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SABC-MultiChoice deal faces probe

13 Mar 2017

MultiChoice's controversial contract with the SABC is at risk of being cancelled after a parliamentary inquiry recommended the broadcaster's interim board should launch an independent investigation into the deal.

President Jacob Zuma is expected to appoint the interim board later this week.

The inquiry's final report, adopted last Tuesday, included the MultiChoice contract in a list of "questionable transactions" that should be probed.

The R570m five-year contract was signed by former chief operations officer Hlaudi Motsoeneng in 2013.

In terms of the deal, the SABC supplies MultiChoice's DStv platform with a 24-hour news channel, an entertainment channel called Encore and access to the public broadcaster's archives.

The inquiry heard contradictory evidence from witnesses about whether the SABC's archives were still accessible to the broader public or available only on pay-channel DStv, which would violate the Broadcasting Act. Before the contract was approved, former board member Krish Naidoo, an attorney, had advised the board it was illegal.

The inquiry found the SABC's about-turn in its encryption policy, which would have given it an edge over DStv, "appears to have been the result of conditions imposed by the MultiChoice agreement".

In its submission the SABC denied this, claiming its decision was based on sound commercial concerns. However, industry sources told Business Day the SABC was grossly underpaid. They pointed out that e.tv received about R400m a year for providing MultiChoice with a single news channel, eNCA.

"We were in negotiations for MultiChoice to pay R500m a year. It essentially means the SABC was robbed of R2bn over five years," said one source.

Despite this Motsoeneng was paid a success fee of at least R10m in 2016, motivated by acting CEO James Aguma. In a letter seen by Business Day, Aguma said "Mr Motsoeneng single-handedly negotiated this contract [and] the SABC owes the COO [chief operating officer] compensation for the success of the existing contract".

In a statement, MultiChoice defended the contract and denied suggestions made by witnesses to the inquiry that the SABC had changed its policy on encryption after Motsoeneng held side meetings with MultiChoice executives.

MultiChoice stressed the SABC had adopted a position opposing encryption as early as 2008.

Source: Business Day

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