SABC on going concern addressed by AGSA; SAPO and Postbank on contract value chain and cyber security incidents; with Deputy Minister

Meeting report

Opening Remarks by the Deputy Minister

The Deputy Minister of Communications and Digital Technologies, Mr Philly Mapulane, thanked the Committee for finalising the list of members who will be serving on the South African Broadcasting Corporation (SABC) board. He said he understood that there was a consensus by all the parties represented in the Committee, which embodies well for the future of the SABC and reporting. SABC has been without a board since the end of October 2022. So, the sooner this is finalised, the better. The Department is in the finalisation stage for both a SABC Bill and a South African Post Office (SAPO) Bill. Both the Bills will be tabled as soon as Cabinet has finalised them. There has been support for both Bills.

The presentation will show that the entities are struggling financially. This is due to structural constraints that it has faced. The SABC has a public mandate, but it also has commercial activities. In the SABC’s view, the public mandate is not sufficiently and adequately funded. The Bill will seek to ensure that the public mandate is sufficiently and adequately funded and to separate it from commercial activities. This will allow the SABC to sustain itself but also to respond to the challenge of the collection of licenses. This has an impact on the financial viability of the entity. The Bill is important for this. If it is adopted, it will help to reposition the entity and to ensure that it is sustainable and viable. He indicated that the next financial year would be the SABC's last implementation of the turnaround plan (the bailout). The Committee has been receiving quarterly reports on the work the SABC will be doing.

Briefing by the South African Broadcasting Corporation on going concern

Mr Madoda Mxakwe, Chief Executive Officer, SABC, informed the Committee on what the presentation will cover and who will be presenting.

Ms Yolande van Biljon, Chief Financial Officer, SABC, took the Committee through the forecast – assumptions, reviews, risk and mitigations.

She said that numerous key revenue generation initiatives were included in the revenue improvement plan. These were expected to generate revenue in the later part of quarters three and four, but the SABC has yet to realise that revenue. The full benefits will not be realised, as the implementation date has been revised, and no detailed benefit realisation is available. Most expenditure line items will be subject to continual review, and there will be spending rationalisation to manage cash flows. There may be a further material reduction from the current forecast areas. Whilst critical positions are to be filled, from the previous trend, vacancies and attrition are more than likely to follow a similar trend.

The projected risked net loss for the year is R608 million versus a budgeted profit for the year of R64 million. Overall revenue is below budget by R1 billion. The amortisation costs are anticipated to be above budget, mainly due to FIFA Qatar World Cup sports rights. There are 238 critical vacant positions.

Mr Merlin Naicker, Group Executive: Video Entertainment, SABC, went through good products, improved services, brand experience, and audience growth.

Mr Ian Plaatjes, Chief Operations Officer, SABC took the Committee through SABC’s revenue mitigation plan.

[See presentation document for further details]

Briefing by the South African Post Office: Contract Value Chain

Ms Nomkhita Mona, Group Chief Executive Officer, SAPO, informed the Committee what the presentation would cover.

Mr Geert Bataille, Acting Executive Group Strategy, SAPO, took the Committee through contract management in terms of South African Social Security Agency (SASSA), and what the procurement regulations say about irregular expenditure and financial misconduct committee.

Mr Lucas Ndala, Interim Chief Executive Officer, Postbank, informed the Committee on the integrated grants payment system solutions (IGPS).

In 2018, Postbank, whilst still a division of SAPO, went out on tender for the procurement of IGPS to process social grant payments on behalf of SASSA for a period of five years. The contract was awarded to FSS Technology (FSS) and Electronic Connect (EC) Joint Venture at a cost of R43 294 500. The joint venture split was 70% Technical for FSS and 30% Admin for EC. In early 2021, FSS approached Postbank, requesting permission to cede the contract to its partner, EC. Due to the fact that the contract was entered into under SAPO, Postbank had to first conclude a cession for a contract to be under its name, and the cession was accordingly concluded in February of the same year. A cession between FSS and EC was concluded with the approval of Postbank in May 2021. After taking over the contract, EC raised the matter of the switching component of the system not being part of the contract, and demanded payment for the years Postbank used IGPS switch without paying for it. Failure would result in the switch off of the system.

To mitigate the risk of switch off and national disaster, Postbank signed heads of agreement with EC for the switch capability to ensure business continuity and to give effect to processing payment. The heads of agreement is not a contract. Postbank was supposed to approach National Treasury for support to enter into a switching contract and subsequently obtain approval internally to ensure that a formal contract for the switching capability was concluded. That was done even though payment continued to be made based on the heads of agreement, which resulted in irregular expenditure. Actual Payments made to EC concerning the switch amounted to R76 341 702.12, as of 31 January 2022. Invoices from February until April 2022 have not yet been paid. The total of these invoices amounts to R13 940 328.90. Invoices for the period May until October 2022 have not yet been received. These are estimated at R27 880 657.80.

[See presentation document for further details]

Briefing by the Postbank: Cyber Incident Report

Mr Ndala said that the Postbank had experienced multiple fraudulent incidents on the SASSA beneficiary grant payment system. The Auditor-General has flagged the system as having controls weakness. A concerted effort has been made to address these system deficiencies since the grant system contract was ceded to Postbank in 2021. The intervention has resulted in the amount of cyber fraud incidents reducing significantly. Postbank is in the process of implementing the long overdue information technology (IT) modernisation project to address the shortcomings.

He took the Members through the cyber incidents ranging from October 2021-October 2022. Privilege accounts passwords have been reset and control was taken by the Postbank. The incidents are under investigation by an independent forensic investigator.

[See presentation document for further details]

Discussion

Mr T Gumbu (ANC) asked when the forensic investigation results on the cyber security and fraud will be made available.

Ms D Kohler-Barnard (DA) said that the business between the SAPO and the Postbank is very blurry concerning the SASSA operations. She wanted to know what the bottom line was. What is the SASSA business currently bring to the SAPO coffers? Has it been taken over completely by an independent Postbank? What does it stand to lose? The Postbank has just lost itself R100 million due to corruption. She asked how much corruption there was regarding the SASSA payouts.

She noted that there was mention of working with Hawks, and investigations being underway. She asked what amount it was looking at. She was fascinated by this business moving the contract from one company to another midterm. Did it have to obtain condonation from National Treasury? It gave the EC room to sue by handing over the FSS technology contract to them. There is someone behind this massive financial bungle. Who is it, and has that person been dealt with? If so, what was the outcome?

The cyber incident report in the Postbank is horrible. There was around a R100 million lost, yet there is still this thought that the Postbank is ready to become a fully-fledged bank. There are losses of huge bags of cash on distribution days for SASSA. She asked what the status and number of these criminal cases were. Have any arrests been made? There is some sort of criminality that seems to be a looting spree. She asked for the case numbers of the various cases that have been opened. She wanted to follow these cases. She asked for more detail on the SASSA incidents of fraud. The Committee needs to be able to understand what is going on. Oftentimes, it sounds like an inside job. She said she had not heard anything about arrests or people going to jail. It has to overhaul the IT system. What will the costs of this be? There is no indication of this whatsoever. Hundreds of millions are spent on IT systems. There seems to be so much blame on this company called Oracle. Is it the company leaking passwords, or is it just clever hackers? She asked for more details. Cyber risks are massive for any bank, and the end should not be to reduce the losses via cybercrime. The aim should be to stop it completely. She suggested that there be a massive IT plan. Is it not the SABC’s job to factor in all possible risks?

The entire presentation makes it looks like a wish list with the so-called de-risked forecast. It projects a R608 million loss. The performance of advertising revenue is far worse than what the Committee saw in the previous year. It seems as if SABC has never really factored in competition, which becomes huge as the days go by. The advertising revenue has dropped because of competition as their programming is more attractive. This forecast is bleak and worse than the previous year. Did the Minister present any research around the analogue switch-off? What was done to mitigate against that? It is said that it has a massive inventory that it is able to sell more than it is capable of selling. What has happened to the inventory that was returned to the SABC? What percentage is obsolete?

She said that she is assuming that there is a team to study the audience of competitors concerning the specific genre of programming (weekend shows that will be introduced). She does not know if it will be a big revenue generator, as stated. How much airtime is SABC giving away? What is it getting in exchange for that? She asked the SABC about its repeat programme. This is now attractive especially because of loadshedding. However, this is something that is being pushed for the new SABC plus. How is it going to generate sufficient revenue to justify it?

Mr L Molala (ANC) said that SABC had reported a net loss of R608 million. His concern is that it has been having a net loss for the past three years. There has never been any improvement. What is SABC going to do to improve this situation? It is not sustainable to have such a big loss.

Mr Molala raised a concern about the streaming programme and that an alleged American expert has been appointed. Are these services of streaming not available in South Africa? Why would it choose somebody from abroad? There are about three to four issues that need board approval. He did not understand this. He understood that all planning is done in a financial year and has to be approved. Is this a new programme? Why is it still waiting for the board?

He also raised his concerns on consequence management for SAPO. Why is it only forming a financial misconduct committee now? Was there no such committee in departments (irregular expenditure committee)? It must indicate this to the Committee, because there had never been this committee for the previous three years. Why is it being established now?

He asked for progress on the forensic audits. There is a mention of the R89 million lost due to fraud and the involvement of Oracle’s system. As far as consequence management is concerned, is Oracle not liable if something happens to its system? Or is it part of the investigation on the Postbank? He asked why KPMG is being used if it has a reputational issue.

Ms T Bodlani (DA) asked how the Department or SABC are engaging with Eskom, especially since there is a loss of audience consumption because of loadshedding. How is loadshedding affecting the entity? The plans presented do not show any relation to this. South Africa will be struggling with loadshedding for the next six years.

What were the criteria used for ceding contracts from SAPO to the Postbank? The presentation received today from the Postbank is just a reminder and perhaps validation that, in as far as trying to get their license and being a fully-fleshed bank, the amendment bill will not be an antidote because the system is failing. There is nothing to correct these things.

Responses

Ms Mona said that the financial misconduct committee was not only established at the behest of the Auditor-General. It was established in 2012, but there has been a year or two when it has not been active. It has been revived. It is not only there to deal with issues of consequence management. Business units are looking at cases, and the process is still underway in terms of accountability. It looks at when the irregular expenditure started and why it started.

Mr Ndala said that the forensic report would be delivered in two phases. The first phase concerns some of the contracts that have been entered into, which are expected to be done in December 2022. The second phase touches on the forensic audit of some fraud incidents, which is expected to be done in February 2023. The Department will be able to deliberate more on this process. It is now in conjunction running this process with the Department. The Department will be able to guide on what will be shared with the Committee. It has reached out to all major companies that provide forensic services. Unfortunately, most companies could not get signed off with the Auditor-General. It engages with the companies, and then it has to go to the Auditor-General to sign off on whether the company can do the work or not. Most of the companies approached could not get signed off; KPMG is the only one that could. KMPG also had the necessary expertise, which led to the company's appointment. It has reached out to companies such as Deloitte and PWC. These are some of the companies that could not get signed off by the Auditor-General.

The SASSA contract has three components to it. The first one is referred to the national payment system where people would withdraw money either through ATM’s or retail merchants. All of that has been predominantly run by the SAPO. This almost equates to 92% of the total grant distribution. The other eight percent is released to the other two components, which are referred to as the community cash pay points. It goes into villages and rural areas to pay. This was historically run by the SAPO and the payments were through the normal post office. The whole contract was mixed up but it is now subcontracted to SAPO and mostly on the national payment system. With this change, Postbank will work very closely with SAPO. SAPO will provide most of the resources, and the Postbank will still pay for the transactions undertaken through the SAPO. It is like a normal banking transaction done through the SAPO branches, and the Postbank pays a transaction fee for the services it renders. The only thing that has changed is the contracting parties. The Postbank has taken over the contract from SAPO. The payment mechanism and the contracted resources still remain the same. SAPO is still an integral part of the grant system. The Postbank Act requires that it utilises the Postoffice infrastructure. So, it is something that Postbank will continue to do as part of its mandate and provide cost-efficient financial services to the market. There was an inter-ministerial process whereby there was an agreement that the contract of SAPO moved to the Postbank. This is something the Department can elaborate on. The biggest issue was with SASSA, as it had to get approval from National Treasury for the process it had followed on its side. The Postbank did internally do all the necessary governance approvals.

In terms of cyber incidents, there is some sensitive information. If allowed, a closed session can be held with the Committee to discuss this. Postbank is currently sitting on the SAPO network; it does not have its own standalone IT network. It is one of the requirements to apply for a banking license. Hence, it has undertaken this IT modernisation project to decouple itself from the SAPO network. He again suggested that, if there is a closed session, some of these things can be elaborated on more. This is only the beginning of the forensic investigation, and it will give a view on who is accountable for what and to whom the consequence management should be applied.

He said he could not state whether Oracle will be liable; the forensic audit report will tell. There is sensitive information that cannot be shared in the public space. On the contract to break up with the Postbank entity: it was believed that the contract would be better suited within the SAPO environment because this was a banking system. There was an agreement that it would be ideal if the contract was sitting within the Postbank environment.

He said he could not elaborate on the session between EC and FSS, but said that it is something that happened between the two parties. He does not see them agreeing on EC to take over the contract.

Mr Mxakwe said that some of the business plans needing board approval have to do with the delegation of authority framework. Certain business plans have thresholds beyond that of the executive committee. It has to be submitted to the shareholders, and the Department reviews those before the approval. The year-on-year losses are indeed concerning. It has presented the mitigations from revenue improvement plans. It is hoped that the number will improve going forward with a focus on accelerating revenue growth. If one looks at the past four years, the net losses have been reducing year on year, which is actually a positive improvement if it wants to grow towards profitability.

Ms van Biljon said the SABC takes all the initiatives shared with the Committee today. However, from a more formal forecast perspective, it is assumed that there is a delay in implementing the de-risk forecasts or less impact on the financial statements. This allows it to plan for the worst-case scenario rather than a scenario where one thinks it is more or less okay, and is caught by surprise when the problem comes. It also creates a scenario where, if it does not energetically pursue the initiatives, the worst-case scenario might actually happen. With that being said, it will ensure that, if this does happen, the responsible people will be held accountable for ensuring that the initiatives are implemented. She said that this is what the de-risk cost means.

Mr Plaatjes said that the previous mitigation was for a long period of a three-year roll out plan. It was shortened, and hence the mitigation plan was not possible because of the previous corporate plan. It does now have these plans, going forward. He apologised and said that when he was talking about inventory, he meant the advertising airtime slots and not the content thereof. There was a previous deal between SABC and Multichoice – a licensing deal for certain content. The SABC encore channel is used to archive material. He said the agreement had ended, and the parties decided not to renew it. All the content is now with the SABC and it will be exploiting that specifically around the streaming services. In terms of trade exchanges, if there is an excess in advertising airtime, it is traded instead of paying cash. There are various things, and it could also be a physical asset such as billboards across the freeway. SABC then has exposure to that, and it will then give them a reciprocal item value on the platform instead of cash. Telkom has taken over the SABC Plus streaming service. It was previously Telkom’s platform that was rebranded. It is an existing service provider that it uses to manage the service on SABC’s behalf.

Mr Naicker said that it does investigate the performance of the weekends of the network SABC 1, 2 and 3. It found that, throughout the week, there is sustained performance, but on the weekend, the performance rate drops below the internal target set. It is therefore looking at strengthening the weekend offering. The competition is predominately on movie content that achieves better results than the SABC.

On performance, the entity has achieved 103 000 viewers, which is below its target. According to the target, it will reduce the content that is not delivering. The show itself does not mean that it is a poor show; it just means that it is not achieving the required targets. It is busy working with its news team to figure out a better current affairs show that can better service the market.

The linear service broadcasts to the entire population whereas the SABC Plus is a demand platform. It becomes easier to repeat content because of the individual basis for each user. The individual user can decide what shows it wants to watch or not. This is how the SABC Plus helps with repeated shows. If one missed it on the linear service or the torrential service today, the individual could watch the repeat on SABC Plus. This viewership pattern is starting to enter with the audience, allowing it to exploit fresh content without impacting the repeats.

Mr Reggie Nxumalo, Group Executive: Sales, SABC, said linear TV broadcasting is built on appointment viewing. Prime time is part of this, and the audience viewership peaks between 06:00 and 10:00 pm. Loadshedding adversely impacts that appointment in the reduction of viewership. Client campaigns failed to reach the audience targets by as much as 15-20%. The other challenge is that, from a client perspective, most campaigns have a specific time frame. For example, a retail campaign runs from Thursday to Saturday over four weeks. Loadshedding certainly erodes that value from a linear TV perspective. As the loadshedding increases, so does the impact.

Ms Nonkqubela Jordan-Dyani, Acting Director General, Department of Communications and Digital Technologies, said that the Department is hoping that the forensic investigation report will be concluded at the end of December or early January 2023. It is aware that there has to be consequence management because these are public funds. It is funds that also belong to the Postbank. The Department will ensure that those who are responsible are held accountable. For this reason, the Hawks will guide the particular process. The report itself will be tabled in Cabinet and Parliament. SASSA actually does the SASSA contract itself and is responsible for the necessary approvals.

An unidentified official from the Department said that the SASSA contract and process are entirely handled by the Department of Social Development and SASSA. These processes were inter-departmental and inter-ministerial.

The Deputy Minister said that he is sure that the Committee has been following the contract from SAPO to Postbank. The Constitutional Court basically awarded this contract after litigation between the previous service providers. At the time that the decision was made, Postbank was a subsidiary of SAPO, so the Postbank was within the SAPO. SAPO was using the Postbank to fund the pre-payment. Under the terms and conditions in which the contract was awarded, the Postbank was different as to how the previous service provider handled it. The conditions are much more favourable. The pre-payment works through the community cash pay points. SAPO is part of the contract to ensure that cash is available. This cash is transported to the community cash pay points by the cash-in-transit service providers. The difference between when the cash is ordered and when the cash is available at the SAPO is that somebody must come in to ensure that the cash is provided. The cash must be available before it can be ordered from the South African Reserve Bank (SARB). SASSA then makes the payment to the SAPO, which is then handled through the division of SAPO. After the separation of the Postbank from the SAPO, the problems started. The Postbank was now a separate entity and was loaning money to the SAPO, and SAPO then made that available to the branches. As a result, the SAPO began to include that because the money had to be paid back. It was somewhere between R1.3 billion and R1.6 billion, which the Postbank advanced to the SAPO. Not all the money was returned, so debt was created. The debt started to grow. Initially, it started to grow over just R1 billion. It kept growing, and the decision was made to cede this contract. The debt was sitting at R3.2 billion.

This is the issue that the SARB raised: this level of exposure is becoming a problem. Postbank was getting to a point where it was no longer willing to provide the key funding. It was beginning to threaten the payment of the SASSA grant because, without the pre-funding, there would not be money available to take to the community cash pay points. When looking at the structure of this contract, the bulk is paid through the national payment system. The Postbank already paid 90% of the grants through the national payment system. It made sense that this had to be transferred from SAPO, because it was creating a liability partly on how it was being managed, as well as the difficulties that SAPO was facing and the issue of reconciling the money. It had to be ceded over because the Postbank managed the bigger portion. Therefore, a decision was taken by the two mainstreams, the Minister of Social Development and the Minister of Communications and Digital Technologies, that this cession must happen. The process was then entered into to ensure that the cession happened. It had to beg the Postbank to make the pre-funding available. There was correspondence from SAPO and SASSA to say it is not going to pay the social grants. This was unacceptable; it could not deprive the majority of poor people of receiving these grants because of the difficulties in the entities. This discussion took place. Around September/October, it started to cede the rest of the SASSA contract over. There was engagement with National Treasury for this cession. The final approach is being awaited but it does not anticipate any difficulties. There will be a follow-up meeting. Postbank has raised a number of issues.

If changes are not made, there will continue to be a problem, especially for the management side of the Postbank. There were unfavourable terms and conditions attached to the management of this contract. The Minister of Social Development indicated in a meeting that she is much more amenable to dealing with all the difficulties that may be there in terms of management. There have been several briefings on the analogue switch-off and the need to transition from analogue to digital through the digital broadcasting migration. This is something that should have been anticipated a long time ago. South Africa is always the last to migrate from analogue to digital. It should not have been the last. It should have been one of the first to transition. The transition does come with its own short-term impact. SABC will recover soon like other broadcasters that are broadcasting its signal through analogue signal distribution. It has been made clear to the board that it must come up with migration strategies to mitigate the impact of the analogue. Currently, the frequencies are not protected because the International Telecommunications Union has requested that South Africa should have long migrated to digital. There is no separation between public mandate and commercial activities. It creates a situation where the SABC's commercial activities and revenue from there are utilised to fund the public mandate. He said that assistance is needed from Parliament when the Bill is being introduced. ‘

The financial viability will continue to be threatened because of all these structural issues. The Department is also worried about the contract from FSS to EC. It is something that the forensic audit should be looking at because it is worrisome. The value of the contract is over R400 million. People are arguing that the payment already done on the system was included in the original contract, when SAPO was contracting with SASSA. So, this switch system was included, and people are arguing that the EC put on a lot of pressure. This is something that should be followed up. The Deputy Minister said he does not understand how much money should be paid to the service provider over and above what was originally agreed to. The report should be finalised soon.

Ms Kohler-Barnard said that the SABC did not do the analogue switch off, and that impacted its costs and audience. Yet, it was put down as some sort of a surprise. Trade exchanges do not bring in cash. How much is given away in terms of airtime? What is SABC getting in exchange for the trade exchanges? The need to overhaul the IT in Postbank is quite clear. What will the cost be of such an overhaul? There has been no indication whatsoever all through the process of dealing with legislation to make it a fully-fledged bank. If an independent Postbank takes it over, what will it stand to lose? The answer on corruption was not responded to. How much corruption has there been? The R3 billion debt was not paid back. It seems as if it is taking back the amount the same way it is taking medical aid, pension and other contributions without paying it over. It seems like yet another financial fiasco.

The Chairperson said the questions on investigations should be answered. How do investigations happen? Are there collaborations with SASSA and the Department of Home Affairs? Are there any interventions so that it is not undermined by those it still needs to cooperate with? When will feedback be received as to the consequences for those that may be involved?

The Deputy Minister said that the correct figures, as from August 2022, were R2.2 billion. But the debt is currently R3.2 billion.

Mr Nxumalo said that, when it comes to trade exchanges, there is a focus on unsold or under-utilised inventory in the different properties, whether radio or TV. It looks at the different platforms and structures the trade exchanges to benefit the SABC. He made an example of a trade exchange with a media owner where SABC could access the printing properties and could extend its marketing footprint. There are also some other events that it engages on from a radio perspective, where it does trade exchanges to extend its demand creation and partnerships depending on the value and the type of activity it is embarking on. It has ensured that the criteria is for a return for the SABC and ensuring that the values and return on investments are checked.

Mr Plaatjes said that the finalisation of its corporate plan and the planning for the current financial year were expedited and brought forward. The entity is now in that process, and therefore it has not been included in the plans at this point in time. There are mitigation plans around this both from a technology and revenue perspective. So, the analogue switch off was initially for a period over three year, but it was expedited and brought forward and therefore not included in its plans.

Mr Ndala said that the cost for the overhaul of the IT system should be around R400 million. This has been approved and the necessary funding has been received. It will be funded by the Postbank resources. IT modernisation will expand over a two-three-year period. It will also use a hybrid system, which will include the cloud.

Mr Lenny Govender, Interim Chief Financial Officer, SAPO, said that the amount that remains with SAPO is an average of R22 million per month in terms of cash pay points. The loss of revenue is about R20 million per month. The net position of Postbank's cash payment would have a positive impact because the cost of providing the services is much higher than the revenue on a monthly basis. The conclusion of the investigation will be important to determine who is at fault for the corruption. The balance as of 30 March 2022 was R3.2 billion. Due to surplus liquidity challenges, SAPO utilised some of the funds that should have been returned back to the Postbank to fund its operation. All the invoices will be paid.

The Deputy Minister said the SAPO has nothing to lose from the contract. The benefit of the cession will help in as far as the pre-payment is concerned. So, there is no longer a need for any pre-payment because the Postbank was responsible for the pre-payment. It will be using its own money, and will not be loaning anything. Some of the money could not be returned back because of the liquidity challenges in SAPO. It is long overdue that it migrates from analogue to digital. This is a matter of urgency.

Ms Kohler-Barnard said that she had difficulty understanding losing a million every month in handing out the SASSA grant, bearing in mind that the Postbank handled a small portion. The Postbank seems to be doing this without making a loss. She failed how to understand how it could drive up to R3 billion. It is impossible to crunch the number. Certainly, the investigation will determine who is at fault and where the money has gone. If it is indeed working at such a loss, why did it continue? Massive amounts of money have simply disappeared.

Closing Remarks by the Chairperson

The Chairperson said that the Committee appreciated the presentation, seeing that it also addressed some of the feedback. Some of the matters were not elaborated on because of sensitivities related to the contract and the parties. There has been a request to visit these in more detail in a closed session. The rules of the National Assembly are there for the necessary application to be made so as to give the Members more opportunity to get into detail without comprising commercial standing or a breach of security matters that may need to be protected. The Committee will consider this for the next drafted programme. There are problems, and mitigating measures have been proposed to respond to this. The Committee will be monitoring the implementation of these measures when it does oversight.

An eye has to be kept on SABC. Challenges and legislative constraints that prevent the SABC from functioning optimally and not favourably competing with its counterparts need to be addressed. It will have to look at the turnaround plans to see if it helps the entity become sustainable. There is a question of whether the SABC be able to operate once the grant is gone. The National Broadcaster must generate some revenue for it to run sustainably. It will have to look at all of these things. The Committee is aware of the bailout for SABC, which was a huge chunk of money. It has to check everything regarding this bailout and see if it will be sustainable post that period. It will have to see who was involved in the projects. A huge chunk of the money was used towards debt, which does not mean there would be no transmission costs going forward. For this reason, there was a task given to the then Deputy Minister to look at those matters relating to Sentech. There were competition issues, and figures as to what happens once the migration takes place were presented to this Committee. So, when the Committee deals with this, it has to take all of this into account, because that would also have been another reason to fast-track the process. There would have been projected savings. There were discussions about transmission costs, and a huge amount of bailout went out to the service and its strategy of getting more reviews. It is important to deal with this honestly, and it should be done in a session where Members could go back to those questions and deal with them.

There is also a report by the Competition Commission as far as that matter is concerned. It has to look at ways of assisting the SABC; it should not come back to the Committee to ask for a bailout. The Committee has to see a return on that investment. The real expectation is not just the report but also what the consequences would be if the findings are adversely on people that may have been involved in such activities. There should be a joint meeting with the Department of Social Development to see both sides of the story. This will allow the Committee to see if action has been taken, especially if the system has been vulnerable. In fact, it had subsidised the service when the intention was to make it a bit sustainable. However, if it is about the losses, because the conditions were not favourable when the private sector delivered it, then it is something that should be paid attention to. State-owned entities should also be competitive and play a role in the economy. Conditions are favourable when the private sector runs it, but it is difficult for an ordinary person. If it is run by the state, where it pays taxes, there are problems, but that is not the case with the private sector. He said that he is aware that there have been engagements with Social Development to ensure that these problems do not occur. The Committee also wants to receive reports continuously on the consequence management from SAPO.

The Committee appreciated every effort the entities have made to try and improve the situation. Some things are also dependent on some of the decisions that need to be made to support SAPO to be able to do its work and implement the turnaround strategy for the building of the Post Office. Even if there are many open vacancies and financial situation but the board and the few executive are still patriots and ready to serve the corporate with the investigations. The Committee is not just allowed to close the meeting from the public because it serves the public and has it has to be transparent to ensure that the public participates in the work of Parliament. So, these rules have been made, but there is a motivation for the Committee to close the meeting to go into detail. It will allow the Committee to finalise its report, so this matter will be prioritised. He thanked the Department and the entities.

Consideration and Adoption of minutes

The Committee went through the minutes of 22 November 2022.

Mr Molala moved for the adoption of the minutes.

Mr A Mthembu (ANC) seconded the motion.

The Chairperson asked if the Committee agrees that the minutes are a true reflection of what transpired that day.

Mr V Pambo (EFF) agreed.

The minutes of 22 November 2022 were adopted.

The meeting was adjourned.