DA shoots from hip and Durban boss detonates
July 3, 2009
Perhaps it was a hastily written statement, but comments made this week by the DA have outraged Durban city manager Michael Sutcliffe. Marti Wenger, the DA's deputy shadow minister of co-operative governance and traditional affairs, called for an investigation of the tender process for the Durban City Council's World Cup website, which had been awarded to a black economic empowerment company at a staggering cost.
Sutcliffe said he would not investigate how the contract was awarded, as the only reason the DA wanted it probed was because the work was being done by a black-owned, black-run company. "It's downright racist, and you can quote me on that."
There are question marks over the cost of developing and managing the website, which information technology (IT) experts say is outrageously expensive at R6.5 million. The city says the budget is for a host of work to be done to develop an information portal for Durban.
The verdict on whether this portal is worth the price is likely to be delivered only once it is fully functional, with all the bells and whistles the council claims it will have.
But the DA statement offers illuminating insight into how the party works.
When questioned in more detail on the allegations, Wenger did not seem to have all the facts at hand, which suggests the statement was hastily put together simply to generate airtime for the DA.
So is the hullabaloo just politicking, or has taxpayers' money been misspent?
Crocodile tears
The belief that cowboys shouldn't cry doesn't seem to hold much sway with the guys running ElementOne. Apart from shouting "foul play" and crying about the need to "resolve this conundrum" when the inevitable happened, what precisely was their exit strategy?
ElementOne was the awkward but unavoidable outcome of an asset stripping exercise at Johnnic Communications (Johncom) back in 2006. Johncom emerged from Johnnic, which had emerged from JCI. The media assets left in Johncom after the asset stripping exercise were renamed Avusa last year.
After a few years of frustrated efforts to restructure Johncom's assets, in 2006 the major shareholders seemed to have scored a victory with the appointment to the board of Dods Brand and Francois van der Merwe. Coronation Fund Managers had recommended Brand and Allan Gray had backed Van der Merwe. The two fund management firms were speculated to control or manage 56 percent of Johncom.
Early evidence of the new directors at work came quickly, with the implementation of the controversial decision to sell Johncom's 38 percent stake in M-Net/ SuperSport to Naspers.
ElementOne was created last year to facilitate the plan to sell a 30 percent stake in Johncom/Avusa to Mvelaphanda. At the time of its creation, ElementOne had only two assets - a small chunk of MTN shares and a 33.6 percent stake in Caxton.
The MTN shares were highly liquid, but not so the Caxton stake, as it comprised a 16 percent direct share in the listed entity and a 17 percent indirect share through an unlisted entity called Afmed.
That ElementOne was ever allowed its own listing has puzzled many market watchers, given the JSE's regulations.
But did the directors of ElementOne seriously believe they could force Caxton's boss Terry Moolman to play ball with them? Caxton's control structure is one of the few constants in a rapidly changing media world. It is decades old and probably played a substantial part in helping to create huge shareholder value in firms dating back to the old Argus.
It was not a contrivance set up to thwart the directors' of ElementOne in their wholly unrestrained bid to splice and dice the media industry as they saw fit.
Offside trap
Stakeholders in the local football industry have been quick to pooh-pooh a study by the Financial Action Task Force, pointing out that the findings did not apply to South Africa. The research found that the universally loved sport was vulnerable to money laundering, tax evasion and corruption.
Local soccer bigwigs argued that the money floating around in South African football was too little to attract these kinds of criminal activities.
But is the money little compared with that in European leagues, where most of the respondents in the study are based, or little when referring to the local context?
Granted, the money available locally is not even worth comparing to the obscene amounts that change hands in leagues such as the English Premier League, Spanish Primera Liga or the Italian Serie A.
But local soccer is no longer struggling, and there is evidence that the game is not as clean as stakeholders want us to believe.
SuperSport is paying just over R1 billion for the exclusive broadcasting rights of Premier Soccer League (PSL) games.
Advertising revenue linked to football generated while the SABC had these rights was estimated at R100 million a year. Last season Mamelodi Sundowns paid Sibusiso Zuma R200 000 a month.
The club that wins the league pockets R10m. There is an additional R6m for the Nedbank Cup, R8m for MTN8 Wafa Wafa and R4m for the Telkom Knockout Cup.
In 2004, more than 20 referees were arrested in the police's Operation Dribble, which investigated corruption in football. Irvin Khoza, the PSL chairman, paid R10m to settle his tax evasion case.
There have also been stories of PSL clubs that paid players salaries from car boots with brown envelopes.
Instead of being defensive, perhaps the PSL and the SA Football Association should study this report for warning signs and put mechanisms in place to ensure these activities don't taint our soccer. The local game has become a huge business, and with the World Cup around the corner, more people are trying to make a quick buck out of it.
Edited by Nontyatyambo Petros. With contributions from Samantha Enslin-Payne, Ann Crotty and Slindile Khanyile
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