ON THE SOUTH AFRICAN BROADCASTING CORPORATION PRESENTATION     ON THE SOUTH AFRICAN BROADCASTING CORPORATION 17 March 2015  the doc Republic of South Africa

PRESENTATION OUTLINE MINISTER’S OVERSIGHT ROLE SABC BOARD OF DIRECTORS AMENDMENT OF MOI SABC AUDIT MATTER KEY CHALLENGES INTERVENTIONS CONCLUSION the doc Republic of South Africa

Minister’s Oversight Role The Minister derives her oversight role in terms of inter alia the following legal instruments:- The Constitution of the Republic of South Africa Act No. 108 of 1996 Broadcasting Act No. 4 of 1999 Companies Act No. 71 of 2008 SABC Memorandum of Incorporation Board Charter Shareholder the doc Republic of South Africa

Minister’s Oversight Role Ministers Interaction with SABC Board The Minister is the shareholder representative, representing the State as the Shareholder in the SABC. The Minister relationship with the SABC Board is governed by the provisions of the Companies Act, Shareholders Compact, Board Charter, and the MOI the doc Republic of South Africa

Minister’s Oversight Role (Continues) Executive Directors Appointments The Minister confirmed the appointments of the Chief Operating Officer and Chief Financial Officer who are also Executive Directors of the SABC Board. Note (The court application by the DA in respect of Chief Operating Officer’s positions is pending before the High Court of South Africa – Western Cape High Court, Minister is bound by the sub judice rule and therefore can not make pronouncement on this matter. The appointment of the Group Chief Executive Officer is pending and the decision will be made in due course. the doc Republic of South Africa

SABC Board of Directors The SABC Board of Directors is currently resolving some of the problems which were experienced by the the previous Boards, resolving Auditor General's queries or disclaimers, improving the ethical standard of Board Members and focusing on improving governance and stable leadership at the corporation. the doc Republic of South Africa

SABC Board of Directors (continues) Minister’s powers as a shareholder representative in terms of the Companies Act No. 71 of 2008, Section 71(1) (Minister had written letters to certain Board Members to explain their alleged misconduct pursuant to the provision of section 71 (1) of the Companies Act The Minister is also entitled in terms of the MoI, Shareholder compact and the Board Charter to intervene in resolving SABC Board Members alleged misconduct. the doc Republic of South Africa

Amendment of the MoI  The Minister has amended the MoI in terms of section 16 (1) (ii) of the Companies Act , the MoI is a document, as amended from time to time, that sets out rights, duties and responsibilities of shareholders, directors and others within and in relation to a company, and other matters as contemplated in section 15 The MoI is a shareholders’ document and therefore the shareholder is entitled in terms of section 16 (1) (ii) to amend during the shareholders meeting if it deems it necessary. the doc Republic of South Africa

Amendment of the MoI The Minister had amended the MoI to empower the Management Team of the SABC to appoint and to discipline staff. The amendments also corrected the grammatical errors which appeared on the original MoI

SABC Audit Matters SABC received a qualified audit opinion Areas inadequately controlled TV licences fee revenue and related receivables Property plant and equipment Deferred tax, tax payable and income tax Other payables Deferred government grant Mobile income IFRS Disclosures Irregular, fruitless and wasteful expenditure Findings on predetermined objectives in the Corporate Plan

Key Challenges Skills challenges and vacancies in the finance functions Inadequate & sometimes out-dated policies and procedures in key areas Inadequate monitoring of key control activities Anomalies in the reporting architecture that affected adequate oversight over key activities Inadequate assessment of tax risks Limited accounting systems applications reviews Inadequate corporate planning & reporting capabilities

Interventions Skills-Targeted recruitment of scarce skills and engagement of consulting firms PSP will address Preparation of financial statements Trade receivables Review of procurement process and revise SCM policies Conduct research on TV license revenue models, benchmark with other entities like Water Trading Entity (Department of Water & Sanitation) & UIF Dedicate a resource on the findings on Performance Report Revise the process to detect irregular, fruitless and wasteful expenditure

CONCLUSION The Ministry is open to Parliamentary suggestions to move South Africa forward . I THANK YOU