Hearings: Krish Naidoo, Philip Molefe & Itani Tsiesi; Multichoice as potential witness

Meeting report

Chairpersons Opening remarks: Process
The Chairperson stated that there were currently two requests before the Committee: one was that the Committee consider adding Multichoice as a witness.

The Chairperson said that currently there was a process underway to secure information from the Board of the SABC, .He suggested that this process be allowed to reach its conclusion; anything different to that would be premature. If that process failed to secure the information needed the Committee could then consider the request to add Multichoice as a witness.

The second request was a little more complex. The Committee had been asked to consider whether it would allow some witnesses to give evidence in camera. The first point to consider was the Constitution, which was intended to lay the foundation for “a democratic and open society”, in which government is based. The will of the people and each citizen is protected by the law. This must be read with Rule 119 of the National Assembly Rules, which directs that all Committee activity must ensure public involvement, in accordance with the provisions of the Constitution.

He proposed that the Committee could be sensitive to the concerns of the two witnesses raised , but must also ensure that this Committee should maximise transparency in the work of Parliament.

He added that Parliament must communicate to all South African public service employees that, on accepting employment in the public sector, they must understand that the employment carried with it accountability – and that applied whether they had left the public service or were still employed there. The Committee is considering whether a person who is no longer in the employ of the SABC should be treated in the same manner as a person who is still in employment. If something happened while a person held a watch in the public service s/he would be held accountable.

The Committee had started this process on 7 December 2016 and had heard from at least five witnesses so far who had not appeared before the Committee because they particularly wished to do that, and had had to endure pressure, and it could be perceived as unfair if others were given different opportunities. The Chairperson, having considered all the points, said that no session would be held in camera unless there were substantially compelling reasons. The principle of maximum dissemination of information outweighed the request of the potential witnesses for in camera hearings.

Discussion
Mr H Chauke (ANC) agreed with the Chairperson on Multichoice that there are other processes that are currently underway and said he was happy to abide by it. He also supported the decision of the Chairperson not to allow in camera sessions.

Ms J Killian(ANC), stated that she was in support of the decision in relation to Multichoice, and with the issue regarding closed sessions. She agreed with the Chairpersons that this Committee, in terms of its rules and in terms of the Constitution, has a duty of representative democracy based on openness and transparency, and she thinks that it should be adhered. The Rules of the NA allow for public scrutiny.

Ms F Loliwe (ANC) expressed that she agreed with both proposals. She stated that she needed to clearly state that witnesses testifying before the Committee should not be threatened by anyone because they are doing this to inform South Africans on what is happening in their institutions.

Dr M Khoza (ANC) supported the recommendations and had nothing further to add.

Ms P Van Damme (DA)  expressed that she was in agreement with both proposals. She also stated that in relation to the first item, the onus was on the SABC, as it accounts to Parliament, to provide the Committee with the documents needed. In relation to the second recommendation, as discussed before, the Committee can ensure that there is protection for witnesses that are threatened or receiving death threats .

Mr J Mahlangu (ANC) supported both proposals. He noted that the Committee had already had closed meetings with several people, including the lawyer for of Professor Maguvhe. If there were compelling issues they could be raised to the Chairperson, who in turn would notify the Committee. That would be a strong exception because in principle he agreed that the Chairperson had set out the principles and the Committee would abide by those. If there were any instances where witnesses have been threatened those issues should be put on record and such people should also be reported to the South African Police Service (SAPS).

Mr L Mokoena (EFF) stated that he agreed with the recommendation on Multichoice. However, he would like an update at the end of the session on getting documents from the SABC. On the second issue, he also agreed that witnesses had been put under scrutiny by the Committee. He wanted a strong message sent out that if anyone was threatening others giving evidence, charges will be laid. Witnesses need to be protected and there is no one who should be threatened.

The Chairperson concluded that the decisions of the Committee had been expressed. Multichoice would be put on hold until all other options have been exhausted. The Committee reserves the right to call Multichoice should it wish to. All sessions will be open to all. The matters raised here were now closed and would not be reopened for discussion. 

Chairperson's introduction to all witnesses
The Chairperson informed the potential witnesses that by law they were required to answer fully and satisfactorily to all the questions that are put to them, or to produce any document that they may be required to produce in connection with the subject matter of the inquiry. This was notwithstanding the fact that the answer or document could incriminate or expose a witness to criminal or civil proceedings or damages. However, there was witness protection in that evidence given under oath or affirmation before a House or Committee may not be used against a witness in any court or place outside Parliament, except in criminal proceedings concerning a charge of perjury or a charge relating to the evidence or documents required in these proceedings. Where witnesses had chosen to take the oath, the Chairperson would administer that oath.

Inquiry into SABC Matters: Evidence Leader Adv Nthuthuzelo Vanara
Adv Nthuhuzelo Vanara, Parliamentary Legal Adviser, acted as Evidence Leader throughout the inquiry.

Mr Krish Naidoo, former Board Member, SABC
The Chairperson administered the oath to Mr Krish Naidoo.

Advocate Vanara stated that Mr Naidoo had dealt with five issues in his statement:
- the legal incapacity of the SABC Board (the Board) to discharge its fiduciary responsibility
- The Board's application of responsibility
- Board management
- Attempts by the Board to remove Mr Naidoo as a board member
- Contract between SABC and Multichoice

Mr Naidoo was then asked to take the Committee through his statement.

Mr Naidoo responded by stating that he is an admitted attorney and currently acting as a consultant to the ANC. He holds a Masters degree in strategic studies. He confirmed that he was indeed a non executive member of the SABC and that the statement tabled and that he was now being shown is his statement. He further confirmed that the issues just read out do appear in the statement.

He noted that he had held a consultation with Adv Vanara in Johannesburg. Subsequently all non-executive members of the Board resigned.

He firstly wanted to deal with the Board’s legal incapacity to discharge its duties and take binding decisions. In terms of the South African Broadcasting Act 4 of 1999, a quorum of nine members is required to transact business on behalf of the Corporation. At the moment the SABC Board has one non-executive board member and three executive board members who will perform their duties in acting capacities. On that basis it was apparent that the Board did not have legal capacity to discharge its fiduciary duty. He held the view that National Assembly may invoke the provisions of s15 A(1)(a)(b) of the Act and recommend a solution to the Board, because the Board is not in a position to dispose of its fiduciary duties, adhere to the Charter and control the affairs of the Corporation due to legal incapacity.

The second point related to how the management had usurped the Board's responsibility. He noted that in general, the dysfunctionality of the Board arose either from the application of the Board's responsibility or the usurpation of the Board's responsibility. In the SABC there was a “curious cocktail” of both application and usurpation brought about by an “immoral and clandestine relationship” between some non-executive board members and executive board members. This immoral relationship was an indication of two groups at both levels. One group was concerned with discharging their fiduciary duties. The other was intent on achieving certain outcomes which were not necessarily in the best interests of the Corporation. Mr Naidoo went on to state that this unhealthy relationship placed Mr Hlaudi Motsoeneng, Chief Operating Officer, in a position of “ring master”. Mr Naidoo said that the burning and unresolved question was “”why are so many educated professionals so beholden to a High School dropout?”

His protestations to bring some sanity to the Board fell on deaf ears. For instance on 9 February 2015 he requested the Chairperson, Professor Maguvhe, to convene a special Board meeting based on a letter from Mr Gavin Davis, a Member of Parliament, which had raised issues around the amendment of the  Memorandum of Incorporation,which is was suggested was ultra vires the SABC Act, Companies Act and Constitution. No meeting was called. On 29 April 2015, he brought this same point to the attention of the Company Secretary, Ms Theresa Geldenhuys, along with some more information that he had gathered dealing with laws of specific application and general application, and requested her to obtain a legal opinion from the SABC legal department. Again, nothing was done.

The appointment of Mr Hlaudi Motsoeneng in 2014 as Chief Operating Officer was probably the best example of where the curious cocktail was mixed between the non-executive and the executive board members, further aided and abetted by the Minister. He had voted against the appointment of Mr Motsoeneng.

The manner in which the report of the Public Protector had been handled left no doubt that the Board had no respect for good corporate governance, the Chapter 9 institution, the Constitution and Parliament. The previous Board chairperson Ms Ellen Tshabalala was the primary driver of the morass of dysfunctionality, and her conduct bordered on criminality.

On 27 September 2016, after witnessing the appointment of Hlaudi Motsoeneng as Group Executive for Corporate Affairs on television, he wrote to the Company Secretary to impress upon her the need to call for an urgent Board meeting . He had received a negative response from Ms Geldenhuys about two hours before the Board was due to meet with the Portfolio Committee on Communications.

In a nutshell, he wanted to describe how the Board had gone astray:

- It enabled the “Hlaudi group” to handle the affairs of the Corporation on a simple majority.
- Some members of the Board were removed unlawfully and there had been two unsuccessful attempts to remove Mr Naidoo
- The removal of Ronny Lubisi and Rachel Kalidass had been based on frivolous and unlawful grounds
- Ms Hope Zinde was charged with divulging SABC information to a third party without consent, and on a simple majority vote proposed by the Board Chairperson, Professor Maguvhe, she was removed as a board member.
- Mr Ronny Lubisi was charged for having a conflict on interest for being a named auditor of two companies which did business with the SABC. Despite his explanation of what constituted a conflict of interest, and Mr Lubisi’s protestation that he did not do any business with these companies besides registering them, he was removed as a board member by a simple majority vote, again proposed by Board Chairperson Professor Maguvhe
-  Ms Kalidass was charged with fraud for having left an audit committee meeting early to catch a flight, when it was subsequently established that she did not fly out that day.

He described the attempts by the Minister and Board to remove Mr Naidoo himself. Firstly the Minister of Communications, in January 2015, summoned him to a meeting, although the Minister was then not available and he met with two other employees. They accused him of not attending meetings and being destructive in those meetings. He told them that he was convinced that the information presented to him was incorrect but the Minister persisted that Mr Naidoo must tender his resignation. While he was driving home the Minister then called Mr Naidoo to apologise and told him that he was an asset to the Board and that he should not even contemplate resigning, . However, a few days later he received a letter from the very same Minister, asking him to show cause as to why he should not be removed from the Board for failing to discharge his fiduciary duties. He responded in writing to the Minister, telling her that her conduct bordered on illegality and that in law no action could arise from a dishonorable course. In short he asked the Honourable Minister to reconsider her actions. He never heard from her again. That, in his view, was a classic example of a dysfunctional Ministry which compounded the problem of a dysfunctional SABC Board.

The second attempt was by the Board in September 2015, after an oversight visit to the SABC by the Parliamentary Portfolio Committee on Communications. Professor Maguvhe wanted to have Mr Naidoo removed as a Board member because he had raised the issue of the dismissed board members of the PPC. Mr Naidoo responded that he believed this to be constructive, he was well within the ambit of the Broadcasting Act and the expectations of the shareholder. He did not hear from the Professor again.

He continued to outline where he thought the SABC had gone wrong, which related to the contract with Multichoice. Prior to his appointment as a Board member in September 2013, the interim Board had signed a contract with Mulitichoice, which drew widespread condemnation in the media. At the board meeting in October, many board members raised issues with that contract, and they also raised the matter with the then Minister of Communications, Mr Yunus Karrim. The then-Chairperson of the Board, Ms Ellen Tshabalala acceded to the request to get a legal opinion. At a subsequent meeting, the Board was advised that the contract was unlawful, and reasons were given. However, a second legal opinion came to another conclusion and Ms Tshabalala suggested that the Board accept that second opinion, which was done.

After he made his input to the Board, Mr Naidoo received a call from the CEO of Multichoice, who had wanted to congratulate Mr Naidoo on his appointment. They chatted awhile, as old friends, and then the CEO of Multichoice asked why Mr Naidoo was opposed to the matter. He was shocked at the obvious leaks in the Board, but he had said that he was not happy on the terms. The CEO agreed that the contract had been concluded very hastily. This was his first inkling that Mr Naidoo would be heading down a long and rocky road.

Mr Naidoo stated that not everything about the SABC was not bad. The staff of the SABC consist of a rich tapestry of experienced, knowledgeable, skilled and talented staff with institutional memory in their priceless national asset in South Africa’s young democracy. The right thing must now be done to place the SABC on a trajectory that will enable it to deliver its mandate to inform, educate, entertain and play a role in social cohesion and nation building. Through that process South Africa would be able to build a strong, state-run entity that everyone could see with pride.

Questions
Adv Vanara thanked Mr Naidoo for his statement and expressed that this inquiry needs to be fair and asked Mr Naidoo, rather than focusing only on the bad, to outline some of the good at the SABC.

Mr Naidoo responded that not everything about the SABC was bad. He had brought along a few meeting Board packs to show their high quality and professionalism, saying that sometimes these were delivered to him home late at night by staff, which proved the hard work of the SABC Secretariat. He repeated that the staff were “a rich tapestry of experienced, knowledgeable, skilled and talented staff with institutional memory and they were a priceless national asset in South Africa’s young democracy. They must do the right thing and place the SABC on a trajectory that will enable it to deliver its mandate to inform, educate, entertain and play a role in social cohesion and nation building and that process build a strong state company of which everyone could be proud.

Adv Vanara said that paragraph 3 makes a distinction between two groups in the Board, and asked who belonged to which group.

Mr Naidoo responded that from September 2013, the Chairperson, Ms Ellen Tshabalala, was in the “Hludi camp”. The Board dissipated quite quickly so that three members, Mr Naidoo, Mr Lubisi and Ms Kalidass were serious about corporate governance. In the end there was nine Board members left, three executive, six non-executive. It was obvious that the outcomes would all be in favour of the “Hludi group.”

Adv Vanara noted the comment that the amendment of the Memorandum of Incorporation (MOI)  was never placed before the Board and wondered if Mr Naidoo was ever given the reasons.

Mr Naidoo, responded that the MOI was initiated by the Minister and seemingly they were intended to make it easier to remove board members, in terms of the Companies Act, but no clause to admit any in terms of the same Act, which, if done, would have allowed the Board to continue without getting down to just one member, its current situation. It was furthermore, to his mind, fallacious because one should not substitute a law of specific application (SABC Act) with a law of general application (Companies Act). The SABC Act is very specific as to the role of the appointing authority and Board members and how Board members are removed. It was wrong to take the simplistic approach to remove board members by simple vote around the table.  in terms of this inquiry. One can’t take a simplistic approach as done in the MOI to remove Board members by having a simple voting around the table.

Adv Vanara asked if Mr Naidoo was given any reasons as to why this important document could not be subject to any discussion by the Board.

Mr Naidoo answered that not many reasons were given other than that this was driven by the Ministry and, he thought, the Company Secretary who had also played a role in developing that document. After he saw the document, in July 2014, he gave input to the Company Secretary on what was in international case law, suggesting that she needed to research it, because it dealt with why it was unlawful to take a law of general application like the Companies Act and substitute it for a law of specific application like the SBAC Broadcasting Act. Nothing had been done. That in itself may be a further point of illegality.

Another aspect was to do with the way that executives were appointed in the Corporation. In the past, some kind of Board intervention or approval or certification was needed. However, that was removed so that executive appointments were then the function of the CEO. The MOI became more of a SABC tool. When attending meetings, one would find different people at every meeting. There was a very high turnover of staff, with staff either being suspended or had left with acting appointees in very senior positions.

Adv Vanara asked Mr Naidoo to expand and explain his statement that the appointment of Mr Hlaudi Motsoeneng as COO was probably “the best example of the curious cocktail” between the non- executive and executive board members, aided and abetted by the Minister.

Mr Naidoo confirmed that the Minister at that time was Ms Faith Muthambi. What was unusual was firstly that the Board meeting took place late one evening. Another unusual point was that the then-Minister was on the premises of the SABC, and it appeared that she had had a private discussion with Ms Tshabalala. At 22:00, Mr Motsoeneng provided a “legal opinion” to the Board, which essentially told the Board that he was “a great chap” who had been in an acting post for far too long, and that he should be considered as permanent COO of the SABC. There was discussion, and a lot of opposition from those who felt that due process had not been observed, resulting eventually in a split vote of six in favour and five against his appointment. The Minister then thanked the Board and said that she would consider that recommendation from the Board. By 08:00 the following morning there was a public announcement that Mr Motsoeneng had been appointed. Mr Naidoo made the point that the Minister must have “considered” the matter whilst sleeping.

Adv Vanara referred Mr Naidoo to the statement on page 2 about the way in which the SABC dealt with the Public Protector's report, and the fact that it “left no doubt” that the Board had no respect for good corporate governance, a Chapter 9 institution of the Constitution. These were very serious allegations and he asked for further elaboration.

Mr Naidoo also stated that unbeknownst to other board members, the interim Public Protector report was given to the Chairperson, Ms Tshabalala, in November 2013, without ever being disclosed to the Board. When the final report came out in 2014, the Board was very concerned at the fact that this was suddenly a final report without any interim report. It only then came out that the Chairperson had received the interim report, but said that it was addressed to her personally and she therefore thought it was for her personal consumption only. That was a very immature approach. Meantime, however, she had engaged the services of an attorney and was busy preparing a response to that report, defending herself and Mr Motsoeneng. It also transpired that between receiving the report herself and the final report being drawn, she had actually made representations to the Public Protector. The Board, however, had no input into the final report.

Adv Vanara asked whether it was correct that Ms Tshabalala was also a non executive Board member and was not an executive chairperson.

Mr Naidoo confirmed that.

Adv Vanara noted that subsequent to Mr Motsoeneng’s appointment, Mr Naidoo wrote to the Company Secretary, and asked what happened?

Mr Naidoo said that about a week after the Supreme Court of Appeal decision he had written to the Company Secretary, pointing out that the decision of the court effectively terminated the employment relationship between the SABC and Mr Motsoeneng. However, the Executive Group CEO, without Board approval, and simply on the advice of a lawyer at the SABC, immediately appointed Mr Motsoeneng as Chief of Corporate Affairs. That, in Mr Naidoo's view, was totally unlawful. He believed Mr Motsoeneng had no right to hold that office. He was “squatting illegally at a national key point”. He asked that the Board meet to discuss that, but got no response, until about two hours prior to the meeting with the Committee, and the response was negative.

Adv  Vanara asked about the examples of high turnover in staff and changing of faces of the executives. He thought that, prior to its amendment, the Memorandum of Incorporation had given the power to oversee the appointment of executives to the Board. He asked if it was correct that the changes to that Memorandum took power away from the Board and gave it to the executive.

Mr Naidoo confirmed that The change essentially did mean that the Memorandum now vested all those powers in the executives, which meant that changes could occur at a very senior level without the Board's knowledge.

Questions from Members
A Member asked where Mr Motsoeneng was getting his powers from.

Mr Naidoo said that he did not know, and had asked himself the same question. He stated that it is very unusual for any individual or state entity to be in opposition, so either he was adducing the authority to himself, or he was getting support from people that Mr Naidoo was not aware of.

The Member asked if the amendments to the MOI were done solely by the Minister, and without the consent of the Board. He asked if there was anything addressed to the Minister to state that the MOI amendments were illegally constituted?

He also asked, in relation to the Public Protector's report, whether there was any evidence that the Minister was advised that the appointment of Mr Motsoeneng was in contradiction to the Public Protector’s report and therefore illegal, or whether it was possible that she was not advised of this. He also asked if the Board was advised of the decision to then reappoint Mr Motsoeneng to another position, and was the Minister advised of the illegality of that appointment?

Mr Naidoo said that everything substantial was done by the Minister and her team, with some participation from the SABC secretariat. The Board never participated. The Board had raised its objections from time to time, but the deed was done at the end of the day. He did have a copy of the opinion that he sent to the Company Secretary which he will make available to the Committee.

Mr Naidoo said that he had a copy of the legal opinion provided to the Company Secretary, which he would make available to the Committee.

He added that when the report of the Public Protector was made public, this was around the same time as the appointment. The Minister was obliged to take the Public Protector's report into account. The very person she was seeking to appoint was so heavily damned in that report, was subject to a host of investigations and the recommendation was that he should be subjected to a disciplinary inquiry. Mr Naidoo questioned whether the Minister could, in light of all of this, be said to have applied her mind properly to the appointment? That was why the Western Cape High Court and the SCA had ruled that the appointment was made without proper application of thought.

He summarised that the main reason for objecting to the appointment of Mr Motsoeneng was the Public Protector’s report, and the fact that he regarded the appointment as unlawful. There should have been a due process first at the very least to clarify all the issues. Mr Motsoeneng lacked capacity on two counts; the first that he did not have the educational background to warrant his appointment, and the second that so many clouds around his integrity had to be cleared. In addition, the SCA had specifically said that he had no place at the SABC.

Mr J Mahlangu (ANC) asked whether the comment on the Multichoice contract were emanating out of Mr Naidoo's fiduciary responsibility to the SABC or because the media asked that question. He asked who had called the meeting held in January 2015. He asked if Mr Naidoo considered the Minister to be an external or internal player and asked him to explain also the role of the Company Secretary.

Mr Naidoo stated that at the time he joined the Board in 2013, there was a huge media debate about the particular contract and as part of his fiduciary duties, he offered the Chairperson his services as an attorney to look over that contract. He thought that he was probably the only board member who actually saw the contract. He went through it, drew an opinion and that was to the effect that it was probably illegal. He believed it should never have been signed.

The meeting with the Minister in 2015, was one of the various one to one meetings she was holding with various Board members and his meeting was set, but when he arrived the Minister was not there; she had gone to see the President and the meeting was run by her advisor and attorney from her Department. Commenting on the general role of the Minister in political oversight, he thought that the Minister came a little too close to the action at the SABC.

He further stated that the he thought that the Company Secretary could have done a lot more to get proper guidance. She was a Chartered Accountant, but often the Company Secretary has to give legal guidance. She should, particularly when asked to bring something to the attention of the Chairperson, have realised the importance of some the issues and should have advise the Chairperson to take such meetings. She fell short in many instances.

Ms P Van Damme said that on 20 September 2016, the SCA denied Mr Motsoeneng leave to appeal, which meant that effectively he should have left the SABC. However, two days later there was a draft resolution being circulated to all Board members requesting that he be appointed to another acting post and on 27 September he was appointed as Group Executive: Corporate Affairs. She asked what had happened between 22 and 27 September. Since there was no Board approval of the new post, she asked whether this was a decision taken by the Minister, without the approval of the Board? She also asked what was the source of the draft resolution. The Minister is a lawyer and should surely have known that she cannot approve appointments which have not been approved by the Board.

Ms van Damme added that on 1 October 2016, Mr Motsoeneng announced publically that he had decided to give R50 000 each to 180 local musicians. She asked if Mr Naidoo was aware of any decisions taken by him that would have required Board approval, but that did not receive such approval, in relation to this incident.

Mr Naidoo, stated that he can only piece together what happened after the fact. Some board members, including himself, had disapproved of the round robin document. He said why he objected – and that was mainly that it was illegal to appoint Mr Motsoeneng pursuant to the decision of the SCA. Normally the round robins go to the Minister. The Acting CEO took it upon himself, upon the advice of the SABC lawyers, to appoint Mr Motsoeneng to lead Corporate Affairs.

Mr Naidoo said he was not sure if the appointment was approved by the Board. His understanding was that even if the Minister had made the appointment, it would have been unlawfully done.

He said that it is not difficult to remember that there are just three top executives at the SABC and it is simple to remember, as a Minister, that there is a due process that must be followed.

In relation to the announcement he said that normally resolutions are put out by the Company Secretary Ms Geldenhuys, presumably on the instructions of the Chairperson. The decision to give the money to musicians was not approved by the Board. There had been a controversial decision about local content, which decided that SABC should be showing 90% local content, so that more money could go to local artists. The sentiment was fine, it was the manner in which Mr Motsoeneng had gone about it that was wrong.

Dr Khoza asked Mr Naidoo to be as frank as possible with the Committee, because the Committee’s intention is to restore good governance at the SABC. She noted that Mr Naidoo is a lawyer. She asked him whether, without the political interference that was alleged, Mr Motsoeneng would have been appointed by anyone else to either of the positions that he held.

Mr Naidoo answered that to get appointed at that kind of level would require some kind of political motivation. Even assuming one follows due process, ultimately the Minister has to confirm the appointment. If anyone had been appointed without the due process first having been followed, then this must constitute political interference. Mr Naidoo stated that he was quite surprised at the view of the particular Portfolio Committee at the time who held that it was lawful to dismisses some of the members of the Board.

Dr Khoza asked Mr Naidoo to give the three main points of contention in the Multichoice contract.

Mr Naidoo said that the contract purportedly was an agreement whereby Multichoice could use archived material of the SABC, but it was made subject to the condition that the SABC adopt a particular position on set-up control. It was that aspect that made the contract unlawful. Secondly, the person who signed the contract had no authority to sign the contract. The key main factors were set out for the Board and the executive. There were other effects also; the downturn in the economy meant there was less income by way of the revenue. Secondly, there was a downturn in payment of licences, with around R2 billion of uncollected license fees – and there too, there was a debate about whether prescription of debts happened after three years, or whether this would follow the State rule of 15 years? That debate went on for a year, leading to a resolution that the prescriptive period was three years, which meant that SABC now had to write off R2 billion of debt. There were other issues concerning VAT, and when it was charged hen paying licence fees to SABC. He and others spent a lot of time trying to resolve these issues – with some success.

Dr Khoza asked if he could identify other key political players, other than the Minister, who might have played a role in this process?

Ms Loliwe asked for clarity on two areas. Firstly, Mr Naidoo had sat on five sub- committees who all passed resolutions. The question is what impact they had on the running of the institution. She also asked how he had responded to the Chairperson of the SABC who wanted to have him removed.

Mr Naidoo responded that the sub-committees were well run and the resolutions were good and were all directed at benefitting the institution. The dysfunctionality came from the fact that there were two camps, and the manner in which the non-executive and executive board members took their decisions. The sub-committee resolutions were there to support the organisation; for example in relation to the audit committee the members there looked at the past problems and considered how they could be resolved,w with all developmental issues leading to a better SABC. He had responded to the Chairperson in writing.

Ms Kilian asked if, when Mr Naidoo started, there was any induction for new members and if he was apprised of the legislative framework. She asked when he became aware of the MOI adjustment. She wondered if this was not a Board responsibility?

Mr Naidoo stated that the Company Secretary complained bitterly that the Board members were not inducted. When they were appointed, there were several issues requiring very urgent attention, so that they had to get straight into those. It was a major failing, the members of the board should have received a proper induction.

He confirmed that from time to time the Board would receive draft copies of documents. The MOI was done in contravention of the Broadcasting Act, and to some extent the Constitution also. The problems came about by the attempts to amend the MOI without taking cognisance of the whole legal framework.

Ms Kilian also asked about the release of the Public Protector's report, and the substantiation that Mr Motsoeneng had committed fraud. She wondered if he had, at any stage, raised and put in writing that his appointments could not be endorsed because of the content of that report.

Mr Naidoo answered that the entire basis of his own opposition to Mr Motsoeneng being appointed was the Public Protector’s report and the damning findings; there had to be due process to clarify the points first. Mr Motsoeneng lacked capacity on two counts, one being that he lacked the educational background to warrant his appointment and secondly those clouds around him it had to be cleared before he was appointed.

Mr P Chauke (ANC) asked when Mr Naidoo had resigned as a board member. He asked that Mr Naidoo elaborate on the point that Ellen Tshabalala was a driver of dysfunctionality of the Board.

Mr Naidoo responded by stating that on 5 October 2016, when he made a presentation to the Parliamentary Committee, Ms Ellen Tshabalala already had a copy of the interim report of the Public Protector. However, this was not disclosed to the Board. The fiduciary responsibilities of a Board member included a duty of good faith, a duty to act loyally and a duty to disclose information, and a board member acting contrary to these responsibilities could attract criminal liability.

He added that there were two options when considering the Public Protector's report; either to accept the findings, or to take the matter on judicial review.  Instead she chose to create a justification to show that the findings were incorrect, and that was not the correct route.

The Chairperson thanked Mr Naidoo for availing himself and for cooperating with the Committee and told him that if there was anything else relevant, the Committee would happily see him.

Mr Philip Molefe: former SABC employee
The Chairperson explained and administered the oath to Mr Philip Molefe.

Mr Thabo Philip Molefe noted that he holds a postgraduate degree in management from the University of the Witwatersrand, and that is currently studying towards his Masters degree with the University of South Africa.

The statement that he had prepared started with his background and the designation he held at the time. He had been Group CEO of the SABC from July 2011 to January 2012. He had been in total, employed at the South African Broadcasting Corporation for almost 20 years from  March 1994 to 31 May 2013. During this period he held several senior editorial and executive positions in the Corporation. These included: political editor, Head of television news, Editor in chief of radio and television news, Head of SABC Africa, Head of international affairs, group executive news and current affairs and lastly Acting Group Chief Executive Officer.

He stated that his statement covers mainly the period of July 2011 to January 2012 when he served as Acting Group CEO, and this submission provides an historical context of the gradual erosion of governance and ethics as well as the collapse of systems and processes in the SABC. The total disregard for processes and good governance was characterised by irregular appointments and highly questionable decisions.

The appointment as Acting Group CEO also meant that Mr Molefe was sitting on the Board as executive director at the time that this Board comprised 15 members; being12 non-executive directors and 3 executive directors, who were the Group CEO, the Chief Financial Officer and the Chief Operations Officer. At the time of Mr Molefe's appointment the position of the COO and CFO were not filled with permanent appointments. The CFO was acting and the COO position was not filled at all.

The first thing that struck him when he attended his first Board meeting, was to find that a member of staff who was neither COO or CFO was allowed to sit in meetings as a Board member. This member of staff is Hlaudi Motsoeneng. This was a glaring deviation from the norms and standards of the Board to have a staff member other than the appointed executive directors sitting in Board meetings. He raised this matter with the then-Chairman of the Board, Dr Ben Ngubane, who said to Mr Molefe that Mr Motsoeneng was attending board meetings at the invitation of the Board. His attendance was queried again in a subsequent Board meeting, by board member Adv Cawekazi Mahlati. This time Dr Ngubane said that Mr Motsoeneng was participating at his invitation as it was the Chair's prerogative to invite whoever he chose.

Acting in the absence of the Group CEO in October 2011, he travelled to the Seychelles to attend the general survey of the Southern African Broadcasting Association, which is the SADC body attended by heads of broadcasting corporations. He had appointed a senior member of the Group Executive, Mr Anton Heunis, to act as Group CEO in Mr Molefe’s absence, in terms of the delegation of authority framework. In his view, everything was done in accordance with the DAF requirements. In fact he had put forward two names for acting in his absence - namely Ms Charlotte Mampane and Mr Anton Heunis, but Ms Mampane was rejected by the Board. On his return, the Chairman, Dr Ngubane was not happy with Mr Molefe’s appointment of Mr Heunis and suggested that Mr Motsoeneng should have been appointed instead. Mr Molefe stated that he was then advised that in future that he should leave this matter to the Board to decide who must act when he was absent again.

In November 2011, Mr Molefe had to travel to Ghana for the African Union Chapter of Broadcasting , as he was a member of the Executive Council of that body. He handed delegation of authority back to the Chairman of the Board, who could decide who to appoint to act in the absence of Mr Molefe; he had tried in vain to find out who this would be before leaving the country but was told only later, when he had arrived in Ghana, that Mr Motsoeneng had been appointed acting Group CEO with effect of 14 November 2011. This came as a shock to him because he had advised against the consideration of Mr Motsoeneng, whom he considered junior and grossly inexperienced compared to the other very senior Executive members. To add to this shock Dr Ngubane appointed Mr Motsoeneng as Acting COO on the following day, to take effect on 18 November 2011. These critical appointments were made in the absence of and without the knowledge of the Acting Group CEO, and he concluded that this was done because of his opposition to the elevation of Mr Motsoeneng to such a senior position.

In late November Mr Motsoeneng approached Mr Molefe requesting aasalary increment of R500 000, Mr Molefe refused and pointed out to him that this request could only be approved by Board decision. Dr Ngubane called Mr Molefe to his office at the SABC in early December 2011, and, in the presence of Mr Motsoeleng, Dr Ngubane asked Mr Molefe to sign a prepared letter recommending a R500 000 salary increase for Mr Motsoeneng. Mr Molefe refused to sign the letter and told Dr Ngubane in no uncertain terms that he would not agree to such demands. Dr Ngubane tried to persuade him but Mr Molefe stood his ground. Mr Motsoeneng then stood up and said “Chair, I told you that this is not our man, so I am going to Pretoria tonight”. Dr Ngubane pleaded again with Mr Molefe to “ please sign this thing, so that we settle this matter”.

All of this happened at the time that the process of appointing a permanent Group CEO was under way. Mr Molefe had applied for the position and the decision was to be taken by the Board.

He described another incident. Mr Motsoeneng arranged for another meeting, in late July 2012, with one of the Gupta brothers, because they were “keen to pursue a business partnership with the SABC”. Several meetings were held, mainly with a Mr Toni Gupta, with discussions centred around signing an MOU between the SABC and the TNA media group. In terms of this,SABC would allow TNA media group to have live broadcasts of its breakfast meetings on Morning Live and would also agree to a huge subscription for The New Age newspapers to be distributed in all SABC offices nationally, at substantial cost to the Corporation. Mr Molefe did not agree to these proposals, which he considered drastic, with significant financial implications and he also did not agree with the proposal to share an SABC channel with an external partner. This decision in any event required Board and ministerial approval. In the end the position he took did not go down well with the Gupta brothers. Mr Motsoeneng tried to persuade him to soften his approach in dealing with the Guptas. He refused, pointing out that he would not make irregular or unjustified decisions. In conclusion it was quite evident that from above that erosion of evidence and ethics as well as the collapse of systems and processes had started to take root in the SABC as far back as 2011.

Questions
Advocate Vanara said that he did not have any questions. He asked that the statement be admitted as evidence.

Mr Chauke thanked Mr Molefe for the detailed and shocking presentation he had just delivered and as a first question asked what was his view, when he was approached by the Chairman of the Board and Mr Motsoeneng to sign the increase,  and what did you do ?

Mr Molefe believed the entire chain of events was irregular and that it could not be justified, and that is why he did not agree to the demand that he should sign an approval for the increment in salary of R500 000.

Mr Chauke asked how Mr Molefe understood the statement made by Mr Motsoeneng about going to Pretoria?

Mr Molefe said that he was given to understand that the “I'm going to Pretoria” remark was a trip to see a higher authority, although he did not know who that would be. His response to the request clearly worked against him; it was evident to him that he would lose out in terms of his application for the permanent position but he chose to fall on the side of ethics and governance.

Mr Chauke asked whether any other arrangements in relation to the Gupta brothers and the SABC had been carried out, as far as he knew?

Mr Molefe stated that he knows that the SABC continued to have this arrangement with the TNA media group to carry the broadcast engagements live on their morning television broadcasting show. He did not know what happened to the distribution of The New Age at a subscription cost to the SABC. He does know that the SABC proceeded to launch SABC News which sits on Channel 404 DSTV. His understanding is that that channel is exclusively run and owned by the SABC, and subsequently the media group started its own news channel which sits on Channel 405.

Mr Chauke asked whether it was a normal occurrence for the Chairman of the Board to approach the CEO with letters to approve increments for staff.

Mr Molefe said that this was the first time the Chairperson had ever approached him about any increase, and he stated that they had never dealt with increases at that level.

Ms Kilian asked whether Mr Molefe could remember what was the amount of The New Age agreement deal?

Mr Molefe responded that he did not remember, but that the context to that whole approach was that at the time the SABC was considering scaling down on the number of newspapers that were distributed in the organisation and in the newsroom. In fact, he had even given a notice that newspapers should be circulated only to people who used them as a tool of trade. He could remember that it was a large amount considering that the SABC needed to carry the costs of other newspapers on a daily subscription arrangement.

Ms Kilian noted that Mr Molefe had applied for a post as Group CEO, but also said that he did not side with any group. She asked if he thought that his attitude had worked to block his appointment, as he was not appointed despite his credentials and qualifications.

Mr Molefe responded that he absolutely agreed that it worked against him. The timing matched the time when the whole process of appointing a new Group CEO was underway. He was aware that what he had done would work against him but he had chosen to err on the side of ethics and governance.

Ms Kilian asked Mr Molefe if he was aware of Mr Motsoeneng’s participation in Board meetings, and how his appointment came about and who decided on it.

Mr Molefe stated that he knew that Mrs Phumelele Ntombela-Nzimande held the position of Chief People’s Officer, and that position incorporated stakeholder and Provinces relationships. She was removed from her position to make way for Mr Motsoeneng, despite her being very capable.

Ms Kilian asked whether, from an outside perspective, Mr Molefe thought that the Portfolio Committee had, in the period when he served as acting Group CEO,  held the SABC to account?

Mr Molefe answered that he felt that they did indeed hold the SABC to account and they made regular trips to the Committee, showing how seriously accountability was taken.

Ms Loliwe asked what had been the status of Mr Motsoeneng in the meetings; was he an active participant or an observer, and did he attend he all meetings after the one meeting where his attendance was queried. She asked what is the policy of the SABC in relation to increments, and did he finally get the R500 000. She wanted to know whether Mr Molefe left the SABC of his own accord.

Mr Molefe said that Mr Motsoeneng had been sitting in Board meetings as early as 2010, and Mr Molefe had picked this up in 2011 when he himself was a Board member, but he had not made any effective challenges to it at the time. If Mr Motsoeneng had received that R500 000 increment this would have been after been after Mr Molefe’s tenure. The policy is very clear, that increments could take place in two ways. One involved a whole labour process, where the unions would engage with management and the increase was applied universally across the organisation. The second would be a performance related increment if someone was performing exceptionally, at an executive level, and this increase would have to be approved by the whole Board.

Mr Molefe stated that he was forcibly and prematurely removed because he still wanted to continue serving the organisation and South Africa.

Ms Khoza, as a member of the ANC, wanted to assure Mr Molefe that the ANC and this Committee wanted to restore good governance at the SABC. She then asked whether Mr Molefe lodged a constructive dismissal complaint with the SABC or whether he had simply left that.

Mr Molefe stated that his own removal from the SABC followed a “phantom” disciplinary process, but on the set date the new Group CEO reported ill, so nobody was available, and eventually after several delays he had taken legal advice so that the matter would be settled and he could get on with his job. Finally the SABC decided to settle his contract.

Ms Khoza asked when did Mr Motsoeneng join the ANC.

Mr Molefe was not sure; Mr Motsoeneng had previously been employed in Free State.

Ms Khoza asked for a comparison of the qualification of Ms Phumelele Ntombela-Nzimande and that of Mr Motsoeneng.

Mr Molefe stated that there was was a world of difference.

Ms van Damme asked Mr Molefe to speak to the character of Mr Motsoeneng and how a person without the necessary qualifications managed to get to that position.

Mr Molefe answered that it was a mystery,but he must derive power from somewhere or somebody.

Ms van Damme suggested that Mr Motsoeneng seemed to haves some kind of political protection by someone in a high office, who makes sure that Mr Motsoeneng constantly gets what he wants. She asked whether, during Mr Molefe's tenureship as CEO, the name of the President was ever raised in relation to Mr Motsoeneng. She wondered if there was any political pressure because several people seemed to be removed when they did not agree with Mr Motsoeneng or when he coveted their positions.

Mr Molefe thought it was possible and there might have been a suggestion of some form of protection from the President. This came out in the public space when the Minister said that the choice was that of the President, and it was widely reported on, but there was also talk in the corridors.

Mr Molefe said that, with all due respect, he had tried to assist the Committee in stating that there is a powerful force but he would be very wary in speculating as to what that force is. He thought that the Committee was better placed than he was to investigate and find out the position.

Ms van Damme asked if there were any other instances where the Guptas tried to do business with the SABC, other than the TNA deal.

Mr Molefe said he was not aware of any.

Mr Molefe answered that he was not aware of any in his time.

Mr Mahlangu asked who was in HR at the time, in the SABC. He also asked how the “going to Pretoria” remark had effected both Mr Molefe and the SABC. He wondered if there was anything to suggest that there was a “Pretoria effect”.

Mr Molefe thought that, at the time, the HR person was Mr Paul Tati. From the time that Mr Molefe took a stand and declined to approve the salary increment, he knew that he had taken on a course that would amount to the jeopardising of his career . He picked that up already in the following week. The interview process had been tampered with, with interviews  postponed indefinitely and finally they were held in January instead of the scheduled time of December 2011, and from that point on it was evident that something was going on.

Mr Mokoena asked who the Minster of Communications was at the time? He asked how Mr Molefe would have described the relationship between the Minister and Mr Ngubane at the time and whether it was likely to be the Minister that Mr Motsoeneng said that he was going to see.

Mr Molefe said the Minister at the time was Ms Dina Pule. The Minister and Mr Ngubane had a cordial relationship and there was nothing special about it. He also stated that his take on the Pretoria comment was not necessarily about the R500 000, it was in the context of saying “that this is not our man and now I’m going to Pretoria”.It created the impression that there was regular contact with Pretoria.

He asked what the stake was that the Guptas were seeking.

Mr Molefe said that there was nothing on paper. This was a discussion around having a partnership and the stakes were not named.

The Chairperson thanked the witnesses. He asked that up to 28 February 2017, when the report was to be finalised, they should feel at liberty to send anything through to the Committee Secretary, so that this was not the end of the road.

Mr Itani Tsiesi, SABC’s former group executive
Mr Itani Tsiesi, the SABC’s former Group Executive for Risk and Governance, took the oath, and noted that the document handed in -  ‘Our Beloved Public Service’ - emanated from his office but he had not written it. .He noted that he had  a Bcomm Accounting as well as Honours in Management Accounting. My last position at the SABC was group executive of risk and governance.

He explained that section 51(1)(i) of the Public Finance Management Act (PFMA) requires the accounting authority to ensure that the SABC has and maintains a system of  effective, efficient and transparent  financial, risk management and internal controls. This must be read with National Treasury Regulation 22.1, which required the Board to facilitate proper risk assessments. Risk management is primarily, within an organisation and SABC, to ensure that the objectives set out in the corporate plan or any other strategy document are achieved.

He noted that in his role as risk and governance executive, he was responsible for policies such as

1. the risk management policy;
2. the risk management framework;
3. the whistleblowing policy;
4. the fraud and corruption policy and strategy;
5. the integrated internal control framework
6. the operational governance framework.

           
He was also responsible for ensuring that a proper risk management framework was operated throughout the entire organisation. Whilst he could not manage the affairs at SABC, he could ensure that the risks to which it was exposed were identified, assessed, managed or controlled.

In between that, there were many other things that he needed to do as the Group Executive of Risk. From the the governance point of view, he must avoid stepping on the board’s toes because the custodian of the board governance is the Company Secretary and the board itself. So his role was really operational governance which is from a lower level of any transaction within the organisation up until group executive committee.

However, these two forms of governance are not exclusive, and Exco sat at the point of intersection. There are particular requirements that need to be satisfied in order to go above, to the Board.

Adv Vanara asked how far, in his role as a facilitator  in identifying risk and developing risk registers, he had gone to ensure that there was an institutional risk register that adequately identified risks?

Mr Tsiesi linked the institutionalised risk register to the three points of being  effective, efficient and transparent.

He noted that he had re-joined the SABC in 2013, after having served elsewhere. At that stage the organisation's results were qualified and it it was the task of the new staff to ensure that policies were set up, read, that awareness campaigns happened and that the risks were properly identified. In 2013, the organisation had a qualified statement in respect of compliance, and he found that difficult because he had left the SABC only twelve months prior to this, as Group Executive  Risk and Governance, and it had regressed so far in one year. He started afresh to make sure that the SABC did review the policies  and facilitate the strategic risk register. However, at the same time there were divisional risk registers by the junior staff,and his role was to make sure that the board and group executive sat down to assess the strategic risk on the basis of the strategic objectives of the organisation.  That was done in 2014. The group executives and board came up with 17 strategic risks on the basis of the strategic objectives of the organisation.

He said that all were relevant to the discussion but some more than others. He described that the risk called “board effectiveness” meant the risk that the Board may not discharge its fiduciary duties as legislated and regulated, to meet its strategic objectives and shareholder compact. When assessing this risk, the board and executives ask what the causes of this particular risk materialising would be.

He noted that some of the potential challenges were 
- Lack of independence and board conflict of interest. He explained that conflict of interest is quite clear here, when someone wanted a contract to get awarded to another named person, because there was an interest. Lack of independence goes both ways, and could happen also if members became proxies for others, so that they might not discharge their duties as expected.
- Inadequate attention to strategy and execution
- Board and executive unclear on demarcation of roles and responsibilities. Board executives here were of the view that that could make decisions and just approve and sign off as they pleased. There was not recognition of the fact that the Board is not the Chairperson
- Inadequate knowledge of board responsibilities. This is what executive and board are saying because they have experienced this amongst each other whilst engaging
- Lack of board cohesiveness. The board worked separately, there would be some approvals that some other board members would not know about.
- Lack of appropriate tone set by the board. This was one of the things that even employees below executive tended to be worried about
- Inadequate knowledge of SABC business.
- Interference and influence from executive management. This is a situation where executives would almost make decisions without the consideration of the board.
- Inadequate board support from Secretariat. A former Board Member had said this, and it was caused by divisions within the Board, where people were tending to choose “sides”.

The consequences of these symptoms included the following 

            1. Board instability;
            2. Poor corporate governance;
            3. Ineffective executive committee;
            4. Inability for the corporation to achieve its strategic objectives.
            5. Inability to meet shareholder expectations.
            6. Loss of credibility.

To that end, because this had to do with the board of directors’ effectiveness, there was nothing that he or  other executives could do to make sure that the Board, as a unit or governance institution, could be effective. The point had been made that it was not up to the staff, but the Board, to design strategies to make sure that all risks were managed.

Adv Vanara asked if the strategy was ever developed.

Mr Tsiesi said it was absolutely not.

He added, in answer to Mr Vanara's question, that there really was not any appetite for risk management from the Board in 2014. By the time he had left in September 2016 there was hardly any strategy developed to deal with the number one risk of board effectiveness.

The second risk would be profitability and liquidity.  This speaks directly to the financial stability of the organisation. This is the risk that the SABC may fail to generate profit and its inability to fund its operations from cash generated from its operations. Some of the threats were outside the organisation, including the pending alcohol ban and food labelling and the costs involved in that. Compromising marketing messages would have been an issue. However, the root causes were
- The continued absence of financial strategy
- The misalignment of corporate strategy and resource allocation which is essentially budgeting. There was not a meeting point between strategy and budget.
- The banning of alcohol advertising
- SABC reputation and credibility. If there are public reports about the SABC, people use this as an excuse not to pay their TV licences. Advertisers lose out on client money and will simply just go somewhere else
- TV schedule interruptions. This was more of an operational matter that needed to be dealt with
-
Adv Vanara asked that the document that Mr Tsiesi was reading from be submitted to the Committee.

Mr Tsiesi continued that the third point is the long term strategy. This is the risk where the SABC group Exco is not meeting the set strategic objectives and expectations of the board and other stakeholders. The root causes identified in this case were

            1. Lack of leadership, competency and capacity
            2. High and frequent turnover of executives without planned succession
            3. Ineffective communication amongst board and management
            4. Lack of appropriate tone set by board; and
            5. Monolithic leadership.

Adv Vanara asked what strategies were put in place in response to mitigate some of these risks materialising.

Mr Tsiesi replied that he had now been away from the organisation for two and half months and there are no long term strategies. This works on a corporate plan approach. He and others had raised this in 2014 to the executive directly that this is worrying, and urged that a long-term strategy was needed.

Adv Vanara asked what strategies were in place to respond to profitability and liquidity.

Mr Tsiesi said there some initiatives from the sales part of the business for classical revenue, and to deal with pricing, and shorten the debtors' days. That in itself cannot be enough because the driver of advertising revenue is not necessarily a sales strategy but rather content on air. If the content is not attractive enough and does not get audiences, it is pointless. Some strategies were there, but they were not good enough to sustain the organisation.

Adv Vanara asked what he had identified by way of any material evidence demonstrating the risks.

Mr Tsiesi said that this did actually happen. He had been invited to the risk committee of board and the Board and was a member of the Group Executive Committee. He had a role to play in checking assurances. His findings were that the organisation is going to be loss-making for the foreseeable future. This was very clear in 2014, and there was a pattern that would continue until the “cancers that have spread within the organization are really amputated and we (will) start all over again.”

He said that the causes were lack of strategy and of course the high rate of cost ,whereas revenue was decreasing. There was a corporate plan but the strategy was not right; there was no understanding on how it should look or be for the SABC, and that was still the case.

Adv Vanara asked about the governance, and specifically the internal arrangements, such as the Memorandum of Incorporation (MOI) and changes. 

Mr Tsiesi said that the MOI was simply introduced to the Group Executive Committee one afternoon when they were supposed to revise some of the delegation of authority (DOA) frameworks. He asked why this was presented. The answer was that the the DOA and MOI had to be aligned. He asked if this was a new MOI and this was confirmed, so the decision was taken not to approve the DOA until the MOI had been produced.

He said that the change essentially took away the power of the Board to appoint, fire and discipline executives and give them to the so-called executive directors. There is no such structure as an executive directors at the SABC, even in terms of legislation.

Those who opposed or disagreed with this rule would end up by being suspended.

Adv Vanara questioned Mr Tsiesi on the apparent reorganisation of Exco, at some point.

Mr Tsiesi confirmed that while he was suspended there was a change in structure, which, as he later learned, had not been approved by the Board. It had, however, been brought to Parliament as a corporate plan. That took the  internal audit function, the risk and governance function and the compliance function, and combined them into “ Governance and Assurance”. Originally, his unit had consisted of a Chief Audit Executive for internal audit , himself, as Group Executive  Risk and Governance, and another more junior manager for Compliance. When he came back, he learned the Group Executive  Risk ad governance and Chief Executive of Internal Audit were no longer members of Exco. He asked why and was told the Terms of Reference had changed.

He asked for the ToR but these were denied.

When he saw the Corporate Plan, he noted that the structure had changed. He had not been aware of that and had to engage lawyers. His lawyer’s first question was whether there was resolution on this particular structure and if there was resolution on the exclusions of these two assurance provider positions from Exco. This subsequently outlined his process of exit.

Adv Vanara said that the change in the MOI resulted in the executive being empowered to hire, fire and discipline other members. He asked what the effect of that was.

Mr Tsiesi said that the effect of that was the fact that there was a Commission of Inquiry today.

Adv Vanara asked what interaction with the Board Mr Tsiesi had in his role.

He responded that he was invited to risk committee and audit committee and he had to facilitate the risk assessment with the Board and Exco. He might have been invited to what was supposed to be the finance committee assets and social and ethics committee.

Adv Vanara asked if he had picked up any irregularities within the organisation that you would have highlighted and brought to the attention of the authorities?

Mr Tsiesi responded that there were quite a few and he had recorded these in the transcript of minutes of Exco or the Committee. Some were rectified, others not. Some he had heard about only after leaving the SABC.

He had been the Chair of the Bid Adjudication Committee. Most of the requests came without wanting to follow the processes that the procurement policies prescribed, including appointments of service providers who were mentioned in the terms of reference.

Adv Vanara asked if this included Vision View?

Mr Tsiesi said it did not. In answer to a question if they were brought to the attention of the Exco authorities, he said that Chairperson had wanted to deal with matters straight away. One of the fixed term contractors, (named in the ToR but Mr Tsiesi did not have the names) said that there was no way that a certain individual could be appointed. However, two weeks ago the appointment happened. Mr Tsiesi had raised an objection which was recorded.
 

Mr Tsiesi thought this could fall under D1(d) – which referred to  “human resources related including governance structures appointment of executive and termination and termination of service with affected executives”. It must be seen in this context and came through the Bid Adjudication Committee; the Bid Adjudication Committee rejected it on the basis that this was entirely a Human Rights matter.  When he took it to Exco, asking if someone could be appointed, he was told that there was absolutely no way to appoint an individual to come do a job that the Head of Procurement is actually paid to do

Adv Vanara  asked if there was any contravention of policy relating to the recruitment of staff?

Mr Tsiesi responded that he did not really have any knowledge or access to the recruitment processes, but he had problems with Mr Motsoaneng's appointment. He thought that the HR department would know.

Questions
Ms van Damme asked if the irregularities would amount to financial misconduct in terms of the PFMA.

Mr Tsiesi said that some would but he could not recall all.

Ms van Damme asked what he remembered the PFMA saying about the sanction for financial misconduct, particularly against an accounting authority?

Mr Tsiesi said the accounting authority has a responsibility, first and foremost, to have the discipline and act on those kinds of transactions.

Ms van Damme said that the PFMA also said that an accounting authority guilty of financial misconduct is guilty of an offence and liable, on conviction, to a fine or imprisonment. He asked if Mr Tsiesi would suggest this to be the correct action.

Mr Tsiesi replied “Absolutely”.

Ms van Damme  said that page 2 of the document ‘Beloved Public Service’ lists a whole lot of decisions taken by the Board after 5 October 2016 in its inquorate form. She asked if the Committee could get more detail on some of those decisions. For instance, after the meeting with the Portfolio Committee, said there were some events at the SABC that require urgent intervention. There was a staff meeting called by Mr Motsoaneng, Mr Magoma and Mr Aguma on 6 October also attended by the Chairperson.

Mr Tsiesi said that this apparently pointed out some things that should not be happening, but he was not at that meeting.

Ms van Damme asked in which meeting Mr Motsoaneng was alleged to have said he is giving R10  000 to each staff member of the SABC?

Mr Tsiesi said that this was hearsay but he had heard this had been said.

Ms van Damme noted that Mr Tsiesi could not give the Committee more information about that. However, she sought, and received confirmation, that from this point on, the Board would be inquorate.

She continued that another decision was the renewal of the Muvhango contract for an additional three years at R380 million. That would have been a decision of an inquorate Board and therefore is an unlawful decision?

Mr Tsiesi agreed.

Mr Tsiesi responded that in regard to bullet 4, the DOA required his suspension to be approved by Board but this was never approved. When this was raised at the CCMA , the SABC called him back, but it was found unlawful and irregular because Mr Motsoeneng was the one who signed the document despite having no authority to do so. However, the Board was complicit because it had never held Mr Motsoeneng to account for that action.

In regard to bullet point 2,this is also seen in the management letter that was issued by the Auditor-General who noted that some of the decisions made by the Board were inquorate. He had an issue with some of the decisions relating to the three board members who were fired. That was yet another example of the risk of an invalid decision.

In regard to bullet point 1, this point really has been dealt with by the court which basically says that raising adverse findings about an individual, then but after two weeks appointing them to the Board is illogical. So those were just pointers to show the need for urgent intervention by Parliament.

Dr Khoza asked Mr Tsiesi to tell the Committee what charges Mr Tsiesi was faced with when he was suspended.

Mr Tsiesi said that four members of the staff were alleged to have leaked a document to the Sunday Times. He was suspended for this, and he stayed for around 14 months after that. The State Security Agency was invited to investigate that particular allegation, and although it issued a report, he was not permitted to have access to it.

Dr Khoza sound that sound internal governance is the foundation of an effective risk management strategy and implementation plan. She asked if he had evidence of the external factors that impacted on the inability to implement the risk management and governance strategy, since he was Head of that aspect of the company.

Mr Tsiesi agreed totally on the point about sound governance. The external factors were really that the tone at the top of the Board was truly not supportive enough to get risk management to provide those results that the strategy was there for, and that hindered the effectiveness of risk management. However, at a lower, divisional level of risk management, it was slightly effective. From Exco upwards it became just another assurance which was blocking people from doing what they wanted to do.

Dr Khoza asked when he had started at SABC as the Group Executive for Risk and Governance.

Mr Tsiesi said he worked there from March 2010 to June 2012, then left to go to AFCON as CFO, then returned in July 2013, until September 2016.

Dr Khoza asked him to clarify the issues around the new MOI, and DOA, and to say which came first.

Mr Tsiesi said the first point, for executives, was the reviewed DOA framework, because the Exco was not at that time aware of the new MOI.

Dr Khoza asked about the independence of the internal audit unit and the new structure that came to existence. She asked why the internal audit function was clouded with other functions.

Mr Tsiesi said that the fact that the internal audit was lumped with risk and governance was indeed worrying and another point was that one should not have forensic audit reporting to the CFO, or procurement reporting to the CFO. The basic principle of controls calls for segregation of duties so that in itself is worrying and is one of the causes of the difficulty.

Ms Kilian asked if the MOI and DOA framework which had to be changed effectively amounted to a takeover by specific people to install them in critical decision-making positions. She noted that he had received some serious resistance when he raised concerns with regards to proper corporate management and governance.

Mr Tsiesi agreed. In the old Articles and old MOA of the SABC, there was reference to Exco being a Committee of the Board, where members would have to independently discuss matters, and for that reason they made it possible by actually making sure that there were members of the board so that there could be an honest discussion in this meeting and that as many issues could be raised as possible. When executive directors become involved, you cannot disagree with them because they can fire you any day, if and when they want.

Ms Kilian said that page 2 referred to the SABC as a national key point, therefore subject to the National Key Point Act, and Mr Tsiesi had said that the appointment of certain people without going through a vetting process could amount to an internal hostile takeover. She asked for more detail and made reference to specific individuals who did not go through the vetting process?

Mr Tsiesi said he was a National Key Point owner of the SABC in his role as a Group Executive of risk and governance. It is a requirement, in the minimum information security standard (MISS) document that key employees, in this case the SABC executive, would need to go through the vetting. He had to be vetted to be appointed. The State Security Agency division responsible for vetting cam to Exco an all agreed that all the executives would need to be vetted. That, however, never happened. Individually, people really resisted. Up to September 2016, no executive had been vetted.

Ms Kilian asked him to confirm that the current Senior Management of the SABC had not been vetted and was therefore non-compliant with MISS.

Mr Tsiesi agreed.

Ms Kilian noted that Mr Tsiesi had referred to the irregular removal of board members. She asked if he had raised that anywhere or listed it as a risk, or did not go through that exercise. She pointed out it was rather ironic because the Board, having removed some members, actually ended up not able to operate as it was inquorate.

Mr Tsiesi said that in all honesty this was more a discussion amongst colleagues rather than to the Board. The Board does not appoint Board members, and he said that this was shocking and worried him in terms of the consequences it would have on the organisation.

Mr Chauke (ANC) asked Mr Tsiesi to describe how he had parted with the SABC, and whether there was anything that he could not disclose as a reason why he was removed.

Mr Tsiesi said that the reason was exactly that when he came back, there had been a rearrangement of the structure. That new structure now included his former position. He asked the Acting CEO at the time, whether there was now a new person in his old position and saw that it was and that it was Theresa Geldenhuys. He was shocked to see, on TV, that she is being referred to as the Company Secretary. In essence, SABC needed to make good on his contract.

Mr Chauke remarked that the Auditor-General raised many issues – including that risk identified could have helped to deal with the issues raised in the AG findings. He asked Mr Tsiesi to comment on the  irregular expenditure of R1.5 million, what is his take on that and what could have caused the risk to this extent.

Mr Tsiesi said that he held the view that there was a systematic destruction of the governance within the organisation. It was really an effort to destroy those assurances and governance structures so that all of these things now outlined in the AG's report could and did happen. The first and second lines of defence to prevent that should have been in place. In response also to the earlier question raised by Dr Khoza, if an organisation would lump the functions together and put them somewhere where incumbents would say things that people wanted to hear, there was really no point in having those functional controls. The battle had always been there, internal audit risk will raise issues that people feel uncomfortable about. Therefore to avoid hearing things that people do not want to hear, they bundled functions together and made them insignificant. He was very sure that figure is going to increase.

Mr Chauke asked if there was a link between the people not being vetted linked with the current problems that the SABC is facing. He also asked if the shareholder, the Minister of Communications, or Parliament, had seen his report.

Mr Tsiesi doubted whether his report had been brought to the Minister or to Parliament. He was speaking under correction but this didn't happen while he was there. The dangers of not vetting are straighforward issues of security – for instance, having someone with other allegiances that SABC did not know about going out into the studio and saying something untrue, on air. That could cause huge embarrassment to the country. The consequences are devastating. You need to know the people who are made custodians of such an asset as the SABC.

Mr Mahlangu asked who Mr Tsiesi had taken over from, as Group Executive?

Mr Tsiesi said that, ironically, he was the first in the role.

Mr Mahlangu  asked who discovered that Mr Motsoaneng did not have a matric certificate?

Mr Tsiesi thought that this came out in an investigation done some time ago while he had still been in the news department.

M Mahlangu asked who generated the risk policy for the Board

Mr Tsiesi said he had, in his role as Group Executive for Risk and Governance. Depending on the environment and the change in the industries, he would probably renew them yearly and take them to the Board for approval. They do this annually because of the nature of the business.

Mr Mahlangu said it was strange that there are two risk policies, one for the board and one for everyone else. What happened if the two did not marry?

Mr Tsiesi said that there was one policy and one framework for the whole organisation. However, the registers are separated. There were operational risk registers, and strategic risk registers, the latter dealing with the strategic objective of the organisation.

Mr Mahlangu said that Mr Tsiesi had raised the issue of clearing of demarcations and responsibilities. Now there was a person who possibly is his junior, sitting on the Board, and he wondered how that spoke to risk management.

Mr Tsiesi said that this spoke directly to the points he was making, about executives imposing onto the board to an extent that some other things can go if they are dealt with individually, which could then result in a junior sitting on the Board. That indicated to him that the Board was ineffective.

Mr Mahlangu said he would expect that Mr Tsiesi, as a Group Executive, should have raised that matter with the Board and said that this is not in line with the risk areas.

Mr Tsiesi agreed. This would be done through the Risk Committee of the Board, when emerging risks were identified. The fact was that he was not a Board member and did not attend the Board meetings. The expectation is then that the Risk Committee Chairperson must table a report of the discussion that happened at the Risk Committee, and would then raise the issues to the Board.

Mr Mahlangu asked Mr Tsiesi to speak to external risks to the SABC.

Mr Tsiesi said that competition had increased tremendously since he started in 2003. He thought the delay in digital terrestrial television (DTT) implementation will affect the SABC. The increase in cost of sports rights at some point will push the SABC out of reeling sports of national interest. As content is growing there is the ever-increasing cost of content and there is a fair chance of foreign content and the risk of the foreign exchange affecting the organisation.

Mr Mokoena asked if he was correct in saying that Mr Tsiesi's role as risk manager is a legal appointment and has legal powers which allowed him to conduct investigations and so forth.

Mr Tsiesi said it was not. Legal investigations would be  conducted or done by the internal audit function, and there was also a separate legal department.

Mr Mokoena asked what, then, was the recourse when he identified a risk with legal implications.

Mr Tsiesi said that the implications might well be financial, such as fines or costs if the SABC needed to go to court. The SABC would cover all of those, including the legal implications.

Mr Mokoena asked if Mr Tsiesi was recommending that the MOI should be  investigated and perhaps withdrawn?

Mr Tsiesi agreed.

Mr Mokoena thought there was agreement on the illegal nature of the MOI, which was not in line with the Broadcasting Act and therefore this should not have been changed. He asked what were the legal implications and whether people could be charged for what had been done.

Mr Tsiesi pointed out that he was not a lawyer. However the change had brought about all sorts of queries. He had read, in the AG's report, that the latest DOA framework was actually approved without the quorum. If so, effectively then the SABC reverted to the old one and decisions were therefore made on the basis of that one. This raised the question whether the decisions were legally taken.

Mr Mokoena asked if the MOI was presented to Parliament.

Mr Tsiesi was not aware that it was.

Mr Mokoena  noted that on page 4, bullet 7, Mr Tsiesi said that the Company Secretary was allowed to direct affairs of the Corporation without oversight, by issuing unlawful irregular resolutions. He later said that Mr Motsoaneng issues instructions and she benefitted. He asked who she is and how she benefitted.

Mr Tsiesi said she is Teresa Geldenhuys, and she is now in a new and unadvertised position of Group Executive of Governance and Assurance.

Mr Mokoena said that on page 8, bullet point 4, there was mention of the withdrawal of the court application for the review of Public Protector report by the SABC. He asked Mr Tsiesi to say why that should happen and if it is a formal recommendation.

Mr Tsiesi said that in his view there is no justification for the review, which will be wasteful expenditure.

Mr Mokoena asked how many board members were present at the meeting that agreed for the review to be instituted.

The Chairperson said that it was said that the SABC will not make a profit and asked if there was then a suggestion that the SABC being a going concern is a real threat.

Mr Tsiesi agreed.

The Chairperson said that Mr Tsiesi had mentioned PriceWaterHouseCoopers and the procurement adjudication which was done irregularly. He asked if Mr Tsiesi was aware that those who benefitted knew that corners had been cut, when they were offered the contract.

Mr Tsiesi replied “No”.

The Chairperson said that the SABC was now exposed by the decisions taken by a Board that was not quorate. If it was proved tomorrow that those decisions are not valid, then everyone could go to court on all those decisions. He asked for comment.

Mr Tsiesi said if he was in place at the SABC today he would indeed list that as the biggest risk because there are so many contracts that many people would just go to court.

Mr Mahlangu asked if Mr Tsiesi would evaluate political interference as a risk.

Mr Tsiesi said that political interference is one of the risks included in the risk of news credibility.

Mr Mokoena asked at what point the Board became inquorate.

Mr Tsiesi said it was at the point when the three Board members were dismissed.

Ms van Damme asked what was the Minister’s role in the active disjunction of good governance at the SABC.

Mr Tsiesi said he truly would not know. He had never had the opportunity to meet or discuss this with the Minister.

Mr Chauke asked if Mr Tsiesi could assess each past Chairperson on a risk basis.

Mr Tsiesi said the last three Chairpersons of the Board were “disasters” and he did not even know how to describe them. He had been fortunate to start at the SABC when the Chairperson was Vincent Maphai. Comparing the past and present Chairs is “sad”.

Ms Kilian said that the Company Secretary is conflicted and asked what her role was vis a vis the Board, and how she had not fulfilled her responsibility.

Mr Tsiesi said that it is the role of the Company Secretary to give honest advice. If she could not even advise the Board that it was inquorate, then she literally failed in her duty. If she could not advise the Board that the founding legislation of the SABC Act ranked higher than the Companies Act then he did not know what else she was not doing.

The Chairperson asked that anything needing to be brought to the Committee's attention should be done via the Committee Secretary.

The Chairperson noted that the document entitled “Content” was not authored and had no current status in Parliament.

The meeting was adjourned.