Muthambi and Motsoeneng's hostile takeover of the SABC

8 February 2015

Note to Editors: this statement follows a letter that the DA sent to the full SABC Board on Friday

Communications Minister Faith Muthambi has signed a secretive SABC Memorandum of Incorporation that strips the SABC Board of its statutory powers.

The Memorandum gives Minister Muthambi and Chief Operations Officer Hlaudi Motsoeneng overall control of the SABC. As such, it stands in clear violation of section 13 (11) of the Broadcasting Act that gives the SABC Board the authority to "control the affairs of the Corporation."

If allowed to stand, this Memorandum will turn the SABC from a public broadcaster into a state broadcaster. It is not an exaggeration to say that this ‘hostile takeover' poses the gravest threat to SABC independence since 1994.

The Memorandum of Incorporation (MOI) signed by Minister Muthambi in September last year, replaces the SABC Articles of Association signed in 2011. The new MOI gives Motsoeneng and Muthambi control over the SABC, with the Board reduced to a rubber stamp. 

Section 5 of the MOI requires the Board to seek the approval of the Minister on any rule changes relating to the governance of the SABC - this is a significant reduction in the Board's autonomy. There was no such requirement for ministerial approval of rule changes in the 2011 Articles of Association.

Section 13.5.2 of the MOI empowers the Minister to waive the requirement for the Board to advertise and shortlist candidates who apply for the positions of Chief Executive Officer, Chief Operations Officer and Chief Financial Officer. 

This appears to be an ex post facto attempt to legitimise Motsoeneng's appointment as COO which was made without shortlisting and advertising as required by the Articles in force at the time. This amendment could allow for a similarly flawed appointment process to be carried out for the vacant post of CEO, paving the way for Motsoeneng to be appointed.

Section 13.5.7 gives the Minister absolute authority to decide whether the CEO, COO and CFO should be re-appointed and the terms and conditions of his or her re-appointment. This is a departure from section 19.1.1 of the previous articles that gives the Board control over the re-appointment process. This means that the Minister now has the power to unilaterally re-appoint Motsoeneng when his contract expires.

Section 13.6.3 states that the Board can only discipline and/or suspend the CEO, COO and CFO with approval from the Minister. This gives Muthambi the power to block any move by the Board to discipline Motsoeneng, as directed by the Public Protector in February 2014.

Previously, in section 19.2 of the Articles, the Board was empowered to appoint an acting CEO, COO and COO. This power is now removed. Section 13.7.1 of the MOI says that, "in the event of the CEO position being vacant for whatever reason, the COO shall act in that position upon approval of the Minister." This means that Muthambi now has the power to make Motsoeneng the acting CEO.

Furthermore, section 13.7.4 gives the Minister the sole authority to extend an acting CEO, COO and CFO's contract beyond an initial three-month contract. In other words, Muthambi now has the power to unilaterally keep Motsoeneng on as acting CEO for the foreseeable future.

Section 14.3.1.3 gives the Minister the power to recommend the removal of a Board Member, whereas section 13.1.5 of the previous Articles of Association held that this power was the preserve of the Board. It was on the basis of the new MOI that Muthambi sent letters to Board Members in December last year threatening them with removal from office. The DA maintains that this is in breach of section 15 and 15A of the Broadcasting Act that stipulates only Parliament and the Board have the power to recommend the removal a Board Member.  

Section 20.2.4 introduces a new clause that makes the SABC liable to pay the legal fees of Directors "to defend litigation in any proceedings arising out of the Director's services to the Corporation." This is clearly to ensure that Motsoeneng is afforded an endless supply of public money to fund the court case over his appointment as COO.

In summary:

1. The MOI gives Muthambi the power to veto any rule change proposed by the Board relating to the governance of the SABC.

2. It gives Muthambi the power to recommend the removal of Board Members, in clear contravention of the Broadcasting Act.

3. Muthambi now has the power to make Motsoeneng the Acting CEO and keep him there for as long as she wishes.

4. If Muthambi wants Motsoeneng to be appointed as the permanent CEO, she can waive the requirement that the position needs to be advertised and other candidates shortlisted.

5. If Muthambi wants to re-appoint Motsoeneng when his contract comes to an end, she can do so unilaterally.

6. If the Board decides it wants to discipline and/or suspend Motsoeneng, as the Public Protector directed it to do last year, Muthambi can block the Board from doing so.

7. The SABC is liable for Motsoeneng's legal fees in the DA's court case to have his appointment reviewed and set aside. 

In short, the Memorandum of Incorporation removes the power of the Board to run the SABC, and puts in place a set of rules to ensure the protection and promotion of Hlaudi Motsoeneng.

The implications of this MOI are profound for the independence of our public broadcaster and, by extension, our constitutional democracy. Perhaps this is why, unlike previous amendments, the Minister never officially announced the MOI when it was signed on 26 September 2014.

It also appears that the amended MOI was never approved at a General Meeting involving the SABC Board, as required in section 9.7.2(a) of the 2011 Articles of Association. This much is clear from the first page of the MOI that indicates it was adopted by a special resolution of the shareholders, with no mention of the Board or a General Meeting. If true, this would open the MOI up to a legal challenge on procedural, as well as substantive, grounds.

I wrote to the Acting SABC Board Chairperson Prof Mbulaheni Obert Maguvhe on Friday 6 February to enquire:

Whether or not a resolution was approved at a General Meeting to amend the 2011 Articles of Association;

Whether or not the Board has ever discussed and/or debated the Memorandum of Incorporation; and

Whether or not the Board intends to challenge the legality of the Memorandum of Incorporation.

The Board cannot sit back and allow the Minister and Motsoeneng to usurp their powers. But the responsibility to protect the SABC's independence rests with every South African. Civil society organisations and parties from across the spectrum need to work together to fight this hostile takeover that will destroy independent public broadcasting in our country.

Text of the letter from Gavin Davis MP to the Board of the SABC, February 6 2015

The Chairperson of the Board Professor Mbulaheni Obert

6 February 2015

Dear Professor Maghuve

SABC Memorandum of Incorporation of 26 September 2014

On 26 September 2014, Minister Faith Muthambi signed a Memorandum of Incorporation of the South African Broadcasting Corporation.

It is my contention that this Memorandum of Incorporation (MOI) will destroy the independence of the public broadcaster. It will do so by giving the Minister overarching control of the running of the SABC, in contravention of section 11 of the Broadcasting Act that empowers the Board to "control the affairs of the Corporation." As such, the MOI is almost certainly unlawful.

The MOI invalidates the power of the Board in several ways, including the following:

1. Section 5 of the MOI requires the Board to seek the approval of the Minister on any rule changes relating to the governance of the SABC.

There was no such requirement for ministerial approval in the 2011 Articles of Association that this MOI supersedes.

2. Section 13.5.2 gives the Minister new powers to waive the requirement for the Board to advertise and shortlist candidates who apply for the positions of Chief Executive Officer, Chief OperationsOfficer and Chief Financial Officer. This is a transgression of the prescripts of good governance.

3. Section 13.5.7 gives the Minister the sole authority to decide whether the CEO, COO and CFO should be re-appointed and the terms and conditions of his or her re-appointment. The Board is bypassed altogether, unlike in the 2011 Articles of Association.

4. Section 13.6.3 states that the Board can only discipline and/or suspend the CEO, COO and CFO with approval from the Minister. Previously, the decision was the Board's alone.

5. Previously, in section 19.2 of the Articles, the Board was empowered to appoint an acting CEO, COO and COO. This power is now removed. Section 13.7.1 of the MOI says that, "in the event of the CEO position being vacant for whatever reason, the COO shall act in that position upon approval of the Minister."

6. Section 13.7.4 gives the Minister the sole authority to extend an acting CEO, COO and CFO's contract beyond an initial three-month contract.

7. Section 14.3.1.3 gives the Board or the Minister the power to recommend the removal of a Board Member, whereas it was previously up to the Board alone. This also appears to be a breach of section 15A(1) of the Broadcasting Act that stipulates only Parliament has the power to recommend the removal of a Board Member.

8. Section 20.2.4 introduces another new clause that empowers the SABC to pay the legal fees of Directors "to defend litigation in any proceedings arising out of the Director's services to the Corporation."

In summary, my reading of the MOI is that it gives the Minister the power to appoint Executive Directors without following normal prescripts of good governance, to re-appoint an Executive Director if she so chooses and to block any disciplinary action recommended by the Board against an Executive Director. In terms of the MOI, the Minister also has the power to block any rules made by the Board and to unilaterally recommend the removal of Board Members.

Not only does this MOI allow the Minister to usurp and veto the powers of the Board, it renders it impossible for the Board to exercise authority over Executive Directors. This is because, in terms of this MOI, Executive Directors are accountable to the Minister and not the Board.

On the covering page of the MOI, it notes that the document was adopted by a special resolution of the SABC's shareholders. This appears to be in contravention of section 9.7.2 of the 2011 Articles of Association, which states that no resolution amending the articles "shall be effective if not passed at a General Meeting."

Please can you confirm the following:

Whether or not a resolution was approved at a General Meeting to amend the 2011 Articles of Association;

Whether or not the Board has ever discussed and/or debated the Memorandum of Incorporation; and

Whether or not the Board intends to challenge the legality of the Memorandum of Incorporation.

Given the profound urgency of this matter, please address these questions by close of business on Wednesday 11 February 2015.

Kind regards

Gavin Davis MP

Shadow Minister of Communications

cc.

Ms H Zinde

 Mr K Naido

Ronny Lubisi

N A Tshidzumba

Ms N M Mhlakaza

Ms R Kalidass

Mr V Mavuso

Ms L T Khumalo

Statement issued by Gavin Davis MP, DA Shadow Minister of Communications, February 8 2015

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