News

SABC could face class action on pre-paid TV licence fees

2018-01-09 16:42

The SABC's finances are in such bad shape that it may well end up unable to meet its financial obligations and this will have a negative impact on people who have paid their television licence fees in advance, Advocate Paul Hoffman SC, director of Accountability Now, said on Monday.

Accountability Now - a non-profit organisation with Anglican Archbishop Emeritus Desmond Tutu as patron - wants to ensure that the rule of law is enforced by holding governments, parastatals and the private sector to account.

Fin24 reported earlier that the SABC informed Parliament it posted a R977m loss after tax for the 2016/17 financial year. Its net loss for the year ending March 2017 more than doubled from R412m in 2016.

READ: SABC posts R977m loss

In an open letter to SABC chair Bongumusa Makhathini, Hoffman refers to a report on the SABC the auditor general delivered to Parliament last year.

READ: SABC losses could be much more than R977m recorded - AG

The report stated that the SABC's audited financial statements for the financial year ended March 31 2017 records R40.854m "deferred income" (money received for goods or services which have not yet been delivered) in respect of TV licence fees received in advance.

In Hoffman's view, the SABC is financially in such a bad situation that people who have already paid their TV licence fees run the risk of being "negatively impacted".

READ: The pay TV wars

That is why Accountability Now feels those people are entitled to take steps to protect their "investment in the services of the SABC".

The organisation regards each person who has paid a TV licence fee in advance as a concurrent creditor of the SABC with regards to the "unexpired portion" of the licence fee.

READ: Inside labour: SABC needs loyal union leaders to serve

The Companies Act provides for a potential "class action" if it is contravened. Accountability Now regards the "millions of law abiding citizens" who have already paid their TV licence fees in advance as "affected persons" in terms of the act.

Hoffman, therefore, informs Makhathini in the open letter that the organisation is "contemplating" a possible class action case against the SABC on behalf of people who have already paid their TV licence fees in advance as the organisation deems this to be in the public interest.  

"The SABC will continue to be reliant on government guarantees for it to continue as a going concern. That is, the SABC is unable to sustain its operations from its own resources and is entirely reliant on state guaranteed funding," Hoffman said in the open letter.

"It seems the SABC, already illiquid as its board concedes, is additionally likely to become insolvent in the short term. Yet it continues to collect licence fees, annually in advance, thus increasing concurrent liabilities."

In Accountability Now's view the SABC has not had "a professional and independent board" for some time and is unlikely to survive in the absence of further state support - by way of guarantees of otherwise.

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