SASCOC Inquiry Report; with Minister & Deputy

Sports, Arts and Culture

12 February 2019
Chairperson: Ms B Dlulane (ANC)
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Meeting Summary

The Committee was briefed by the Department of Sport and Recreation on the Report of the Ministerial Committee Appointed to Investigate Irregularities or Malpractice in the Governance and Management of SASCOC. The Minister and the Deputy Minister of Sport and Recreation were in attendance.

The Committee heard that the Ministerial Committee appointed to investigate irregularities or malpractice in the governance and management of SASCOC had found four key themes from the evidence examined in the Inquiry. These included disputes over the election process for members of the Board, the perks and allowances provided to these Board members, the lack of appropriate checks and balances regarding procurement of services and service providers to SASCOC, as well as the conflict of interest of SASCOC Board members who sat on boards of other bodies with similar or conflicting interests. 

While SASCOC and the Department of Sport and Recreation agreed on the majority of the Report’s findings and recommendations, several points remain disputed. These include the proposed amendments to the National Sports and Recreation Act, intended to clarify and delineate the roles of the Department of Sport and Recreation, SASCOC, as well as other national sport and recreation federations. Moreover, amendments to SASCOC’s constitution to include criteria for the eligibility of members to the Board, prohibition of receipts of commissions from other entities, as well as other issues relating to conflicts of interest within SASCOC. Finally, the recommendation that SASCOC Board members not serve more than two four-year terms was also disputed.

The Committee asked questions about timeframes for the implementation of recommendations of the Report, cost of the inquiry, implementation of the recommendations, the consequences of the personal benefits received by Board members, why the Minister had allowed SASCOC to hold its December 2018 Annual General Meeting (AGM) in light of the serious issues SASCOC was facing, and she had attended the AGM.

The Committee was told that there were no timeframes attached to the implementation of the Report’s recommendations yet – it was hoped that implementation would be complete by April 2019. Members ere informed that a separate forensically audited investigation was needed in order to determine the nature and consequences of personal benefits received by Board members, as well as Board members’ conflicts of interest.

Meeting report

The Chairperson apologised for the Department’s delay and welcomed members.
The Chairperson proposed that the agenda be changed to deal with the second agenda point – the briefing – first.

This proposal was supported.

Opening Remarks
Ms Thokozile Xasa, Minister of Sport and Recreation, began by providing a background. She explained that the former Minister of Sport and Recreation, Mr Thulas Nxesi, had appointed a Ministerial Committee (MC) in October 2017 to investigate alleged irregularities or malpractices in the governance and management of SASCOC. The committee was comprised of retired Judge Ralph Zulman, as Chairperson, Ms Shamima Gaibie, a practicing attorney, as a member, and Dr Ali Bacher as the other member.

Mr Nxesi had contacted the International Olympic Committee (IOC) to indicate that the investigation was underway, and he had subsequently kept the IOC informed of the work the investigation was doing.

Numerous actors and institutions had provided an array of submissions to the MC.

The Minister indicated that Director-General Moemi would outline the report findings for the MC.

After having received the committee recommendations, sessions were held in order to determine what actions would be taken in light of the findings. Those implicated in the findings were also given the opportunity to reflect individually and as structures on the findings.

Department of Sport and Recreation Presentation
Mr Alec Moemi, DG, SRSA, said that the Report, as per the MC, covered four broad themes. It had been an open inquiry, with all members of society having the opportunity to provide information to the Committee.

The first broad theme of the report related to the election of the board of SASCOC at its 2016 quadrennial assembly. This election had raised key questions about whether the board was properly constituted. Disputes also occurred about whether the election of the board had followed the eligibility criteria as per the SASCOC constitution. The opinions of two senior council members advised against continuation of the election process, deeming nominees to have not qualified for election to the board. SASCOC disregarded these opinions and had continued with the election.

The second broad theme of the report related to allowances of board members. It found that board members had received exorbitant allowances and perks, and that these should be compared to similar international bodies to determine a standard of best practice.

The third theme surrounded allegations of mismanagement and corruption. This regarded an investigation into the procurement of services and providers to SASCOC.

The fourth theme referred to conflicts of interest of board members due to some members sitting on boards of other companies that either dealt with SASCOC or had contesting terms of interest to those of SASCOC. The report suggested the Committee seek clarity and investigate benchmarks of international best practice relating to elected members of bodies such as SASCOC retaining positions in the Federations that had nominated them.

Mr Moemi said that the SASCOC Board, as well as individuals who had been implicated had been provided with the report and given the opportunity to make presentations prior to the report’s finalisation, and that the opinions of the IOC and the International Paralympic Committee (IPC) had been canvassed. Both bodies had indicated respect for the ministerial powers to implement an investigation of this nature, and that both had referred to the Olympic Charter regarding issues of interference and investigation in terms of ministerial powers and had seen no issue.

The Chairperson interjected to introduce the Committee’s new researcher, Mr Solomon Mthombeni.

Mr Moemi stated that SASCOC had accepted the majority of the Report’s findings, recommendations, and implementation frameworks according to their correspondence with the Minister.

As such, only the issues of contention would be discussed.

The Ministerial Committee proposed that the National Sport and Recreation Act, that provides SASCOC’s mandate and legal authority, be amended. This was motivated by the need to clarify the role between SASCOC and the Department in order to avoid overlaps. SASCOC disputed this recommendation.

SASCOC secondly disputed certain aspects related to the recommendation to amend its Constitution. These constitutional amendment issues were: changes to the terms of office from a maximum of three four-year terms being limited to a maximum of two four-year terms. The Committee had recommended this in order to inspire greater confidence in potential sponsors by changing leadership and keeping ideas fresh.

Mr Moemi said that eligibility issues in the SASCOC constitution were also noted, requiring clarity regarding a clause stating that membership ceases once a member turns 70. Confusion arises when a member is elected but would turn 70 before the four-year term is concluded, causing questions  of whether membership would be terminated, or continue despite the member passing the 70 years old age limit.

Mr Moemi said the Report sought clarity on the election of the SASCOC President and was another source of contestation for SASCOC. However, certain universal democratic principles related to democratic processes despite its variations and needed to be included in SASCOC’s Presidential election. The example of qualified franchise was referred to.

Changes to eligibility criteria of SASCOC Board members and Ministers needed to be incorporated into SASCOC’s constitution by a General Council approved by SASCOC, not the Minister of Sport and Recreation, who merely insisted on the implementation of this two-stage process as a safeguard for fit and proper leadership structures.

The recommendations made in the Pullinger Report raised issues of inadequate dispute resolution mechanisms available in cases of inter-Federation disputes. The dispute resolution process was outlined. In the case of an inter-federation dispute leading to inability to carry out duties and functions, members within the Federation must first try to resolve the disputes internally. Thereafter, it is referred to a higher structure (for example, the Board of the National Federation of Volleyball). If this similarly fails to satisfactorily resolve the issue, parties may refer the dispute to SASCOC which has to listen and attempt to resolve impartially. Here it would play the role of a Sports Federation, not a national Olympic committee. This was an example of conflict of interest of board members. If there are still disputes, the issue could be referred to the Minister of Sport and Recreation. By the time this intervention is possible, it is often too late and costly to solve. This inefficient process pointed to the need for a new dispute resolution tribunal, operating from a point of first reference before issues worsen.

Another is issue was overlapping mandates. The Pullinger Report was initiated by SASCOC after a failed internal dispute resolution. The Report appeared to not satisfy the SASCOC Board and was incorrectly referred to the Minister of Sport and Recreation. The Minister initiated a commission of inquiry to determine why SASCOC had not implemented the recommendations of the Report, as the Minister was unable to intervene to consider the Report until the dispute was properly referred. The Committee recommended that SASCOC consider the recommendations of the Report and the Minister agreed.

The last issue of contention was the appointment of an “administrator” to oversee implementation of the Committee’s Report recommendations. SASCOC preferred the term “facilitator” and had taken issue with the Ministerial safeguard mechanism as interference, rather than a liaison and implementation aide. The facilitator would be implemented by the time South Africa goes to the 2020 Olympic Games in Tokyo in order for all parties involved to focus on preparation and delivery. After the 2020 Games, SASCOC would be due to elect a New Board, which would be operating under an amended constitution.

Discussion
Mr D Bergman (DA) praised Minister Xasa’s efforts to take initiative and rectify issues in bodies such as SASCOC that had been initiated by former Minister Nxesi. However, how would issues arising from such efforts manage the boundary between interference and support, balanced against encroaching on international sports bodies, as well as the need for clarification of mandates?

SASCOC’s AGM should not have taken place due to the issues of SASCOC’s Board election processes and eligibility. Why had the Ministry of Sport and Recreation not signalled its dissatisfaction more strongly?

Was SASCOC a public or an administrative power? This would affect other sports bodies and needs policy direction and overriding leadership from the Ministry of Sport and Recreation.

Responsibility for national sports facilities lies with the Ministry of Sport and Recreation, how would this be organised in line with budget constraints of subordinate bodies? How would the Ministry of Sport and Recreation take up issues raised in the Committee and apply oversight to bodies such as SASCOC?

How would the highly questionable practice of CEOs handing out National colours be addressed? Since this was not condoned by government, would those who received colours be stripped? Did this mean some who had not received colours had been treated unfairly? Would there be new avenues for appeals?

Who was responsible for ensuring transformation? While the Ministry of Sport and Recreation has an oversight role, sports federations and unions see it as responsible for beginning the transformation process by providing facilities.

What timeframes would Minister Xasa give to rectify the recommendations in the Report? Would criminal charges be laid against anyone implicated?

Would both the Pullinger Report and the Report of the Ministerial Committee Appointed to Investigate Irregularities or Malpractice in the Governance and Management of SASCOC be taken into account to ensure sportspeople are protected from further problems?

Mr T Mhlongo (DA) asked for a time frame in which the Report’s recommendations would be implemented.

What was SASCOC’s rationale behind favouring a three-term limit rather than two?

Previous ministers from the Department of Sport and Recreation had failed to raise issues voiced by the Committee previously.
Why was the company Sedgars still on the SASCOC database? Sedgars had been implicated in giving former Minister of Sport and Recreation, Fikile Mbalula, money to travel abroad.

Did members of the SASCOC Board who appeared before the Committee personally benefit from the instances of abuses of power within SASCOC detailed in the report? These were cases of conflict of interest.

Why did Minister Xasa allow SASCOC’s December 2018 AGM to take place? Was Minister Xasa invited to the December 2018 AGM, if not, why? This related to SASCOC’s announcement of a turnaround plan called the Organisational Development Task Team following the AGM which seemed to contradict the Report’s recommendations.

What was Minister Xasa’s view on the Pullinger Report? He understood that the Minister did not have the power to enforce it, yet how would the situation be remedied?

What did Minister Xasa think of South Africa participating in the 2020 Tokyo Olympic Games in light of the crisis detailed in the Report?

Did Minister Xasa meet SASCOC after the first (December 2018) or second (February 2019) AGM?

What was the total cost of the Ministerial Inquiry into SASCOC?

Mr G Mmusi (ANC) asked why Minister Xasa accommodated people with leadership styles such as those detailed in the Report. They were depicted as unaccountable, lacking transparency, disregarding policy, and having a dictatorial nature.

The Chairperson interjected, saying the question was vague.

Mr Mmusi was referring to the President of SASCOC’s leadership style.

Ms B Abrahams (ANC) wanted to know why the Ministerial Committee of Inquiry Appointed to Investigate Alleged Irregularities in the Governance and Management of SASCOC Report had been watermarked as “secret”?

What mechanisms would be put in place to prevent the interference detailed in the report, for example, the interference in the internal affairs of the South African Football Association (SAFA)?

SASCOC members accepted the majority of the compliance regulations in the Report. What monitoring and evaluation mechanisms would be put in place to ensure compliance with recommendations, how frequently and when would these reports be produced and received?

What reason was given by SASCOC for going beyond the two-term limit?

When will the investigation into the conflict of interest issues begin and when will the report be received?

What was the time frame for the implementation of point 43 in the Final Report of the Ministerial Committee Appointed to Investigate Alleged Irregularities or Malpractices in the Governance and Management of SASCOC regarding further recommendations?

When will Minister Xasa appoint the facilitator?

Mr S Ralegoma (ANC) wanted to know whether the Department of Sport and Recreation had ensured clarity in terms of its relationship with international sports bodies and issues of interference.

It was unfortunate that the end of the Committee’s term of administration was near, otherwise it would have been useful to move fast to amend the National Sport and Recreation Act, which currently impeded the Minister of Sport and Recreation from operating effectively.

Mr Moemi clarified that Minister Nxesi did not seek permission from the IOC to undertake the Inquiry – but had informed them of the Inquiry taking place. This showed that the Department of Sport and Recreation was not submitting to international authorities due to fears of interference. The IOC had responded to acknowledge the undertaking of the Report and asked that it be shared with them. The IOC also had contact with SASCOC as it was an IOC member.

Minister Xasa had no power to prevent the SASCOC AGM. Minister Xasa must focus on the Report and ensuring good cooperative governance principles. It was for this reason that Minister Xasa had not become involved in the employee relations issues raised in the Report.

He agreed fully with the Ministry of Sport and Recreation’s overall responsibility over sports matters.

The Department of Sport and Recreation must take a lead on transformation. The process should not be left to the Federations while the Department of Sport and Recreation pointed fingers. Targets set for Federations were always achievable. The Department of Sport and Recreation should oversee whether targets set by Federations were commensurate with the resources provided to them.

The awarding of colours was not a farce. SASCOC was supposed to establish a national colours board in consultation with the Minister of Sport and Recreation, this had not been done. Minister Xasa had asked to be allowed to finalise the regulations pertaining to the issuance of colours which has not been done. However, there was no intention to rescind colours.

Referring to paragraph 34 of the Final Report of the Ministerial Committee Appointed to Investigate Alleged Irregularities or Malpractices in the Governance and Management of SASCOC, the conflict of interest meant that a separate and forensically audited investigation was necessary to determine how criminal charges would be implemented.

In terms of a timeframe of the investigation moving forward, the bulk of the resolution was of minimal dispute and would proceed quickly. Others would be more long term, for instance, the forensic investigation. Minister Xasa wanted the process to be completed prior to the Tokyo 2020 Olympics.

SASCOC’s rationale for three terms was that it provided consistency in implementation. Most terms of office (such as presidents) were limited to two five-year terms. Much damage had been done at SASCOC within the shorter current term limits.

In terms of the right to trade, the Department of Sport and Recreation cannot arbitrarily refuse any company to trade due to the Office of Chief Procurement Officer having introduced a centralised supply database determined by Treasury. It is for this reason that Sedgars is on the SASCOC database, despite not trading with the Department of Sport and Recreation.

The question of whether Minister Xasa attended the SASCOC AGM was left to the Minster to answer.

In terms of Minister Xasa outlining an opinion on the Pullinger Report, SASCOC had to first express its own opinion on the Report, only then could the Minister respond.

The cost of the Ministerial Inquiry was projected to cost R1.8 million. While attempting to keep costs low, the MC members, staff and witnesses required transport and accommodation. Anything more specific at that time would be impossible to determine until after the audit.

Mr Moemi left the comment about the style of SASCOC leadership to the Minister. This did point to the importance for the Committee to vet fit and proper candidates for appointment.

The ‘Secret’ watermark on the Report was because all cabinet documents were classified depending on sensitivity of the information from the lowest level (classified) to the highest level: top secret. The document had since been declassified but was legally required to retain the watermark.

Mr Gert Oosthuizen, Deputy Minister of the Department of Sport and Recreation, said the Department had attended the SASCOC AGM on 2 February 2019 in order to discuss the recommendations of the Report with the Board of SASCOC. This had been an act of political leadership. Minister Xasa had addressed the SASCOC Board, thereafter recusing the Department from the proceedings of the AGM. There had been no discussion of the Report.

He noted the fine line between interfering and intervening in light of respecting the independence of bodies such as the IOC, SARU, and the Federation Internationale de Football Association (FIFA). Funding must be provided by the Department, and implementation of the funding must be overseen, but implementation must be left to the relevant independent body.

The distinction between sport’s developmental role, and its high-performance role was a matter that needed to be discussed further.

The Department intended to see South Africa at the 2020 Olympic Games, and anticipated success due to Operation Victory Lap and ministerial bursaries that had been made available to athletes.

Minister Xasa reaffirmed the need to ensure South Africa’s sporting bodies remained credible whilst respecting affiliations to international sporting bodies. She drew confidence from the fact that the international bodies had responded to the investigation positively due to its goal of ensuring proper governance of organisations of integrity.

SASCOC would not implement the Pullinger Report. The Final Report of the Ministerial Committee recommended that SASCOC must implement the Pullinger Report. Should SASCOC not cooperate, the Department would have to act to ensure compliance.

The Final Report did not dissolve SASCOC; it stipulated specific matters to be dealt with. Should this not be done, individuals would be criminally charged.

The Minister stressed the importance of the Department’s oversight in order to ensure implementation and facilitation of the Final Report recommendations.

The Department had been invited to SASCOC’s December 2018 AGM but had not attended. The February 2019 AGM involved a Special General Council in order to discuss and give inputs on the Final Report.

The Department would be introducing the facilitator at the next meeting with SASCOC. The proper terms of reference and timeframe would be shared with the Committee subsequently.

The attitude of SASCOC President, Gideon Sam, showed a lack of respect for political leadership and pointed to the need to vet elected officials and nominees.

The Chairperson noted that the Committee had been told not to attend the December 2018 AGM due to the Report being discussed. She confirmed the disrespectful manner of the SASCOC President and noted that SASCOC had degenerated due to the lack of respect.

The Committee saw the Inquiry as a means to leave an outgoing legacy in the important area of Sport and Recreation due to its importance to social cohesion. The Committee needed to uphold its oversight mandate.

Mr Bergman presented an understanding of “transformation” being distinct from “quotas”; quotas being a mechanism of transformation. Transformation was strongly agreed with, quotas were strongly disagreed with.

Mr Mhlongo urged Minister Xasa to avoid contradictions such as those emerging from SASCOC’s December 2018 AGM about a turnaround plan led by the Organisational Development Task Team appointed by the SASCOC Board.

He asked Minister Xasa to clarify whether SASCOC’s role was to adhere to the Pullinger Report.

Minister Xasa responded that SASCOC’s interchanging preference for the Pullinger Report, the Ministerial Committee Report, and the Organisational Development Process Report, as well as the need for a forensic investigation showed avoidance tactics on the part of SASCOC. SASCOC promoted the forensic investigation recommended by the Pullinger Report yet could not commit to implementing the Pullinger Report. This showed a poorly functioning organisation and Board structure in SASCOC. SASCOC had to implement the Pullinger Report.

Minister Xasa asked that Committee Members remain behind to take a photo posing in support of South Africa’s bid to host the 2023 Netball World Cup.

Committee Business
The Chairperson informed the Committee that it would not be able to attend to the second point of the agenda due to time constraints.

The Chairperson thanked the Committee and the meeting was adjourned.

 

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