/ 30 April 2010

SABC’s R26-m rental bill

Sabc's R26 M Rental Bill

The cash-strapped SABC plans to rent studio space at the Sandton Convention Centre during the World Cup — at an astronomical mark up — from a businessman linked to the broadcaster’s head of Project 2010, Peter Kwele.

Graham Cooke, the president of World Travel Awards and a personal friend of both Kwele and his wife, Lindiwe Mahlangu-Kwele, the chief executive of Johannesburg Tourism, is the middleman from whom the SABC will rent the space.

At a cost of R26-million for 1800m2 for the duration of the event, Cooke will make a substantial profit on the deal — according to the convention centre, its rates during the World Cup period have remained at R20 a square metre a day for exhibition hall one and R15 a square metre a day for its second exhibition hall. But in the sub-letting deal, the SABC will effectively pay about R480 a square metre a day.

Last year the SABC spurned the opportunity to rent space at Nasrec, the site of the opening and closing games. At €380 000 (about R3,7-million), the public broadcaster decided it was too expensive. The broadcaster had decided to downscale its presence at Nasrec, presenting only 12 matches from there and the rest from the SABC sports studio at Auckland Park.

But that’s not what happened. In the new year the SABC general manager of sport, Oupa Mahlangu, issued an instruction calling for “big ideas”, triggering a scramble for new broadcasting space. According to internal SABC documents in the possession of the Mail & Guardian, Kwele then went ahead and facilitated the deal with Cooke.

According to the documents, Kwele arranged to barter R1-million worth of advertising in a trade exchange for the use of the convention centre. On March 17 he passed on the handling of the trade exchange to Mahlangu after confirming to the technical team working on the project that it was in the region of R1-million.

Knowledge of the deal was kept from the SABC’s new chief executive, Solly Mokoetle, who was appointed on January 1. Two senior officials at the corporation have told the M&G that members of the senior management team continued to withhold information from the corporation’s new leadership.

The M&G has confirmed that the convention centre was initially booked by Johannesburg Tourism for the duration of the tournament, but in June last year the booking was transferred to Cooke’s World Legacy Limited Company because the tourism authority was not in a position to assume “this financial risk”.

According to a source at Johannesburg Tourism, the initial booking for “almost the entire exhibition space” of around 10 000m2 cost R12-million.

The relationship between Cooke, Kwele and his wife, Mahlangu-Kwele, appears to be an intimate one.

Last year the M&G revealed that Mahlangu-Kwele, in her capacity as chief executive of Johannesburg Tourism, signed an agreement with Cooke paying his World Awards Limited Company R90-million for the rights to host the 2009 Miss World pageant in Johannesburg. This was double the amount publicised by Johannesburg Tourism and is why, according to sources at Johannesburg Tourism, the company is “currently trading insolvently”.

Cooke was a guest of honour at the couple’s glamorous wedding at the upmarket Zimbali Lodge on the KwaZulu-Natal North Coast in 2009. His relationship with Mahlangu-Kwele goes back to 2005 when she was head of Durban Tourism.

Kaizer Kganyago, the SABC spokesperson, said there was no internal investigation into the relationship between Cooke and Kwele: “This [R26-million booking] has got nothing to do with Peter Kwele — The Sandton Convention Centre told us that they had already sold the place to this person [Cooke]. Peter happened to know this person and helped approach him. It’s not like he has done anything out of the ordinary.”

Kganyago also questioned “why there should be an issue” over the dramatic price increase, as “this is part of the negotiation process”.

He said there was a need for an outside broadcasting site “to have commentators [on] a special set for the World Cup” as part of their fresh coverage plans, about which he declined to elaborate further.

Regarding renting the space from Cooke, he said “nothing has been signed”, and intimated that the corporation was still looking at other venues.

But SABC documents that outline the broadcasting planning process — including set-design consultations and on-site inspections at the convention centre — throughout February, suggest the corporation’s use of the site during the World Cup is a fait accompli.

The technical team has gone as far as drawing up an overall budget of R87-million for outside broadcasting costs, which would include everything from equipment to presenter wardrobes. But they were shocked to discover in March that just the rent would be R26-million, not R1-million as they had been led to believe.

Cooke said he was “baffled at the insinuation of the escalation” as “our quote was never R1-million at any time”. He refused to elaborate on his relationship with the Kweles and said rental of the convention centre space was still being negotiated.