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An SA Revenue Service (Sars) bill of more than R2 million is the main reason the Border Rugby Union is having its affiliation with SA Rugby suspended indefinitely while the governing body attempts to put a rescue plan in place.
In a decision that was made on Wednesday by SA Rugby’s executive committee and announced on Friday, Border – which avoided liquidation at the 11th hour in April – will go under administration for the second time in four years after Sars lost patience with it and recently attached its entire broadcasting rights grant of R600 000.
According to a source close to the case, Sars had repeatedly contacted Border over the past eight months to try to get it to thrash out a payment deal of sorts. However, its requests repeatedly fell on deaf ears as the provincial union’s leadership ignored them.
The result was that Sars took a third of Border’s grant last month, which left the union able to pay only 70% of its staff salaries.
Sars has now upped the ante by notifying SA Rugby that it will attach the whole amount this month, which means none of Border’s employees – 22 players and 35 staff members – will be paid at the end of the month.
“Where the problem started is that Border’s overheads are much more than its income,” said the official.
“It just had enough money to pay salaries, but not enough to pay Sars’. If it had been a business with good corporate governance, someone should have said: ‘We’re breaking the law of the land here, we should pay tax.’ But they all hoped nobody would notice.”
An example of the accounting at Border was an explanation by one of the union’s officials of what the plan was to pay Sars: “We thought, with the players’ contracts coming to an end this month, we’d be able to pay Sars from November, but they pounced before that.”
While that may have been a solid plan in desperate times, it sounds like Border spurned the chance to communicate its plans to Sars, something that also irritated SA Rugby. It, too, was ignored by its affiliate over a five-week period when asking to meet to discuss ways of solving the problem.
“Other members with similar challenges have engaged with us, but Border has repeatedly missed scheduled engagements both with the SA Rugby executive council and the finance committee. We were left with no alternative.
“The Border region is a very important pipeline for the emergence of black players and we could not stand by and watch it fall into complete disrepair. However, we are aware it faces significant financial challenges and SA Rugby does not have a magic wand to fix it at a stroke.”
The Border official said the whole debacle could have been avoided had the union’s leadership made a decision to approach SA Rugby and ask it not to deduct a long-running loan of at least R8 million it has been servicing – since the union was run by the late Andre Killian – from its monthly grant to allow it to make the Sars payments.
Going forward, the union will now get an administrator who has been tasked with getting to the bottom of Border’s financial troubles and reporting back to SA Rugby by the end of the year. The emphasis will be on paying out players and retrenching staff.
“They shouldn’t send someone on their own there, only for that person to not get the necessary support like the last administrator. They need to get everyone around the table and talk about how to solve it, once and for all,” said our source.
The official also said that, if the “minor tweaks” required were put in place, the union would have a lot of potential because there was an interest in investing there.
“There are sponsors and businesses who want to be involved, but without a chief executive, they won’t be because there’s nobody to look after their money.”
