Cricket South Africa forensic report: discussion

Sports, Arts and Culture

13 October 2020
Chairperson: Ms B Dlulane (ANC)
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Meeting Summary

Video: PC on Sport, Arts and Culture, (NA) 13 Oct 2020

The Committee was not pleased with the Cricket South Africa (CSA) forensic report, with Members suggesting it was one-sided because 90% of it was aimed at the former chief executive officer (CEO), and not the other board members. They viewed this as a targeted way of shifting the blame to one person without taking collective blame.

The Committee also expressed dismay at the fact that racial issues at CSA were not being dealt with urgently, as they were painting a negative picture for the country. A suggestion was made that the report be subjected to a third party review, because it was one-sided in its investigations and findings.

CSA representatives who were implicated in the report were asked to recuse themselves from the meeting, which was held via a virtual platform. Members probed the extent to which the report had been kept confidential, and criticised the fact that media coverage had created negative perceptions which would have an adverse effect on CSA in future.

Members asked for details of the disciplinary process which had led to the dismissal of the CEO. They wanted to know what was being done to address the transformation issues raised recently by senior black players. They also urged the CSA to ensure that the person appointed to replace the CEO was suitably qualified to provide leadership to the organisation.

Meeting report

The Chairperson welcomed Committee Members and thanked them for attending the virtual meeting. She gave a brief background of the meeting that was held last week, and the deliberations that Members had had about the Cricket South Africa (CSA) forensic report. Members also discussed whether to adopt the agenda, or give the floor to CSA so that they could give their opening remarks and give comments.

Mr Beresford Williams, Acting President: CSA, thanked the Committee for inviting the Association to the meeting, which would allow it to respond to matters related to the report, and also to clarify a number of operational issues

Mr W Faber (DA) said that it was important for those who were implicated in the report to recuse themselves from the meeting.
 
Mr T Mhlongo (DA) agreed that those implicated had to leave the meeting.

Mr Williams left the meeting because his name was implicated in the report.

Mr B Madlingozi (EFF) was concerned about the departure of CSA members from the meeting, because there would be a possibility that questions would not be answered.

Mr C Sibisi (NFP) said that he concurred with Mr Faber and Mr Mhlongo, but suggested that the Committee be furnished with names so that they would know to whom they should address questions.

Mr Marius Schoeman, Independent Director, CSA, said that Mr Williams was mentioned in the report in connection with a conflict of interest involving a R5 million loan that was made to the Western Province Cricket Association, of which he was a member before he became President, and that Mr Donovan May was not part of the meeting. Those were the two members who were implicated in the report.

Mr Mhlongo raised a concern that it was not only two members who were mentioned in the report. Also, CSA had previously said that the report could not be emailed, but they had made a complete U-turn and emailed the report to the Committee. He wanted to know what had changed.

Mr Faber agreed with Mr Schoeman, but also wanted those board members mentioned in the media to recuse themselves from the meeting in order to protect the integrity of the meeting. He asked why the report had been given to the media, although CSA had claimed that there would be confidentiality in the handling of the report.

Mr M Seabi (ANC) suggested that CSA make their presentation, and Members would raise their questions after the presentation because they were running out of time.

Ms V Malomane (ANC) supported Mr Seabi’s proposal.

Mr Mhlongo insisted that he would like to get answers before CSA made their presentation. Mr Schoeman had said there were only three copies of the report, so he wanted to have clarity on how many copies were available.

Mr Madlingozi agreed with Mr Seabi that the presentation had to take place.

Mr Schoeman said that the report which could not be emailed was the redacted version.

He also introduced Mr Ernest Nekhavhambe, Managing Director: Fundudzi Forensic Services, to explain to the Committee the process that had been undertaken in compiling the report.

Fundudzi Forensic Services presentation

Mr Nekhavhambe said that when they were approached to conduct a forensic report by CSA, there had been terms of reference. Fundudzi had conducted the investigation with its own team, and had extended the investigation because of the lockdown. They had had consultations with the individuals who were being investigated via Zoom because of the lockdown. but once the regulations were lifted they were able to have some face to face consultations. The two individuals who were not consulted were the chief executive officer (CEO) and the chief operating officer (COO) of CSA, due to different reasons.

He confirmed that the report was comprehensive and they had submitted the first draft to the designated people at CSA. They had had meetings with Mr Schoeman, because he was mandated by the board to assist Fundudzi with the investigation.

The investigation of the CEO, Mr Thabang Moroe, had been completed and the draft report was submitted to the steering committee. It was later submitted to the board members. The second investigation was completed around July, and it was given to Mr Schoeman and a board member, Mr Dheven Dharmalingam. Comments were made on the report, and Fundudzi was later asked to submit the report to the Minister of Sports, Arts and Culture. A copy was sent to the Bowmans law firm so that the SA Sports Confederation and Olympic Committee (SASCOC) would have access to it, but they understood that the SASCOC did not get the report. A copy was also sent to the Chairperson of the Parliamentary Committee. He added that the media summary that was prepared by Bowmans could be confirmed as a true reflection of the findings by Fundudzi.

Fundudzi had not been under pressure from anyone or any organisation to conduct the report in a certain manner, because they had done their work without any interference. He was also prepared to answer any questions that Members would have.

The Chairperson thanked Mr Nekhavhambe for the presentation, and asked if Members had any questions that they would like to have clarity on.

Discussion

Mr Mhlongo asked if Fundudzi did not see a conflict of interest regarding the draft report, because it had been seen by CSA’s secretary, Mr Welsh Gwaza, and not by other board members. He also asked if the Ethics Committee took the decision to suspend Mr Moroe, or if it was because of the report.

Mr Seabi acted as Chairperson of the Committee, as the Chairperson was having connection problems. He suggested that Members hold on to their questions until CSA had made their presentation so that they could ask and get full and detailed responses.

CSA Presentation

Mr Schoeman presented the report on behalf of CSA.

He started by stating that Mr Gwaza did not have access to the draft report, and that the board had  suspended Mr Moroe in December of 2019.

Mr Mhlongo did not agree to what Mr Schoeman had said. He wanted Mr Nekhavhambe to respond, because the Committee was getting different responses and it was confusing.

Mr Nekhavhambe said that a draft report had been issued to one board member, and Mr Gwaza had not seen it.

Mr Schoeman expressed CSA’s appreciation to the Portfolio Committee for allowing it a postponement of the Committee meeting on 21 August, which had enabled it the opportunity to address critical issues related to its operations and the forensic report.

CSA had had ministerial engagements on 6, 17 and 31 August of this year.

It would be consulting with critical stakeholders regarding the adoption of some of the Justice Chris Nicholson recommendations, in particular, the composition of the Board. The complete governance review proposal resulting from this process was expected to be tabled before the members’ Council. It included requiring a minimum number of black female members of the Board and members’ Council, the composition of these structures, geopolitical alignment, clarity of mandate of each structure, and the powers of the organisation to deal with non- compliance with its membership requirements.

A programme to enhance the skills in governance of affiliate members would commence from November, with a specific focus to identify and upskill female administrators and board members. No specific end date was envisaged, but development milestones would be reported periodically. The intention was to identify at least 10 candidates to start this programme.

Referring to the terms of reference of the forensic report, he said the forensic investigation had been commissioned by the board following a request submitted by the independent directors to the then chairman of the board. The terms of reference had been signed off by the members’ Council.

Key sub-committees which were critical players in ensuring that there was an effective link between the risk management framework (and activities) and combined assurance activities reasonably relied on management information, and applied reasonable levels of professional skepticism to such information before recommending such proposals for approval by the Board -- and where necessary, by the members’ Council.

Mr Schoeman said that the terms of reference of the forensic investigation had been amended to permit the forensic investigator to provide the board with certain information/report chapters related to the conduct of certain members of the CSA management team, but excluding any information related to the investigation of the conduct of the board and the members’ Council.

The terms of reference required that the forensic report be submitted to the Audit and Risk Committee. The report had been submitted to the three independent directors serving on the Audit and Risk Committee whose tenure did not overlap with the period under investigation, to ensure that no incidences of conflict of interest would arise in the management and implementation of the findings and recommendations.

The Board, under the advice of an external legal firm, had considered the difficult balance to be struck between preventing the harm that may arise to CSA from the publication and possible dissemination of the forensic report, and ensuring that key stakeholders had sufficient access to the information in the forensic report to ensure that they could make decisions that were relevant to CSA, and to hold the Board accountable for taking the necessary action to investigate and implement the findings in the forensic report.

On the matter of selection of players, Mr Schoeman said the initially agreed number of 17 contracted players had been increased to 20. The midyear expiry of three contracts, two retirements and two contract upgrades, had kept the contracted number of players around this mark. A threshold of 18 points was required before a non-contracted player qualified for a contract upgrade. (The weightings for such upgrades were shown at the bottom of Table1).

Discussion

Mr Madlingozi said that seemed like the board had been spending money unnecessarily. The sponsors for CSA were not making a noise about the racial claims that have been raised by black players, and this showed that the board was more concerned with representing the minority. He asked if Mr Schoeman was of the view that the report was made along any racial lines.

Ms V van Dyk (DA) wanted to know how many of the recommendations had been implemented by CSA. It had not transformed at all -- was there data to prove this? Was it true that Mr Gwaza was previously employed by Bowmans, which now rendered legal services to CSA? She also wanted to know what had gone wrong between CSA and SASCOC.

Mr Mhlongo requested that Mr Schoeman forward the roadmap to Members. He asked if Mr Moroe and the COO had been given a fair process, and why some of the board members were not yet suspended. Had Mr Moroe been acting alone, or was he working together with the board? It was not in good protocol for the Members to ask questions, yet some of the board members from CSA were present at the meeting, and he asked the Chairperson to make a ruling so that he could ask his question regarding independent board member, Dr Eugenia Kula

Mr Schoeman said that Dr Kula was not implicated in the report, so there was no reason for her to be absent from the meeting.

Mr Mhlongo asked what had contributed to the profit of R54 million, and what irregularities had been found by the auditors, if there were any? How could an individual with marketing skills replace a member with a legal background? He also wanted to know if CSA’s human resources (HR) policies had been updated.

Mr Sibisi said that he was disappointed by the issue of racism still appearing in the report. It was strange that a black man was being held responsible for the demise of CSA, whereas it was the board that should be held accountable. The whole report was centred on one man, which showed that it was a racial issue.

Mr Seabi said that the report was one-sided. Most of the issues raised were against the CEO, and it did not deal with the other board members. More than 90% of the report focused on Mr Moroe. He asked if the board members had been briefed about the report. If the board did not receive the report, then on what basis had Mr Moroe been dismissed, and were the appropriate procedures followed? He also wanted to know how feedback was given and how was it done, considering that the report was supposed to be confidential. It was not good governance for the company secretary to be involved in some of the matters. Was there any intention to investigate the racial issues that had marred CSA? He asked if there was a roadmap in the Nicholson report.

CSA’s response

Mr Schoeman responded to the first round of questions. He said that the issue of racism was being taken seriously by CSA, and Dr Kula would elaborate on the issue.

The Nicholson Report was part of the agenda of the annual general meeting (AGM) and it was top of the issues that would be dealt with by CSA.

Stakeholder engagement was of great importance, and the report remained confidential. The full report had not been presented to stakeholders. Details in the report would not be released to the media. The steering committee was the oversight committee, and they would oversee the implementation of the recommendations. A nominations committee had been established so that everything was done accordingly.

In his view, the dismissal process had been fair and all procedures were followed to ensure that everything was done correctly. The report had not racially targeted Mr Moroe -- those allegations were unfounded.

Mr Schoeman said that the report had been presented in two parts, and the first part dealt with the issue of the Acting CEO’s dismissal.

Mr Gwaza had been employed by Bowmans 10 years ago, and the decision to make use of Bowman's legal services had been taken in his absence.

On the issue of replacing the independent board member, Professor Steve Cornelius, Mr Schoeman said that the panel dealt with such issues and looked for people with the required skills.

The R54 million profit had been included in the report, and further information would be given by board members from the financial department.

The reason why some board members had not yet been suspended was because they were not employees, and could not be subjected to the same employee rules. In the detailed report there was a timeline that explained the processes taken by CSA, and the current position of the Companies Act.

He said he felt strongly that money should be recovered from those who had misused it, and there was a credit card policy at CSA.

Mr Dharmalingman said that CSA was not a broken organization, and it had had clean audits in the past. The most important thing was working on improving the governance of the organisation.

Any procurement to be done went through the procurement process and was cleared by the chief financial officer (CFO).

On the R54 million profit, the key issue was the content that had been sold by CSA, because it represented the bulk of the revenue. 40% of the CSA budget went to grassroots organisations, and it was important that clubs started playing cricket because CSA was a non-profit organisation. Its main priority was the development of cricket, and looking at it from a profit and loss perspective was not correct.

Management must also take credit for the positive decisions they had made. The AGM should be held as per the recommendations in the Nicholson Report.

Dr Kula said that there was a concept of social justice at CSA. Appointments had been made and a budget of R10 million had been approved. Transformation was at the core of CSA. An advert was going to be flighted, and calls for submissions would be opened. A development impact bonds (DIBs) programme had been implemented in order to make sure that transformation was upheld. They had also met with organisations that had raised issues of racism, and there had been progress.

Further discussion

Ms Malomane asked about the forensic investigation, and if the auditors had interviewed the service providers? Had the board members received a copy of the forensic report, and could they respond if they read it? She also wanted to know who from the board had led the investigation from December up to now.

Mr Faber asked Mr Schoeman if they had plans to recover funds from the provincial structures, because some of these provinces did not have clean audits. It seemed as if there was no system in place to get the money back.

Mr Mhlongo asked when the procurement policy had been updated, and if CSA could share its roadmap. When would board members be asked to resign? He wanted to know why the internal policy had not been implemented for the CEO, as it had also been utilised for the COO. Was CSA aware of any labour disputes in court? He wanted to know the finer details of why Mr Moroe had been dismissed, and about the credit card policy of CSA, and how it was applied before Mr Moroe had been employed. Lastly, he asked why CSA had refused to submit the report to SASCOC, if they accepted that SASCOC was their mother board. The board had thrown one man under the bus, yet it was all of them who were accountable and they should all be blamed, not selectively.

The Chairperson said she wanted to have clarity on why the investigation had chosen to target the CEO and not some or all of the board members. Why was the report said to be confidential, because the matters were all over the newspapers. The way the report had been handled by CSA was difficult to understand, because it lacked leadership qualities. The conduct of CSA had not been respectful towards the Committee. The report was one-sided, and did not reflect the true nature of events at CSA. She said the report was not a true reflection of the state of affairs at CSA, and there were inconsistencies in how CSA had dealt with some issues, especially the credit card policy, because there had been no policies in place before. It was difficult to determine how CSA was working, and if there was a solution on when school children would even be able to start playing cricket again, since the country had moved to level one of the lockdown. The way in which CSA was dealing with some of the issues, it was difficult to ascertain if anything would be achieved from the meeting.

Ms Van Dyk asked why the report had not been given to SASCOC, and also why the Minister had not shared the report with SASCOC.

Mr Madlingozi asked about the names of directors who were not mentioned in the report. He asked if the disgruntled players had been compensated by CSA.

Ms R Adams (ANC) asked how the newly appointed ombudsman would tackle the issue of racism. Was CSA in the process of securing new sponsors, and how did it plan to survive financially after losing sponsorship? Had the federation tried to stop the mass resignations of senior members from CSA?

CSA’s response

Mr Schoeman said that the investigations were done by Fundudzi, and no one from CSA had been involved.

Ms Vuyokazi Memani-Sedile, Independent Director, CSA, responded to the questions that dealt with HR.
She said that he had gone to the Labour Court and lost the case because the court ruled in favour of CSA. The CEO’s contract followed a different route from that of the COO, because the board had written to the CEO on the matters that they wanted to address with him, and he had been given an opportunity to to be present. He had not agreed with the process, and the Labour Court had said that the contract process should be followed. There was a disciplinary process, and it had been updated.

Mr Mhlongo asked who exactly had taken the decision to terminate the contract of Mr Moroe, because there was no clear indication of who had taken the decision and when it was taken. He wanted to know how Mr Moroe was dismissed.

Ms Memani-Sedile said she was appointed only in May, and might not have all the details on the meetings that might have taken place prior to her appointment. She said that the process to be followed in terms of the CEO’s disciplinary issues was well documented in the contract, and policies were undergoing review and updating at this stage.

Mr Faber said that he had not yet received an answer to his question on the money allocated to the provinces. He said that it had to be noted that Mr Moroe did not have the relevant qualifications to be appointed as CEO according to the requirements of CSA, so how had it been possible to appoint him? Those who had appointed him should also be held accountable.

Dr N Nkabane (ANC) said there was a clear lack of integration in the approach from CSA. Some of the board members were mentioned in the report, and it was a concern that the CSA board had failed to perform its duty. There was a need to get advice on what should be done to the board, since they had not managed to fulfill their mandate.

Mr Sibisi wanted to know what had been done by CSA when the report did not reach SASCOC, and if they accepted that SASCOC was the mother body. He also wanted to know what was being done to attract sponsors.

The Committee agreed to look into the matter of how the COO of CSA had been granted access to the meeting

CSA’s response

Mr Schoeman said that distributions were made to cricket affiliates according to the terms of a formula, and the recoverability of funds was a key point for the board. CSA did recognise SASCOC as its mother body.

It was regrettable that there had been so much focus on the report, and it was having a negative impact on attracting sponsors. The incoming England tour was very important especially when it came to broadcasting rights, and the modelling plan of CSA made it beneficial when cricket was played.

He said there must be mechanisms that would make sure that staff were retained.

He reiterated that the CEO had been suspended through a decision by the board after a board meeting, and it was not a decision by the Ethics Committee, as speculated.

The report findings showed that there was more to be done in order to attract sponsorship and stakeholders.

Mr Schoeman said that board members were there to make sure that CSA did well, and it was their duty that they should fulfill their mandate. Poor governance had been highlighted in the report, and there was no doubt that there were shortcomings.

The credit card issue was not the issue used to suspend the CEO, but it had been one of the matters included in the charge sheet. The absence of a credit policy did not mean that one could use the card as one pleased.

The new appointment process would be rigorous, and the terms of reference had been drafted to make sure that nominations could be accepted and an informed decision could be taken.

Investigations had not commenced in December 2019, but the request for an investigation had been instituted in December.

The report was not a redacted version, because Fundudzi did not have any restrictions whilst conducting the investigations.

He said that the issue of corruption cases was being dealt with by the South African Police Service (SAPS).

CSA was willing to work with SASCOC and had invited them so that they could work together and perform oversight duties.

Members’ comments

Mr Seabi proposed that the Committee support the intervention by SASCOC, and that the Minister must be closer to the process, since CSA was running cricket on behalf of the country. CSA had to cooperate with SASCOC. Issues of racism should be dealt with urgently.

Mr Mhlongo asked if the terms of reference had been amended to exclude board members. If they were amended, why were they amended? There was a conflict of interest on the board, because some members were holding other positions. He was of the view that CSA was not in a position to cleanse itself.

He also asked Dr Kula what her view regarding the barometer on cricket was, because schools in the townships do not have access to cricket facilities. He recommended that the report be given to an independent board which would access it, because there were grey areas that needed to be dealt with.

Mr Faber suggested that board members implicated in the report should recuse themselves from the board, because they must not be part of the process.

Ms Malomane wanted to know of the possibilities of the current board stepping down so that a new board could be appointed, because there were some issues that were not being raised.

Mr Mhlongo asked if the forensic investigation was from 2019 or 2016, because there was a need to root out the problems from the past. The T20 event had failed and nothing had been done, and some underlying issues had not been dealt with. The Committee had been misled several times because there was no transparency, especially when it came to the spending of funds.

Mr Seabi said that he was in support of the points raised by Ms Malomane. The report was one-sided because it targeted only the CEO, and 95% of the report was only about him. No proper labour practices had been followed, and it showed incompetence on the CSA side.

Mr Sibisi concurred the views raised by previous speakers, and said that the Committee should not accept the report. He added that nothing had been done in the townships and rural schools to make sure that they could be part of cricket in South Africa. He wanted to know Dr Kula’s views on transformation.

Mr Faber said that the problems had started with the appointment of an under-qualified person for the job, and he had been appointed because of malpractice by the board. He proposed that there should be an internal investigation, and that all the board members implicated should resign. The CEO must be competent to do his job, and since Mr Moroe had been dismissed, Mr Williams should take responsibility. There should be time limits on the investigations that were currently under way so that the Committee did not wait for a long period to get feedback from CSA.

The Chairperson thanked the Members for their contributions and also extended her gratitude to CSA for being able to attend the virtual meeting. She also thanked Adv Jenkins for assisting her during the weekend on how to deal with the report, considering the legal consequences that may arise.

CSA’s closing remarks

Mr Schoeman gave his closing remarks, and said that it was very important to understand the roles of board members, and when they would get involved in the investigation. SASCOC had been invited to offer support, and its input was of great importance. Transformation was a key objective of the CSA, and the money spent for development should be audited to check that the money was well spent and it reached the right areas.

The Global T20 needed reflection on why it had failed, and learn from the mistakes that had led to its failure

There were many challenges for CSA, and they could not be given a blind eye. He also agreed that the board members implicated in the report should step aside and let the investigations be carried out. He would engage with Fundudzi so that Members would be supplied with written answers. The problems might have started by appointing someone who did not meet the necessary requirements, but there were also deeper issues to be dealt with, and the perception that Mr Moroe was being targeted was not true. Time limits would be maintained, because time was of the essence and certain matters had to be addressed before the AGM.

He closed by saying he agreed that CSA needed to work closely with the Minister, and racial issues had to be treated with tremendous care. Appointments had been in line with transformation so that there could be lasting change, not only in cricket, but the rest of the country.

The meeting was adjourned.
 

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