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SABC loses R1.5bn in discount rip-off

2020-01-21 01:38

One senior manager fired, others face disciplinary action for their costly unauthorised actions

Employees allegedly used the SABC as their personal fiefdom when they irregularly gave huge discounts – sometimes up to 85% – to big corporate clients, resulting in the public broadcaster losing at least R1.5 billion in much-needed revenue.

A forensic investigation into the SABC’s Commercial Enterprise division scrutinised 35 top advertisers who contributed the lion’s share of the R6.6 billion in net airtime sales over 18 months.

The report by Nexus Forensic Services, finalised in October last year, found that clients – including advertising agencies, network providers, insurance giants and fast food franchises – were handed discounts totaling R1.517 billion between January 2018 and June last year.

In one instance, an insurance firm only paid 15% of the advertising rate after an official unilaterally gave a discount of 85% – against the broadcaster’s own policy on advertising discounts rates.

The investigation found that at least 17 junior account executives and senior managers in the division – including former Commercial Enterprise group executive Tshifhiwa Mulaudzi – flouted several rules in granting the discounts to the detriment of the SABC.

“During the investigation, we noted that Commercial Enterprises applied large discounts and added value deals awarded to clients. These discounts and added value devaluate the [advertising] rate card rates and have significant impact on the revenue collected by the SABC,” the report reads.

It also found that a senior manager, whose name is known to City Press, allegedly passed confidential client information to his wife who was running an advertising agency that had contracts with the SABC.

The report noted that the same employee splurged undisclosed amounts of money on beach front properties and 20 cars – among them five vintages.

“We recommend that the SABC consider instituting appropriate disciplinary action against the employee,” the report said, and suggested that the matter should be reported to the police.

Mulaudzi was fired last month after he was found guilty of corruption, gross negligence, gross insubordination, dereliction of duty, dishonesty and failure to act in the best interest of the SABC.

A source said that the public broadcaster had also instituted disciplinary hearings against three other employees. 

“More employees are yet to be charged as the process continues. We cannot allow the Commercial Enterprises division, which is vital in bringing advertising revenue for the SABC, to collapse,” said the source.

The forensic report also shows that investigators found evidence on Mulaudzi’s work laptop that he received an international trip and even secured a job for his wife from a company that concluded a lucrative advertising deal with the SABC.

A charge sheet at his disciplinary hearing, which City Press has seen, alleged that Mulaudzi went on an all-expenses-paid trip to China in May 2018 sponsored by advertising company Global Max Media Group.

In January last year, he allegedly submitted a business case for the Umbrella Airtime Trading Model which would benefit the Global Max Media Group.

“You [Mulaudzi] deliberately withheld the name of the company that invited you to the event [in China]. It later transpired that the company that paid your expenses is the same company that the SABC entered into an agreement with in relation to the Umbrella Airtime Trading Model.

“The trip was a gratification intended to influence you to act in a dishonest, improper and unauthorised manner thereby abusing your position of authority, a breach of trust that is paramount to the employment relationship and violating your legal duty.”

Mulaudzi was also charged for signing “an agreement of 12 months instead of six months and also granted the Global Max Media Group a discount which was not within your authority in contravention of the delegation of authority in order to achieve the unjustified results”.

According to the SABC, the agreement was supposed to be approved by the executive directors and it exposed the SABC to potential legal liability and a potential loss of income of more than R20 million.

Global Max Media Group promised to send its South African representative to respond to City Press but failed to do so by the time of going to print.

Mulaudzi was also charged for having approved and extended to a life insurance company an “un-unreasonably and/or unlawfully and/or irregularly extended the approved effective discount of 76.62%, whereas this required mandatory approval by the SABC board”.

That transaction led to the SABC losing “actual and/or potential harm/loss of R144 695 055”.

He was also accused of having neglected to “adequately collect the revenue due for the packages awarded to another SABC client, which caused the broadcaster a financial loss of R364 634 625”.

Speaking through his lawyer last week, Mulaudzi denied any wrongdoing: “It is a well-established fact that the current [SABC] leadership has failed to lead the institution in the right direction. There has been a developing trend in the organisation for a while now, whereby senior managers who have served the SABC with integrity, have either been dismissed or resigned following sustained pressure by the current leadership.

“The forensic investigation of the management team at sales [Commercial Enterprises] by the current leadership is intended to justify underhanded tactics to get rid of professionals that have dedicated their lives to serve the organisation.”

The SABC said it would not comment on the ongoing disciplinary cases or those in future but confirmed Mulaudzi’s dismissal.

“Mulaudzi faced 11 charges of misconduct, including fraud, corruption and doing business with his wife’s company without declaring this to the SABC.

“He was found guilty on all 11 charges and the chairperson of the disciplinary hearing recommended his immediate dismissal from the corporation,” the SABC said in a statement.


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Abram Mashego

Senior journalist | City Press

+27 11 713 9001
abram.mashego@citypress.co.za
Media Park, 69 Kingsway Road, Auckland Park
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City Press is an agenda-setting South African news brand that publishes across platforms. Its flagship print edition is distributed on a Sunday.

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March 29 2020