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SABC's total irregular expenditure nears R5bn

Oct 04 2018 17:18
Lameez Omarjee, Fin24

The SABC incurred R570m in irregular expenditure during the 2017/18 financial year, bringing its total irregular expenditure to R4.9bn.

According to its annual report, recently tabled before Parliament, the Auditor General (AG) of South Africa did not give an official opinion on the State broadcaster’s financial position, as the AG did not obtain "sufficient appropriate audit evidence" to support one.

However, the AG, Kimi Makwetu, highlighted that the SABC incurred a loss of R622m during the period ending March 31, 2018.

He also pointed out that the SABC's current liabilities exceeded its current assets by R292m.

Total assets amounted to R4.4m, while total liabilities came to R3.5m. Although the SABC maintained its solvency, it had decreased over the past three years due to liquidity constraints, according to the report. "The cash levels dropped significantly, coupled with increases in liabilities. The net losses experienced over the years have also negatively affected the equity of the corporation," the report read.

News24 reported previously that the SABC’s debt was close to R700m.

Irregular spend could be understated

The AG also flagged the irregular expenditure at the entity, which could amount to more than reported as there are challenges in terms of record keeping, supply chain management and internal control systems.

"As a result, the Auditor-General could not satisfy itself with the completeness of reported irregular expenditure… The full extent of the misstatement identified could not be quantified, and I was unable to confirm the amount of irregular expenditure to be disclosed by alternative means," Makwetu said.

According to the AG, the irregular expenditure resulted from deviations in the procurement processes.

According to the financial statements providing details about the nature of the irregular expenditure, R121.5m in spend was for payments made without contracts, R34.8m in expenditure was attributed to deviations, and R146m was incurred for procurement policies and processes that were not followed, to name a few.

The SABC also incurred R84m in fruitless and wasteful expenditure, about R9.3m more than the previous year. Expenditure is considered fruitless and wasteful if it could have been avoided provided there was reasonable care.

Of the totals, R14.2m is attributed to interest and penalties incurred for late payments, R20.5m relates to SARS penalties, R24.7m relates to unauthorised payments on overtime, among other things.

Exec pay drops

The report also includes details of remuneration paid to executives, board members and senior management, which amounted to R45.5m during the period, 43% lower than the R79.7m reported in the previous year.

Former Group Chief Executive Hlaudi Motsoeneng’s basic salary was R2.7m and his total cost to the broadcaster was R15.5m – he held the roles of group chief operating officer for six months and CEO for six months for the financial year 2016/2017. During this period, acting group chief executives basic salaries amounted to R3.98m. Their collective total cost to company came to R6.94m.

There have since been reports that the SABC’s board is considering retrenchments or a restructure as part of cost cutting measures.

Communications Minister Nomvula Mokonyane, however, is opposed to the retrenchments, according to a statement from her department issued last month. Mokonyane said that retrenchment should be a last resort, and appealed to the SABC board and management to reconsider.

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