MultiChoice: The plot thickens - Phumzile Van Damme

DA MP says SABC board minutes show the company was seeking to buy influence at time it made ANN7 deal

DA refers Multichoice to ICASA following fresh kickback allegations

Note to Editors: Please find attached a soundbite by the DA Shadow Minister of Communications, Phumzile Van Damme MP.

The DA can reveal SABC board minutes dated 6 June 2013 suggesting that Multichoice sought to pay the SABC R100 million for its 24-hour news channel in exchange for the public broadcaster's political influence over digital migration.

The minutes form part of hundreds of documents provided by the SABC in December 2016 to the Ad Hoc Committee on the SABC Inquiry, and support allegations in media reports last week that Multichoice paid Gupta-owned ANN7 millions in exchange for similar influence over government’s position on set-top boxes.

The minutes reveal a “clandestine” meeting attended by former SABC board members and executives, including Ellen Tshabalala, Hlaudi Motsoeneng, Lulama Makhobo and Jimi Matthews, with the then CEO of Multichoice, Imtiaz Patel.

Patel was at pains during the meeting to explain that Multichoice does not ordinarily pay TV stations for their news channels to be aired on DSTV, but he would be able to convince the Multichoice board to pay for the SABC’s 24-hour news channel, if a set of “deal-breaker” conditions in Multichoice’s favour were met.

One of the conditions was changing government’s position on set-top boxes to favour Multichoice.

During the meeting, Patel informs the SABC:

We would not normally pay for a news channel. Ok. We don’t. There’s a unique relationship with eTV that everybody espouses etc. It’s got unique conditions. They’re supposed to supply us with many more channels and it’s quite tricky at this point in time. But, besides that we don’t pay for any other news channel, anyway, ok.”

He goes on to state:

“…we need to justify to our Board to say why would we pay you R100m a year which is a lot of money. Ok. It’s after tax money. To make R100m net you have to make R150m or R200m, R300m in turnover. We are looking for the excuse and the excuse for us is to be able to justify to our Board that you are giving us something in return. What are you giving us in return for the R100m? We’re saying you giving us a news channel, you’re giving us a general entertainment channel from your archives, your old, you know. We are less focused on the core elements of it being new content. And we’ve been sort of quite open about it with Lulama, saying even if it’s old stock. And thirdly, we are saying we also need to justify this problem of conditional access [unencrypted set-top boxes] is a big problem. And in order to justify that we’re saying in addition to that, your additional channels will be available on our platform.”

Patel also says:

So, in addition to the R100m in cash, you will be getting a lot of advertising revenue, probably the equivalent, even more, I don’t know, I don’t know the details, I don’t know to what extent, you know, given that kind of base, how much you can monetise it. In return, we can justify to our Board that, we are paying this extraordinary sum of money but we are getting something for it. That was the simple logic that we applied in our own minds. So I’m giving you a sense and therefore I’m hoping that if we can co-create a solution, we are also happy to co-create a solution. We are not coming here saying this is, you know, this is the be all and end all, you know. But I must say though, Lulama, that this is the very important point for us. It’s a deal breaker point, I’ll be honest. And I have re-iterated it. I have said this to you before. 

The implications of Multichoice paying kickbacks in order, to not only solidify its dominance in the pay-TV sector, but also secure influence over government policy in its favour are serious.

It speaks to a company willing to stop at nothing, including paying kickbacks to the Gupta family, thus supporting State Capture, in order to get its way. (It is an undisputed fact that two years after this meeting, and the payments to ANN7, digital migration policy was changed to Multichoice’s favour).

The DA believes that while companies should be allowed the space to conduct business in a free market system, there must be adherence to business ethics and the law.

This matter, and in particular the payments, now require thorough investigation by South Africa’s broadcasting regulator, the Independent Communications Authority of South Africa (ICASA). The DA has today written to ICASA requesting an investigation in terms of Section 4B(1) of the ICASA Act.

The DA had hoped that following the media reports about ANN7 last week, Multichoice would take the opportunity to play open cards by revealing all. It refused to do so. It is now left to ICASA to reveal the truth.

We hope that ICASA will finally flex its muscle and take a clear stand against what appears to be seriously unethical conduct by a company it regulates.

Statement issued by Phumzile Van Damme MP, DA Shadow Minister of Communications, 29 November 2017