MultiChoice cleared of state capture allegations in shady R553-million DStv-SABC deal
The Judicial Commission of Inquiry into State Capture has found no evidence to support allegations that MultiChoice behaved improperly when it negotiated a controversial R553-million channel carriage deal with the SABC in 2013.
The deal set off alarms when news emerged that it included a clause that effectively blocked the SABC from encrypting its channels when South Africa migrates from analogue to digital terrestrial TV.
Set-top box Control (STB Control) or encryption was a battleground issue that severely delayed South Africa’s switch from analogue to digital TV broadcasting.
Digital TV set-top boxes are decoder-like devices that convert digital TV broadcasts into signals that an analogue TV set can display.
DStv owner MultiChoice was against encryption, while E-tv owner eMedia was in favour.
MultiChoice opposed compulsory encryption of free-to-air digital TV signals because it would give E-tv a government-sponsored entry into pay-TV.
E-tv warned that launching digital TV without STB Control would allow scalpers to buy up government-sponsored boxes and sell them in countries that use the same digital TV standard as South Africa.
The fight delayed South Africa’s digital migration, which had damaging knock-on effects.
One of the consequences was it held back the release of radio frequency spectrum — cellular network capacity that operators could have used to improve South Africa’s mobile networks.
Instead of the spectrum getting into the hands of operators more than a decade ago, industry regulator Icasa could finally auction off the precious resource in March 2022.
The fight over digital TV has cost South Africans access to better cellular networks for at least ten years, and arguably cost the South African economy billions of rands.
In September 2013, the Sunday Times reported that MultiChoice had signed a secret deal with the SABC.
Under the terms of the deal, the SABC could not broadcast its channels on an encrypted digital terrestrial television platform.
If it did, it would risk MultiChoice cancelling the lucrative five-year, R553-million contract.
However, Chief Justice Raymond Zondo has dismissed allegations of wrongdoing on MultiChoice’s part.
“There is no evidence on which a finding can be made that MultiChoice’s lobbying in this regard included acts of fraud and/or corruption,” the report stated.
Zondo also criticised the evidence provided by former SABC group CEO Lulama Mokhobo and former communications minister Yunus Carrim.
He said Mokhobo had failed to provide an important email between herself and MultiChoice group CEO Calvo Mawela in which she says that the SABC board had approved the deal.
Although the clause involving encryption was in dispute, Mokhobo’s mail to Mawela does not mention it, potentially suggesting that the board had accepted the condition.
She also did not respond to a follow-up mail from Mawela stating that they would draft the final agreement based on “broad terms as contained in [MultiChoice’s] letter of 15 May 2013.”
Zondo found that, at the very least, she did not clear up any possible misunderstanding regarding the STB Control clause.
“Her failure to [disclose this letter in her affidavit], casts a cloud over the whole of her testimony as to how the agreement was concluded,” Zondo stated.
It is worth noting that Mokhobo and Mawela exchanged these emails between 19 and 20 June 2013.
The SABC signed the deal on 3 July 2013 — the day after Mokhobo took an emergency leave of absence. She said she returned to work on Monday, 8 July to find the deal had been signed without the proper approval.
Therefore, Zondo’s findings seem to discount any communications that may have flowed between MultiChoice and SABC officials in the intervening weeks.
Zondo also didn’t put much stock in Carrim’s evidence and allegations that MultiChoice’s actions may have amounted to a form of “regulatory capture”.
According to Zondo, the evidence shows that MultiChoice entered into good-faith negotiations with the SABC.
He said the DStv broadcaster had no reason to doubt whether the SABC board had properly approved the deal.
“It had no knowledge of any of the internal irregularities such as they were, and MultiChoice relied on Ms Mokhobo’s personal assurance that the SABC Board and Management had accepted its proposal before the agreement was signed,” Zondo’s report stated.
“Views to the contrary must be accepted,” he acknowledged.
Zondo further criticised Mokhobo’s testimony, saying there was no factual basis for her assertion that the SABC hurriedly effected the agreement while she was away on leave.
“In conclusion on this topic, there is no evidence that MultiChoice had been involved in any improper, unlawful conduct, still less conduct which amounted to fraud or corruption.”
Interestingly, Zondo does not deal with the fact that MultiChoice executives lied about the deal’s particulars while insisting that there was nothing clandestine about it.
Two years after the news broke, MultiChoice told MyBroadband that the STB Control provision of its deal with the SABC was not a precedent.
MultiChoice said it could not refuse to sign the deal if the SABC objected to the encryption clause.
However, in 2017 the Democratic Alliance published minutes of a meeting between the SABC and MultiChoice that proved this was false.
MyBroadband contacted MultiChoice and the SABC for comment.
“The SABC welcomes the Zondo Commission findings and recommendations on matters that relate to the SABC,” said the public broadcaster’s communications head, Ndileka Cola.
“Our Legal Division will review the Report and advise the SABC on the next steps.”
MultiChoice did not respond by the time of publication.