Sentech asks for bailout


South African state-owned signal distribution company, Sentech had to write off more than R45m in irregular and wasteful expenditure. It has also asked government for a bailout.

Auditor KPMG, in its qualified audit, said Sentech’s board would make “certain requests to the department of communications to enable Sentech and its subsidiaries to have sufficient cash resources to meet their financial obligations”.

According to KPMG the policies and procedures which were put in place to prevent wasteful expenditure and losses “were not effective”. There was also “no embedded risk management and monitoring procedures in place”.

Should the government not meet Sentech’s “requests” for a bailout, there would be “significant doubt on the ability of Sentech and its subsidiaries to continue as a going concern”, the Sentech board of directors said.

According to Sentech’s annual report, tabled in parliament recently, the company’s cash flow from operating activities is down almost 98%, from R121-million in 2009 to R2.5-million.

Sentech however reported a profit of R105m for the financial year but half of this amount included interest on government grants which totalled round R59.6m.

A Sunday Times report on 3 October records that Sentech spokesman Nthabeleng Mokitimi said the auditor’s statement “referred only to the circumstances in which Sentech is unable to achieve its objective of becoming sustainable”.

 Mokitimi added that Sentech was “of the view that its current strategy will yield sufficient cash”.

Expenditure by Sentech includes R5.6-million to Rentworks Africa, part-owned by Cyril Ramaphosa’s Shanduka, where “no shareholder consent was sought or obtained,” said Mokitimi.
This brings Sentech’s total payment to Rentworks Africa over two years to more than R40-million.

Mokitimi said a payment of R8.3-million was made to NagraVision “without a contract”.

Sentech was also “under the impression that VAT was not payable on government grants received”, says Mokitimi.

It was reported last year by Business Times that Sentech had failed to pay R13m in tax owed on government grants of nearly R1bn.
Of the R31m written off as fruitless and wasteful expenditure, R18m was paid to SARS for “interest on VAT payable on government grants”.

This year Sentech spent more than R1.5m on 96 Fifa World Cup tickets and clothing for staff, clients and “government entities”.


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