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| Sentech Faces Financial Woe |
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| Written by Administrator |
| Friday, 02 October 2009 14:39 |
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Sentech Faces Financial Woe
Business Times 14 September 2009
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 |
| Last Updated on Friday, 02 October 2009 15:34 |




