According SABC and MultiChoice staff, who worked on the deal between the two companies back  in 2013, have revealed it was all about a set-top box policy – good for some, but bad for the country – and it put the public broadcaster’s archive at greater risk than previously believed.

“Basically, Hlaudi [Motsoeneng, the SABC’s head of corporate affairs] sold the SABC for a R30 million bonus,” alleged one former senior SABC staffer involved in the controversial deal.

It stipulated that MultiChoice pay the broadcaster R553 million, over five years, for two new channels on DStv.

After the deal was finalised in 2014, Motsoeneng scored an alleged R33 million bonus, R11.4 million of which he has already been paid.

The MultiChoice deal loomed large at this week’s parliamentary inquiry into the fitness of the SABC board to hold office. It has been flagged for further investigation by the Public Protector and is the subject of a Competition Commission investigation.

The sole remaining nonexecutive member of the failed SABC board, chairperson Mbulaheni Maguvhe, walked out of the inquiry this week after refusing to hand over documents, some of which pertain to the MultiChoice deal.

City Press has obtained all available documents pertaining to the deal. They reveal how Motsoeneng drove it through, despite its negative effect on the broadcaster and the country’s digital future.

It’s all about set-top box control

Seventeen sources and experts – within SABC and MultiChoice, or formerly employed by both – told City Press the deal was structured around the control of set-top boxes.

Former SABC board member Krish Naidoo told City Press the deal was “unlawfully and irregularly signed by Motsoeneng on behalf of the SABC”.

The deal, the sources said, had very little to do with the SABC agreeing to supply two new channels to MultiChoice – namely, the SABC News and SABC Encore channels on DStv.

But it had a great deal to do with Clause 7 of the contract – and clarity on a little-seen amendment to this clause, which concerns set-top box control.

In response to detailed questions, SABC spokesperson Kaizer Kganyago said: “This matter is before the Competition Commission and is being dealt with there. We therefore wish not to comment any further.”

MultiChoice has repeatedly denied claims that the deal was about control of set-top boxes, saying again this week that the deal was business as usual.

But sources paint a very different picture.

“The original deal was for a 24-hour SABC News channel on DStv, and was brought about through [former communications minister] Dina Pule.

The chief executive officer at the time, Lulama Mokhobo, picked it up,” said one.

But SABC board minutes, seen by City Press, reveal that a business plan stated that R778 million would be needed to run the news channel for four years. In January 2013 the channel was “mothballed” as a result of a lack of funding.

“Hlaudi picked the deal up again, sidelining Lulama,” says the source – a statement confirmed by all the others.

“No risk assessment was done – even though, by then, it was a far worse deal for the SABC than the first one, and it now also contained a second channel [Encore].”

Sources and board minutes show the deal was driven through the interim board by the now-disgraced SABC chairperson, Ellen Tshabalala.

Naidoo, a lawyer by profession, said the deal was one of the new board’s first concerns.

“When the board met in September 2013, I approached [Tshabalala] to do a legal opinion on the deal, which we had read about in the media … I think I was the only one who saw it, besides the chairperson and Hlaudi,” said Naidoo this week.

He said he was immediately struck by the fact that it was “unlawfully signed by Motsoeneng against the SABC’s own Delegation of Authority Framework. The person who should have signed it was then CEO Lulama Mokhobo.”

Sources close to Mokhobo say the deal was “the beginning of the end for her” and a major reason she resigned.

More worryingly, said Naidoo, the deal gave MultiChoice unheard-of control of the SABC’s archive, a national asset.

But most striking, he added, was “that the entire contract – and even payment in terms of the contract – was subject to MultiChoice’s preferred set-top box control, which is unencrypted”.

“This made the deal highly unusual … I concluded that it was fatally flawed and should be put aside.”

In the end, said Naidoo, “about six board members voted against the deal and about eight for it … The deal made it clear that the board was divided into two camps” – and that the anti-Motsoeneng camp would end up being purged.

But what does this mean for South Africans?

In the pending digital terrestrial TV era, all South Africans – except those already using DStv decoders – would need to buy or be given a set-top box if they wanted to keep watching SABC TV.

When the deal was signed, government had concluded as early as 2008 that this should be a smart box, which is encrypted, to allow for the growth of new free-to-air and commercial channels – thus ensuring a safer transmission of TV content against piracy – and also to allow poor South Africans free access to the internet through their smart box.

But the deal Motsoeneng and MultiChoice signed in July 2013 is subject to SABC content being available on an unencrypted set-top box, or “dumb box”. At the time, the official state policy was the opposite – that set-top boxes would be encrypted smart boxes.

“Sadly this agreement was seen rather as a way to enrich a few manufacturers, which did not make sense,” Mokhobo told Parliament this week.

The state’s set-top box policy was controversially changed by Communications Minister Faith Muthambi in 2014.

Analysts believe that Motsoeneng relied on her to amend the country’s Broadcasting Digital Migration Policy for the deal to work for the SABC.

Muthambi did not answer questions at the time, nor did she respond to questions this week.

This week, MultiChoice general manager of corporate affairs Jackie Rakitla responded to questions, saying:

“The SABC agreement is a standard supply contract similar to the ones we have with other channel suppliers locally and internationally … It is important to point out that we entered into the SABC agreement on the understanding that the public broadcaster followed due process before signing it.”

How the deal was hammered home

Several independent sources told City Press how, in 2013, executives were called to Motsoeneng’s office, presented with the unsigned contract and asked to review it. The next day, some of them raised “huge issues, huge concerns …

“A lot of these had to do with Clause 7 and the SABC’s policy on encryption, and the flagrant violation of it in this contract.”

At that meeting, and subsequent ones, MultiChoice was represented by media law expert Greg Hamburger.

Said one source: “He said he was given instructions that he cannot change anything. None of our concerns could be addressed. We looked to Hlaudi, who was not interested. He said we were stumbling blocks, that the deal will and must happen. Only cosmetic changes were made in the end.”

Another source mentioned a meeting where Hamburger told SABC experts that Clause 7 “was categorically non-negotiable … The deal was all about encryption; that was clear.”

Article By News24