SASCOC 2020/21 Annual Performance Plan; with Deputy Minister

Sports, Arts and Culture

06 May 2020
Chairperson: Ms B Dlulane (ANC); Mr E Nchabeleng (ANC, Limpopo)
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Meeting Summary

Video: JM: PC on Sports, Arts & Culture & SC on Education, Technology, Arts and Culture, 6 May 2020

Annual Performance Plan (APP) of Government Departments & Entities 20/2021

Transformation of sport was in a dire state because the South African Sports Confederation and Olympic Committee (SASCOC) was in a dire state, and would not be able to remedy the situation until its house was in order. This was the verdict of the Deputy Minister of Sports, Arts and Culture, commenting after SASCOC had presented its Annual Performance Plan to the joint meeting of the National Assembly and National Council of Provinces Committees. The two major issues that needed to be resolved involved the organisation’s governance and financial situation.

The meeting was told that the stabilisation of SASCOC was dependent on the National Lotteries funding, which had undergone changes to its rules regarding funding allocations, and this had resulted in a reduction for SASCOC from R100 million, to R5 million per year. There were disputes involving the eligibility of candidates for appointment to its board, and this had been exacerbated by the delays caused by the COVID-19 lockdown.

Members were generally critical of SASCOC’s performance. They referred to several management and leadership scandals, and asked if the organisation was maintaining the interests of sports bodies or not. It had not implemented several Ministerial recommendations, and questioned what was causing SASCOC not to function. Of particular concern was that the positions of Chief Executive Officer and Chief Financial Officer were held by the same person, which represented a clear conflict of interest. The Committees had not been provided with SASCOC’s financial statements, so how could they provide oversight?

The Department endorsed the Committees’ decision that SASCOC must submit its available financial statements, as well as a report on how it intended to resolve its internal governance issues, by a deadline set for May 13.

 

Meeting report

SASCOC: Implementation of Ministerial Committee recommendations

Mr Ravi Govender, Acting Chief Executive Officer, South African Sports Confederation and Olympic Committee (SASCOC), began the meeting by introducing himself and six fellow board members present at the meeting, and apologised on behalf of the three who were not present. Ms Nocawe Mafu, Deputy Minister: Sports, Arts and Culture, tendered an apology on behalf of the Minister.

Mr Govender took the Joint Committees through a status update on the implementation of the recommendations of the Ministerial committee. The current recommendations dated back to former Minister Thulas Nxesi, who had received complaints from shareholders and put together a mechanism for evaluating those complaints. Former Minister Tokozile Xasa had had a meeting with SASCOC in February 2019, with the initial report subsequently released in July 2019. SASCOC had had a number of engagements with Minister Nathi Mthethwa throughout 2019 -- most recently on 25 January 2020 -- the purpose of which were to engage and reach agreements on some of the recommendations that needed to be implemented, and the updating of SASCOC’s constitution.

There were seven key recommendations in the Ministerial report. These related to the Sports and Recreation Amendment Act, the composition of SACOC’s structure and its mode of operation, the composition of the SASCOC board, the appointment of independent and specialist board members, the management structure, the policy review and administrative matters. There were further matters relating to those seven recommendations -- the Progress Pullinger Report, the National Colours Board, a five-year review of financial transactions, the hearing in respect of the previous executive, a declaration of interest by board members, and a review of the dispute mechanism. SASCOC had had engagements with the International Olympic Committee (IOC) and the International Paralympic Committee (IPC) regarding their membership. They had submitted their comments to the chair of their judicial committee, and held a board meeting on 4 October 2019.
Of the seven recommendations and 42 sub-recommendations, they had complied with 26. Six sub-recommendations were in review, and 10 were outstanding. The amendment of the constitution had gone through a constitutional process, and the amended constitution had been reviewed and approved by the membership on 25 January. The outstanding recommendations were to be completed on staging of the quarterly general meeting (QGM). The stabilisation of SASCOC was dependent on the National Lotteries funding, which had undergone changes to their rules regarding funding allocation and seen a reduction for SASCOC from R100 million, to R5 million per year. The postponement of the Tokyo Olympic Games had not been confirmed yet.

Mr W Faber (DA) expressed dismay that Members had not received the presentations Mr Govender was presenting to the Committee, nor SASCOC’s financial statements, prior to the meeting, and said that they should have had the opportunity to scrutinise them before the meeting. The Secretary of the Committee confirmed that the presentations had been sent the previous week.

Update on QGM and disputes

Ms Patience Shikwambana, SASCOC, took the Committee through the second presentation, which was an update on disputes and the QGM. Before calling for nominations, SASCOC had taken a decision at the Annual General Meeting (AGM) to look at amending its constitution, which was done on 25 January. After the constitution had been approved and amended, a notice calling for the QGM was issued as per the set timeline of 60 days, as provided in the constitution. Key information for the process was sent to the members, and all constitutional requirements and documentation compliance was outlined to them. An external audit firm was appointed, as required by the constitution. An independent nominations committee was appointed to evaluate and report on the nominations received. The external audit firm had fulfilled a role like a post office, whereby all nominations were sent to them, and checked that all requirements were met.

After receiving all the nominations by the deadline, the list was submitted to the acting CEO, which was then handed over to the nominations committee. The members of the nominations committee were all independent. A final report was submitted and of those nominations, five were reported to be non-eligible, as three were received outside of the prescribed timelines, and two were non-compliant with the documentation requirements. The dispute resolution process was done in compliance with the constitution. An arbitrator was appointed to look at the complaints received around not being eligible. The SASCOC board resolved not to oppose applications, and provided the constitutional process to be followed and all the required information and documentation.

The arbitrator had been in favour of all those who were not eligible, to qualify for the SASCOC elections. On the complaint of Ms Muditambi Ravele (Chairperson of the South African Women and Sport Foundation), it was clear from the beginning of the nomination process that the nominee needed to obtain a signature from the president and secretary-general of the federations to which they belonged. Ms Ravele had written to the Minister, and alleged that she was being blocked by SASCOC’s acting President, Mr Hendricks. When the Minister received the complaint, it was referred to the SASCOC board to be looked at. The board had sought an independent legal opinion regarding the complaint, and the opinion that Ms Ravele should be allowed to raise a dispute for arbitration was accepted.
Tennis South Africa informed SASCOC that it would be doing its own investigation in respect of its president and Ms Ravele, and in the meantime both had been asked to take voluntary leave of absence while the investigation was under way. The outcome of the investigation was that Mr Hendricks was asked to make a representation to the board on taking voluntary leave of absence, which he did not accept. The QGM that was scheduled for 28 March was postponed due to COVID-19. The non-eligibility of nominations dispute was concluded, and thus had no impact on the QGM. The dispute relating to Ms Ravele was in progress and was expected to be concluded soon enough for the QGM to be set for after the lockdown period. It was also expected that the investigation into unprofessional conduct and breach of code of ethics would also be completed before the QGM was held.

South African Sports Coaching Association

Mr Govender briefed the Committee on the South African Sports Coaching Association, describing the body’s mandate, core activities, interim board structure, membership, relationship partners, core responsibilities and steps going forward.

Mr T Mhlongo (DA) interrupted the presentation to request that Mr Govender present the association’s financial statements, and the Chairperson concurred with the request.

Mr Govender said the presentations were being provided in accordance with the invitation SASCOC had received, but went ahead to the funding overview section of the presentation. SASCOC’s financial year had ended on 31 March.

They were in the process of auditing of their financial statements, and hoped to finish the by August. Their current projected cash inflow for 2020/2021 was R39.3 million, which was made up of money received from their sponsors, including the National Lottery Commission, from which they were expecting R5 million, the Department of Sports and Recreation, Arts and Culture, from which they were expecting R11.2 million, an annual grant from the IOC of R17 million (at the current rand/dollar exchange rate), a sponsorship from City Bank via the IPC of R2 million, a National Olympic Committee activities grant of R1.5 million, and an administration grant from the IOC of R675 000 (at the current rand/dollar exchange rate).

While their incoming cash flow prediction was R39.3 million, their outflow forecast for the same period was R47.4 million. That indicated that they had an operating deficit of just under R8 million. These figures excluded the cost of games delivery, unfunded mandates and any other activities that fall outside of their core activities, such as the legal disputes and challenges that they faced, for which they had not budgeted.

Discussion

Mr B Mamabolo (ANC) referred to the letter that Ms Ravele wrote to the Minister, alleging that the acting president of SASCOC had tried to block her candidacy. How powerful was the position of the acting president of SASCOC, to the extent that they could block another candidate? In terms of their constitution, only one person from a federation could contest a person’s candidacy for the SASCOC board. The acting president at that stage, Mr Hendricks, and Ms Ravele were from the same federation, so were they allowed to compete for one position when coming from the same organisation? Some board members had been in office for more than three terms -- was the board not considering limiting those terms? The Olympic and Para-Olympic Games had been postponed to 2021. What logistical preparation was being done outside of the finances to prepare for those events? 

Mr Mhlongo said that SASCOC had failed its mandate and the community. He referred to the SASCOC judicial body, and asked who the members were, how they were appointed, and when they were appointed. Was SASCOC considering having its elections digitally? SASCOC had endured several management and leadership scandals – were the members maintaining the interests of sports or not? They had not implemented seven Ministerial recommendations, and there were still ten outstanding. What was causing SASCOC to not function? They were on the verge of bankruptcy. According to the report, they had received R22 million from Tokyo Gain – who were the members of this company, and could SASCOC survive without the money?

Mr B Madlingozi (EFF) referred to the news all over the media about the disputes that were going on within the board members, and asked how the Committee could believe the organisation could pull through and manage athletes. Was SASCOC assisting young black sports women and girls? He sought some clarity regarding SASCOC’s financials, and suggested the entire board undergo evaluation because it was not functioning. How many women were on the board, and were they committed to progressing young women and girl athletes of South Africa in their endeavors?

Mr C Sibisi (NFP) referred to the five members who had challenged their disputed candidacy through arbitration and won their cases, and asked why their candidacy had been disputed to begin with. Could SASCOC transform sport in South Africa, considering it was a huge task, while their performance was being put into question and there were other issues, such as disputes over candidacy and not being able to produce financial statements?

Ms V van Dyk (DA) asked what the IOC’s response to the Minister’s letter had been. Would Mr Hendrick’s transgressions be investigated? Had the board complied with their powers and authority? Was the board divided on this? Did the board follow due process? What was the Operation Excellence funding status?

Mr M Seabi (ANC) referred to the fact that the acting CEO of SASCOC was also the acting chief financial officer (CFO). Was this acceptable, or did it not go against the principle of good governance? Was the board of SASCOC in its current state able to progress with plans for the transformation of sport, especially with plans for the Tokyo Olympics 2021? He requested that SASCOC submit their financial statements to the Committees so that they could work with them. What were the timeframes of the suspensions of SASCOC members, or were they suspended indefinitely?

Mr M Bara (DA, Gauteng) said that SASCOC had been in the media for the wrong reasons, relating to poor governance. As they had been entrusted with the mandate of transformation across all sporting codes, he suggested that there should be an intervention because their failures were worrisome. He requested that when the Deputy Minister gave her input, she should make suggestions of what interventions could be made regarding replacing the current board with a reputable, respectable board. He echoed Mr Seabi’s statement that the acting CEO of SASCOC was the acting CFO, and asked if this represented a conflict of interest, and wanted to know how this was viewed by the Department. What was the relationship with the organisations associated with SASCOC? Was SASCOC not undermining those affiliated organisations because they were not in order themselves?

Ms D Christians (DA, Northern Cape) said it was difficult to assess SASCOC’s progress to date, because they had not given the Committee a detailed report on their financial performance, and she wanted to know why this was the case. The Tokyo Olympics had been postponed, but did SASCOC have a financial plan in the meantime?

Ms S Luthuli (EFF, KwaZulu-Natal) asked SASCOC to explain why their presentation at this meeting had not addressed their performance indicators and financial statements.

Co-Chairperson Nchabeleng asked when SASCOC would provide their quarterly report, pointing out that the Committee could not monitor what they did not have.

Ms M Gillion (ANC, Western Cape) said that SASCOC was failing the country in terms of the transformation of sport, which was not happening at the speed that people wanted it to happen. In their role as oversight, Parliament could not be silenced. She asked if the board could be dismissed and an interim board put in place so that SASCOC could get their house in order at their AGM.

Ms N Ndongeni (ANC, Eastern Cape) asked how many vacancies SASCOC had. What was the status of their current presidential elections? Was it free and fair?

Mr Faber commented that Mr Barry Hendricks had already said SASCOC was on the verge of financial bankruptcy, and that there were a lot of conflicts of interest within the board. One example was Mr Skhosana, who was on the Lottery Distribution Board, and the presentation had highlighted that there was almost no money coming in from the Lotto. If such a person would stand for chairperson of SASCOC, all the other federations would be hanging back because this specific individual might be able to provide money from the Lotto to their federations. Was this not a conflict of interests, when it came to voting within the board? Mr Govender had said on radio not too long ago that SASCOC had not had a CFO since 2016, but now that they were in an Olympic year, their website had not been updated. Why had it not been updated? Members had been told that it was for operational reasons. Mr Hendricks had asked who the members of SASCOC’s judicial body were and when they had been appointed, because this body had not been in existence when he left.

The Chairperson referred to the postponement of SASCOC’s conference due to COVID-19, and suggested that if the pandemic lasted till next year and they were not able to have their conference till that time, something must be planned in the interim, such as having virtual meetings in future. She said SASCOC needed to work for South Africa, and have its AGM as per its mandate. The state of SASCOC was that they were about to be bankrupt while not having their financial statements in order, and had constant court battles which were condemned by its constitution. The Committee wanted SASCOC to have a new board, and she asked the Deputy Minister if they would be able to prepare for it. She asked for responses from the Deputy Minister and SASCOC.

Deputy Minister’s response

Deputy Minister Mafu said she would give a general response, and allow SASCOC to provide a more detailed response.

SASCOC was entrusted with the work of ensuring that sport in South Africa was in good shape. If anything was wrong with the board, it affected sport across the country. SASCOC was a national coordinating macro body for high performance sport in the country. It was also an Olympic committee and was responsible for preparation for the Olympic Games. Lastly, it was a sports confederation. This clearly demarcated the scope of the work with which SASCOC was entrusted.

SASCOC had been in the media and the public domain for the wrong reasons. The Ministry and the Department had intervened for a long time, during the terms of office of three different Ministers. They had come back with recommendations and asked SASCOC to implement them. At their AGM in November 2019, when the Minister addressed them, they were told to put their house in order. On 25 January, they had to amend their constitution to be ready for their elective conference, which occurs every four years. That conference was brought forward to March, although it was meant to take place in September, because they realised the issues they were dealing with needed to be resolved sooner. The conference could not be held due to COVID-19.

As a Department, they acknowledged they could not intervene on sports issues because this would be perceived as interference. This also explained the accusations regarding the elections, as the Minister had written to the IOC to intervene and their response had been that SASCOC must resolve its own issues. It must be put on record that the IOC responded that SASCOC must act independently and resolved its own issues, and not have Ministerial interference. Without the election occurring in March and the lockdown situation, one could not wait indefinitely for the conference, so the Ministry, SASCOC and Committee Members had to put their heads together and determine a different manner to resolve the conference issue.

SASCOC’s financial year had ended in March, so they did not have statements, but they should have an audited financial statement that would have been presented at the March conference which should have been ready. Could SASCOC members assist and get that part presented to the Members? How could they do their work without the financial statements?

Transformation of sport was in a dire state because SASCOC was in a dire state, and they could not fix it until their house was in order. In response to the request that the Minister intervene directly, she said that SASCOC was an independent body and due to the separation of functions, all other options would have to be exhausted before government could intervene. What could be done now so that SASCOC could return to fully performing its function?

SASCOC’s response

Mr Jerry Segwaba, SASCOC board member, responding to Mr Mamabolo’s questions, said Mr Hendricks and Ms Ravele were not from the same federations. With regard to the Tokyo Olympics, Mr Govender’s report had stated that due to COVID-19, the Olympic Games would postponed to 2021. The preparations SASCOC was taking for those games were all on track, and a report could be provided on the mitigation factors they had put in place.

Mr Kaya Majeke, SASCOC board member, referred to the question of transformation in sport, and said that this emanated from the various federations themselves, where transformation should be seen in terms of meeting the demographics of South Africa in respect of their development plans for black and women athletes. Regarding the state of readiness for the Tokyo Olympics, they had a plan for the 2020 games prior to the COVID-19 lockdown, and the process they needed to embark on was to engage those federations that had already qualified for the Olympics, and those earmarked to qualify. The process that they embark on as the Olympic Committee was to engage the coaches, the national federations and the athletes themselves. SASCOC’s high-performance department was working on meeting with all those relevant parties so that it could develop revised plans, and did not miss out on its new strategy being ready for the Olympic Games next year. 

Ms Cecilia Molokwane, Netball South Africa President, said there were four women on the 12-member board -- herself, Ms Lwandile Simelane, Dr Debbie Alexander and Ms Natalie du Toit. She had not been eligible to stand for candidacy, due to not submitting a copy of her Identity Document (ID). Other members were considered ineligible for not submitting their good standing forms from their federations. The members who were ineligible to stand for candidacy had been Mr Aleck Skhosana, from Athletics South Africa, Mr Farrell Moses, from the Northern Cape Sports Confederation, Mr Jerry Skhosana, from Free State Rugby, and herself. In response question regarding members’ terms of office, some had been in office for only months, while others had been in office for a long time.

The financial year had ended on 31 March, and they had to provide an audited financial statement to Parliament. She committed to have a condensed financial statement submitted to the Committee by 13 May, for them to report back on.

Regarding the conflict of interest issue, with the acting CEO also being the acting CFO, SASCOC had come to an arrangement whereby Ms Patience Shikwambana performed an administrative role and the acting CFO did the work related to the finances of SASCOC. According to good governance principles, this practice was not correct, but that was the measure the SASCOC board had put in place in the meantime.

Mr Segwaba commented on the conflict of interest issue regarding someone not being eligible to stand or contest the candidacy, and said that SASCOC’s constitution clearly stated who was eligible to stand for elections. There was no policy currently that prevented a board member of SASCOC serving on the National Lottery Commission. If there was a potential conflict of interest, he committed to referring the issue back to Parliament so that a policy could be implemented. The SASCOC constitution was clear that each member was allowed to serve for a maximum of three terms in the same position, but after 12 years they could only stand for a position that was different.

Mr Govender responded on the perceived conflict of interest between the CEO and CFO positions, and said that the CFO position was vacant. He was the accounting officer, and there was a segregation of duties and adequate controls. SASCOC had had a clean audit for the last two years.

The Chairperson interjected, and said that Mr Govender’s statements regarding their audit could not be confirmed because they had not been given SASCOC’s financial statements.

Ms Shikwambana responded to the question Mr Mamabolo had posed regarding whether only one person from a federation was allowed to contest the candidacy. She said that more than one person may be nominated, but only one person from each federation may be on the board. Advocate Willem Eerling was the chairperson of the judicial body of SASCOC, appointed by the board as per the constitution, with about five or six members. When the judicial body was put in place, it had been presented to the general assembly, which was the highest decision-making body of the organisation, given the power to create a judicial body. There was an issue of demographics, and the board had been given the task of finalising the judicial body. Regarding whether Mr Skhosana was eligible to contest candidacy for the board, he was no longer part of the National Lotteries Commission.

On the issue of the audit, SASCOC was using its own auditors, Mazars, who had been asked to receive nominations and check whether the requirements had been met as per the checklist, to ensure due process was followed. In response to the issue of why the non-eligible candidates were not accepted initially, if the auditors did not receive certain documents in accordance with the checklist, those candidates were disqualified.

There was a difference between Tennis South Africa and SASCOC’s internal processes. Tennis South Africa had gone through its own internal processes to put their acting president on leave of absence, which had nothing to do with SASCOC.

SASCOC had a high-performance commission which meets and talks every single week to look at what type of support was needed for athletes who had potential to make it at the Olympic Games. By virtue of the Games being postponed they were meeting to make plans, but doing so with the national federations.

Mr Mhlongo said that his question as to whether SASCOC could function without the money from the Lottery had not been answered. He followed up with a question with regard to SASCOC’s judicial body that was appointed at their AGM – which AGM was this, and what was the judicial body’s mandate?

Mr Majeke responded that in terms of the sustenance and viability of the Olympic body, he fully concurred with Mr Mhlongo’s concerns. Looking at the number of sponsors that had featured in the past, they could conclude that SASCOC could not survive without the Lottery. He urged Members to take note of the funding from the Department of Sport and the IOC through the Olympic Solidarity Fund.

He highlighted that it was important that when they appointed people to run the organisation, they had to identify individuals that had relevant qualifications and would add value towards the sustenance and viability of the organization, and change SASCOC’s status quo. Regarding the amendments raised by the Olympic Committee with the IOC, the board had resolved that Mr Govender and Ms Shikwambana must communicate quickly with the members of the board so that the amendments could be adopted as soon as possible, and should expedite the process so that elections could go ahead. The only mechanism to change the status quo was to go ahead with the elections.

Ms Shikwambana responded that the judicial body’s membership list had been presented at an AGM on 8 June 2019.

Deputy Minister Mafu asked SASCOC to submit the financial statements they had in a week from the current meeting date, which was 13 May. She believed that SASCOC needed to be given timeframes so that they could see if they were not following what the Committees were saying. Mr Mhlongo’s question about having enough funding was difficult to answer if they did not have financial statements to refer to, but she believed they would have some form of financial statements due to their preparation for the upcoming election.

The conflict of interest arising from the acting CEO holding the position of acting CFO was a serious governance issue which they needed to resolve and submit a written report on, so that there was evidence of the matter being taken seriously and being resolved. The two major issues were about funding and governance. The transformation issue could be resolved only once SASCOC had put its house in order.

Mr Seabi supported the view of the Deputy Minister that they needed to prescribe a due date for SASCOC to produce their financial statements, and proposed that the due date be 13 May. He further proposed that SASCOC produce a formal report on how they had dealt with the conflict of interest issue regarding the acting CEO being the same person as the acting CFO, also to be submitted by 13 May.

The Chairperson concluded proceedings by asking the secretaries of both Houses to look at the agenda for the following days and correlate future activities with the Members. She emphasised that the Committees had to work together to achieve their goals.

The meeting was adjourned.

 

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