Sentech Faces Financial Woe

Sentech, a market dominance in signal distribution is staggering towards collapse under the yoke of mismanagement, escalating losses and pointed accusations of cronyism . This is partly evident in Sentech’s financials obtained by Business Times, which highlights several suspect deals and a R23.8 million loss. The problems include an R8.5  million payment to Rentworks Africa (part-owned by Cyril Ramaphosa's Shanduka) which auditing  firm KPMG said was "irregular expenditure" under government  accounting rules. 

But more surprising  for taxpayers, who have supported Sentech to the tune of  R1-billion over the past two years through "government grants", is  the fact that Sentech effectively dodged R13-million in tax owed on those  government grants. When asked by Business Times how it believed it did not need to pay that tax,  Sentech said the matter was discussed with South African Revenue Services( SARS) and will comply with the law. As for the Rentworks matter, Sentech said it did not think it  needed approval from the national Treasury under the Public Finance  Management Act. But auditor KPMG disagreed. 

 Sentech has also managed to pass a 10%  increase for its three executive directors, who were paid R4.9-million in all.  Excessive spending by Sentech bosses, including on salaries, has angered the  Communications Workers' Union (CWU). The Chief executive Sebiletso Mokone-Matabane - who was paid R2-million last year  - has been a particular focus of rage, accused by the CWU of creating a  culture of "job-creation for pals and family members", rather than  trying to fix the company. 

Last week,  The Communication Minister’s (Sphiwe Nyanda) spokesman Tiyani Rikhotso said the task team has received  a "preliminary report" examining Sentech's business model and it  contained a "review of the business plan of Sentech". Whether this will precipitate changes is unclear. But CWU official Buyile  Dyasopu, who was involved in acrimonious restructuring negotiations with  Sentech, said the company has been "going down the drain" for  years through "mismanagement and lack of strategic direction". He cited the appointment of "people who know nothing about the business"  to key positions, board members going on regular overseas trips without  tangible results, and millions in taxpayers money wasted on  projects such as Sentech's discontinued retail broadband offering MyWireless. 

The company's financials also show it spent R8-million on consultants last  year , nearly double that of the year before. "Sentech is worse than the SABC in the way it's managed," said the  CWU's Dyasopu. "The Department of Communications must take drastic  action and get rid of the board and CEO." Sentech's lavish entertainment budget might also come under scrutiny.  Documents seen by Business Times show that in 2005 R3.8-million was charged  to Diners Club and a further R1.8-million was spent on travel, including  R169000 for executive helicopter hire. But what might alarm government most is that Sentech appears close to being  insolvent. But Sentech said it is "confident that any liquidity difficulties would  be addressed and resolved", partly because it has been promised more  government funds. 

Source: Business Times