Despite uncovering procedural shortcomings, MultiChoice's audit and risk committee found no evidence of corruption or other illegal activity concerning the company's relationship with ANN7 and how it sought to influence government policy.
MultiChoice SA CEO Calvo Mawela made the announcement at a media briefing in Johannesburg yesterday.
Mawela revealed the findings of a MultiChoice review report on whether appropriate procedures were followed in relation to its contract with ANN7, whether the payments MultiChoice made to ANN7 were handled correctly, and whether there were irregularities in the submissions it made to government on splitting the communications department into two.
MultiChoice, a subsidiary of SA's Internet giant Naspers, has been in the limelight in recent months amid allegations it made questionable payments to ANN7 as well as the public broadcaster, SABC, to influence government policy on digital migration.
Unpacking the findings of the month-long review process, Mawela said through the process it became obvious that mistakes have been made in relation to contractual negotiations. As a result, MultiChoice has decided to sever ties with Gupta-linked TV news channel, ANN7, by not renewing its current contract when it ends in August.
Mawela stated: "This has been a humbling experience for MultiChoice. While we entered into an agreement for the ANN7 channel at a time that the extent of state capture was unknown, we fully understand the outrage of the public regarding endemic corruption in our country and accept we should have dealt with the concerns around ANN7 far more swiftly."
However, on the issue of regulatory submissions to former minister communications minister Faith Muthambi, the committee found no irregularities.
According to Mawela, in making submissions to Muthambi's office, MultiChoice only sought to understand the impact the split of the communications department would have, as the industry was confused by the government move.
"The submissions were solely to ask government to provide clarity and certainty in terms of which ministry is fully in control of broadcasting and which ministry is in control of telecommunications and postal services," he said.
"MultiChoice regularly makes submissions to regulatory stakeholders, both formal and informal. This is in accordance with acceptable practice and is a legitimate, democratic process under South African law.
"No correlation was found between payments made to ANN7 and the MultiChoice lobbying effort."
Encryption warfare
Among the allegations against MultiChoice was that its payment to the SABC for its 24-hour news channel was attached to a clause that the public broadcaster accept provisions favourable to MultiChoice concerning digital migration.
It was alleged MultiChoice lobbied behind the scenes on the type of set-top boxes (STBs) to use for digital migration.
Government's stance on the technical specifications for the country's digital migration project underwent changes during Muthambi's term as communications minister.
Despite the ANC's resolution to adopt encrypted STBs for when the country migrates from analogue to digital television, Muthambi amended the Broadcasting Digital Migration policy to use unencrypted decoders when the country finally migrates.
At the time, Muthambi slammed suggestions that she defied her party's directive on the issue.
According to Mawela, MultiChoice's stance on encryption has always been very clear in that it is against encryption. "We don't think it's in the public interest; we think it is a waste of taxpayers' money."
Xhead] = ICASA investigates
The Democratic Alliance (DA) confirmed at the weekend that the Independent Communications Authority of SA (ICASA) will investigate allegations that MultiChoice exercised undue influence to change government policy on digital migration.
The DA's shadow minister of communications Phumzile Van Damme said ICASA confirmed the matter has been referred to its compliance and consumer affairs division for investigation.
In a statement, ICASA says it will look into the matter and intends to approach MultiChoice to provide responses to the formal complaint.
"In this regard, ICASA will also request copies of the contracts concluded between MultiChoice and ANN7 as well as between MultiChoice and the SABC.
"Upon receipt of the contracts from MultiChoice and the response to other issues raised by the DA, ICASA for its part will peruse all the copies of the contracts and submissions to determine if there may be any matters of non-compliance in respect of MultiChoice's licence terms and conditions as well as applicable regulations.
"ICASA will - based on the outcome of its review of the contracts and submissions by MultiChoice - make a decision as to the appropriate action to be taken, if any, and advise the public accordingly."
Mawela noted the telecoms and broadcasting regulator has yet to contact MultiChoice.
Unanswered questions
Van Damme believes the public needs to know the whole truth about the dealings between MultiChoice, ANN7 and the SABC because the company's attempt to be transparent left many questions unanswered.
While the DA welcomes MultiChoice's efforts in conducting its own review of its carriage agreement with Gupta-owned ANN7, she said, it is difficult to objectively assess the findings of its investigations without sight of the full report.
According to Van Damme: "It is quite clear now that the ICASA probe is more important than ever to ensure the full facts are put on the table, and those responsible for any wrongdoing are held accountable.
"In addition to requesting ICASA to subpoena all contracts pertaining to both deals from MultiChoice, the DA will request that it also do the same for ANN7.
"We trust that ICASA will flex its muscles and subpoena all records, including documents, accounts, estimates, returns and information from MultiChoice, SABC and ANN7. Failure by any broadcaster to comply should result in criminal action."
Outa also noted it is concerned that MultiChoice played a significantly influential role in government's action to reverse its decision on STB encryption.
The non-profit civil action organisation said it is sceptical of the rationale provided by MultiChoice around its increased payments to ANN7.
The timing of these increases, some of which coincided with the contract that bound the SABC news channel to MultiChoice, along with government's decision to reverse its plan for STB encryption, require thorough investigation, it said.
There is strong suspicion that MultiChoice was effectively paying for political influence via the Guptas to the Cabinet, according to the organisation.
Best practices
In light of the latest findings, the MultiChoice audit and risk committee believes a number of procedures can be improved.
According to the committee, historically, MultiChoice has not performed a due diligence test on any channel ownership. Therefore, it is of the view that in future due diligence should be instituted and be made compulsory for all new start-up channels.
"Given the fluid nature of lobbying, which is part of the broadcasting and telecoms industry globally, MultiChoice should study international best practice and formalise its lobbying process. The new process should be adhered to by all involved to ensure an acceptable line is not crossed in such activities."
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