Sports ministry to intervene in CSA bonus dispute

South Africa's sports ministry will establish a committee to look into CSA's handling of the bonus dispute

Firdose Moonda
Firdose Moonda
Cricket South Africa chief executive Gerald Majola speaks to the media, Johannesbug, June 6, 2011

South Africa's sports ministry will investigate the payment of bonuses to Gerald Majola and 39 other CSA staff  •  Getty Images

South Africa's sports ministry will establish a committee to look into Cricket South Africa's (CSA) handling of the bonus dispute. The issue was thought to be closed yesterday after former president Mtutuzeli Nyoka was removed by a vote of no-confidence, supposedly ending a 16-month long spat with chief executive Gerald Majola.
However, the government has decided to intervene after CSA chose not to make public the findings of the forensic audit into bonus payments conducted by KPMG, and ignored subsequent legal advice by advocate Azhar Bham. The ministry called Nyoka's removal a "decisive action of the board," but is displeased with CSA's overall handling of the saga.
"Nothing has been resolved," Fikile Mbalula, the sports minister, told reporters in Johannesburg. "Our cricket is diminishing, we don't have sponsors, we don't have a program of action in terms of what needs to be done, all because of a board of people who differ among themselves. We are intervening."
Mbalula said the ministry would act in accordance with the Sports and Recreation Act to appoint a committee under a retired judge, whose name has yet to be announced. The terms of reference will be announced next week and he hopes the matter will be concluded "before Christmas." He said the ministry is choosing to intervene because they feel they have given CSA "a chance to resolve their issues within a reasonable period of time."
The differences pertain to the payment of R4.7 million (US$ 671.428) in bonuses to 40 CSA staff members, including Majola, for hosting the 2009 IPL and Champions Trophy. However, those payments were not authorised through CSA's remunerations committee (REMCO) and were picked up as irregularities. Nyoka had repeatedly pushed for an external audit and had already lost one vote of no-confidence and had to win a court battle to be reinstated.
KPMG were eventually tasked with looking into CSA's financial affairs and found that Majola may have breached the Companies' Act on four counts. They recommended legal advice which resulted in a severe reprimand for Majola. However, the spat between Majola and Nyoka had not cooled, as Nyoka struggled to gain access to various documents. Nyoka was then removed for a second time on Saturday, with CSA claiming he had breached media protocol and the Companies' Act by taking his honorarium in advance.
Although the KMPG report and Bham opinion have not been released to the public, Mbalula said he has viewed both documents. "Bham endorsed the fact that sections 234 and 235 of the Companies' Act were breached by Majola and this constitutes serious contraventions of the Act. CSA has possibly not applied its mind properly to the relative seriousness of the findings," he said. Another advocate, Paul Pretorius, also presented opinion to CSA, which concurred with Bham's findings. Mbalula indicated that the ministry did not feel CSA took the advice seriously enough, both in their own internal inquiry under acting president AK Khan and when presented with outside, expert opinion.
"That commission never came with its recommendations that there are irregularities of payment of bonuses," he said. "KPMG says there are irregularities, the board goes and takes another decision." He also implied that the personal spat between Majola and Nyoka may have played its part in the board's thought processes.
"It's quite interesting that the board can decide to dismiss somebody [Nyoka] but they can't take action on allegations of corruption. It can take a decision about somebody who is challenging its own decision, run to provinces but it can't act to protect good governance within its own body. It just says that people should be reprimanded."
"We must be decisive against corruption. I am prepared to leave my job but I will not turn a blind eye to it. If you have done well, you must get a bonus, but it can't be done against corporate governance."
Mbalula also said he received telephone calls on Saturday evening from influential people asking him not to intervene. "I got calls last night from people saying, 'What are you going to say, get out of it, don't be involved,'" he said. "But I was in the police, nobody can touch me. I am not going to be threatened."
Known for his heavy handed discipline, Mbalula said that arguments that bonuses have been paid in this way at CSA for years, did not sway him. "If a minister in the past ignored that they were paying bonuses irregularly, two wrongs don't make a right," he said. "I can't ignore it now." Insiders claimed that the reason CSA paid bonuses without the approval or knowledge of their remunerations committee was because of precedents set in both the 2003 World Cup and the 2007 World T20.
"What are we going to say to the next federation that gobbles money?" Mbalula asked. "We must be decisive against corruption. I am prepared to leave my job but I will not turn a blind eye to it. If you have done well, you must get a bonus, but it can't be done against corporate governance. Corporate governance means the board must meet and decide."
He asked for sponsors to "hold their breath" and be patient while the issue is sorted out. CSA have not been able to secure backers with for the T20 series against Australia, do not have ODI or Test event sponsors and two of the three domestic competitions are without sponsors. Corporates have said they do not want to associate with the body until a line has been drawn under the ongoing scandal.
CSA may have thought that the line was drawn with the ousting of their biggest critic, Nyoka, and the appointment of Khan, but they appear to have been wrong. Mbalula refrained from lauding Khan's appointment, saying that it would not be appropriate in the current context "You only congratulate somebody who has been elected in a democratic process not out of crisis."
CSA has stated it will cooperate fully with the ministry's investigation into the board's handling of the independent audit. "I can promise the Minister our full co-operation," Khan said in a statement. "We will be studying his full statement once we have received it and I look forward to discussing the matter further with the Minister when we meet this afternoon."

Firdose Moonda is ESPNcricinfo's South Africa correspondent