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Almost R50 million in royalty fees paid to music record companies by the SABC has gone missing, reports the City Press.
Music executives claim they have tried to get clarity on the issue several times but are met with a lack of information.
The latest allegations claim that the money is being deposited into a trust account that belongs to a former SABC employee.
Citing sources, the City Press reported that the SABC still pays the royalties despite these allegations.
Airco
Not long after Hlaudi Motsoeneng was appointed SABC CEO in 2010, the broadcaster reportedly signed an agreement to pay the Association of Independent Record Companies (Airco) R320,000 per month for music video broadcasting rights.
Motsoeneng was a controversial figure and was eventually fired in June 2017 after a press briefing in April was determined to have brought the SABC into disrepute.
City Press reported that former SABC legal adviser Nhlanhla Sibisi made the deal happen and earned himself an 8% commission for his troubles.
Soon after the deal was signed, Sibisi left the SABC and became a director at Airco.
Quoting independent music executive Brian Mokoena, the paper reported that this practice is known in the industry as “throwing the javelin.”
“You set up a very lucrative contract between your employer and a company, and then you resign and join that company to enjoy the spoils,” he said.
Hlaudi MotsoenengAirco founding member Harvey Roberts, who quit in protest after Sibisi’s agreement was signed, said Airco was never meant to be a royalty collection agency.
“It was started as an association for independent record labels to prevent them from being overshadowed by the large international record companies,” said Roberts.
“It was Nhlanhla, who worked for the SABC at the time, who negotiated that Airco should become a collection agency.”
Roberts said although it had been claimed for the deal that Airco had 2,000 members, this was impossible as “there have never been that many independent recording companies” in South Africa.
He alleges that these numbers were deliberately inflated to get more money — and that the R320,000 monthly royalty payment was about ten times more than an organisation like Airco would be entitled to.
Well Run Trading
However, this is not where the story ends, as City Press reported that Airco’s financial statements show it has never received any money from the SABC.
Rather, the money was initially paid into an account of a private company called Well Run Trading.
This company was set up in 2011 by Airco chairperson Mandla Maseko and Dodo Monamodi, the current Independent Music Performance Rights Association chairperson.
In 2017, however, the company was de-registered, and the payments have since been paid into the trust account of former SABC legal adviser Thabang Mathibe.
Response
Mathibe confirmed that the payments are being made and referred further requests to Airco spokesperson Stanley Khoza.
Khoza reportedly said Airco remains functional and legitimate.
“Airco has grown tremendously from 2013 to date. Our members are proudly independent labels and their artists,” he said.
Khoza did not disclose membership numbers or names, saying he was not obliged to reveal this information.
He did not respond to City Press’s other questions regarding the SABC contract and payments.
Financial struggles
This is the latest in a long history of financial challenges facing the SABC.
The public broadcaster has struggled to convince customers to pay their TV licences over the past few years, with only 18% of licence holders paying their fees for 2021.
For this reason, as well as an underperformance when generating advertising revenue, the SABC expects its overall 2022/23 revenue to be R1 billion below budget.
To turn the public broadcaster around, former communications minister Khumbudzo Ntshavheni said that the ANC supports scrapping TV licences altogether in favour of a general household media levy.
This levy would be “technology-neutral” and based on a household’s ability to access SABC services, rather than whether they actually use them.
This is similar to Germany’s Rundfunkbeitrag, which comprises a monthly levy that helps fund public broadcasting.
The recently promulgated SABC Bill did not include the proposed change to South Africa’s TV licence regime.
“Unfortunately, the SABC Bill retains the outdated TV licence system,” said the SABC.
“[It] does not take into account the SABC’s view that it should be replaced by a technology-neutral, public broadcasting household levy that would exempt the indigent and should be part-collected by the dominant pay-TV operator.”
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