CEO says SABC technically insolvent

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JOHANNESBURG - The South African Broadcasting Corporation (SABC) is technically insolvent, and has no choice but to embark on the mass retrenchment of workers in order to avoid total collapse, CEO Madoda Mxakwe said on Wednesday. The cost-cutting measures that were already implemented saved the SABC R463 million in the past two quarters but was not enough, he added. Advertising accounted for 85% of the revenue. "If you look at our net loss to date, we are sitting at R323m. The focus loss for the financial year is at R805 million. This brings us to the focal point of reviewing all operations and biggest cost drivers [to] ensure a commercially viable corporation," Mxakwe told reporters in Auckland Park. "The cost of the public mandate has been sitting at R 4.2 billion, projections show that costs in the next three years would be at R6 billion. We are technically insolvent as the SABC and cannot fulfill our monthly obligations...we are not able to fulfill our financial obligations. If we were a private company, we would have been recapitalised, and this is why we are engaging all stakeholders." The threat of insolvency was increasing, worsened by the wage bill which totalled R3.1 billion.

"There has been a narrative that a lot of this [wage bill] is consumed at senior level, we need to address this. The total costs to company of three executive directors is at R12.5 million -- that's 0.12% of the overall wage bill. In terms of group executives, costs are at R25 million. Then you have the cost of freelancers, which is at R500 million per annum," said Mxakwe.

The SABC has 495 managers, whose combined annual costs are at R635 million. The managers' wage bill shoots up to R1 billion when junior managers are included, he said.

"When we embarked on this process, we not just focusing on any particular layer. We want to ensure that the structure we come up with is fit for purpose to take the SABC to the next level. As executives, we are committed to ensure that we turn around SABC. We have a choice to say, do we do what is right in taking this decision or allow the SABC to collapse."

Group human resources head Jonathan Thekiso said over 10 years at the public broadcaster, salary increments were implemented even though the revenue and the consumer price index was very low.

"Maybe we might want to attribute this to the artistry and wizardry of the negotiation teams in the past, but whatever it is that was happening did not take into consideration where the [consumer price index] CPI was. At some point in time, revenue growth was sitting at - 7.3%, CPI at 5.4% and [the] salary increase was 4.8%. For the past 10 years, salary increases were consistently on the rise, while revenue was on the decline," said Thekiso.

He said section 189 notices to retrench as per the Labour Relations Act would be issued after conclusion of talks with the labour unions.

Former SABC COO Hlaudi Motsoeneng and his board are blamed for the financial collapse of the SABC when he was at the at the helm.

The SABC had to fork out millions in legal fees for litigation during Motsoeneng's tenure. His legal bill in his battle in court against the Democratic Alliance (DA) reportedly stood at over R5 million.

Furthermore, former public protector Thuli Madonsela's 'When Governance and Ethics Fail', found that poor corporate governance, poor human resources management and a dysfunctional board.

The probe found that Motsoeneng’s salary progression was irregular for receiving salary appraisals three times in a year when he as an executive manager. He gave himself a salary of 63% in 12 months while COO.

Thekiso said the SABC plans to recoup all monies spent irregularly through appointments and salary increments costing the SABC R60 million. He said in some instances, the formal job of permanent employees was sometimes done by freelancers, therefore inflating the wage bill.

"The organisation has been in a position to unravel some of the irregularities that happened over time. There were ad hoc increases implemented without any just course, we are delving into those. Secondly, there were irregular appointments and promotions done without proper processes...these is no paper trail or documentation. These are essentially cost the SABC R60 million," he said.

At least 981 permanent employees, including executive directors, face retrenchment. Half of the SABC's 2 200 freelancers' services will also be terminated.

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African News Agency (ANA)