SABC boss Hlaudi Motsoeneng is hiding the troubled broadcaster’s financial woes in a last-ditch bid to hang on to his job.
The Sunday Times can reveal the public broadcaster is facing a loss of about R500m, which Motsoeneng concealed in parliament this week, in stark contrast to profits of R641m last year.
This means that with Motsoeneng at the helm, the SABC has suffered a loss of R1.1 billion in one year.
These figures, based on internal financial documents seen by the Sunday Timeswhich will be presented to the auditor general next month, will not be released publicly until September.
The SABC has been reeling from one crisis to another under Motsoeneng’s watch, but he appears to be immune to being sacked amid persistent speculation about his close relationship with President Jacob Zuma.
The public protector previously found he had lied on his CV about having a matric and irregularly inflated his own salary by almost €1m a year.
On Friday, a defiant Motsoeneng returned to work after a court ordered the suspension pending the outcome of a disciplinary hearing for dishonesty and abuse of power. He said he appealed the order.
Hiding a R1.1 billion loss in value as the SABC’s accounting officer may be harder to ignore.
Motsoeneng told Parliament’s portfolio communications committee this week: “The SABC, financially, we are sustainable.”
Following Motsoeneng’s lead, Communications Minister Faith Muthambi painted an optimistic picture of the SABC’s finances, projecting that profits would rise from R19 million next year to R179 million in 2017.” The SABC is on a strong financial footing,” he told the committee.
Neither Muthambi nor Motsoeneng mentioned that the SABC is facing a projected loss of R501 million for the financial year that just ended on March 31.
Motsoeneng took over the SABC in February last year when Lulama Mokhobo stepped down as CEO just two years into her five-year contract. The SABC made a profit of R217 million in Mokhobo’s first year at the helm and R641 million in his second.
Asked if he was aware of the massive expected losses when he addressed parliament, Muthambi said through his spokesperson, Ayanda Holo: “This is an operational matter that the SABC must respond to.”
Senior executives who spoke on condition of anonymity said it was a “ticking time bomb waiting to explode” that Motsoeneng hid from the public.
“If the SABC makes a loss of R500 million now, it will be R1 billion next year,” said one. “That’s exactly how the post office went down.”
These unaudited figures will only be released publicly when the SABC’s audited financial statements are tabled in parliament in September and are subject to change. “I think that, in any case, the losses will be worse,” said the executive.
Motsoeneng’s claims that the bank’s current reserves of more than R1 billion showed it was in full financial health were misleading, another executive said.
Financial documents show the SABC had R826 million in the bank as of March 31, most of which could have been depleted within weeks as the SABC’s operating costs are at least R600 million a month. Another 178 million rupees in cash reserves from government grants should be deducted because the money was earmarked for specific projects such as digital migration, the executive said.
“Don’t brag about trading cash. It’s not your money.”
Financial documents reveal that the SABC’s operating cash reserves plummeted to record lows last month and are on a steady and alarming downward trend.
This year, it saw the largest gap in four years between cash inflows and much larger outflows, the filings show.
An analysis of the SABC’s detailed income statement, dated March 31, shows:
- Salary costs rose by more than R500 million in the past two years, thanks to Motsoeneng’s arbitrary wage increases to appease unions and millions spent on board member fees;
- “A €120 million drop in “other income” last year, attributed to management mistakes such as negotiating low building rents;
- The cost of programming, film and sports rights soared by R500 million last year; i
- “The SABC spends €1 billion collecting €2 billion worth of TV licences, a 50% collection cost which is wasteful.
Experts said the SABC blew the chance to make hundreds of millions a year in a deal Motsoeneng struck with MultiChoice.
As part of the deal, MultiChoice will pay the SABC R553m over five years to broadcast its 24-hour news channel and have access to its archives.
“The SABC should be getting R300-400 million a year for this, but Hlaudi gave it away for R100 million a year,” said a senior SABC source.
Faced with these figures, Motsoeneng yesterday denied having misled Parliament, insisting that “the SABC is financially sustainable” and that cash reserves were an indicator of financial health. “Before we couldn’t pay production houses, artists, or even our own people. Now people know they’re safe with the SABC.”
He emphasized that “these figures are not audited, they can change”.
Newly appointed SABC chief financial officer James Aguma said the numbers were still subject to “finalisation, audit [and] closing adjustments”. Includes pension valuations, tax calculations and updating the property register.
“Therefore, any comment on the financial transactions in the income statement would be premature and misleading,” he said.
Understanding the SABC’s financial health also required looking at its balance sheet and cash flow statement, he said. “It could go substantially either way.”
A senior financial source at the SABC admitted pension valuations could change the numbers, but said poor market performance meant losses were likely to be worse.
Source: Sunday Times