Boxing South Africa Annual Report 2022/23 and related matters

Meeting report

Opening

The Chairperson welcomed the Members, the Department, and entities. She said she was happy with the sport development as well as the assistance that was being given to sports in schools. It was good to see that poor communities were being assisted. She said many were disheartened with the loss of the semi-finals for the boxing championship between South Africa and Australia. It was important to take a moment to appreciate the journey the Proteas had had. The loss could never overshadow the hard work and dedication put forth by the team. They had made the country proud by displaying grace and passion. The country stood by the Proteas through its victories and defeats. She wished the Deputy Minister a very happy birthday.

Ms Mandisa Tshikwatamba, Deputy Director-General: Corporate Services, Department of Sport, Arts and Culture (DSAC), said the acting DG, the Minister, and Deputy Minister were not able to attend the meeting as they were travelling internationally for work.

The Chairperson said that the Committee did receive letters of apology from the Minister and Deputy Minister. She said in the previous meeting, the Committee was not happy with the financial aspect of the entity and had proposed some interventions. What had been done since then? The Committee was expecting answers and improvements.

The Committee adopted the agenda.

Mr T Mhlongo (DA) said that he was disappointed that the main officials were not a part of such an important meeting and instead, there was Acting DG, Acting CEO and so on.

The Chairperson said there was an apology from the South African National Boxing Organization (SANABO) due to their conference.

DSAC Overview Presentation Boxing South Africa (BSA)

The Committee was taken through the presentation. The following was highlighted:

Targets Achieved

37%- 2019/20; 92%- 2020/21; 71%- 2021/22

Not Achieved

63%- 2019/20; 8%- 2020/21; 29%- 2021/22

Audit Outcome

Unqualified with findings: 2019/20

Unqualified with findings: 2020/21

Unqualified with findings: 2021/22

Important issue to note:

Boxing SA was still engaged in a protracted litigation by the erstwhile CEO. The matter was at the Constitutional Court. Boxing SA however was also engaging with the legal representatives of the litigant for an out-of-court settlement.

[please see presentation for more information]

Annual Report 2022/23 Boxing South Africa (BSA)

Mr Luthando Jack, Chairperson, BSA, said the SANABO was a legal entity independent of Boxing SA. Both entities had distinct mandates and were different structures, hence, a MOU was established. The perennial matter of the CEO of Boxing SA had been laid to rest. There was now a process of filling that position to bring about stability. There had been growth in boxing in the country. The fights around the national title and the level of activism had improved. All provinces had been engaged with to support the sport of boxing. Without the support of government, the sport of boxing would have collapsed. There had been a strong system of graduating amateur boxers into professional ranks across the country.

Members were taken through the Annual Report presentation, where the following was highlighted:

The adopted Turnaround Strategy with five pillars:

1. Governance and Administration – (Board committees, Organisational Development, Marketing and Branding, Federation of Associations and Stakeholder management)
2. Development of the Sport - (Assessments of Licensees and licensing, Tournaments and compliance, Boxing Conventions, Boxing Awards, Baby Champs)
3. Sport for development – (Boxing cares programme, Women in Boxing Development, Nation Building and Social Cohesion)
4. Research and Innovation – (Innovation hub & commercialisation, E-knowledge management, Revitalisation of infrastructure, International partnerships)
5. Boxing Heritage – (Documentation of Boxing History, Boxing Museum, Boxing Hall of Fame and Boxing House)

Achievements

Implemented disciplinary measures against licensees found to be bringing the sport of boxing into disrepute.

Provided several workshops that were seeking to capacitate our promoters in terms of organising and staging tournaments.

Celebrated National Days through Boxing.

Initiated engagements with the University of Zululand for a possible MOU that would produce Research studies to be utilised by BSA in its quest to ensure that boxing became the safest sport in South Africa (the MOU was set to be signed before the end of November 2023)

Improved Audit Outcomes: Reduced number of audit findings.

[see presentation for more information on performance per programme]

External Audit outcome on previous year’s financial statements

• 2021/22: Unqualified audit with findings
• 2022/23: Unqualified audit with no material findings
• 2023/24: Unqualified audit with no material findings

BSA’S Revenue

Boxing South Africa’s main long term revenue base remained its annual allocation from the Department of Sports, Art and Culture totalling R19.9 million for the current year 2023/24. In addition to the money appropriated from the fiscus.

A total projected income of R2.9 million would come from internally generated revenue sources, including licensing, sanctioning fees, penalties, and interest from the investment revenue.

Collectively, that brought the total budget for 2023/24 to R22.7 million.

BSA’s Response to the Report of the Auditor-General

In response to the report of the Auditor-General, Boxing South Africa has put the following measures in place:

• To fast track the approval of the BSA proposed organogram which was aligned with the adopted Turnaround Strategy;
• Finalisation of the New Sanctioning Model to ensure that there was no debt by Promoters to BSA and maximum collection of revenue;
• BSA developed the AG Action Plan to resolve the findings that were raised by AGSA.

[please see presentation for more information]

Discussion

The Chairperson said it was important to note that in South Africa, everyone had the right to go to the media and voice their concerns.

Mr Mhlongo said he was not happy that the actual accounting officers were not present in the meeting. It was also important for the Minister to attend the meeting because he [the Minister] would soon appoint the board members. What legacy was the chairman of BSA leaving behind? On graduation and training – could there be more information on the change of methodology? Why had there been no advertisement for the CEO position? The issue of the CEO position not being filled and being dismissed as if it were addressed was misleading to the council. On the MOU, what criteria were used to choose the University of Zululand?

Why had BSA received bad publicity? Why were there no responses given towards media and social media outlets? Bad publicity needed to be corrected by responses. On the boxing awards – how much was spent on that? Could there be more information on the wins and what strategies or tactics were used for the wins? What was the total number of guests that attended the event? How much incentive was given to the legend boxers?

Who were the other beneficiaries? Could there be more information on the tenders involved with that event? The Committee needed to be invited to events for future events since it was responsible for oversight. Who was the owner of the boxing promotions? Could there be more information on that? Was that promoter owing BSA money? Could there be more information on the promotion of female boxers? Had the suspended COO been charged? If not, why not?

Ms V Van Dyk (DA) asked what was being done about the irregular expenditure. Could there be more information on the doubtful debt of R6.28 million? How had local travel costs grown from R1.23 million to R5.5 million? What were the travel policies in place? On the R2.15 million spent on consulting and professional fees – who were those consultants and professionals? Please explain the rise in the cost of seminars and conferences and telephone and fax. On the momentum investment – why was that under assets?

Could there be more information on the settlement with “Mr Moffat”? On what technical or procedural reasons, had the BSA failed in the case against the previous COO? In her resignation, the former acting CEO mentioned that the board members would interfere in management decisions – what had been done to address that? Several tournaments were being cancelled due to BSA not following rules and regulations – why were the board members allowing that type of negligence? Why was a boxer who was not rated playing for BSA? Why were there financial breaches with promoters?

Ms V Malomane (ANC) referred to the Department and its composition of the board members; she asked how the Department would improve the selection of the board in terms of gender balance. On legal cases and representatives of BSA – why was the case with “Mr Moffat” sent to various courts and what amount was paid to him? What were the costs associated with each law firm and representative? Were there any minutes from the board endorsing any legal representative? If not, could there be information on how the legal representative was recruited and by whom? Could BSA provide details of the legal representatives still under the Department’s payroll?

Ms D Sibiya (ANC) said it was concerning that despite having unqualified audit opinions with findings, the Department failed to have any mitigating strategies. Today, we were played as a Committee. Luckily, Mr Mhlongo had already picked up and highlighted some of the issues because this one was just a movie. The Department was falling, and it was concerning to note that despite the entity’s audit outcomes that had findings for over three financial years, the Department still failed to identify any mitigating strategies.

On BSA, the entity had spoken about school and municipality visits but failed to provide statistics regarding how many schools and municipalities had been visited. What criteria had been used to select those schools and municipalities? Coming to provincial champions, there were 28 males and two females, yet the entity stated that it was bridging the gender gap. BSA suspended the COO, however the media stated that the COO was still getting a monthly salary way past August 2023. His cost of employment had been estimated to be over R1million, was that true or not?

The Labour Relations Act of 1995 and the Senior Management Services Handbook stipulated that if a member was suspended on precautionary measures, the employer had to hold disciplinary hearings within 60 days. 60 days passed long ago and still nothing had been done about the matter. How had the organisation’s expenditure aligned with its strategic objectives? Could the board update the Committee on the status quo of the case in question?

Mr E Mthethwa (EFF) asked what type of training the BSA was providing? Why was it providing training when it was not accredited? How had the BSA saved millions in settlements? Were there any other sponsors and aid the BSA received to help with its achievements? On the Board members that were promoters and owing BSA – had they hosted any boxing tournaments regardless of their owing status? What mechanisms were used for decision-making when you were a board member and a staff member as well? How was the separation of powers managed? How was it ensured that the money paid to the boxers reached them? Could the CEO mention the qualifications that he had that qualified him to be the CEO of BSA? Why was “Hlaba Promotions” (sp) not suspended after cancelling a tournament at the 11th hour on stage?

Mr M Zondi (ANC) referred to programme three on promotions and said the entity had done exceptionally well in meeting its target. Why was the BSA not addressing matters in compliance letter sanctions when the count exceeded sixty in tournaments? On the findings by the AG – what measures did BSA hope to take to address the unresolved audit findings? What were the potential financial implications associated with over achievements? How much money was spent on boxing practitioners, tournaments and functions?

Mr B Mamabolo (ANC) asked if BSA was bankrupt. Why was over R3 million spent on the boxing award event?

Mr D Joseph (DA) said there were increases in the last three years of around R750 000 in finances. Negative media needed to be addressed and be factual. On historical debt – who was owing the money? What processes were in place to collect that money? The Department needed to inform the Committee when the new board members would be announced. On the settlement with the CEO that occurred in June – how much was the cost of the settlement? How much was the CEO earning per annum? What was BSA doing about the anti-doping projects? What did the BSA do with athletes that used illegal substances?

The Chairperson thanked BSA and the Department for their efforts and engagement, then asked if an internal audit department recommendation for BSA had been implemented. If not, what were the reasons? Were there members or promoters that had outstanding debts to BSA and why were they allowed to organise tournaments? What actions were taken for “Hlaba Promotions” for cancelling the event on the day? Who was the national chairperson of the promoter’s association?

Ms R Adams (ANC) asked what the reasons for the resignation of the previous CEO were. What measures were being taken to mitigate and rectify the cumulative irregular, fruitless, and wasteful expenditure and ensure better financial management and sustainability? How did BSA aim to solve the gap in implementing its boards' resolutions so that its targets were fully achieved?

Responses

Mr Erick Nsikayezwe Sithole, Acting CEO, BSA, responded that there was no double dipping taking place because he was a board member and then seconded to the post of the CEO. He only got paid for the CEO position. Upon settlement with the former CEO, that matter was put to rest, and the information would be handed to the Committee. The former CEO was paid the full amount in the settlement. That post would be advertised soon.

On collaboration with the University of Zululand – BSA could collaborate with any University that had been accredited. There was an incident that stood out – a boxer passed out in the ring and passed away in hospital and he was a student from the University of Zululand. The University reached out for collaboration to honour their late student. The boxing awards went through normal procurement processes and were not on tender. eThekwini Municipality sponsored the awards and the KZN Department assisted in transport and accommodation of certain boxers. The information on the spending of the boxing awards would be submitted in writing to the Committee.

The main cost BSA paid was for the boxing male of the year and the boxing female of the year of R50 000 each. The constitution and further information of the members of BSA would be submitted to the Committee. On the rise of female boxing promotion – BSA with the Women in Boxing Committee created and launched it. When it was launched, there were 62 female boxers in the system and now it had grown. That initiative had given the women recognition and some of them would be fighting in a tournament in Dubai.

Numerous investigations were done on irregular expenditure, and a report would be submitted to the Committee. BSA had limited staff, and that affected its performance – there was one HR, one internal audit, one IT person and so on. Not everything that was in the Boxing Act could be achieved. The 38% of the audit action plan that was not addressed was due to the BSA being a thin structure that was struggling to see to everything due to its constraints.

A board committee addressed the issue of historical debt and ensured that promoters paid their debts. Legal avenues of collecting debt had been taking place and there was documentation providing the details of that debt and a detailed response would be provided to the Committee.

On costs of projects – BSA used a pastel system which did not allow them to allocate the cost next to each project. So, costs for transport, accommodation and so on all fell under one item and needed to be interpreted. Information on costs of projects and information on promoters would be provided to the Committee. It was important to note that black promoters relied heavily on government aid, and if that aid pulled out, the event did not go through. Private aid needed to come through for black promoters. “Hlaba Promoters” pulled out last minute due to sponsors backing out and that was not the promoters’ fault.

On training – the BSA Act said that BSA could develop a mechanism to measure the level of knowledge of the licensee’s before granting the licence. CATHSSETA had been approached for other accredited courses to be shared with BSA.

On the settlement with the former CEO – BSA received legal opinions from the Department to proceed with the case as they believed that BSA would win the settlement. There was always back and forth when it came to negotiations, and that was the issue with the case with the former CEO. The Committee would be provided with a list of all the cases that occurred.

On the money reaching boxers – it did reach the boxers as it was paid directly to the account of the boxer but there had been delays in payment which had been pushed to 14-28 days for payment.

On the Malinga Promoter, the Committee would be provided a detailed response on that.

On bad publicity – that could be done deliberately, and letters had been sent to media outlets that information had been distorted about BSA. On the qualifications of the CEO – he had a National Diploma in Financial Management, a Bachelor of Commerce with a specialisation in Internal Auditing and qualified as a professional accountant. He went on to study at Stellenbosch University for a Postgraduate Diploma in Business Management and then a Master’s Degree in Business Management.

Dr Azwitamisi Shadrack Nthangeni, BSA board member, responded to the questions of the Women in Boxing Initiative. He said the subcommittee of the board which was Woman in Boxing had conceptualised the rights of women in boxing services with a total of 10 services that were in line with the commemoration of Woman's Month when it was launched. BSA strived to empower women in boxing both in and outside of the ring. That initiative spanned across all nine provinces of the country and brought about several development workshops and tournaments that empowered women in boxing.

Six tournaments were successfully held out of the 10. Some focus areas in the workshops included financial management, wealth creation, and marketing and branding. A resolution was taken that only female promoters would be given the opportunity to host events with that initiative. Out of the six provinces, five provinces had had events hosted by female promoters. At the start of that initiative, 62 female boxers were recruited, and recently, 18 new boxers were approved for their licenses. At the moment, there are around 119 women with boxing licenses.

Mr Sakhiwe Sodo, Board Member, BSA, responded to questions on BSA. On the graduation of amateur boxers to professional ranks, he said BSA had signed a memorandum of understanding with SANABO. That was something that was new and thoroughly consulted with professional structures as well as amateur structures. The main aim was to ensure that a formidable base was created for professional boxing in the amateur ranks. The foundation had been laid well for the future of boxing in the country.

Joint committees were also created for the purpose of ensuring a seamless transition from amateur level to professional level. Those new plans that BSA had put into place were to ensure that boxers reached professional levels to bring medals at international and world levels for the pride of the country. There were formal committees that SANABO engaged with regarding that new memorandum of understanding. SANABO approached the committees when they felt a boxer was ready to fight in professional ranks, creating that seamless transition.

That new method had helped BSA greatly in ensuring that boxers who fought for their country continued to fight for the country until SANABO cleared them to fight professionally. On bad publicity - it was difficult for BSA to contain the issue of bad publicity, particularly when there was no reason for it. For example, the City Press article said the board had dubbed Parliament on a procedurally postponed session. The constant and persistent attacks as of recent were incorrect, and people had acknowledged the good work that BSA had been doing in renewing, growing, and transforming the sport. BSA went throughout the country on a roadshow, interacting with the boxing licenses to sell BSA's vision and engage with the people so that they could buy into the vision.

People were bringing out attacks on the last term of the board because they wanted to see a board of their choice. On the selection of the Chief Whip - when the Chief Whip was the MEC for Sport, Recreation, Arts and Culture in the Department of Sport in the Eastern Cape, she introduced a development programme for boxing. Despite all the challenges faced with that programme, the programme had made a huge difference. It had a big positive impact on the development of boxing, particularly in the province of the Eastern Cape.

In the period under review, the Eastern Cape province led the pack with 27 tournaments, followed by Gauteng. BSA needed partners like that, which made such a huge difference in the arena of boxing. On the cancellation of tournaments at the last minute - much as that was not desirable, factors on the ground compelled promoters to cancel tournaments at the last minute. When that occurred, BSA was compelled to accept that decision, and that was not the case with just one promoter but several. Promoters did that when funders pulled out at the last minute.

Regarding the board members staging tournaments, the South African Boxing Act, 11 of 2001, stated that a board member could not put up a boxing show. If that was the case, the BSA would need to be apprised of that information so that the normal processes of discipline could be taken forward. To BSA's knowledge, there was not a single board member involved in staging tournaments, and if that were to happen, proper processes would be followed.

Monies were paid directly into the boxers’ accounts, but if there was a case where a promoter took the money of a boxer, it would be difficult or impossible for the board to know. Boxers must not make themselves vulnerable. BSA protected the boxers from harm in the ring and from exploitation, but it was the boxers’ responsibility not to make themselves vulnerable. There were many times when the board of the BSA performed really well, but at times, statistics gave the wrong impression of the board. It was important to note that women's boxing was new, and it was a continuous struggle and the board of BSA had done a lot to ensure that women's boxing in the country thrived.

Mr Jack referred to the leaked letter written to the board by the former acting CEO of BSA on interference of the board. That matter was not addressed because there was nothing to address since the BSA disagreed with the former acting CEO regarding her observation. There were two committees on the board: the sanction and ratings committees. The Act had mentioned that BSA needed to establish the two committees. The sanction committee was responsible for sanctioning tournaments, and it met weekly. It was chaired by a board member, Mr Sodo, and it had external non-board members who would constitute the committee.

On some licenses threatening to affiliate with bought in boxing commissions - that was just one case with one licensee. The legacy that that board was leaving was that the reality of the matter was that we live in a post-truth society where facts are not recognised and falsehood is the cause of action. The board of BSA had played a part in transforming boxing in South Africa and made it the talk of the town because it had brought boxing back on television. On the agreement with the former CEO, a non-disclosure agreement was signed and that matter had been concluded and was no longer in the court. Proper documentation and evidence would be sent to the Committee.

Mr Khulile Radu, Board Member, BSA, responded to the question regarding the BSA board allowing a non-rated boxer to contest the National Title saying that there was no boxer in the country whose license had not been rated. The board in the ratings committee showcased ten boxers and those boxers that were showcased in every weight category were boxers who were eligible to contest the National Title. So, every boxer, from the first contender to the last contender, was eligible to contest the National Title. There were only seven boxers in the weight category, so there was no 8th, 9th or 10th place, and that was where the problem came from.

Mr Jack responded to the question on the composition of the board members and gender balance, saying that the board tried its best to choose successful candidates according to their competencies and considered gender balances. The board had a good gender balance but was aiming for a 50/50 when it came to male and female board members.

On the issue of funding for BSA, the BSA had done the best that it could with the budget cuts that it had been experiencing. The aim was for the BSA to improve its revenue generation measures. On the matter of monitoring the AG findings - the main aim was to make sure that there were no actions that got abandoned along the way and BSA would ensure to do its best in paying heed to the recommendations in the Action Register and to ensure that it was attended to.

Follow up discussion

Mr Mhlongo asked the following questions. Which clause of BSA endorsed the promoters’ ability to bail out the regulators for paying out other boxers? Mr Jack was misleading the Committee because Section 4.4, Point 1, was very clear on the process and policies. Could that be explained further? On the conflict of interest, could the BSA provide the reason why Mr Radu, as a board member who was supposed to respond for the entity oversight, was involved in facilitating education training courses for BSA that had taken place this year? How many training courses were facilitated by him and at what cost did he get as a facilitator? Did he get consequence management?

On the issue of bad publicity, why did BSA fail to say that Parliament had postponed the meeting? Why did they not ask why the meeting was postponed? The statement made by BSA was in a racist tone and was uncalled for. Letters and documents detailing the settlement with the former CEO must be handed to the Committee. Board Members should not be recycled for years and years if they did not bring about a positive change and difference. A man led the initiative that promoted women in boxing, which was not right. How was boxing turning professional as compared to previously? Could it be proved that the boxer who was not rated playing in the Nationals was actually a rated boxer? Could there be information on the three top promoters who owed the BSA money? How much was being owed? How could the CEO define historical debts?

Mr Mthethwa said that “Hlaba Promotions” held a lot of power and therefore got preferential treatment. Why was that promoter allowed to stage tournaments if it owed BSA money? How much did that promoter owe to BSA? On the issue of bankruptcy, how much does BSA have as of now?

Ms Van Dyk said there were many questions she had asked that had not been answered and she would provide them in writing. What was the purpose of the Boxing Act if it did not protect the boxers over the promoters? What was the consequence management for cancelling, withdrawing, postponing, or reducing money that was supposed to go to the boxers? On the issue of the boxer who was not rated, why was the right process not followed so that there were ten rated boxers? How did one qualify to be an invisible boxer? Why did Mr Jack have to interfere with the processes regarding the boxer who was not rated and the rated boxers? On money that went to the previous CEO- was the BSA entitled to sign a non-disclosure agreement regarding taxpayers’ money? Was what the settlement was and what the legal fees were a secret?

Ms Sibiya referred to the governance issue and asked what the guidelines were for prioritising gender balance and marginalised groups when selecting coaches with experience and qualifications. Was there a female member on the board? If not, that was extremely concerning.

The Acting CEO responded to that the journalist did not contact the BSA regarding the article in The Sunday Times. Since there was no communication between the journalists and the BSA, that was a deliberate attempt to attack the BSA. Historical debt was noted on the BSA's annual financial report. The last time, that debt was sitting at R8 million from the number of promoters. A process had been put in place to recover that money, and that was a constant back and forth in recovering that debt for the past two years. If the board had been consistent with the sanction model, it would never have had an issue of debt.

The promoters needed to be paid upfront for an event to go ahead to prevent any last-minute cancellations in the future. If that fee is not paid, the event must not proceed. When working with a provincial or national department and you get a commitment saying that a promoter autonomously would be sponsored by the department and sometimes they had the issue that funds could not be transferred upfront due to the issues of recovery. There were many loopholes in the Act.

Mr Mhlongo asked if the Act was amended and if the BSA was not aware of it.

The Acting CEO said the Act had not been amended but when there was a gap between the Act and the Regulation and where the Regulation did not address certain issues, such as celebrity boxers and so on, the BSA had had to develop guidelines to assist on how to manage the entity when it came to celebrity boxing as it was not there in the Act.

Mr Radu responded to the question on the ratings, saying that the ratings were not a numbers game as there were other variables taken into consideration, for instance, latent potential, pedigree and so on. When the committee did not do the rating well, then it engaged with the board for advice and the board gave the committee guidance.

Mr Sodo responded to the questions on the new model of taking amateurs to a professional level. The new model was guided by a memorandum of understanding, which was thoroughly consulted on involving structures from both professional and amateur ranks. That was to ensure that whatever model the board came up with created the synergy referred to in the Act. The BSA had gone through the process of creating committees to deal with the graduation of boxers from amateurs to professionals. The appointment of the committees was based on the memorandum of understanding. That new model was going to prevent boxers from moving to a professional rank prematurely.

Mr Radu said boxing was evolving and what happened in the global world also affected the BSA. The IBA, whose president was Russian, had put boxing in a tight spin because they had allowed pro boxers to compete with amateur boxers and amateur boxers to delve into the professional ranks. Boxers who were in the last Olympia and did not get medals were available to go back to continue fighting as amateurs and were also allowed by the IBA to double into international boxing and that scenario was coming to BSA. One of the amateur boxers went to Europe and was paid R128 000. To deal with those issues, BSA had had to collaborate with SANABO.

The Members would provide the rest of the questions in writing.

Closing

The Chairperson said that BSA could have debt for over two years - this needed to be addressed. Oversight and monitoring after the implementation of the forensic report by the executive and authorising an accounting officer was needed. That material irregularity would be implicated in the departments. A loss of R8 million was very bad and that debt needed to be paid back. In closing, the issues raised by the audit opinion needed to be addressed.

Mr Jack thanked the Committee for their engagement and feedback. Written responses would be sent to the Committee.

The meeting was adjourned.