Six years of hell for a black business in the clutches of an SOE
Afew weeks ago I learnt that SekelaXabiso had again won its case against the SABC and the Special Investigating Unit (SIU), after years of attempts by the broadcaster to cancel the black-owned professional services firm’s contract on the basis that it did not follow due process.
So I picked up the 20-page appeal judgment and read it. The short story is that back in 2015 SekelaXabiso made a proposal to assist the SABC in detecting and documenting irregular, fruitless and wasteful expenditure, after the broadcaster had received a qualified audit opinion the year before.
For various reasons, including urgency, the procurement process followed was a permissible deviation, which was duly signed off by the CFO and CEO at the time.
A contract was signed between the parties in December 2016 and
SekelaXabiso rendered various phases of this assignment until the SABC interim board decided it was all improper, suspended the contract in May 2017 and took the firm to court.
The SABC and the SIU asked the court to cancel the signed agreement with SekelaXabiso, all the while refusing to pay millions of rands for work already done by the firm for the broadcaster.
The grounds for the court challenge are what make for interesting reading.
If “clutching at straws” was a key performance area, the SABC would top the charts. Its missteps ranged from a breach of the Public Finance Management Act to a breach of the broadcaster’s own supply chain policy, and even an alleged breach of the South African constitution.
Grounds relating to all of these rules and regulations were found to be false by the high court in Johannesburg in 2019 and again on appeal three months ago.
But there was one ground put forward by the SABC that gave me newfound respect for the world champion of straw-clutching.
On appeal, the broadcaster claimed that its then CEO, James Aguma, had been misled when he approved the deviation order. The true facts were concealed from him, and that is why he approved it. Therefore, on this “they pulled the wool over his eyes” basis, the contract should be cancelled.
I love how the appeal court dealt with that one.
“This court does not know what facts or other documents were before the CFO and Mr Aguma when they approved the deviation ... Only Mr Aguma and the SABC know the actual facts surrounding this issue. They have chosen not to place these facts before the court.
“In any event, it is unlikely that he would’ve been misled as to the contract value of the impugned agreement since, on the SABC’s own version, SekelaXabiso’s proposal was attached to the business case in terms of which the approval for the deviation was sought.” Ouch!
The initial case against SekelaXabiso was dismissed with costs. The SABC appealed the matter and it was again dismissed with costs. So why, you ask, did they do this in the first place?
There is a real danger in this kind of behaviour by boards of state-owned entities (SOEs). Whether it is overexuberance or a poor display of the fiduciary duty they owe the companies they serve as directors, SOE boards have become trigger-happy and can quite easily and irresponsibly spend millions on fees with lawyers on matters that are clearly frivolous or ambitious at best.
They do this because, frankly, it is not their money. They do not really care whether the mud sticks or not, they simply grab as much as they can and throw it at any wall that will make them look productive.
The best part is that they don’t have to go back and clean up their mess. They simply get replaced by new board members, who proceed to uncover skeletons about the previous board in an effort to prove that they are better than their predecessors.
In the process, however, these SOEs drag the good name of black businesses such as SekelaXabiso through the mud, and indebt them millions in legal fees as they try to repair their damaged reputations — for something they did not do.
It’s probably been six years of hell for the firm, its founders and employees, and they have nothing to show for it except wasted time, effort and money as well as the real prospect of shutting down their business, especially given the effects of the Covid-19 lockdown.
The irony in this entire saga is that SekelaXabiso, which was not responsible for the SABC complying with its processes in appointing it, was, however, able to prove to two different judges that the SABC did follow a legal and proper process in appointing the firm, even though the broadcaster itself approached the same courts claiming it had not.
Just when I thought I was done, right at the end of the judgment I read that SekelaXabiso had used TGR Attorneys, a black-owned law firm, as its legal adviser. The SABC used Werksmans. I rest.
These SOEs drag the good name of black businesses through the mud, and indebt them millions in legal fees — for something they did not do