Why is the SABC not in business rescue? - asks NGO

Questions are being raised over why the SABC has not been placed under business rescue as the broadcaster faces “illiquidity‚ looming insolvency and lack of internal resources”.

The Institute for Accountability in Southern Africa‚ or Accountability Now‚ has written to SABC board chairman Bongumusa Makhathini asking why steps have not been taken.

In a statement issued on Tuesday‚ the NGO said it relied on the Auditor-General report into the finances of the state-owned broadcaster. The SABC has seven days to respond. “The letter refers to the report of the Auditor-General to Parliament on the SABC (commencing on page 89 of the annual financial report)‚ which reads:

“[The SABC was] ...commercially insolvent because it was not able to pay its debts as and when they were due even though its assets exceed its liability. Subsequent to the year end‚ the entity applied for a government guarantee to the National Treasury in order to enable it to borrow funds to be used to settle outstanding obligations; this process was not yet finalised at the time of my report. I was unable to obtain sufficient appropriate audit evidence for the entity’s viability in the foreseeable future; consequently I was unable to assess the reasonability of the going concern assumptions used by the entity‚ which forms the basis for the current preparation of the financial statements.

“The ineluctable conclusion from a reading of the SABC’s March 2017 annual financial statements is that the SABC is financially distressed. “By all accounts‚ the SABC is in a precarious financial position such that it may well be unable to meet its financial obligations as and when they fall due for payment. This will have a direct adverse impact on those that have paid television licence fees in advance.”

Last year the SABC informed Parliament it posted a R977 million loss after tax for the 2016/17 financial year‚ more than double the R412 million loss the previous year. “In short‚ it would appear that the SABC‚ already illiquid as its board concedes‚ is additionally likely to become insolvent in the short term. Yet it continues to collect licence fees‚ annually in advance‚ thus increasing concurrent liabilities.”