South Africa Communiqué
9 February 2010
Findings on Sentech investigation by the task team

A task team Communications Minister Sphiwe Nyanda appointed in 2009 to investigate turnover strategy for the ailing signal distributor Sentech has revealed its report, described as damning findings. With the imminent sacking of the chief executive and the entire board of Sentech, it has emerged that the struggling signal distributor is budgeting for a net loss of R123 million for the 2009/10 financial year as a result of discontinued operations such as MyWireless.

Team’s damning finding includes:

• Sentech appointed eight suppliers that were paid a total of R13.6 million without following procurement processes;

• The auditors reported wasteful and irregular expenditure relating to the interest on a finance lease of R8.2 million on the basis that Treasury approval was not obtained. The management’s response was that expert advise had been obtained, which said such approval was not required;

• The absence of a formal process flow linking the billing, legal and sales and marketing departments resulted in clients not being billed for services they received. At the time of the audit the unbilled services were worth R30.8 million.

• Six tubes valued at R2million were stolen at the Meyerton site due to poor security. Security cameras were purchased for the site but not installed;

• The chief executive and two board members, including the chairman, took a trip to Sweden in 2008 at a cost of R1.2 million. The task team was not provided with a business plan for the trip;

• The board approved bodyguard service for the chief executive, although a signed contract could not be provided. A bodyguard was employed full time, and cost R262 126 a year;

• A service provider was paid R945 844 for services not rendered and was not appointed through proper conduct.

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• Sentech appointed eight suppliers that were paid a total of R13.6 million without following procurement processes;

• The auditors reported wasteful and irregular expenditure relating to the interest on a finance lease of R8.2 million on the basis that Treasury approval was not obtained. The management’s response was that expert advise had been obtained, which said such approval was not required;

• The absence of a formal process flow linking the billing, legal and sales and marketing departments resulted in clients not being billed for services they received. At the time of the audit the unbilled services were worth R30.8 million.

• Six tubes valued at R2million were stolen at the Meyerton site due to poor security. Security cameras were purchased for the site but not installed;

• The chief executive and two board members, including the chairman, took a trip to Sweden in 2008 at a cost of R1.2 million. The task team was not provided with a business plan for the trip;

• The board approved bodyguard service for the chief executive, although a signed contract could not be provided. A bodyguard was employed full time, and cost R262 126 a year;

• A service provider was paid R945 844 for services not rendered and was not appointed through proper conduct.