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Brand SA in shambles: Here’s how bad things are at the organisation promoting SA’s image

2019-04-01 00:45

No chief executive, chief financial officer or marketing boss raises fears among staff that the organisation is in crisis

The state-owned company entrusted with promoting South Africa’s image is in shambles, amid allegations of an irregular tender and demands by the board for a pay hike.

This, after Brand SA’s chief executive officer (CEO), Kingsley Makhubela, was placed on special leave last April, following his announcement that he wanted to commission a forensic investigation into a questionable tender for a digital marketing agency.

CFO Nadine Thomas was placed on precautionary suspension two weeks ago and is now being disciplined after she uncovered how much was paid to a digital marketing company that Brand SA hired.

City Press has learnt that the only remaining disciplinary charge against her is that of communicating with Makhubela.

Thomas has refused to comment.

Also this month, Brand SA fired its CMO, Linda Magapatona-Sangaret. She is appealing her dismissal at the Commission for Conciliation, Mediation and Arbitration.

Several Brand SA staff told City Press of the shambles the organisation is in at a time President Cyril Ramaphosa is desperate to increase foreign investment, and when their task of marketing the country abroad is most critical.

“We are in crisis. There is no trust and no morale,” said an employee.

“When we write emails it is to cover our a***s and have evidence in case we become targets for dubious disciplinary complaints.”

They also spoke of the fear and suspicion that pervades the organisation following the appointment in August of board member Thembi Kunene-Msimang as acting CEO.

But Kunene-Msimang has been on sick leave since breaking her ankle at the World Economic Forum in Davos in late January, leaving a rudderless ship.

Communications ministry spokesperson Nthabeleng Mokitimi-Dlamini said Communications Minister Stella Ndabeni-Abrahams “is concerned about the state of management at Brand SA and possible governance breaches, especially at a time when South Africa is tasked with ensuring economic growth”.

“The board has made the minister aware of the disciplinary issues at executive level. She is especially concerned about the protracted absence of the CEO.

“To this end, the minister will further engage the board to ascertain its plans to stabilise the organisation.”

In November, City Press reported that Makhubela was placed on special leave following allegedly spurious allegations on the company’s whistle-blower hotline, in what he described as an attempt to get rid of him for uncovering corruption.

Makhubela, a former ambassador and later, director-general of the tourism department, was cleared after three investigations but is still not back at work.

He was cleared of sexual harassment charges.

Last week, board chair Khanyisile Kweyama again insisted that Makhubela was formally suspended – although he denies this – and she declined to produce his suspension letter.

She said his disciplinary hearing would begin soon.

Brand SA sources alleged that Kunene-Msimang, the board member for marketing and communications, was appointed as acting CEO because she “needed a job”.

Although deputy board chair Babalwa Ngonyama told City Press the trust deed does allow for the appointment of a board member, and that Kunene-Msimang is no longer a board trustee until her acting period is over, staff say she has also acted as CMO and director of corporate services.

This, they say, leaves a significant chunk of the company’s executive in the hands of the board and is contrary to good corporate governance principles.

The board said that this was not irregular and chief executives are often expected to “hold the fort” for other positions when they become vacant.

Staff further allege that Kunene-Msimang is a “tyrant and a bully”, who dishes out warning letters and contravenes good labour practices.

“I have had bad bosses, but she really takes the cake,” said a staff member.

“I cannot believe that someone behaves so badly in a public entity ... If we had a union, we would be on strike by now.”

Khanyisile Kweyama

But Brand SA said it could only address and investigate the allegations “if we are furnished with specific details”.

“We take good governance seriously,” it said, adding that it would not be drawn into “speculation regarding the status of Kunene-Msimang’s employment outside of her duties as a board trustee and now as acting CEO.”

Another allegation is that staff are instructed to include board members on overseas trips, including Kweyama’s trip to Davos in January, her trip to the UN General Assembly last year and another board member’s trip to New Zealand last year.

“Under Khanyisile’s instructions, Brand SA was told to include board members for all their international trips. This meant allocating huge budgets for them to travel in business class, stay at expensive hotels and not actually do much while on the trip,” said another staffer.

But Brand SA said that board travel “at these strategic platforms and engagements is a standard and approved process”, and that to say Kweyama issued the instruction was incorrect.

“The chair of the board and the CEO are required to travel, given the high profile of the delegations attending such gatherings. This is to ensure that Brand SA can facilitate, coordinate and participate in all planned official engagements with potential investors, media relations and strategic partnerships for Team SA,” said Brand SA.

Meanwhile, the suspension of Thomas, widely regarded as a stickler for good financial management, has staff up in arms.

“In one of the last board meetings I attended, the board chair and members instructed Nadine to look into their remuneration, which they said was too low. They wanted Nadine to ensure that it was increased and the increases were implemented,” said a source.

City Press heard allegations that the board wanted to be paid in line with what a full-time board earns and in monthly tranches.

A letter, dated September 2017 and signed by former finance minister Malusi Gigaba, indicates that Brand SA’s board is classified as a part-time board, entitled to earn R2 140 per day for ordinary members and R3 493 for the chairperson.

It is alleged, however, that Kweyama wanted to receive a full-time board chair’s remuneration of more than R800 000 a year, and the board wanted R700 000 for the deputy chair and R600 000 for its audit and risk committee chair.

“The CFO said she could not do that and that the rates paid are those prescribed by the Treasury and approved by the communications minister. The board rejected this explanation and told the CFO to investigate further and increase their remuneration,” the source said.

“Nadine was placed under tremendous pressure, but she did not budge and would not pay higher hourly fees to board members. They were very angry and wasted precious time that should have been used to discuss Brand SA matters to debate and insist on the increase.”

Although the board did not want to reveal the reasons for her suspension, Ngonyama said it was not a decision that was taken lightly and so close to the financial year-end, but was necessitated by “serious ethical” concerns and calls to the whistle-blower line which they had no choice but to investigate.

“When we did the preliminary investigation it was clear that we could not ignore it, and the allegations were coming from the people she was working with,” she said.

The board denied it demanded more money, saying it received no payment at all for the first year of its term.

City Press heard that it was Thomas who uncovered that the R18 million, three-year digital marketing contract awarded in 2014 was vastly exceeded in terms of scope, and cost the company R33 million by the time it ended in 2017.

The tender was readvertised but withdrawn amid allegations of irregularities.

Several Brand SA staff told City Press of the shambles the organisation is in at a time President Cyril Ramaphosa is desperate to increase foreign investment, and when their task of marketing the country abroad is most critical.

“Another matter that caused tension between the board and Thomas was the failed tender for a digital agency, currently being investigated by Treasury,” another source said.

“Kweyama and the board insisted that she divulge information on the content and progress of the investigation, which is confidential.

“Thomas explained the confidentiality of the matter. The board rejected this, but the CFO stood fast and refused to divulge confidential information.”

But last week the board strongly denied asking for any such information.

“The board does not even have a tender committee,” said Kweyama. “The board never gets involved in tenders.”

Kweyama said Magapatona-Sangaret was dismissed after being found guilty of 12 out of 18 disciplinary charges, including poor performance, abuse of the company’s leave policy and “unlawfully” recording a board meeting.

But Magapatona-Sangaret hit back, saying there were no performance-related charges levelled at her, and that the company had incorrectly calculated the number of days sick leave she took.

“I have never had any complaints in my 20-plus years as a marketer. I am a high performer who exceeded expectations,” she said.

The tender that caused the trouble

City Press has obtained a copy of a draft internal audit report, compiled by BDO Advisory following its review of the 2014 digital marketing tender awarded to agency Avatar.

The report, dated March 5, states that although the tender “underwent a formalised, competitive bidding process, the actions by the management of Brand SA and Avatar in finalising the contract, after the bid was awarded, did not constitute a fair, transparent, competitive and equitable process”.

It also found that the scope of the tender was only concluded three months after the tender was awarded, a contravention of the Public Finance Management Act.

It further states that because the additional services that Avatar provided Brand SA with were not approved by Treasury, they should be deemed irregular expenditure.

The report goes on to state that Avatar’s billing was not specific and was instead based on an hourly rate per employee working on the account.

In addition, BDO got three other digital agencies to quote for the same work Avatar did, and it concluded that the agency was paid more than twice as much as the highest bid it received.

But in an interview on Friday, Avatar chief executive Zibusiso Mkhwanazi said he had not been asked to present his side of the story.

He said a clause in his contract, which he showed City Press, stated “initiate approved projects arising out of industry review” and allowed for additional work to be performed outside the scope of the tender.

Avatar was awarded the R18 million contract in 2014, but was paid R33 million by the time its three-year contract ended.

Mkhwanazi said most of the difference was spent on “media” – including advertising on Facebook and Twitter – and on other tasks that “could not be factored into the original tender”.

“For each task assigned by senior Brand SA managers, we were given a budget. This was never queried at the time. We even got a letter of recommendation from CEO Kingsley Makhubela. There was never a query about our service,” he said.

On allegations that his agency potentially overcharged, Mkhwanazi said the auditors “were not comparing apples with apples” and that their offering should have been compared to the other bidders who competed against them.

He also showed City Press figures indicating that Avatar charged far less than industry norms for his staff’s time “to accommodate the additional requirements they wanted”.

He said the company produced excellent results, significantly driving up Brand SA’s audience engagement and website traffic.

Mkhwanazi said the Brand SA drama was unfairly “damaging” his business.

Brand SA declined to comment on the specifics on the investigation, saying it would do so once it was concluded.


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August 18 2019