Committee Oversight Reports on Eastern & Western Cape Visits: adoption; Boxing SA 2005 Annual Report: briefing

Meeting report

SPORT AND RECREATION PORTFOLIO COMMITTEE
15 March 2006
COMMITTEE OVERSIGHT REPORTS ON EASTERN AND WESTERN CAPE VISITS: ADOPTION; BOXING SOUTH AFRICA 2005 ANNUAL REPORT: BRIEFING

Chairperson: Mr B Komphela (ANC)

Documents handed out:
Draft Report on Committee Oversight Visit to the Western Cape
Draft Report on Committee Oversight Visit to the Eastern Cape
Boxing South Africa Annual Report 2005
Boxing South Africa Annual Report 2004 [please email [email protected]]
Presentation to the Committee on 15 March 2006 by Boxing South Africa
Boxing South Africa: Resolutions - Boxing Convention 2006

SUMMARY
Boxing South Africa made a presentation on their Annual Report for 2005. The organisation highlighted how it was being restructured and its initiatives to develop boxers and boxing officials. Problems in respect of the role of promoters and television networks were also highlighted.

Members expressed their dissatisfaction with the financial control problems in Boxing South Africa, and also with the delays in obtaining ministerial approval for the appointment of a Chief Executive Officer. Questions were also raised about the promotion of boxing in rural areas, the role of women in the sport, and sponsorship from corporate entities.

The Committee adopted its reports on oversight visits to the Western Cape and Eastern Cape with minor corrections.

MINUTES

Adoption of Committee Reports on Oversight Visits
The Chairperson said that the recommendations had now been incorporated into the reports on the oversight visits to the Eastern and Western Cape. He clarified that the Memorandum of Understanding was between the Department of Education and Sport and Recreation South Africa (SRSA). He stressed that Integrated Development Plans (IDPs) must include sports facilities.

Mr L Reid (ANC) said that local councils assigned low priorities to sport. Intervention was needed to reverse this trend.

The Chairperson responded that the Committee had had some impact in redressing this situation. The 2010 Soccer World Cup had given momentum to lifting sport higher in government’s priority list. Public hearings were being held in Port Elizabeth regarding the location of facilities, which would be included in an IDP.

Mr E Lucas (IFP) felt that the small budgets for sport led to its low priority. The provision of sports facilities had to be extended to outlying areas. He said that sport was a unifying factor.

The Chairperson stated that smaller municipalities were moving in the right direction. The 5% allocation of the Municipal Infrastructure Grant (MIG) was welcomed. Facilities were being developed, but the small municipalities struggled to maintain them. He mentioned the example of a stadium in Mafikeng. It was good that there was an emphasis on providing more money, but this never seemed to materialise. SRSA had allocated approximately R70 million for lifestyle orientation training for young athletes. Several rising stars were making poor lifestyle choices.

Mr D Lee (DA) said that a big problem was that many councillors were not interested in sport. Sports stakeholders should be present at the various forums to push their cause. The sporting authorities should be sacked if they failed to do so.

The Chairperson agreed with these sentiments. He said that 90 facilities were being developed by the Building for Sport and Recreation Programme. An audit was needed to determine their location so that the Committee could arrange to inspect the sites. He mentioned Kroonstad where a good basic facility was being developed, but there were some safety concerns. There was also a phased development in Motherwell.

Mr B Dhlamini (IFP) stated that the need for transformation legislation should be included as a recommendation in the reports.

The Chairperson responded that legislation was being finalised in Cabinet, and should be tabled in Parliament later in the year. Time was available for a debate on the reports, but the number of speakers would have to be limited. He suggested that two Members should be delegated to present the report on each province as more time would be available for each speaker during the debate. This would probably occur after SRSA’s budget vote in May.

Mr Reid noted a correction to the Western Cape report regarding the visit to Bongolethu. There was a European sponsored development there through the Sport Coaches’ Outreach (SCORE) agency. Mr Lucas asked what the relationship was between the European Union (EU) and SCORE.

The Chairperson stated that the EU gave funds to SCORE, which were used to set up facilities. SCORE had the capacity to design these facilities, which it did after the needs of the community had been determined through a consultation process. Once these needs had been established, the EU released funds.

Mr Lucas commented that this type of development would normally be carried out after a tender process.

The Chairperson replied that SCORE seemed to have its own preferred agents. Discussions were needed with them.

Mr Reid said that a meeting should be held, as SCORE was regarded as a non-governmental organisation (NGO) funded by the EU.

The Chairperson said that the Committee had met with SCORE, but a "refresher" meeting should be arranged. The challenge was to have a 95:5% split between home financing and EU financing.

The Committee unanimously adopted both oversight visit reports. The Chairperson said that a Committee meeting might be held on 16 March. If this meeting was cancelled, Members could accept the invitation to attend an U19 Rugby World Cup function to be held at Club Mykonos.

Boxing South Africa (BSA) 2005 Annual Report: Committee Discussion
The Chairperson noted that the delegation from BSA had not yet arrived. He requested that Members discuss the BSA Annual Report to identify questions to pose to the delegation. He was interested in the comments of the Auditor-General (AG). He compared the Annual Report for 2004 to that of 2005. In the 2004 report, the AG had stated that BSA had no internal financial controls, and the matter seemed unresolved in the 2005 report. Problems spelt out in the 2004 report had not been solved. He felt that quarterly meetings with BSA were necessary to keep track of developments.

Mr Lee said that SRSA should have been monitoring the situation as the Department responsible for BSA.

The Chairperson confirmed that BSA was the direct responsibility of SRSA. Problems should have been picked up earlier. He noticed that money was not being allocated according to targets, which was a National Treasury regulation. As there was no Chief Executive Officer (CEO), the Public Finance Management Act (PFMA) determined that the Accounting Officer or Chief Financial Officer (CFO) should take on the responsibilities of the CEO.

Mr Reid stated said that nothing had changed.

Mr Lee said that BSA’s lack of staff led to a lack of capacity.

The Chairperson indicated that these issues would be discussed. The previous Chairperson of BSA had not been re-nominated at the last conference, and Mr D Mpofu had since been elected. A CEO was needed to explain the situation in BSA. Although Mr M Tyamzashe was no longer in the chair, the new person still had to take responsibility.

Mr Lee indicated that old issues were still outstanding. The Committee was letting people down who were suffering by not holding BSA in check. He was exasperated that simple things were not being done, as these were the most important issues.

Mr Reid said that the same situation had existed for about five years. Something needed to be done to set the record straight. The Chairperson said that the last CEO had resigned in 2004 and had not been replaced for two years. All the Board Members should appear before the Committee.

Mr Lee asked why BSA had been formed in the first place. The Chairperson replied that it had been established to comply with United Nations norms due to the high incidence of injuries.

Mr Lee concluded that the formation of BSA was to assist boxers, but the Chairperson replied that BSA’s apparent inability to account properly was denying it access to government funds, so that no help was being given to those in need.

Mr Reid proposed that quarterly meetings would be the only measure to rectify what he termed the "sorry state of affairs in BSA".

The Chairperson noted that annual reports should be presented to the Committee by the responsible Minister. Thus, the Chairperson of BSA must lay the foundation for the report. As an elected member of the Board, he was responsible for policy direction. The support staff could supply additional details. As the Portfolio Committee on Communications was still delaying Mr Mpofu, he asked the BSA delegation to start the presentation as the main topic covered the annual report. The strategic plan was still coming and the budget would be considered at a later date. He emphasised that September was the deadline for tabling of annual reports in Parliament, although the preliminary report for 2005 had been discussed. He asked the BSA delegation to advise how the AG’s comments on the 2004 report had been addressed.

BSA presentation
Dr P Ngatane (Board member, BSA) was the leader of the BSA delegation. He was accompanied by fellow Board members Ms S Xulu and Ms N Magwaca, and the General Manager, Dr K Naidoo. Dr Ngatane said that BSA was grateful for the time to address the Committee. Their previous visit had raised queries which needed to be addressed, and most issues had been corrected. He tendered an apology on behalf of the other two Board members. All of BSA’s work was currently being done by the Board members as a new CEO had not yet been appointed.

Dr Naidoo made the presentation. He highlighted that the new Board had been appointed by the Minister in May 2005, and had met for the first time in July. A series of objectives had been identified for the next three years, and the list of objectives had been updated since November. An appropriate structure was still to be finalised. The offices of BSA were in Johannesburg and there was thus a danger of the organisation losing track of what was happening in the rest of the country. Ms Xulu was working in close conjunction with the Minister.

BSA was making an earnest attempt to train boxers, officials and promoters. The top 25 boxers had been identified and would be attending training at the High Performance Centre in Pretoria and with Dr Tim Noakes at the Sports Science Institute in Cape Town. Special training would be given to prepare them for appearances at international events. Officials had recently written examinations, and a group of between ten and 25 of the top officials would receive intensive training to improve their skills.

Insurance policies as well as a pension fund were available, and boxers were given financial advice. Compensation was paid for injuries incurred in the ring, and three or four claims had already been processed. Compensation had also been paid to the family of a boxer who was murdered recently.

In the past, there were two separate bodies to control the amateur and professional wings of the sport. International experience showed that talented boxers could be identified as young as three years of age, after which they needed to be groomed. Licences were only issued at a minimum of eighteen years of age, and to that point BSA had no role in their preparations. An agreement had been reached with the amateur body, the South African National Boxing Organisation (SANABO), to aid their development. BSA funds would be made available and BSA would assist with fund-raising and administrative support.

A major structural problem existed in relation to licencing officers. These officials were in place throughout the country but there was no structure to support them. Permanent employees were needed in the regions and commissions or advisory groups should support them.

Several resolutions were made at a recent, well-attended convention. Contracts were concluded between promoters and television networks but BSA was not privy to these arrangements. There was an imbalance regarding the rights of promoters, dates of tournaments and the size of the purses on offer. TV networks found sponsors for tournaments, and BSA was also not privy to these agreements. There should be a triangular relationship between TV networks, promoters and BSA. A legal study was underway into this question. BSA had met with the SA Broadcasting Corporation (SABC), which favoured the triangular relationship. A partnership had been proposed between the SABC and BSA.

A transfer system was under consideration. Good boxers emerged from the rural areas and moved on to the big centres where they were "inherited" by urban promoters. Compensation should be paid to the rural trainers responsible for their development which often required large investments. It was not possible to stop the migration of boxers, but this should not happen at the expense of other roleplayers.

Some contractual issues with boxers existed. Legal terms should be simplified and contracts should be translated into the home languages of boxers so that they could better understand them. There would be legal input into the licencee workshops.

BSA was trying to increase prize money, but promoters had a problem with this as their rights fees from the TV networks were not being increased.

BSA was working on improving the standard of ring officials. All eighty officials had written an examination in Pretoria and they were being assessed. Ring officials would be graded and would be rotated through tournaments around the country. This would reduce the element of bias in their decisions.

The ratings systems should be reviewed. Currently, champions only dropped a few places in the ratings when they were dethroned and then moved up after winning a fight. New boxers struggled to rise in the ratings because of the circular movement at the top. It was suggested that fighters should drop further in the ratings so that the up and coming boxers could be promoted quicker.

Promoters aligned themselves with certain camps, and younger boxers not in these camps did not get a chance. This was the reason for the Baby Champs program. Exposure was given to those boxers outside the loop.

Quality management could be improved by the introduction of incentives. By offering better deals on rights fees, promoters would have an incentive to achieve better results.

Dr Naidoo then highlighted some aspects of sponsorships. He felt that corporate support was only directed at the top-end of sport. Boxing was one of the five most popular sports in respect of television viewership. The SABC currently had 38 live dates available, of which 26 were allocated to sponsors. They would be partners with BSA for the remaining twelve. Vodacom had sponsored BSA in an amount of R27 million, spread over three years. Of this annual allocation of R9 million, R1 million went towards BSA’s expenses and the remaining R8 million was channeled into the expenses related to televised tournaments. There was a prospective sponsor for the Baby Champs program.

Certain structural problems had impacted on BSA’s finances. There had been disparities between documentation and licence fees received. BSA would hold a full-day workshop to address issues regarding its provincial representatives and the way to create a proper licencing structure. The licencing year started in April. Daily liaison was needed with the provincial licencing officers, and documentation needed to be submitted timeously. An audit committee had been established and had met twice already. The appointment of a CEO was expected in the next month. Key issues regarding the quality of representatives had to be dealt with. The internal audit committee was dealing with tournament documents. In the past, money had been paid with no supporting documentation. A new system of authorisation and payment forms had been introduced. The Board would now have total control over the movement of funds. Additional support staff would be appointed. An expenditure benchmark of R18 000 was set. Anything in excess of this, if undocumented, would automatically result in a qualified audit report.

Dr Naidoo then dealt with the new issues that had arisen from BSA’s last meeting with the Committee. Television broadcasting times were dependent on the number of viewers. If this number increased, then better times could be negotiated. An agreement had been concluded with SANABO. Dates for televised tournaments were determined by an SABC committee, which BSA attended as an observer. A tender procedure was in force whereby promoters tendered for tournaments. The award of tenders was according to a points system. Approximately ten percent of the points were awarded on empowerment considerations.

There were currently not enough female boxers to make the sport competitive. However, many women were involved as officials. There was a lack of activity in some provinces. Funds were being made available to stage tournaments in certain areas. The SABC had asked for two national title fights to be held in the Western Cape and KwaZulu-Natal. The Baby Champs events were being held throughout the country.

Assistance was being given to neighbouring countries. One of the new Board’s achievements was in establishing an outright championship belt, which would be awarded to boxers on first winning a title. They had to win five championships to qualify for the traditional Old Buck belt.

Discussion

The Chairperson complemented BSA’s efforts to deal with previous comments from the Committee. There was a sign of productive movement. He congratulated Dr Ngatane on being appointed Vice President of the World Boxing Council in Africa. He noted that South Africa had the biggest economy in Africa, but was about the "worst" in sport. There was very little money in sport when compared to other countries. It was unfair to compare South Africa’s performance in sport to that of more developed countries in Europe or Australia. Yet, other African nations were able to outclass South Africa despite their lack of resources. It seemed that resources were not being allocated properly.

Mr Reid noted that the Vodacom sponsorship had been lost. He said that this was no wonder considering the negative comments in the AG’s report. There were no internal financial controls. BSA’s non-compliance with financial regulations was one of the same issues highlighted in the 2004 report. The CEO had resigned in 2004 and there was still no replacement. These conditions indicated that there was something seriously wrong.

Mr Lucas asked if the new structure of BSA had been implemented, and if this would change the situation. The General Manager was the acting CEO. Proposals needed to be "fast-forwarded" to BSA. He asked how many posts were vacant. He commented that if BSA could not fix its problems at home, then how could it help neighbouring states? Tournaments were held in selected centres, but most of the boxers were from the rural areas. Some form of "plough-back" into rural areas was needed.

Mr J Masango (DA) questioned some of the figures. He pointed out that R274 000 was paid to commissions in 2005 as opposed to nothing in 2004. The expenditure on advertising has increased from R85 to R127 074, and the expenditure on premises had increased from R199 000 to R315 000. He also noted that bad debt had been written off. As there was no indication of this in the 2004 report, he wondered what timeframe was applicable to these debts.

Dr Ngatane replied that the provisions of the Boxing Act hamstrung BSA’s staffing. Appointments had to be made by the Ministers of Sport and Finance. The process of finding a new CEO and staff had been completed, but they were waiting to be appointed by the Minister. The structural proposals had also been given to the Minister. He emphasised that BSA had done all that was expected of it, but all the paperwork was currently still with the Minister.

Dr Naidoo stated that Vodacom had gotten much more out of their sponsorship than expected. The return was approximately three and a half times their investment. Their opinion was that support for boxing and soccer was synonymous; so they had decided to move to soccer. On the issue on non-compliance and the lack of internal controls, he said that BSA had inherited the problems from the previous regime. This had consisted of a central national body with nine provincial satellites, each maintaining its own accounts. These problems had been carried over and represented the reason for the bad debt mentioned in the report. There was a vast difference between the present situation and 2002. Electronic payments were now preferred to cheques. A transparent procedure had been followed in advertising for the CEO and other staff positions. Consultants had been appointed to manage the staffing process. He pointed out that the budget for BSA was some R5 million, and as much as R600 000 was needed just to cover audit costs.

Regarding BSA’s premises, Dr Naidoo stated that they were committed to previous arrangements regarding the lease. They have looked at relocating, and premises in Johannesburg had been identified. However, the lease on their offices in Midrand was effective until 2007.

Dr Naidoo stated that the choice of venues depended on the promotor of an event. BSA needed to ensure that a balance was maintained. The only role for BSA was to ensure that safety standards prescribed in the Boxing Act were met.

Dr Ngatane said that there was control of boxing in many areas. BSA excelled in certain aspects, and in fact was a world leader regarding safety factors. This was the sort of help that was offered to neighbouring states. The rural aspect could only be judged on the reality of the situation. Nursery tournaments were being staged in the outlying areas. In the past dates had been allocated for regional events. Television management had been restructured and the regional dates had been removed. Dates had now been allocated to the promoters who made their own choice of venue. BSA was no longer involved in this process.

Mr T Louw (ANC) felt there should be mutual assistance between BSA and the Committee. He could not see BSA assisting the Committee at present. Blaming problems on an historical legacy sounded like a broken record. The first question should be what steps were being taken to address the concerns of the AG. On the issue of the CEO, he proposed that the Committee Chairperson interact with the Minister to find out what was delaying the appointment. The Committee should mandate the Chairperson to set up such a meeting.

Ms D Morobi (ANC) asked what BSA had done to curb expenditure and to address issues of non-compliance with PFMA regulations. She asked why women could not be professional boxers and why none had received awards. She asked for confirmation of the existence of a satellite office in Port Elizabeth.

Mr D Dikgacwi (ANC) asked when all the "will be" issues would be resolved. He also wanted to know where the discrepancy occurred between licence fee documents and the supporting documents.

Mr Lee said he was disappointed. One of the main problems was the lack of an internal audit committee. The proposed structural organogram did not reflect such a committee.

Mr E Saloojee (ANC) said that annual reports were published only once a year. There were more good intentions in the 2005 report, but the same problems. Officials needed to be accountable. He had no doubt that there were serious problems in BSA. He suggested that quarterly meetings be held with BSA while these problems still existed.

Dr Naidoo replied that steps had been taken to address historical problems. Regular meetings were being held with the AG. An internal audit committee had been formed even though it did not feature on the organogram which had been part of the presentation. Each Board member chaired a specialist committee. The appointment of the CEO should be taken up with the Minister. One of the instances of fruitless expenditure had been redoing the financial statements and the cost of printing of reports. BSA was still recovering from the nightmare of the previous situation, which resulted in non-compliance. It was not even known if BSA had a Value-added Tax (VAT) registration number.

Dr Naidoo added that the question of minimum purses and cancellation fees was under review. BSA was the regulating body, but contracts were drawn up between the promoter and the boxer. A minimum figure of R 1 000 was suggested to prevent exploitation, but there was no increase in rights fees. A cancellation fee of 10% was suggested. A higher fee might make promoters reticent to stage events. Regulations needed to be amended, but as these were prescribed in the Act, it would be a long process.

Dr Naidoo said there was one person dealing with licence fees in the Eastern Cape, based in East London, but there was now a satellite office in Port Elizabeth. There were licence holders all around the province. They were allowed to pay their dues directly into BSA’s bank account. Provincial representatives were not always well equipped to deal with financial issues, hence the planned workshop.

Dr Naidoo felt the idea of a quarterly presentation to the Committee warranted consideration, but there would be cost implications for BSA.

Dr Ngatane said that there was a functional office in Port Elizabeth. Dr Naidoo added there was no physical office, but that the representative was a Mr Mapetiza who operated from his own premises. Dr Ngatane told the Chairperson that all contact details would be provided. He also pointed out that a female official had won an award in 2005.

The Chairperson asked how many meetings BSA were holding with the Minister and with SRSA. What items were on the agenda of these meetings? Contacting the Minister and SRSA could be like chasing shadows. What provisions of the Act impacted on the efficiency of BSA? The Act could be amended. He urged BSA to have quarterly meetings with the Committee despite the expense. Assistance was needed in clarifying issues. The Committee had a clear position that its work was being hampered by the long delays caused by only having annual meetings.

The Chairperson stated that the improvement in tournaments was welcomed. The Committee had not been invited to attend the convention, but this was perhaps just an oversight. The welfare network was commendable, and retired boxers were in a better position than artists. There was uproar over boxers not being given fights, but BSA seemed to have no control over this. There was no direction in spreading the cake for all to benefit. BSA should be the custodian of boxing. He also asked how the organisation should be shaped. Federations in general should protect the interests of players within their association. The Committee thought that the SABC’s allocations were wrong.

The Chairperson added that Vodacom was not opposed to sponsoring BSA. There was a tentative agreement to extend their sponsorship. Mr Mpofu had been involved in talks with Mr P Matlare of Vodacom.

The Chairperson asked if boxing was still a voluntary organisation. He did not know how BSA could run the sport in the country with so few staff members. There were problems with the need for ministerial approval of the appointment of a CEO. The question of empowerment would be addressed in a new Act. This would serve to combat window dressing. There must be a bias towards women and the disabled.

The Chairperson said that the work of BSA must fall within the broad government agenda, especially relating to unemployment. Promoters could not employ boxers, and boxers should employ managers rather than the other way around.

On the question of regional representatives, the Chairperson felt it might have been a mistake to disband the provincial commissions despite their shortcomings. There was huge interest in the Baby Champs and these served at a developmental level. He asked what the standing of provinces was. He also asked where the white boxers were, as their presence would involve that sector of the community in the sport.

Dr Naidoo replied that white boxers were taken seriously. At a tournament held two weeks ago, a white boxer had come out of retirement to win the event, and many white spectators had been present in Soweto on that occasion. He said that 63 out of 88 applicants in East London had been accepted for licences, and there was also growth in the Port Elizabeth area. There was a 10% growth in these regions.

Dr Naidoo added that meetings had been arranged with the new Minister. He had also been invited to be guest speaker at the boxing awards, but these engagements had all been cancelled. Ms Xulu said that there had only been meetings between the Chairperson of the Board and the Minister.

The Chairperson said that the Minister was obliged to meet with the full Board. The lack of involvement would lead to bottlenecks.

Dr Naidoo felt that the Act over-regulated BSA’s affairs. There was a "tussle" between provincial and national competencies. These differences could exist, but should be subject to the unifying standards of the Constitution. He said that BSA still wanted to improve training. Dr Naidoo stated that it had been an oversight not to invite the Committee to the convention, but Members had been invited to the boxing awards. He suggested that Vodacom provide a year’s leeway until a new sponsor could be found. BSA was a statutory body and not a voluntary one. This was the only federation controlled by government. He did not think that the CEO needed to be appointed by the Minister.

Ms Xulu said that BSA had sifted through the "can do" and "must do" tasks. Structural change was within the Minister’s competency. Dr Ngatana said the change of Ministers had been a problem. The process of interviews for the new CEO had been completed in 2005. Ms Xulu confirmed that the new CEO had already been identified, and that structural changes had been completed in November 2005. They were just waiting for signatures. The Minister of Finance had to approve the salaries.

The Chairperson said that a session was needed to understand and interpret the Act. The Committee was not "comfortable" at present. He asked how the Board had been appointed.

Ms Xulu replied that nominations were forwarded to the Minister who made the appointments. Dr Ngatane said that the Act did not explain how nominations were to be made. The Minister had wide discretion in this regard.

The Chairperson said that the Committee dealt with a "litany" of issues. He explained that for any Board, candidates should appear before the relevant Committee who would make recommendations. The Minister would normally only appoint the Chairperson, and the Committee would appoint the rest of the Board. Special attention needed to be paid to the Act. The meeting between the Committee Chairperson and the BSA Chairperson was not finalised. The Members were dissatisfied as they had waited for Mr Mpofu until 13h30 and he had still not arrived.

The meeting was adjourned.