the SABC. What would it take to have a fully-fledged financially equipped Office of the Public Protector?

The Public Protector, Ms Mkwebane, responded that the SABC bodies who were implementing the action sought a legal opinion to determine what they need to implement but instead they sought grounds to determine non-compliance. There is a decision on Monday 12 December. She noted that there is a detailed document which will be circulated with the Committee.

The meeting was adjourned.