We only stole R336-million! - rejoices the SABC

Written by Tashi from the blog Tashi's TV on 07 Oct 2019
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I almost rolled my eyes off my face when I saw this and then I went boiling with fury before forcing myself to calm down because I'm not in the mood for a heart attack...

Last week the SABC released a statement about their 2018 to 2019 financial report and when you look at it closely, it's gobsmacking.

The first thing that struck me is the glib, unapologetic treatment of irregular expenditure, which is described like so:

"The Corporation is encouraged by the decline in Irregular Expenditure incurred in the financial year by 41% to R336-million with most of this irregular expenditure relating to transgressions in previous years."

Bah!! As if we should praise them for blowing R336-million because it had nothing to with them. "It wasn't us!" the subtext screams, so no-one is to blame. And NO-ONE is in prison for it. And there's no apology. Also, notice the lack of specifics. How much is "most"?? 

Even worse though is what comes afterwards... the fact that Wasteful and Fruitless Expenditure went up instead of down, also glibly glossed over with excuses:

"Although Fruitless and Wasteful Expenditure increased, 63% or R141 million of the amount reported for the 2018/19 financial year related to transactions incurred in prior years. 

Of the remaining R83 million, R81 million was incurred as a result of interest and penalties due to late payments caused by cash flow constraints."

R81-million went up in flames to interest - picturing it is enough to drive you insane. When you think about how many people you could feed and educate with it.

And what happened to the whopping R2-million that isn't mentioned?!

The thing is, we know this has been happening for so long and yet we've somehow become desensitised to it. Suddenly I don't feel desensitised - it's as if I'm looking at it with fresh eyes like I used to.

The health hazard continues to the end of the press release, which boasts about how the SABC channels exceeded their local content quota - but it's total fake news because of course they don't mention the percentage of disrespectful repeats of repeats that caused them to exceed this quota.

Anyhoo, it's clear that there is no consequence because the SABC's getting R2.1 billion of our tax payer money today (Monday, 7 October 2019) in yet another bailout. 

The Department of Communications announced the news on Friday, saying that they're getting the R2.1 billion today and another R1.1 billion once they meet three conditions that they haven't met yet.

How will this be spent? Will we see new shows and exciting SABC projects? Or is it all gonna go to interest, wasteful spending and "expenses incurred from previous years"? 

I really want to be positive about it but it's extremely difficult.

These are the two reports if you have enough breath to huff and puff your way through them: (notice how there's no mention of the urgent need to go digital): 

The SABC's statement

Johannesburg - Monday 30 September 2019 - The South African Broadcasting Corporation (SABC) 2018/19 Annual Report was tabled in Parliament today. 

In celebrating 25 years of democracy, the public broadcaster has delivered on its extensive public service mandate despite very challenging conditions. 

The year under review was a financially difficult one for the SABC. At the end of March 2019, the Corporation reported a net loss of R482.4 million. However, this net loss is a 35% improvement on the restated loss incurred in the 2017/18 financial year.

The main contributors were losses incurred on Sporting events and interest incurred as a result of the liquidity constraints. A further contributor to the loss is the decline in Total Revenue by 3% to R6.4 billion from that of the 2017/18 financial year.
Total expenses declined by 6% or R475 million to R7 billion from that of the 2017/18 financial year. While the Corporation pursued cost containment measures actively, the decline was mainly as a result of cash flow constraints leading to a significant curtailment of investment in content, infrastructure, repairs and maintenance and marketing. 

The SABC’s liquidity constraints resulted in an increase in Total Liabilities, mainly due to an increase in Trade and Other Payables amounting to R1.6 billion as at 31 March 2019, with creditor payment days nearing 143 days.
The cash on hand as at 31 March 2019 amounted to R 72 million - a decline of R58 million from the balance of the prior year. 

During the year under review, the SABC placed extra-ordinary effort in improving its internal controls and ensuring that governance is restored in the organisation.  
The Corporation is encouraged by the decline in Irregular Expenditure incurred in the financial year by 41% to R 336 million with most of this irregular expenditure relating to transgressions in previous years. 
Although Fruitless and Wasteful Expenditure increased, 63% or R141 million of the amount reported for the 2018/19 financial year related to transactions incurred in prior years.  Of the remaining R83 million, R81 million was incurred as a result of interest and penalties due to late payments caused by cash flow constraints.
Of significant importance is that the Corporation’s Auditor General Opinion improved from a Disclaimer Opinion for the 2017/18 financial year to a Qualified Opinion for the year under review.

This follows improvements to the management of Property, Plant and Equipment in addition to the assumptions underpinning the Going Concern status of the Corporation.

In particular Government’s announced that it would provide a capital injection to the SABC that will assist Corporation’s liquidity issues. In addition the Corporation managed to resolve 96% of the Audit findings related to the 2017/18 financial year.
During the year under review and despite its severe liquidity challenges, the SABC performed well in meeting obligations to nation-building and social cohesion by acquiring and scheduling content that reflects the South African story on both its radio and television platforms.
The SABC’s radio stations complied with the ICASA Regulations, which state that from 26 September 2018, all Public Broadcasting Services (PBS) radio stations had to increase the local music quota played in a reporting period from the previous 60% to the revised 70% and Public Commercial Services (PCS) stations from 25% to 35%. 
For the period under review, all the SABC’s three free-to-air television channels exceeded the local content requirements. SABC1, in terms of full-day coverage, exceeded the target at 72.92%. About 75.52% of content broadcast during SABC1’s prime time was local.

SABC2, which shares SABC1’s 65% target, as set by ICASA, delivered 75.61% for full-day coverage and 86.31% on prime time. SABC3, as the PCS channel has a local content quota of 45%. The platform delivered 60.39% for full-day and 61.35% for prime time.
Other highlights for the period under review include:

  • Development of the SABC News App and Elections Website;
  • Preparations for News Coverage of the 2019 National Elections;
  • SABC1 and SABC3 started broadcasting in High Definition (HD) on DStv and DTT in June 2018.  The introduction of HD ensured that audiences enjoy a picture quality that is clearer and crisper than was the case with normal Standard Definition. The conversion of SABC1 was completed in time for the 2018 FIFA World Cup. SABC2 followed suit in early July 2018;
  • The SABC was also recognised though a variety of awards including the Liberty Radio Awards, Promax Awards, Afrikaans Media Awards as well as the South African Traditional Music Awards.

The SABC is confident that the implementation of its turnaround plan will ensure financial sustainability in order to fulfill its public mandate of educating, entertaining and informing the nation.

Statement by the Minister of Communications and Digital Technologies, Ms Stella Ndabeni-Abrahams
Update on the SABC Funding Allocation
Friday, 4 October 2019

Good Morning.
I thank you for availing yourselves to this important briefing, which seeks to provide an update on the South African Broadcasting Corporation (SABC) funding allocation.
The Department of Communications (DoC) has assisted SABC to obtain the requisite funding allocation through submitting required motivations to National Treasury and enlisting the services of the Government Technical Advisory Centre to help bolster its turnaround plan.
The above interventions resulted in the Minister of Finance’s announcement in his February 2019 Budget Speech that SABC will be considered for funding through contingency reserves.  However, National Treasury attached preconditions to the funding allocation.
Following a consultative process, SABC submitted updated responses to the set preconditions on 30 August 2019. These have been jointly assessed by National Treasury and DoC; revealing that of the eight preconditions, SABC has fully met five, partially met two, whilst one has not been met.
The preconditions that are fully met are as follows:

  •          Determine immediate cash requirements supported by detailed cash flow projections for the next 12 to 18 months;
  •          Submit a list of identified initiatives for revenue enhancement and costs-cutting initiatives;
  •          Conduct a thorough investigation into what caused the financial collapse of the SABC and why previous turnaround plans have failed to be successfully implemented;
  •          Provide an update of how the entity is dealing with the people implicated in the investigation report; and
  •          Develop a turnaround plan incorporating measures to prevent the reoccurrence of the identified factors. This must also take into account various reports including those of the Special Investigating Unit, Public Protector, Auditor General and Parliament.

 The preconditions that are partially met are as follows:

  •          Produce separate financial reporting for public and commercial broadcasting services; and
  •          Identify non-core assets for disposal to assist with reducing the recapitalisation requirement from government.

 Lastly, SABC has not met the condition to develop a comprehensive Private Sector Participation (PSP) strategy, clearly highlighting initiatives to be implemented and the net value to be derived from these partnerships. However, willingness to work on this condition has been expressly provided and this is welcomed by the two departments.
Based on the above joint assessments, the two departments have worked together to facilitate the initial tranche of the R3,2 billion allocation to be transferred to the SABC.

As such R2,1 billion will be transferred to the public broadcaster on Monday, 07 October 2019. The remaining balance of R1,1 billion will be transferred once the public broadcaster fully meets the remaining three outstanding conditions or firmly demonstrates evidence to fully comply. 
Further, DoC has communicated the SABC funding allocation to the Auditor General to assist in addressing the going concern matter and conclusion of the 2018/2019 Annual Financial Statements. As a result, SABC obtained a qualified audit opinion instead of a disclaimer.
It should also be noted that the National Treasury attached three conditions to the DoC which do not impact on the release of funding to SABC. These conditions have been addressed as follows:

  •          On Policy and Legislative review: The department has submitted the legislative review schedule to address the National Treasury’s conditions as required.
  •          Appointment of the Chief Reorganisation Officer: The department has received the draft Terms of Reference from National Treasury and is providing the required input. Upon finalisation and agreement with the Minister of Finance, the appointment process for the CRO will be expedited.
  •          Lastly, the new Board has been appointed.

It is noted that the SABC turnaround requires more than the R3,2 billion short-term funding. However, the public broadcaster was required to submit a fit-for-purpose turnaround plan which would respond to short-, medium- and long-term requirements; and the changing broadcasting landscape.
SABC has since submitted a board-approved Turnaround Plan which is currently being reviewed by both departments.

DoC will further continue engaging with National Treasury to source funding through the normal Medium-Term Expenditure Framework processes.

Going forward, and to ensure compliance with the funding conditions, SABC is expected to present its monthly financial status to DoC (My note: Good!).
The SABC plays an integral role to inform, educate and entertain the public. As a department, we remain committed to ensuring a public broadcaster that is able to effectively discharge its mandate, whilst being a commercially viable organisation. 
In conclusion, I appreciate the support provided by the Minister of Finance and his team; as well as Deputy Minister Pinky Kekana for the collective leadership. 
Thank you


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