SABC Board on implementation of section 189 of Labour Relations Act

Meeting report

Opening Remarks

The Chairperson said that the South African Broadcasting Corporation (SABC) Board had been called to brief the Committee as a result of the turnaround strategy that the Board had presented to the Committee on 26 September 2018. In that turnaround strategy, the Board had indicated that it was considering implementing section 189 of the Labour Relations Act (LRA) 66 of 1995 to address some of the financial crisis faced by SABC. At the same meeting, the Board had informed the Committee that the SABC would consult the employees and unions to find the best method of implementing section 189 of LRA. After having been briefed on the decision to implement section 189, the Committee had resolved that the SABC Board should provide a report on the consultation process before taking further action. Therefore, the Committee had invited the Board to further engage on the consultation process and find ways to address the financial crisis faced by SABC. The Committee was concerned about the effect of implementing section 189 on employees.

Ms P Van Damme (DA) said that she did not understand why Parliament had reduced the hours of Committee meetings. She was worried that the Committee would not have adequate time to engage with the SABC Board. As such, she proposed that the Board should go straight to the important issues concerning cost cutting measures, the financial status and implementation of section 189.

The Chairperson welcomed her proposal and directed the Board to limit its focus on key issues that the Members wanted to interrogate.

SABC Update on Progress

Chairperson’s Overview

Mr Bongumusa Makhathini, Board Chairperson: SABC, thanked the Committee for the opportunity to give an update on the progress made in the implementation of the turnaround strategy. He reminded Members that the turnaround strategy presented at its last meeting had identified three key elements.

The first element dealt with governance, and the SABC was in the process of implementing the Public Protector’s remedial action and the Ad Joc Committee Inquiry’s recommendations. The SABC had also approached the Labour Court to declare certain appointments invalid for irregularity. The government guarantee that the SABC had been given in 2009, had requested it to cut its costs and increase its revenue. Therefore the SABC’s current cost cutting measures emanated from what was supposed to have been done in the previous years. The Board felt that it was important to implement the recommendations and meet the conditions of the guarantee. A few months ago, it had received a borrowing letter of R1.2 billion from the National Treasury. However, the letter had not contributed any of the financial assistance required by the SABC because of the disclaimer status pronounced by the Auditor General (AG). The banks were reluctant to provide financial assistance to the corporation because of its disclaimer status as a non-going concern. Therefore, currently SABC had not secured funding from the borrowing letter.

The second element of the turnaround strategy was about regulatory and policy changes. The SABC appreciated the efforts made by the Committee to engage the Independent Communications Authority of South Africa (ICASA) to improve its financial state. Sports rights were also an important driver of the SABC’s costs because sport content was highly priced. It had made submissions to ICASA and sports associations concerning sports rights. The Board was also currently working with the Minister of Communications to drive the digital terrestrial television (DTT) agenda. The DTT would allow SABC to have more channels and deliver its public mandate.

The third element concerned TV licences. The SABC had made submissions to the Minister of Communications to increase the annual TV licence instalment. Currently, a TV licence cost 72 cents a day. SABC was of the view that this amount was not sufficient and should be reviewed. It was therefore working towards improving its commercial and operational efficacy. The strategy sought to cut costs and improve revenue for the corporation.

Remuneration Committee on Section 189 of LRA

Mr Mathatha Tsedu, Chairperson: Remuneration Committee, SABC, said the main reason why the SABC considered invoking section 189 of the Labour Relations Act (LRA) was because of its dire financial crisis. Many alternatives to cut costs had been considered before arriving at the decision to invoke section 189. However, the cost cutting measures had still been insufficient.

In trying to cut costs, the SABC had renegotiated contracts with content suppliers. Several independent content producers supplied their own content to the SABC, and sometimes the SABC failed to pay them. It had therefore renegotiated terms of payment with many content producers so that it could pay them by instalments on a monthly basis. One of suppliers that SABC renegotiated terms of contract was Syntech. The SABC provided 60% of Syntech’s income, but it had been failing to pay them. It had entered into new payment contracts with other service providers like IBM and SuperSport.

At the moment, it was also renegotiating sports rights. However, it had not been able to pay the money which South African Football Association (SAFA) wanted it to pay. Several other austerity measures had been implemented. For instance, many freelance contracts had not been renewed. SABC had not managed to renovate or maintain its buildings for a very long time because of the unavailability of money. It had a Special Payment Committee (SPC) which looked into the essential contracts and service providers who should be paid, to ensure that the SABC continued to function. Last month, it had been able to pay all invoices from service providers whose claims did not exceed R200 000. However, all invoices that exceeded R 200 000 could not be paid unless there were serious prevailing circumstances. Some companies were complaining because of non-payment of invoices, as some were also financially stressed and could also start retrenching their own employees.

In March 2019, the SABC may not be able to pay the salaries of its own employees if it was not assisted. The Auditor General (AG) had declared it a non-going concern. This declaration had had implications on its ability to secure funding. He further indicated that the SABC had requested a joint meeting of the SABC Board, the President, the Minister of Finance and the Minister of Communication to resolve the financial crisis that it was facing. The deadline given by the Board for the meeting was this week, but it was still waiting to hear what the President and the two Ministers would say. He emphasised that the Board had done everything expected of them to rescue the SABC, but it was failing.

He said that the labour unions and some SABC representatives were currently at the Commission for Conciliation, Mediation and Arbitration (CCMA) engaging on the process of implementing section 189. The SABC Board was committed to operate within the ambit of the law and that was why it had opted to involve the CCMA to facilitate the implementation of section 189. The Board was doing everything in its powers to ensure that the SABC survived. The Committee should support the SABC in these difficult times to try and find the best solution to rescue the organisation.

Group CEO on revenue generation and cost-cutting measures

Mr Madoda Mxakwe, Group Chief Executive Officer (CEO): SABC, said that the decision to utilise section 189 formed part of the cost cutting measures being implemented. He reminded the Committee that the SABC had previously reported on its comprehensive strategic turnaround plan. It was committed to implement the plan, which focused on revenue generation and cost-cutting measures. There had been progress in the implementation of the plan since August. There had been a 6.2% growth in revenue. The revenue generated from August to date was R3.2 billion. The main revenue generating streams were TV licences, sponsorships and advertising.

One of the biggest drivers of the revenue generated was the cost-cutting measures that were being implemented. The total expenditure this year was R3.5 billion. This was significantly lower than the total expenditure for the previous financial year. Because of the cost-cutting measures, it had been able to save R463 million. This had resulted from cutting costs for sport rights and programmes and filming, as well as operational costs. It had also managed to save R36 million through a reduction in marketing expenditure. However, cutting market costs and filming significantly affected the SABC, in that it could not attract many audiences.

Having implemented the above cost cutting measures, the SABC was still concerned that it was not financially sustainable. The projections for the end of the 2018/2019 financial year indicated that its losses would total R803 million if nothing was done rescue the organisation. Its focus had been to look all cost drivers. He said that the acquisition of sport rights was not sustainable, so the SABC was entering only into contracts that were mutually beneficial for all the parties.

He reiterated that the SABC had approached the banks for financial assistance but had been unable to secure the required funding. Further, it had tried to use its properties as surety, but the banks were not willing to provide assistance because it had been awarded a disclaimer opinion by the AG. This meant that the threat of commercial insolvency was imminent.

As part of the turnaround strategy, the SABC was also reviewing its wage bill. The wage bill took 43% of the overall revenue. The biggest cost driver of the wage bill was senior management. The SABC had 495 senior managers and their total bill was R630 million. The bill for freelancers was over R500 million. The implementation of section 189 would affect 981 employees.

He emphasised that the Board was committed to building and restructuring the SABC so that it could be financially viable.  It was dealing with a lot of financial problems created in previous years, and it would take time for it become financial sustainable. The managers and the Board were committed to instilling financial discipline within the organisation.

Chief Operations Officer on optimising savings

Mr Chris Maroleng, Chief Operations Officer: SABC, said the organisation was implementing many cost optimisation measures due to the fact that the wage bill was high. A typical broadcasting organisation should spend 50% of its costs on the generation of content and broadcasting services. The SABC had begun reducing its investment into content due to its financial constraints. For instance, capital expenditure (Capex) had reduced by 30% to 50%.  The inability to invest in content had significantly affected its competitiveness both as a TV and radio broadcaster. Failing to effectively invest more money in content also affected the mandate of SABC as provided by the Independent Communications Authority of South Africa (ICASA) Act 13 of 2000 and the Broadcasting Act. It was mandated by legislation to broadcast sports, but the acquisition of sports rights was expensive and the SABC had failed to meet its mandate in terms of the legislation. Although the legislation mandated it to broadcast certain sports, there were no provisions in the funding model so that it could execute this mandate.

Because of the financial constraints, the SABC was now focusing on broadcasting only critical content. A reduction in broadcasting content had also impacted on Capex investments. Capex was the lifeblood of the technology that SABC was required to invest in so that it could continue to broadcast diverse content and ensure that its technology was up to date and be competitive in a market that was increasingly entering into a digital space. Therefore, failure to invest in Capex raised business risks for the orgnisation. He emphasised that the risk associated with failure to invest in Capex was enormous and SABC continues to work so that it could generate more revenue and avert the risks.

It was working towards reducing its broadcasting costs, which were essentially costs incurred from signal distribution. To reduce broadcasting costs, the SABC was introducing shared service mind-set process. This essentially meant that all operations for both radio and TV should share different services, like maintenance operations and signal distribution. This was important to increase efficiency and optimise costs.

Regarding employees’ and directors’ compensation and benefits, the SABC had introduced some initiatives to increase savings. At the centre of these initiatives was the introduction of a fit-for-purpose workforce that conducted itself in a disciplined manner, where resources were not abused. Therefore, the SABC was not interested in retrenching its employees but was looking at retaining talent and working with people who could drive the organisation’s mandate.

Another initiative that it was considering was the automation of broadcasting between certain hours where listenership was low, and thus reducing the reliance on freelancers. He emphasised that SABC was working on reducing the number of employees required for broadcasting services to be provided at specific hours. The structure of the pension fund and medical aid for employees would also be reviewed to ensure cost effective solutions.

Furthermore, the SABC had reduced its marketing budget and marketing costs. This, however, had severe consequences on its ability to derive revenue from content. The cost containment processes had a direct impact on operations. Some operational costs reduced included basic commodities like milk, coffee, printing materials, mobile communication costs and water. The value of its property and equipment had also depreciated due to the lack of maintenance.

The SABC had managed to reduce revenue collection costs by robust contract negotiations and the implementation of contract performance management to ensure maximum value from debt-collecting agencies. The reduction of direct revenue collection costs had also been achieved through discontinuing the early settlement discount and introducing more cost effective products to encourage timeous settlement from its debtors. This had helped the SPC to settle the SABC’s debts. Professional consulting fees had also been reduced to optimise costs, so it was now relying on the use of its own employees. In addition, after hours transport facilities were going to be reviewed for relevance and cost effectiveness. Similarly, staff advances would be recovered in terms of the policies and procedures.

Human Resources (HR) considerations

Mr Jonathan Thekiso, Group Executive Officer: Human Resources (HR), SABC, said that the current remuneration bill for the SABC was R3.1 billion. The figure of 981 employees who may be retrenched was based on an anticipation of solvency of the SABC. There was potential for saving R610 million. In terms of the Basic Conditions of Employment Act, a severance package had to be paid to all employees whose employment contracts were terminated. This meant that if the SABC proceeded with retrenching 981 permanent employees, it would have to pay a total of R171 million as a severance package of a week’s salary. The saving after paying severance packages would be just under R480 million. There were also potential savings if the contracts of independent contractors or freelancers were terminated. If it reduced its 1 300 freelancers, it would save R150 million.

He said there were two main reasons why the Board had considered invoking section 189. The first was that the SABC was in dire financial crisis. One of the major reasons why the wage bill was high was because there had been several irregular promotions that had happened under the previous Board. There had also been many other salary increases for employees which continued to inflate the wage bill. This was a result of maladministration by the previous management.

The second reason was operational requirements. The analysis done by the Board indicated that the SABC was overstaffed, considering its actual operational needs. Many employees were not properly trained or mentored to meet the operational needs of the organisation. As a result, the SABC had started to engage the services of freelancers. Certain positions were also fragmented and it meant that tasks that should be performed by one person were now being performed by four or more people. In an effort to cut costs and meet the operational needs of the SABC, the Board was considering abolishing a number of positions and re-evaluating the entire organisational structure.

Before contemplating invoking section 189, the Board had considered other alternatives. These included restricting the purchase of refreshments, no longer providing catering for meetings, stopping the hiring of venues, limiting attendances at conferences and workshops, and reducing the printing of documents.

Mr Thekiso said the implementation of section 189 would affect all employees, from top senior management to the bottom, and all divisions within the SABC and all provinces across the country. It would be based on an objective assessment of the skills, experience, expertise and/or qualifications of employees. The method of selection would be fair, legitimate and correct and added that the selection criteria would form part of the consultation process with organised labour. This process was under way, presided by a facilitator appointed by the CCMA. In the event that the employees to be affected had the same qualifications, qualifications and competence, the principle of last in, first out would apply.

The duration of the consultation process, as provided by the LRA, was 60 days. Within the 60 days, parties should engage in a consensus-seeking process.  The Board estimated that the consultation process should be finalised by 31 January 2019. In the event that SABC proceeded with the termination of employment contracts, the termination would be subject to a notification period which would be given from 1 February 2019 to the end of February 2019. He added that if it proceeded with retrenchment, it would pay a severance package of one week’s salary per completed year of service, in terms of the guidelines of the Basic Conditions of Employment Act.

The SABC undertook to provide all reasonable assistance that employees may request in the process, or as a result of any termination of employment. The assistance to be provided would include a certificate of service stating the work category, length of service and reasons for termination of service. Furthermore, the SABC would also pay all outstanding money in respect of leave pay, and issue letters to creditors and possible references for future employment. Within six months of retrenchment, employees may be allowed to apply for posts that could be vacant in future.

Discussion

Mr M Kalako (ANC) expressed his gratitude that the SABC was not going to CCMA with a conclusion to retrench its employees, but to engage with the organised labour unions. He asked if it had conducted a skills audit. Would the implementation of section 189 affect the SABC executives? What did it need between now and January 2019 before retrenching its employees, to ensure that it was financially sustainable? What amount would keep it financially sustainable? He suggested that the Committee may have to appeal to the President to come up with a solution to assist the SABC and avoid retrenchments.

Mr B Bongo (ANC) said he was not convinced by what the SABC had reported, as it seemed as if the section 189 was already being implemented. Section 189 stipulated that a skills audit should be done before implementing the section. He wanted to find out if SABC had done any audits before engaging in consultation with the labour unions. The report seemed to blame the previous management, but it was silent on the number of people who had been employed wrongly or whose salaries had been increased irregularly. The report should be clear so that the Committee understood the situation faced by the SABC before offering assistance. It was important to have a clear picture of the organisational structure before retrenchment.

He said the retrenchment was focusing on lower level employees, yet the SABC’s top executive structure was heavily staffed. Recently, it had employed a legal adviser and the Committee should be informed the extent to which such employment would have an impact on the organisation and the implementation of section 189. He did not understand why the SABC was employing more people, while at the same time it was working towards retrenching 981 of its employees. He reminded the SABC officials that the reason why the Committee had appointed them was because of their skills. He was disappointed that some SABC officials were not showing their competence and creativity that would assist the organisation to be financially sustainable in the long term. The problems in the SABC should be addressed at a strategic level.

Mr Bongo said that the Board had been quick to arrive at a decision to retrench its employees. It should have started by evaluating the skills that could be used internally before employing a legal adviser whose salary would be very high. The 891 employees to be retrenched could also include some employees with a legal background, and could be utilised. What had been done to restructure the payment package of the group executive? He wanted to know how much the group executive earned, because the wage bill was huge and was the biggest contributor to its expenditure. He suggested that the reduction in costs should start by reducing the salaries of the executives. He also wanted to know what the SABC had done concerning ICASA and sports rights. He reminded the SABC officials that the Committee had engaged with ICASA to ensure that some of the regulations were finalised before December.

He said the report presented by the Board was supposed to show scenarios of possible measures that could be explored before considering retrenchment. He had expected the Board to be innovative and provide strategic direction for the SABC. The turnaround strategy presented at the previous meeting had been broad and comprehensive, and the Board should have focused on other cost cutting measures before thinking of retrenchments. He also wanted to know if there would be any improvement in SABC’s operations and financial status if the TV licence cost was increased. He reiterated that retrenchment should not be the first matter to be focused on when an organisation wanted to be financially sustainable. He was concerned that the period of 60 days for engaging in consultation was not sufficient to come up with a solution. There should be a long term intervention, and not one for a short period only. The Board should be concerned about how to get money from the Department.  It had to be innovative and improve its strategic management.

Mr R Tseli (ANC) said he was not impressed by the fact that there were no efforts by the SABC to get out of the disclaimer audit opinion made by the AG. It was important for the organisation to get out of the disclaimer audit opinion for it to secure funding from financial institutions. It would be difficult for the Committee to motivate National Treasury to provide the SABC with more money if it stayed with a disclaimer audit status. There was no guarantee that the outcome of the CCMA consultation process would be in favour of SABC, and he wanted to know what it would do if the process resolved that employees should not be retrenched. The reason why the Committee thought that retrenchment should be the last resort was because the decision to implement section 189 would affect the poor people. He also wanted to understand how much the SABC would be saving by implementing all the cost cutting measures in its turnaround strategy. Had the Board considered the financial implications of retrenching its employees? He agreed that the salaries of the executives should be looked at, and wanted to know how would be affected by implementation of section 189. Would the last in, first out principle also apply to the retrenchment of executives?  

Ms Van Damme expressed her displeasure at the SABC Board’s attitude. She felt that the executives were arrogant and that their attitude should be addressed. The executives thought that they were bigger than the Parliament that had oversight over the SABC. She had once asked the SABC to review the salaries of its top management and they had refused to do so. It had taken the Minister of Communications for the Board to review their salaries. She did not know why the SABC officials thought that their salaries could not be reviewed. The way Group Executive Officer for Human Resources had handled the issue of the strike by SABC employees while speaking on TV had been appalling. If employees decided to engage in a picket during lunch time, why should they be threatened with disciplinary action? She told the officials, “You are not lords at the SABC that you can decide to treat employees badly or threaten them with disciplinary action and hang the axe of retrenchment above them.” She recommended that they change their attitude.  The authoritarianism had to stop because the executive was not more special than the employees it served.

Ms Van Damme pointed out that the Board knew that the SABC was not performing well when it was appointed, and after a year they had failed to come up with solutions to make it financially sustainable. Over the past year, the Committee had given SABC support to find its feet. She was not impressed by the report presented. She had expected a report with different funding models to be considered to resolve SABC’s financial constraints. The Board should consult with business people and strategise in order to find a funding model that would resolve its financial crisis. It should not focus on getting a bailout from National Treasury, because the government did not have the money.

In her opinion, the strategy of cutting costs by limiting consultant fees, printing materials, limiting attendances at workshops, not hiring venues and catering for staff would not work because the SABC required billions to function properly. She did not understand why it was cutting costs for content production and marketing costs – was this not what draws viewers and advertisers to generate more money? The cutting of marketing costs did not make sense. She was concerned that SABC officials had not conducted salary audits, but had already come up with the number of employees who must be retrenched. She would not support the retrenchments because it had not submitted a complete turnaround strategy with all the possible options to be explored. The SABC had once presented a report to Parliament on its salary audits, and Members had resolved that their report was not conclusive. She stressed the need to employ an independent organisation to conduct the skills and salary audits. The results of the audits should be presented to the Committee before the SABC could consider retrenchment. Also, before considering retrenchment, the SABC should come back to the Committee with a proper turnaround strategic plan and a full skills and salary audit conducted by an independent firm. The skills and salary audit should include the salaries of all SABC employees from the top management to the bottom.

Ms Van Damme said she did not understand why the SABC was not selling some of its properties. Why was it holding on to art work which it stated was valued at R400 million? She repeated what Mr Bongo had emphasised -- that the SABC Board should present another strategic plan with all the possibilities to be explored before contemplating the retrenchment of employees.

Mr N Kwankwa (UDM) agreed with Mr Bongo that retrenchment should be the last resort. He said that the SABC officials should have presented options to the Committee, showing that they had conducted thorough research on funding models. At the last meeting, the SABC officials had been given a task by the Committee to consider many options and report back on all the options. The mandate from the Committee had been clear, but a day after the meeting some of the SABC officials had been on TV talking about retrenchment. He could not understand why the officials painted a picture indicating that retrenchment would be the last option, yet it had already quantified the number of employees to be retrenched and the amount of money to be paid as severance packages. According to him, the SABC was already prepared to proceed with retrenchment because it had quantified all the costs involved.

He said the Board should inform the Committee what needed to be done to avoid retrenchment and the kind of support required from government. It was also important to note that the SABC had a shareholder representative who had to be considered in the whole process. He supported Mr Bongo’s point that the SABC Board should be clear as to what it needs to be financially sustainable. The money to be saved after retrenchment was only a small fraction of the total amount that it required to be financially stable. This meant that after retrenching employees, it would still remain in a financial crisis. Therefore, there should be a long term plan to solve its financial problems. He asked how they would strategically turn around the entire SABC.  

Ms M Matsoba (ANC) also expressed her unhappiness about the decision to retrench workers, and said she could not accept the entire report. The officials should go back and fundraise money to save the SABC. Reviewing the cost of TV licences would not assist the SABC in any way, since it required more money. She suggested that the Committee had to engage the National Treasury. Allowing the SABC to retrench its workers would be a brutal act. She stressed that the Committee should not allow the retrenchment of workers to happen in February, as indicated by the officials. Even if the SABC Board reached agreement with the CCMA and the labour unions, the Committee would not allow any retrenchments. The problems faced by SABC were a result of many corrupt activities that had taken place in past years and were now affecting innocent workers.

Mr W Madisha (COPE) said everyone knew about the financial crisis faced by the SABC, but the Members should move from repeating the problems and start focusing on what needed to be done. He believed that the officials had thoroughly studied the problem and had tried to come up with solutions. He urged the Committee to thank and appreciate the SABC Board for what they had been doing, because since their appointment Members had got to know the real issues that had crippled the organisation. He also did not support entrenchment, saying that the national unemployment rate was very high and retrenching workers would worsen the situation.

Because the SABC was a public broadcaster and belonged to the people of South Africa, the Committee should be prepared to work with the executives to save the organisation. The officials might not come up with solutions if Members sent them back to investigate further. The report presented by the officials indicated that they had done their homework and that Members were supposed to engage with what they had done. He was concerned that if the Committee did not help the SABC, it would collapse. If it collapsed, the people would blame all the Members of Parliament, and not just the SABC Board. He asked how they could work together to ensure that the SABC survived.  The problem had to be solved by all the Members, and not just the Board. The SABC was a public institution because it belonged to the people, so it should be publicly funded and the government should clarify the funding model to be followed. The budget for the SABC, as approved by Parliament was not enough, as had been stated by the previous Chairperson of the Committee. He indicated that Members supported the idea of the previous Chairperson to engage the National Treasury to increase the budget for SABC for it to survive.

He then made the following proposals:

1. All permanent workers at the SABC should not be retrenched, meaning that the 891 workers should not be fired.
2. SABC officials should consider dealing with the issues of freelancers, because a lot of money was being paid to them.
3. The SABC Board had indicated that they had requested a meeting with the President, the Minister of Finance and the Minister of Communications, but that may not be possible because of time constraints. He therefore proposed that Committee should go to the National Treasury and plead that SABC received sufficient funding for it to survive between now and the end of the financial year. While it got funding for it to survive, there should be a commitment from the government, indicating that it would assist or save the SABC. His opinion was that the SABC Board would get a chance to access more funding from banks while its workers continued going to work.

Mr Madisha added that the R1.2 billion that had been given to the SABC was not sufficient and the Committee should be reasonable and not send the Board back to investigate, since they had already done their research. He added that even if the cost of TV licences was increased from 72 cents per day to R1, this would not work because the majority of the people were not working. The Committee should look into how the government could assist the SABC.

Ms V van Dyk (DA) wanted to know if there were any workers willing to take voluntary retrenchment packages and not forced retrenchment, and if that option had been offered to employees. If the SABC wished to increase its advertising revenue, it had to produce content that viewers could relate to or watch. She needed to find out how the reduction in investment affected its content and its impact on the organisation. She asked how retrenchment would affect freelancers and how many freelancers in relation to permanent workers would be retrenched. She did not understand how the SABC paid freelancers for their products, and why the commission paid to freelancers was included in the SABC’s bill. There was a moratorium on hiring new staff, but it was still employing more people. Why were the officials continuing to employ more people while it was also trying to retrench the majority of its employees?

The Chairperson thanked the Members for posing crucial questions. The concerns raised demonstrated how serious the SABC’s problems were. It might not be fair to expect the SABC officials to respond to all questions raised by the Members, considering their significance of the issues. She therefore proposed that the Board could respond to the questions by providing an alternative comprehensive document to the Committee. She was of the view that information relating to the skills and salary audits might not be readily available, and that the Board could prepare a document with all the necessary information and submit it to the Committee. With regard to the funding model and a guarantee letter to access funding from banks, certain procedures needed to be considered by Parliamentary committees in consultation with the Treasury committee. She did not believe that the Committee had sufficient information for it to proceed to engage with the President or Minister of Finance, as suggested by the Board. She therefore reiterated what other Members had underscored, that there should be other options besides retrenchment. She also wanted clarity on whether the executive had engage with employees at different levels. The strengthening of democracy required transformation that sought to engage all workers within an organisation. She asked the Board how much time it needed to prepare a full document that would address all the concerns raised by the Members. 

Ms Van Damme asked the Chairperson to clarify why she thought it would be unfair for the Board to answer questions raised by the Members. She did not think that it would be unfair, since the Board had been in office for a year. She stressed that the Board should be held accountable by the Committee for the period that they had been in office, and that all the questions raised should be answered.

Mr Tseli agreed that the Board should be accountable and answer the issues raised. However, he did not want them to give inadequate answers without preparing. He therefore felt that the Chairperson’s suggestion to give the Board more time to go and prepare was reasonable, since some of the issues raised required detailed research.

The Chairperson said she agreed with all the Members that the Board should be accountable, but at the same time they should allow the Board to prepare a document that would address all the questions. She stressed that the severity of issues concerning picketing by workers, and that some executives were arrogant, could not be discussed without a complete picture of what had transpired. As such, it was important to afford the Board more time to prepare a document which would address all substantial questions.

Mr Bongo said the Committee wanted the Board to present a report showing different scenarios that could be explored. However, because the report had not presented those scenarios, he wanted them to be given time to prepare and report again to the Committee. It was important for the Committee to reconvene again to discuss the revised document.

Ms Van Damme interjected and strongly disagreed with the proposal to give the Board time to prepare another document.

The Chairperson suggested that the SABC officials should answer the questions for which they had answers.

Ms Van Wyk said that the Board had presented the same report to the Committee for the third time. She contended that the Chairperson should not pre-empt on behalf of the Board and protect them so that they did not have to answer questions raised by the Members.

Mr Kalako responded that some Members did not understand the point made by the Chairperson, that the Board could answer questions, but would also need to prepare another comprehensive presentation. It would not be feasible to address all the substantial issues within the limited time before adjourning.

Ms Van Damme said many Members had served the Committee for many years and had seen the SABC going through different difficult phases. She felt as if the Chairperson was pre-empting what the Board would say, and protecting the SABC officials. She asserted that Mr Thekiso had blatantly lied on national TV that the SABC had not received an official notice of the strike, and had threatened workers with disciplinary action. She had seen the emails sent to him concerning the strike and the responses thereto. She said Members wanted answers to all their questions, since this was the third time a report had been presented that was not well thought through.

Mr Kalako said that the Committee should not concentrate on Ms Van Damme’s attitude towards the SABC Board, because she was bring up issues of which Members were not aware. Her attitude to the Board should not be viewed as the attitude of the Committee. If she thought that the Board was big-headed, it was her opinion, but other Members do not share the same view.

Ms Van Damme said it was her opinion and as a Member of the Committee, she was allowed to express her view.

Mr Kalako said the Chairperson was not protecting the Board from answering questions, but only suggesting that another presentation would be desirable. The Committee should not be side-tracked by issues that were not on the agenda and avoid dealing with the real issues faced by the SABC.

The Chairperson pointed that democracy was based on critical values that included fairness, justice and deep respect for each other. She had a duty to ensure that those values were respected at all times. She was committed to ensuring that the Board accounted to the Committee. However, she did not want the Board to answer questions on issues that they might not have prepared for. The onus was on Members to ensure that the Board was accountable, but at the same time they should respect each other. She concluded that the Board would be allowed to respond to questions raised by the Members.

Mr Madisha said that it would not be fair to argue that the Board must give the Committee possible options, yet the Board had put forward an option of retrenchment and had asked for more money. The Committee should decide whether it agrees with the options given by the Board. He requested that Members should not continue attacking the Board, but work as a collective to protect the SABC for the benefit of South Africans.

The Chairperson requested the Board to respond to questions raised by the Members of the Committee, and seek further clarity if necessary.

SABC’s Response

Mr Mxakwe, Group CEO, replied that the reason the Board had made a presentation on section 189 was because the Committee requested information in relation to that section. However, the Board had decided to incorporate the revenue and expenditure of the SABC for the current financial year. He indicated that the report had not included the turnaround plan, but had incorporated initiatives that were currently being implemented. The report was only an update of what had been done. He reminded the Committee that on 25 September 2018, the Board had presented its comprehensive turnaround plan and strategy which the Members had applauded as good work.

Responding to the question of how much the SABC needed to be financially stable, he said it needed to be recapitalised by R3 billion, taking into account all the liabilities and debts of the organisation.

He said the narrative of an arrogant executive suggested by Ms Van Damme was not true, and he did not see himself as an arrogant or authoritarian leader. The SABC executive was trying hard to engender discipline and trust by engaging with its employees. The Members felt that what the officials were doing was not enough, yet the SABC had managed to save R463 million as a result of the small things done by the executive, like reducing attendance at workshops, printing materials and others initiatives.

He agreed that cutting marketing costs was not desirable, but the SABC had no money to conduct its operations.

Regarding a salary and skills audit, he pointed out that section 189 did not require an organisation to conduct an audit. However, from an operational point of view, SABC had employed PriceWaterhouseCoopers (PWC) to conduct the audit. The Committee was aware that the findings and recommendations had not been implemented. However, because of the 4% attrition rate at the SABC, the audit conducted by PWC was still relevant. The functional competences, qualifications and expertise of employees were being looked at. All these processes were being incorporated in the implementation of section 189 and the consultation process.  

Mr Mxakwe replied to the question raised by Ms Van Damme as to why SABC was not selling some of its properties, including the art works. He said the SABC had employed the services of a consultant who would advise whether to sell the property or not. Once the process was completed, the Board would report back to the Committee.

He said the corporation had a six-tier management structure, and there were many duplications. As such, the retrenchment would affect all levels of management, from top to the bottom. The SABC had not been quick to arrive at a section 189 situation, because it had been trying to avert the financial crisis of the organisation for the past two quarters.

The SABC could not unilaterally increase the cost of TV licences because it was beyond its powers. However, the Board had submitted a request to the relevant authority to consider an increase in the cost of TV licences, and through the Committee, the process could be accelerated. 

He said there was confusion concerning the borrowing limit and the guarantee. The extension of the borrowing limit was aimed at giving SABC an additional R1.2 billion from the banks. Unfortunately, this could not be possible because of the issue of insolvency and the disclaimer status according to the AG’s report. For SABC to be financially sustainable, it would need about R3 billion.

Mr M Tsedu replied to Mr Tseli’s question concerning SABC’s efforts to deal with the findings of the AG. He pointed that the AG had been conducting audits for the previous years on how money was spend. The findings for this year which led to the disclaimer relates to the fact that SABC does not have money and was not a going concern to run its operations in the near future. He further stipulated that the AG was impressed that all the issues that SABC experienced in the past had been dealt with.  Therefore, the cost cutting measures being implemented were aimed at resolving the disclaimer status so that SABC could be financially viable.

Mr Tsedu said the issue raised by Ms Van Wyk concerning voluntary severance packages would be dealt with during the consultation process, and the parties must be in agreement. Section 189 required an organisation to do certain things before arriving at any conclusion. He said that the figures indicating 891 employees to be retrenched and the costs involved, were required by the provisions of section 189 before engaging in the consultation process. However, the outcome of the consultation process would be determined by what the parties had agreed on.

Mr Maroleng replied to questions raised by Ms Van Wyk relating to investment in content and marketing costs. He said that the Board had studied the costs of content over the last four years and found that the SABC had spent R4.1 billion on content. The study went further to project the cost of the unfunded mandate, and had arrived at a figure of R6.7 billion.  The Board fully understood that the requirements of meeting the mandate without any funding model involved exploring various approaches to invest in content. The SABC business was not complicated and ran on the basic principle that content investment was critical.

Currently, the SABC invests slightly less than 30% of its total revenue in content when it should ideally invest 50%. The impact of limited investment in content was that SABC could not sell audience figures to basic advertisers. It should be able to invest in more content from revenue generated from advertising. Unfortunately, because of the financial crisis, this was not happening. The SABC was now becoming a burden on producers, because it was unable to invest in content.

Mr Maroleng went on to mention that some issues viewed by Members as very small were important to the SABC and its employees. For instance, reducing milk in coffee and biscuits for workers could be trivial to Members, but they all amounted to the R400 million savings presented to the Committee.

He concluded by requesting the Committee to assist SABC with a funding model to resolve the crisis, and added that the SABC executive was not arrogant, as alleged by Ms Van Damme

Mr Thekiso said that the skills audit had been carried out by PWC in 2013 and presented to the SABC in 2014. The findings had highlighted specific gaps relating to digitisation, technical skills, customer management, sales and strategic management skills. The 2013 report was relevant now, since the SABC had been given five years to implement the recommendations. He repeated that the current attrition rate at the SABC was 4%, and highlighted that only 146 people had left the organisation in the past year. This meant many employees did not leave until they reached retirement age. The average tenure was around 10 to 15 years.

He expressed his shock over the accusation that he had lied on TV about not receiving notice of the strike. He was hearing for the first time that he had lied on national TV in a 25-year career in the human resources environment. The employees of the SABC could attest to the fact that he was not arrogant or had ever lied to the nation. The nation had been told last year by the leadership of organised labour that there was going to be a total shutdown of the SABC. This was in both the electronic and print media. However, the SABC Board and directors had heard about this for the first time on TV and in the print media. There had been no documentation sent to the SABC’s HR office or the CEO regarding the intended shutdown. For an ordinary South African who depended on the SABC for entertainment, a total shutdown meant that they would not be able to watch their programmes and all services would be suspended.

He went on to quote section 69 of the LRA, indicating what the law said about picketing. Section 69 (1) provided that “a registered trade union may authorise a picket by its Members and supporters for the purpose of peacefully demonstrating in support of any [protected strike]; or in opposition to any lockout.” He said that Members should also understand what a protected strike was. It was a legal strike where the union informed the CCMA of its grievances and was given a certificate to proceed with a strike. However, the employer should be given notice before the strike. Thus what had happened last week was an illegal strike, because no dispute had been declared or notice given to the SABC management.

He further referred Members to Chapter 3 of the ICASA Act relating to regulations for individual licences. He quoted the regulations that related to the hours of operating, which provided that a “licensee must provide broadcast services for 24 hours per day unless the authority had approved a shorter schedule for broadcastin…”’ If these regulations were not provided, a licensee would be statutorily penalised. The reason he had quoted these pertinent provisions was that he wanted Members to understand the legal implications of what the nation had been tol,d and that the Board had to act accordingly since it had not been notified about the strike.

Mr Makhathini concluded the response by emphasising that the Board was committed to save the SABC and would follow the law in all the processes. The executive was working hard to rehabilitate the organisation. The Board appreciated the support of the Committee. For over a year, the Board had been requesting a government guarantee so that it could secure more funding. However, the SABC would collapse in March 2019 if money was not injected into the organisation.

The Chairperson thanked the Board for the responses and for clarifying questions raised by Members. The SABC officials could submit further documents to the Committee on any questions that had not been properly dealt with.

Ms Van Damme said that the PWC skills audit which had been done in 2013 had focused on qualifications, expertise and skills. However, it had not included the salaries of all SABC employees. The PWC audit was now outdated because five years was a long time and many things had changed within the SABC. She asked the Board to conduct a salary audit and to stop relying on the PWC audit.

The Chairperson suggested that the SABC officials should provide more information concerning what Members had raised. More information was vital for the Committee to engage with the Treasury committee to assist the SABC or to secure a guarantee letter. As such, there was a need for the Board to prepare the information on what it required from the Committee so that it could be saved. The Committee would engage further with the Minister after getting a clear picture of what was required.

The meeting was adjourned.