There can be no doubt that the SABC is experiencing its worst crisis ever since 1994. Quintessentially, the problem is a meltdown in corporate governance. For this, we must all take a collective responsibility. [Interjections.] This is not a time for finger-pointing - be it against the Communications Ministry and department, the SABC Board and the executive management of the corporation or the committee itself. What we should be focusing on are the lessons to be learnt from this dreadful debacle and on charting a way forward.
On 17 June 2009 the committee took an extraordinary step of instituting an inquiry into the SABC Board in terms of section 15(a) (1)(b) of the Broadcasting Act. It also relied on the Rules of Parliament. Our inquiry focused on the board as a collective entity, rather than on any particular member of the board.
The inquiry was necessitated by the wide range of media reports relating to the resignation of the majority of board members, including the chairperson and the deputy chairperson; the cash flow crisis of the SABC; the possibility of strike action by SABC employees; the protest by independent producers relating to the non-payment of fees to them; the various legal battles between the former group chief executive officer and the board; and the perceived breakdown in effective corporate governance at the corporation.
The committee's inquiry focused on a number of issues. We raised questions about the status of the board's membership and whether or not the board was functional and able to exercise its fiduciary responsibilities. We also examined the financial and funding crisis of the SABC and the ability or otherwise of the executive management to effectively manage its operations. We explored the tensions among board members themselves and between the board and the executive management.
At the end of the inquiry, the only consolation and solace the committee shares is that it is able to present a consensus report to the House. All the political parties that participated in the inquiry commonly agreed on the findings. We can confirm today that the SABC is, indeed, in a state of paralysis. This is evident from its current financial position. The SABC reported a financial loss of R839 million for the last financial year as a result of declining revenue and unrestrained expenditure over this period. [Interjections.] This explains its current cash-flow crisis.
There is also a breakdown in effective corporate governance. There is a lack of common purpose and cohesion among members of the board and the executive management. This has impaired their ability to carry out their statutory fiduciary responsibilities. The tensions between some members of the executive management and some members of the board had damaged their relationship to the overall detriment of the SABC.
Currently, there remains confusion about the actual status of board membership owing to the resignations not being properly addressed by members to the President in terms of section 15(2) of the Act. But we are quite certain that even if board members are able to constitute a quorum, the board is in effect dysfunctional. In a matter of days it will not be able to constitute a quorum as the resignations will come into force.
There is evidence of serious lapses in sound operational management of the SABC by the executive management. We believe that this warrants urgent attention by the government and the shareholder. Finally, it is our view that the board does not enjoy a healthy relationship with the shareholder that is necessary for timeous reporting and proper accountability.
The upshot of this distressing state of affairs is that board members themselves do not believe that they have the will and tenacity to continue fulfilling their duties. They also believe that they do not enjoy the confidence of political office bearers. At the end of the inquiry, they, in fact, called upon the House to dissolve them so that a fresh start could be made.
The committee therefore concluded unanimously that there was no possibility of the current board being collectively able and legally competent to fulfil its statutory duties. We therefore recommend that the House adopt a resolution recommending to the President the dissolution of the entire board, and that an interim board be nominated as soon as possible to manage the affairs of the corporation for a period of six months.
Where do we go from here? Firstly, if our recommendation is supported today, we must ensure that the interim board is appointed quickly. Secondly, at its meeting yesterday the committee requested the office of the Auditor-General to investigate allegations relating to the manipulation of tenders, conflicts of interest, and other financial irregularities at the SABC. Thirdly, it is essential that a clear hierarchy of authority is established within the governance structures of the SABC and that the rules of business and decision-making are clearly understood by all. And, lastly, we trust that the future interim board and the shareholder will act speedily to fill the vacant posts at the senior executive management level of the corporation.
Finally, the committee expresses its sincere gratitude to board members, the executive management, and the officials from the Department of Communications for their participation in this inquiry. It also wishes to thank other stakeholders in civil society for the written submissions forwarded to the committee.
On my own behalf I wish to thank each and every member of the board for the service that was rendered under wearisome circumstances to the corporation. Each one of you is a talented and highly skilled South African. In my eyes you remain true patriots. Given another chance and under different conditions, I have little doubt that you will continue to make a profound contribution to our democracy. I commend the Report to the House. Thank you. [Applause.]