SAMRO members demand answers over lost money

The weekly newspaper says SAMRO members are unhappy about the delay of a report on the loss of some R48m ($3.5), previously reported to be R40m, that SAMRO invested to set up a collective management organisation (CMO) in the Middle Eastern country.

The members accuse SAMRO of not following internal processes in approving the investment, not consulting members who wanted an independent and transparent process when appointing the forensic investigators, stalling the release of the report because a former acting CEO’s account of what happened contradicts the testimony SAMRO management gave the investigators, and exposing a "woeful" lack of risk assessment conducted by SAMRO before making the investment.

City Press says it has seen a 26 July letter to members by SAMRO CEO Nothando Migogo, saying the forensic report into the investment was delayed until Monday last week. Attached to the letter was a note from the lead investigator in the case, Boyce Mkhize, of forensic auditor SekelaXabiso.

“Having produced an interim report to the board, we came across information that contradicted some of the initial statements we had received and which were part of the interim report,” Mkhize wrote.     

City Press said its sources had told the publication that the contradictory information was contained in a letter from former acting CEO Reverend Abe Sibiya. The letter had confirmed that SAMRO had not involved the International Confederation of Societies of Authors and Composers (CISAC) before committing to the investment, and that SAMRO delegates never met with the necessary partners when in Dubai.

“We want that report. We have been in contact with the SAMRO chair and told him we want to know what these contradictions are in the information given to SekelaXabiso because that’s a red flag," Gospel Music Association president Tebogo Sithathu told City Press.

The report was still not released by Friday when City Press contacted Migogo about the members' claims.

“The forensic audit is taking longer than initially expected due to the complexity of the issues and the number of parties involved, as well as the legalities to be considered in publishing any contents of the report," she told the publication.

“Good progress is being made and we will inform our members when the report is ready for discussion. We choose not to respond to your other questions until the report has been shared with the membership. It is only fair that they receive feedback from the organisation itself, rather than through the media.”

Sithathu also questioned the credibility of the investigation. “We also want to see the terms of reference of the investigation and we want answers to the allegations in the media that the investigator, Mr Mkhize, has been found wanting ethically. Was due diligence done in appointing the investigators? We fear that the credibility of the report is already tarnished and it hasn’t even been released yet,” Sithathu said about previous reports alleging corruption regarding an internal audit report when Mkhize was the CEO of the provincial Mpumalanga Economic Growth Agency. Mkhize has denied the claims.

“The allegations were never investigated," he said. "I was never given the chance to tell my side of the story. They were used to rubbish my name and, even so, they would have no bearing into an objective investigation into SAMRO based on facts.”

On the "woeful" lack of risk assessment, City Press cited a 2015 report in the international Licensing Journal, which showed that setting up a licensed body in the UAE would cost about R200m, placing in doubt SAMRO's initial estimates in the venture.

“It’s a good thing Samro bailed when they did,” a source told City Press, “else they might have lost five times the amount. They obviously never studied the Licencing Journal report or else they would never have taken the risk.”

The UAE investment was spearheaded in late 2015 by former SAMRO CEO Sipho Dlamini, who is currently the managing director of South Africa and sub-Saharan Africa at Universal Music Group. In July last year, Migogo took the reins at the embattled CMO, which has been forced to weather a number of scandals, including a government probe into alleged royalty fraud and the recent axing of non-executive board director Arthur Mafokate.