PROGRESS REPORT ON IMPLEMENTATION OF RECOMMENDATIONS OF FINAL

PROGRESS REPORT ON IMPLEMENTATION OF RECOMMENDATIONS OF FINAL AD-HOC COMMITTEE REPORT

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS • The final report of the Ad-Hoc Committee on the SABC Board inquiry into the fitness of the SABC Board was adopted by the National Assembly in March 2017. • The committee found that the Board had for sometime prior to its collapse, failed to discharged its fiduciary duties, adhere to the Board charter and carry out its duties as contemplated in Section 13(1) of the Broadcasting Act. • The final report contained 33 recommendations – 24 of which was expected to be implemented by the Interim Board and 9 by Parliament.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS RECOMMENDATION ACTION TAKEN 1. Investigate validity of MOI signed in October 2014 and recommend amendments to align it to the Broadcasting Act 2. Company secretary should ensure that members of the interim Board are inducted within a reasonable time 3. Board takes reasonable steps to regularise previous decisions that may pose a financial or legal risk. The Interim Board had addressed correspondence to the Minister of Communications to establish which MOI was currently in force. Thereafter the Board will consider the validity of MOI. Induction was done over a period of 3 days from 9 -11 April 2017. This is an on-going process at Board level and subcommittee meetings. A number of decisions have been taken regularise the previous decisions that may pose financial or legal risks, including reputational risk. Briefly, the decision to continue to defend the matters that may pose risk to the Commercial viability of the SABC and withdrawal of court matters that are of no value add to the Corporation, but the Corporation continues to incur legal costs. Through the Shareholder, the Interim Board has met with ICASA to establish matters that were of concern and in front of Court, for example the Editorial Policy, 90/10 local content issue and work to address these matters underway.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 4. Establish Board subcommittees All Board subcommittees were established in April 2017 and due to the size of the Interim Board some committees have been combined to avoid an increase in a number of meetings. The Committee are in no way delegated to take over the Boards responsibilities. All Committees have met and made certain recommendations to the Board for approval. Audit & Risk Committee: The Committee has held its meetings and recommended to the Board cancellations of certain contracts that do not add value to the Corporation and subjected some contracts that had been highlighted in the Ad Hoc Committee Report to the SIU and Internal Forensic Investigation. Finance, Investment, Procurement & Technology Committee: The Committee has met and considered the Digital Library Strategy and the project for Lifts and Escalators in order to improve the safety of the staff. Human Resources Governance and Nominations: The Committee has met and dealt with HR related the recommendations of the Ad Hoc Committee and made recommendations to the Board, which are included in this report.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 5. Initiate The Board has commissioned an SIU Forensic Audit investigation on fruitless and wasteful disciplinary action expenditure incurred in the period between April 2012 and March 2017. against any official Forensic Audit to be conducted by SIU on all appointments, promotions, salary who made and increases and bonuses paid in contravention of the policy of the Corporation and as permitted irregular, contained in the recommendations in the Public Protectors report, the final report of fruitless and wasteful the Ad-Hoc Committee, and other specific matters brought to the attention of the expenditure section Interim Board. 51(e)(iii) of PFMA). Internal Audit has been tasked to conduct a forensic audit on the following matters: 1. All irregular expenditure incurred in the period between April 2012 and March 2017. 2. The contract with Infonomix to develop the websites; 3. refurbishment of escalators; 4. The contract with Asante Sana to provide certain services; 5. services; 6. Thecontractwith. Lesaf. Consultingtoprovideconsultancyservicesinconnectionwith the collection of TV licences.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 6. Institute independent forensic investigation into questionable and irregularly-awarded contracts. Contracts with Vision View and Sekela Xabiso have been submitted forensic audit by the SIU. Licence collection fees contract with Lorna Vision has been cancelled and submitted forensic audit by SIU. Meetings have been requested with Multi. Choice and TNA to discuss current contracts and determine relationship going forward. 7. Evaluate the feasibility of entering into agreements with rival broadcasters (ANN 7 and Multi. Choice (DSTV). 8. Take appropriate action against current and former employees and Board members who are found to have been complicit in the SABC incurring wasteful expenditure as a result of irregular activities. The necessary documents have been submitted to the Public Protector as that office is investigating the SABC’s relationship with TNA. • Awaiting forensic audit by SIU.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 9. Submit progress report to Parliament Ongoing 10. A decision has been taken to expedite the permanent filling of the positions of GCEO, COO, CFO, Group Executive Radio and Chief Audit Executive. Currently discussions are underway with the Recruitment Agency to place the adverts GCEO, COO, Group Executive Radio and Chief Audit Executive in this regard. It is the Board’s understanding that there is a CFO who is currently acting as AGCEO and the Speaker of Parliament has been informed accordingly. A date to contract the AGCEO is being secured and once the Board has contracted with the AGCEO, the Performance Contract will be cascaded to the levels below and it would be ensured that all staff members enter into Performance contracts. suitably qualified people 11. Enter into performance agreements with employees within 60 days.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 12. Start the process of appointing a new Company Secretary. It is the Boards’ understanding that a Company Secretary was legitimately appointed on 19 August 2016, while the pervious Board was still quorate. Minutes were the appointment was approved have been provided and the Speaker of Parliament has been informed accordingly. The Interim Board has been advised that in line with the Companies Act, the SABC has an indemnity insurance cover for its Directors and Officers and that the legal costs of the previous Chairperson were paid by the insurance and not the SABC. 13. Ensure that all legal costs incurred as a result if the court challenge by the previous SABC Chairperson in his personal capacity is recovered as per Court Order. The Interim Board has been advised that in terms of the Companies Act, the SABC has an indemnity insurance cover for its Directors Officers and that the legal costs of the previous Chairperson were paid by the insurance and not the SABC. 14. Ensure all senior management appointees The Board agrees that vetting is compulsory for all current and new employees and tasked Management to provide the Board are vetted by SSA. with a timetable when the process would be completed.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 15. Review human resource policies to ensure compliance with legislation. The Board has noted that in total the Corporation had 49 Policies and that so far 13 had been reviewed and implemented. There are 12 Policies that are being consulted with the Bargaining Unit and the Board will be provided with an update on polices that are under review. 16. Investigate the nature of SSA’s activities within the SABC. The Board took a decision to review the transcripts of the Ad Hoc Committee enquiry in order to identify the individuals that alleged to have been put under surveillance and once determined, a report will be sent to the Inspector General of Intelligence to conduct an investigation in this regard.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 17. Perform an audit of all remedial action, recommendatio ns and orders that have been issued over the last 3 years to determine SABC’s compliance in this regard. SIU and Internal Forensic Unit have been tasked to deal with all the matters that had been raised by the Auditor General, Public Protector, ICASA and the courts of law and the following actions have taken place: The findings of the AG are being addressed by strengthening the Corporate Governance and financial management framework of the Corporation and by dealing with the irregular, fruitless and wasteful expenditure incurred since 2012. The SIU has been commissioned to conduct a forensic audit on the fruitless and wasteful expenditure incurred and the SABC’s internal forensic audit unit to conduct an audit on the irregular expenditure in that period. The scope of work and terms of reference of both audits range from compliance with policy and corporate governance to consequence management in the areas of civil and criminal liability. The recommendations of the Public Protector will form the basis of charges against former COO, Mr Motsoeneng. The SIU will investigate all promotions, appointments and salary increases which were not in compliance with the policies of the Corporation as contained in the Public Protector report. The editorial policy will be revised to ensure that independence of the media is maintained and protection is afforded to journalists who uphold this independence. The decisions in the Western Cape High Court judgement are being implemented. Mr Motsoeneng will be subjected to a disciplinary hearing as ordered by the court. A charge sheet is currently being drawn and the Board is considering the appointment of a presiding officer and initiator for the disciplinary hearing.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 18. Evaluate financial and legal implications of unilateral changes to policies. This is on-going thus far it has been established that the 90/10 local content directive has cost TV R 183 m (unaudited) and Radio R 29 m (unaudited) loss in advertising revenue. These figures exclude the additional costs of R 72 million for the replacement of local content. Management has been tasked to provide a detailed list of payments that were made out of normal salary payments including bonuses and payments that were done haphazardly without due processes being followed or budgetary provision between 2012 and 2016. The Interim Board has rescinded the previous Board’s decision to review the Public Protectors Report in the South Gauteng High Court. 19. Implement PP’s remedial action outlined in the Report, ‘’When Governance and Ethics Fail”. The Interim Board will be appointing a Presiding Officer and Initiator to conduct the disciplinary hearing of Mr Motsoeneng. Management has been tasked to conduct an analysis and provide the Board with a report on whether the payments that were recommended for recovery by the Public Protectors’ Report from certain staff employees were made legitimately and in accordance with the SABC’s processes and procedures and compute those amounts.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS ghest the standards Adhere to 20. of journalism with editorial independence being of uppermost importance. Restore public confidence in its reporting on current affairs, entertainment and educational programmes and seek to recover revenue lost as a result of inadequate editorial policies. The Interim Board, noting that the SABC has not behaved as a public broadcaster of late, is committed to build a culture to ensure that Journalists adhere to credibility, professional standards and a culture which is designed to protect journalists against intimidation. The Board has also declared that intimidation must be stamped out. The Board has approved that the process to review the 2004 Editorial Policy and development of a Plan which will speak to public consultations is underway. The Board will ensure a compliance culture that will focus on consequence management, monitoring of decisions and implementation and that Management deals with staff grievances. A workshop will be convened to dialogue the Journalists’ challenges as the environment is constantly evolving. sure 21. This is on-going and reinforced at re-diffusion sessions with staff. The fear and intimidation or abuse of Board will be visiting all the SABC provincial offices to listen to staff issues power. and reassure staff of Board’s protection. The Board makes a commitment to performance management to ensure that intimidation is addressed and consequence management is enforced for any conduct which is not consistent with a free editorial environment.

IMPLEMENTATION OF AD-HOC COMMITTEE RECOMMENDATIONS 22. Correspondence has been addressed to the Speaker of the implement action against acting GCEO for National Assembly seeking clarity in this regard. having defied Parliament. Investigate Company former 23. Correspondence has been addressed to the Speaker of the Secretary’s conduct and if necessary National Assembly seeking clarity in this regard. charge her in terms of Section 17(2)(e) of the Privileges Act. ynd Attorneys 24. Correspondence has been addressed to the Speaker of the should face appropriate consequences for National Assembly seeking clarity in this regard. denying Parliament access to documents.

WORK CURRENTLY UNDERWAY • In view of the SABC’s financial crisis the Board has been in consultation with the Shareholder and a process to source funding is underway. With the assistance of the Shareholder, the Board established a Task Team to work on a Funding Proposal that addresses a Turnaround Strategy for the Corporation. The Board has approved the Funding Proposal, which has been sent to the Shareholder. Details contained in the funding proposal have been included in this presentation. • In order to manage payment of Creditors and Service Providers, the Board has established a Task Team to approve commission of contracts and prioritising of payments to these third parties. • There are continuous consultations with staff and stakeholders regarding the status of the Corporation and to build public confidence. The Board will be visiting the SABC provincial offices to interact with staff and listen to staff issue and assure them of free intimidation environment. The Board has already met with staff at the SABC head office on two occasions, ICASA and independent producers’ organisations.

WORK CURRENTLY UNDERWAY • Through the Shareholder the Board has requested the withdrawal of the 2017 to 18 and 2019 to 20 Corporate Plan that had been submitted by Management in the absence of the Board. During Induction, the Board considered the Corporate Plan taking into account the current financial status of the SABC and observed that the document was not reflective of the SABC’s financial crisis, the internal dynamics contribute in the manner in which the SABC operates and how these will be dealt. Further the Corporate Plan had been viewed to contain unrealistic budgets. • Together with Management, the Board worked on a revised Corporate Plan, which has been approved by the Board and submitted to the Shareholder.

WORK BEYOND THE RECOMMENDATIONS OF THE FINAL REPORT In an endeavour to strengthen the corporate governance and financial management framework of the SABC, the Interim Board has deliberated and approved the following proposals and courses of action: Approval of the Terms of Reference for 2017/2018 of all the Board subcommittees AUDIT & RISK COMMITTEE Amongst other things the Purpose of this Committee is to assist the Board in discharging its responsibilities relating to the integrity of the Corporation’s financial statements, the effectiveness of the systems of governance, risk management, internal control and monitoring the effectiveness and objectivity of the internal and external auditors. These responsibilities include the safeguarding of assets and ensuring compliance with the statutory duties of the Committee as contained in the relevant legislation. Further, the Committee assists the Board in setting risk appetite and tolerances, as well as overseeing the SABC’s responsibility to manage its risk profile and implementation of the risk programme. In addition, the Committee will oversee the SABC’s responsibility to implement a compliance programme, with emphasis on compliance with legal and regulatory requirements.

WORK BEYOND THE RECOMMENDATIONS OF THE FINAL REPORT AUDIT & RISK COMMITTEE The Board has approved the cancellation of the contract with Lorna. Vision to collect TV licence fees and has subjected the contract to a forensic audit by the SIU. The Board has also approved that the contract with Sekela Xabiso (to assist with clearing of audit findings) and the contract with Vision View to construct the multi-purpose studio be referred to the SIU forensic audit. FINANCE INVESTMENT PROCUREMENT & TECHNOLOGY COMMITTEE The purpose of the Committee is to assist the Board in fulfilling its responsibilities by advising the Board on matters relating to the financing activities, investment policies and procurement policies and processes and to ensure that the Corporation employs innovative technology and information systems that enable the SABC to deliver on its public broadcasting mandate. The duties of the Committee include oversight on the activities of the Group Bid Adjudication Committee and receive periodic feedback and reports on the activities of the Committee from its Chairperson and review the Group Bid Adjudication Committee’s submissions to the Board as approved by Group EXCO and make recommendations.

WORK BEYOND THE RECOMMENDATIONS OF THE FINAL REPORT HUMAN RESOURCES GOVERNANCE & NOMINATIONS COMMITTEE The purpose of the Committee is to ensure that the structure, size, composition, skill sets and performance of the Corporation is regularly reviewed and maintained at levels which are appropriate, the implementation of Performance Management across the Corporation, appropriate succession planning, monitor the extent to which Human Resources practices and conditions of employment are being adhered to; and evaluate succession-planning arrangements for Group Executives, to ensure that these are orderly and calculated to maintain an appropriate balance of diversity, skills, knowledge and experience. The Committee recommends to the Board and subject to the approval of the Minister, determine the remuneration for the Executive Directors, on appointment, having regard to the remuneration policy.

WORK BEYOND THE RECOMMENDATIONS OF THE FINAL REPORT JOINT PBS/PCS COMMITTEES PBS One of the primary roles of the Committee is to assist the Board in setting the editorial policies of the Corporation, having regard to the requirement to ensure the editorial integrity of news and current affairs programming presented by the Corporation, ensure that the SABC produces accessible, accurate compelling, professional and authoritative news, current affairs and other programming that is fair, balanced and in line with its editorial policies and the regulations. Defend the editorial independence of the News Division and encourage the pursuit of excellence and of the highest professional standards PCS The role of the Committee is to ensure that the SABC delivers on its obligations as provided for in the Public Broadcasting Service Charter of the Corporation, which is set out below for ease of reference. This committee is seized with reconsidering the directive of 90/10 and 80/20 local content on radio and TV respectively and will make a proposal to the Board at its next meeting.

WORK BEYOND THE RECOMMENDATIONS OF THE FINAL REPORT SOCIAL & ETHICS COMMITTEE The purpose of this Committee is to assists the Board in discharging its responsibilities relating to the Company’s activities, having regard to any relevant legislation, other legal requirements, or prevailing codes of best practice, with regard to all matters related to its social, ethics, and transformation responsibilities. The role and it function is to monitor/oversee the Corporation’s activities, having regard to any relevant legislation, other legal requirements, or prevailing codes of best practice, with regard to matters relating to the following functions: The scope of the Committee extends to the SABC Foundation (SABC), in ensuring the necessary oversight within the legislative and regulatory framework that governs the SABC Board.

WORK BEYOND THE RECOMMENDATIONS OF THE FINAL REPORT Annual Internal Audit Plan The Plan has been approved by the Audit & Risk Committee. Internal Audit Charter The Charter has been approved by the Audit & Risk Committee. Internal Control Framework The Internal Control Framework has been approved by the Audit & Risk Committee. Approval of the IT Governance Framework The IT Governance Framework has been approved by the Audit & Risk Committee. Business Continuity Plan This Plan has been approved.

WORK BEYOND THE RECOMMENDATIONS OF THE FINAL REPORT Disaster Recovery Plan This Plan has been approved. The Special Investigating Unit (SIU) has been appointed to conduct forensic audits A Task Team of the Board has been establishment to work with the SIU A task Team of the Board has been established to approve commissioning of contracts and prioritisation of payments

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