Iqbal Surve, left, and former Public Investment Corporation CEO Dan Matjila (Photos: Gallo Images / Foto24 / Lerato Maduna / Gallo Images / Phill Magakoe)

The media magnate is facing the PIC breathing down his neck for repayment of over R5-billion as staff face deep salary cuts.

An estimated 1500 staff, including journalists, have been warned of salary cuts of up to 45% from April at Iqbal Survé’s Independent News Media (INM) and the African News Agency (ANA).

In a letter that arrived without consultation with staff on Friday, 3 April, divisional heads wrote to staff members saying “Our payroll bill is one of our highest expenditures. Unfortunately, we are left with no alternative but to take the extreme measure of applying a salary reduction. This will come into effect from this month of April until such time as the situation has stabilised.”

The letter then sets out a complicated table based on five scenarios, the realisation of which will see cuts ranging from zero to 45% of salary packets. From the tone of the letter, it implies that the worst-case scenario – a cut of 45% – is likely. Staff are said to be panicking after the bombshell arrived on their emails as the first week of a Covid-19 lockdown ended and the economy showed signs of tanking.

Yet three weeks ago, one of the group’s magazines, Fast Company, announced a R200-million prize for tech start-ups. Neither Survé nor company spokesperson Lutfia Vayej responded to several requests for comment by the Daily Maverick. One of the questions was whether the prize money could not be diverted to the balance sheet to save jobs.

Despite this vanity project, the letters to staff reveal the dire straits tht Survé and his companies are in. With the Public Investment Corporation (PIC) breathing down his neck with threatened lawsuits for unpaid debts running into billions of Rand, it looks like his empire is crumbling with the added impact of the Coronavirus (Covid-19) on the business.

“The revenue levels we are currently achieving are insufficient to maintain our cost structures which were already bloated prior to this event. Early indicators for the month of April per discussions with various commercial heads in the business are that we will miss the revenue targets by as much as 40%-60% in some sectors,” said Takudzwa Hove, COO of Independent Media in a letter to staff.

The remaining staff at the African News Agency, which Survé once claimed was valued at over R7-billion, but which now has a handful of staff remaining and started retrenchments in September last year, received the letter similar to the INM’s. That letter was ostensibly signed by ANA CEO Vasantha Angamuthu.

But it is likely both letters were written by Survé or Ayo Technology CEO Howard Plaatjes (who is said to be Survé’s henchman) as they are almost identical and reveal some C-Suite panic at the group. Ayo Technology is another Survé family-controlled company funded by the PIC at R4.7-billion.

The ANA letter, for example, speaks about “reduced print orders (for newspapers) and reduced pagination across all our titles” when in fact it is an online news agency and PR distribution site for which there are no print orders or pagination (a reference to printed pages) limitations.

Is this really about Covid-19?

Daily Maverick asked Independent Media if the cuts were really a result of the impact of Covid-19 on the media economy or whether it was a result of PIC funding drying up after the release of the report of the PIC Commission of Inquiry into Report. The report recommended that a forensic review into all Survé’s dealings with the asset manager be started. Legal proceedings have started to get back the PIC money paid for the loans to buy Independent Media and to fund the listing of Ayo Technology at inflated valuation.

The PIC manages the pensions of government workers.

“…the Commission recommends that the PIC must conduct a forensic review of all the processes involved in all transactions entered into with the Sekunjalo Group and ensure that the PIC obtains company registration numbers of every entity in the Sekunjalo Group to be able to conduct a forensic investigation as to the flow of monies out of and into the Group,” said the report released on March 12 2020.

The inquiry was chaired by Judge Lex Mpati, with former Reserve Bank governor Gill Marcus and stockbroker and leading businessman Emmanuel Lediga. The report also directed that, “…Steps must be taken to recover all monies with interest due to the PIC, especially where personal or other sureties was a precondition to approval of the investment.”

Survé has always claimed to have turned around the media company he bought seven years ago from the rapacious O’Reilly clan which asset-stripped and exported profits to feed their own declining empire in Ireland. But the PIC exposed that as a lie as did this amaBhungane report.

In effect, Survé still owes the PIC R1.5-billion for the original purchase of Independent News and Media (as it was then known) in 2013. With former PIC boss Dan Matjila, he fandangoed a share swop to trade the debt for equity in the company called Sagarmatha which was extravagantly valued in what the PIC report calls a “highly questionable proposal for the PIC to even consider”.

The Sagarmatha listing failed in April 2018, ending the pyramid. The PIC report also said that “The ‘close relationship’ between Dr. Matjila and Dr Survé created top-down pressures that the (PIC) deal teams experienced to get the requisite approvals.”

The upshot of the report is that Survé’s funding tap to keep his companies going has disappeared with the report’s publication and with a new leadership in place at the PIC. Chairperson Reuel Khoza is determined to get loans repaid and promises the culprits their comeuppance.

It appears as if Covid-19 is giving Survé the cover he needs to put the blame on vis major and his staff will be the final victims of his ill-fated media adventure.

African News Agency (ANA) and a high-living Doc

The remaining staff at ANA, which Survé once valued over R7-billion after a Chinese development fund bought a five percent stake for R357-million in transactions that still beggars belief, now also face deep salary cuts adding to the anxiety of a retrenchment exercise launched in September 2019. The PIC report shows how funds from Ayo Technology, another confection of an investment funded at over R4-billion by the PIC, were funnelled into and out of and into ANA. It also reveals, through a bank statement analysis, how the Chinese funding was almost immediately moved out of ANA into other parts of the Survé empire and to his own accounts. This suggests Survé may only ever have intended the agency as a vehicle to move funds around and as a vanity project to build his African expansion plans and project himself as a leading African businessperson.

Survé’ lives the high life at his base in Cape Town where he now keeps office and home at the exclusive Silo apartments on the Waterfront. amaBhungane revealed in February that just one of the four apartments Survé owns is worth an estimated R24-million, an amount that could stave off the salary cuts for his 1500 staff members.

amaBhungane wrote in an article that was unchallenged by Survé:

Tricia Apollis is a former Independent journalist and was a personal assistant to Survé who has accompanied him around the world when he travelled to BRICS summits and the World Economic Forum. She is evidently very close to him.

She gives her residential address as a unit in the extremely expensive Silo development in Cape Town’s V&A Waterfront.

This is one of four units in that complex owned by Pro Direct Investments 112 – a private company with Survé and his two sisters as directors. The apartment was worth about R24.5-million when Survé bought it in 2018.

So the company getting money from Ayo was co-founded by Survé’s personal assistant who is living in his apartment.

Asked if he could consider selling one of the apartments or seeking a mortgage to keep the wolf from the door of his staff, Survé did not reply. This story will be updated with comment should Vayej or Survé respond. DM

Update: INM and ANA published the following statement on Saturday:

JOINT STATEMENT

Independent Media and African News Agency announce measures to counter impact of Covid-19

We would like to begin with a public vote of thanks to our editorial teams and support staff who are working painstakingly to continue to bring news to our loyal readers and subscribers and often at risk to themselves. This is as a result of the spread of Covid-19 and the ensuing national lockdown period to contain it.

The lockdown has exacerbated the sluggish economy and has led to a number of media houses experiencing a negative impact on both their advertising and circulation revenue. The South African National Editors Forum (SANEF) also released a statement, earlier this week, calling for continued support for media companies, especially during this time, to mitigate further impact on the industry.

But impact there is. It has affected our businesses too.

Independent Media and African News Agency’s (ANA) senior management teams have already implemented several interventions to ensure the sustainability of these businesses during the Covid-19 crisis and beyond. These include stringent cost reductions across the supplier chain, procurement, logistics, printing and syndication costs.

Salary reductions will also now be implemented with the highest earners required to sacrifice the biggest percentage reduction and the lowest earners being the least affected. Circumstances will be continuously monitored and assessed with interventions modified according to the business environment and business impact. The news was conveyed to staff at both organisations on Friday 3 April 2020.

This was not an easy decision to make or take, but both companies consider the move to be a necessary and responsible approach to safeguarding the employment of the approximate 2000 personnel at these establishments.

It is also a proactive measure, as it is expected that media businesses, like many other businesses and industries, will be impacted for at least three to six months. In making the necessary reforms now, Independent Media and ANA are preparing for the inevitability of a different working world post Covid-19, but one that we trust, will be sustainable for our companies and our staff.

Our communications with our staff have been open, honest and transparent. It has, however, become subsequently necessary for ANA and Independent to issue this joint and clarifying public statement, given the wholly inappropriate and insensitive line of questioning the companies have received from some members of the competing media overnight.

Independent Media and ANA jointly denounce the petty attempts by these publications and their journalists, to use our sustainability measures and actions to perpetuate their ongoing smear and propaganda campaign against our businesses and in particular, our executive chairman, Dr Iqbal Survé.

ANA and Independent stand united with all media colleagues across the country and the world. We are all in the same boat and for once, we are all on the same side. #FlattenTheCurve.

Our deeply considered and proactive measures to protect our people should, therefore, be welcomed, and not used to score cheap points for a repeated attack on either company or their Chairman, Dr Iqbal Survé. Sekunjalo Investment Holdings has independently supported the operations of both companies and will continue its efforts to safeguard a free and transformed press in South Africa throughout this process and these challenging times. Dr Survé and the entire Sekunjalo Group, are highly appreciative of the efforts the executives at Independent and ANA have done to secure staff and the Group stands united behind us.

The continued tactics to undermine the Sekunjalo Group and its underlying entities, are divisive and most definitely not in the spirit of unity, which we are all striving for at this juncture.

The media are therefore respectfully requested to refrain from insidious remarks and questioning. They will simply not be entertained, and no response will be given. Genuine questions in the interest of news, we will happily answer. – Jointly Issued on Saturday 4th April on behalf of African News Agency and Independent Media.