SABC's R26-m 2010 WC Rental Bill
Niren Tolsi, Mail & Guardian
Apr 30 2010 13:32
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.
» » » » [Mail & Guardian]
Soccer City Scam
BEE partner paid nothing, has no authority, and still lives in poor township
Apr 25, 2010 12:00 AM
By ROB ROSE, Sunday Times
Soccer City, the R3.4-billion showpiece stadium set to host the World Cup final in June, is being managed by a company whose major empowerment shareholder is a former security guard who lives in a poor township outside Heidelberg, Gauteng.
The 43-year old partner, Gladwin Khangale, "bought" 26% of Global Event Management (GEM) less than a year before a consortium led by GEM landed a plum tender from the City of Johannesburg, in 2009, to manage Soccer City for the next 10 years.
Khangale, who is listed as a "human resources executive" in tender documents, did not pay a cent for the shares and, when contacted, denied still owning any .
The Sunday Times visited Khangale's house this week - on a dirt road in the low-income township of Ratanda next to Heidelberg - where residents clearly do not have the means to deal in large chunks of stock in multimillion-rand companies.
This suspicion of "empowerment fronting" is one red light in the below-the-radar tender to manage Soccer City that was opposed by Mike Moriarty, a Democratic Alliance Johannesburg councillor. He said the matter was "opaque from the start".
The claims, detailed in an Institute of Security Studies publication on conflicts of interest in the World Cup, due to be released this week, raise sharp questions about poor transparency in tenders, especially when corners are cut to land lucrative government work.
As well as the cup final, Soccer City is set to host the opening game between South Africa and Mexico on June 11. The government spent R3.4-billion to upgrade the calabash-shaped showpiece of the World Cup.
In 2009, the City of Johannesburg awarded National Stadium SA - of which GEM owns 50% - a 10-year contract to manage the stadium.
Sibongile Mazibuko, the City of Johannesburg executive responsible for the World Cup, said that empowerment credentials had been "an important part" of the decision to award the tender to National Stadium SA.
In confidential tender documents, National Stadium boasts of its black empowerment credentials, which stemmed mainly from Khangale's share in GEM.
A letter from secretarial firm Actasec on November 2 2007 confirmed that "the transfer of 26 shares to MG Khangale was processed ... and (he) now holds a 26% shareholding in the company". Companies office records show he was appointed a director in October 2007.
Three months later, in February 2008, an invitation to tender "for the general management of Soccer City" was announced by Johannesburg, with the closing date for tenders in April that year. The deal was officially signed in January 2009.
When contacted, Khangale said he no longer owned that 26% of GEM, a stake now potentially worth millions. When asked what had happened, he said: "I can't explain that to you ... there's some confidentiality on that."
Khangale confirmed that he still lived in Ratanda - a neighbourhood where the average price of a house sold last year was R79487, according to an analysis by property experts Lightstone.
His assertion was contradicted by Henk Ferreira, a director of GEM and National Stadium who said Khangale was "still a shareholder".
Ferreira said a valuation had put the value of that 26% at about R100000. He conceded that Khangale had not paid a cent for those shares, saying that "at this stage, there is a deferred payment plan".
Khangale confirmed he never paid for any shares - but said: "I don't know about any agreement" to pay for shares at some later stage. On this point, he invited the Sunday Times to draw its own conclusions: "You've seen where I live."
Ferreira denied it was a coincidence that Khangale should pop up as a 26% shareholder shortly before a major tender: "The shares were transferred (to Khangale) ... more than a year before the transaction, so it had nothing to do with the tender," he said.
Ferreira said Khangale joined GEM as a security guard in 2001, and was "pulled through the ranks" to become a supervisor, before becoming GEM's human resources executive.
Another of the red lights about this "empowerment deal" is to be found in the tender documents as they relate to Khangale's responsibilities. The "26% shareholder HR executive" has no power to hire or fire employees, or even sign company cheques. Instead, his duties are "supervision of office personnel" and "field/production activities".
When asked about this limitation on a major shareholder, Ferreira said: "Once the shares are fully paid up, that will definitely change."
National Stadium SA executive chairman Jacques Grobbelaar denied there was any fronting.
"I get frustrated when people refer to so-called window dressing, and I invite anyone to come and investigate the minute book, because there's a path of issuing the shares," he told the ISS.
Quite how much money National Stadium SA will make from the tender (and how much Khangale should theoretically have made) depends on how successful they are. After the World Cup, National Stadium SA will keep all the after-tax profit less a "consideration" of between 10% and 20%, which will go to the city.
According to National Stadium's initial projections in 2008, the stadium was expected to make R80.6-million in after-tax profit over the next three years. Grobbelaar said these figures were "outdated", however, and National Stadium would not see all this cash. But it seems shareholders will still make millions.
The DA's Moriarty, who first raised concerns about the poor disclosure around the tender in a Johannesburg city council meeting in October 2008, said the case showed up weaknesses in the transparency around how multimillion-rand tenders were awarded.
"We weren't shown the full details of the tender, so it was impossible for us to assess the merits and problems in the deal, let alone details of its empowerment status. That's why we opposed it," he said.
» » » » [Sunday Times]
Cape Town bullied by Blatter, Mbeki
Stefaans Brümmer, Mail & Guardian
Apr 30 2010
Fifa president Sepp Blatter and former president Thabo Mbeki intervened to have a new 2010 stadium built in Cape Town -- a likely white elephant that was R3-billion more expensive than the two alternatives.
Green Point stadium, now renamed Cape Town stadium, cost R4,5-billion to build, compared with an estimated R1,1-billion to revamp the Newlands stadium or R1,7-billion to extend the Athlone stadium, according to Player and Referee: Conflicting Interests and the 2010 Fifa World Cup, published by the Institute of Security Studies this week.
In South Africa's 2010 bid document Newlands was proposed as the Cape Town match venue, which Fifa initially accepted. Athlone, on the economically depressed Cape Flats, was the choice of city and provincial officials, as they believed it would have the most developmental impact.
But Green Point won, because it was in the interests of Fifa and the local organising committee to have access to "state-of-the-art stadiums in the 'best' locations to draw the maximum number of visitors and viewers".
Fifa makes most of its revenue from the sale of television rights. The organising committee, Fifa's local implementing agent, derives its revenue largely from ticket sales.
The Cape Town chapter of the institute's study reveals that:
- Ebrahim Rasool, then premier of the Western Cape, who formally preferred Athlone, met Blatter in November 2005. Blatter argued for a new stadium at Green Point, suggesting it would earn Cape Town the right to host one of the two semifinals.
- Mbeki met Blatter later the same day. After that the presidency contacted Rasool to motivate for Green Point.
- A decision to go with Green Point rather than Newlands or Athlone was taken two months later at a Union Buildings meeting, ostensibly by members of the national government executive. But each minister present also served on the organising committee, which answers to Fifa.
- Cape Town mayor Nomaindia Mfeketo subsequently switched the city's formal preference from Athlone to Green Point without referring to her mayoral committee or council. She and her city manager could do so only because the council had been dissolved to prepare for the March 2006 elections.
- In the final days of Mfeketo's administration the city formally offered Green Point to Fifa. Blatter signed the acceptance, formally binding Cape Town to it, on March 15 2006, a day before the Fifa executive was to consider the offer. A possible explanation for Blatter's haste: the Democratic Alliance's Helen Zille replaced Mfeketo as mayor on the same day, March 15.
- Zille publicly complained that the decision in favour of Green Point was taken without "costings and sums … I really think that we're going into Green Point because Sepp Blatter says: 'I like Green Point', not because it's the best thing for South Africans."
In studies Zille commissioned on different stadium options Green Point was rated the most expensive and socioeconomically least desirable, but the only option which would earn Cape Town a semifinal.
She folded, reportedly saying: "Whether a threat or not, the provincial and national governments have said that we must host a semifinal or we lose 2010 [altogether]."
Green Point will host eight World Cup matches, including the promised semifinal. Athlone or Newlands would have hosted five to seven matches. This, the institute's study says, brings the cost of one to three matches to about R3-billion, the amount Green Point has cost over revamping Athlone or Newlands.
The investment might have been worth it if Green Point Stadium left a lasting positive legacy. But city and provincial studies have highlighted the stadium's questionable viability. Unless the Western Province Rugby Football Union moves its matches there, the new stadium will run at a loss.
But the rugby union does not want to, as it owns Newlands, which would be left redundant.
Partly to shield against losses, the city has appointed a private operator, SAIL Stadefrance, to manage Green Point on its behalf. On the face of it the city will get a third of revenue, but not be liable for losses. But the small print shows that the city will pay all structural maintenance costs, plus operational maintenance costs of more than R5-million a year.
The institute's study quotes a city official as conceding that structural maintenance costs remain unbudgeted for and could have a major impact on rates.
And it quotes former provincial sport and recreation head Rod Solomons saying: "Let me make a prediction … That thing is going to be a white elephant because Newlands rugby is not going to move there and soccer unfortunately is never going to attract games where that stadium is going to be full."
The study also reveals that:
- South Africa's 2010 bid book, kept under wraps, claimed it would cost $406-million (about R3-billion at the time) to host the World Cup, including $156-million (R1,2-billion) for stadium and related infrastructural upgrades. By now, the government has spent more than R17-billion on building and upgrading stadiums alone. Fifa, by comparison, stands to make record proceeds from this World Cup -- at least $3,2-billion.
- The organising committee pays local authorities 10% of ticket revenue to "rent" their stadiums. In Cape Town this is estimated at about R37-million -- a third of a flat fee of R111-million that the city is paying SAIL Stadefrance to run the stadium before and during the World Cup.
The committee and Fifa do not contribute to the cost of stadium construction.
For Cape Town the total R4,5-billion cost is made up of R200-million-plus from the province, R1,2-billion from the city, and more than R3-billion from the national government.
Find the full report at the ISS Corruption & Governance Programme website www.ipocafrica.org or the Cape Town chapter at www.amabhungane.co.za
» » » » [Mail & Guardian]
[Corruption & Greed at Match] From a flood to a trickle
Niren Tolsi, Mail & Guardian
Apr 23 2010 07:59
Authorised Fifa operator Match Hospitality AG is struggling to sell its allocation of 380 000 tickets for luxury hospitality suites and seats during the World Cup. It is now estimated that as few as 2 000 of these high-end tickets have been bought by foreign visitors.
Lethargic sales and a perception among international tour operators that they are being forced to buy overpriced tickets from another Match company -- Match Services AG, which is responsible for selling tickets within Fifa's tour operators programme -- have contributed to constantly declining projections of the number of foreign visitors expected to attend the tournament.
This week, business advisory firm Grant Thornton, which tracks World Cup-related economic trends, cut its 2007 estimate for foreign visitors from 483 000 to 373 000.
And the consensus among international tour operators canvassed by the Mail & Guardian was that neither crime nor media fear-mongering about the possible outbreak of a race war in the country had affected sales. Instead, Match Services' ineptitude and high prices were cited as reasons retarding sales. One tour operator told the M&G that it had had to pay a $30 000 (R224 000) licensing fee to Match as well as a 20% surcharge, plus 10% on each ticket it bought for resale.
Low sales last month led to Match Services returning 450 000 of the 1,8-million bed nights it had initially booked from hotels and bed and breakfasts. This was after the company returned 45 000 airline seats it had booked through SAA.
Match's accommodation returns have led to a last-minute scramble around the country to fill empty beds.
A phone-around to several popular hotels in Durban, Cape Town and Johannesburg revealed some with vacancy rates as high as 50% following Match's return of bed nights.
A reservations clerk at the 120-room Grand West City Lodge in Cape Town said: "Match returned more than 50% of the rooms it had booked with us. It is filling up slowly but surely, but we have been hit -- 30% of our rooms are still available."
Several hotels confirmed that Match does not allow hotels to lower prices on returned beds: "They dictate to us the price to ensure that we are at the same [pricing] level [as the other hotels where they have sold bed nights]," said a receptionist at Southern Sun Hotel at the Victoria and Alfred Waterfront.
There are growing perceptions in the trade that Match, which has links to Fifa president Sepp Blatter through his nephew Philippe, is a financial autocracy allowed to hog tickets at its discretion ... and shift them into the public domain when it is convinced that no profit can be made.
Speaking to the M&G, Gillian Saunders, principal at Grant Thornton, estimates that as few as 2 000 foreign visitors to the country will actually watch matches from the opulent confines of the VIP boxes.
The luxury suite and seat packages available through Match Hospitality include hospitality suites (ranging from $1 500 for a first-round match to $5 500 for a semifinal), where the rich are waited on by hostesses and served free food and drinks throughout the match.
There are also business seats (ranging from $950 for a first-round match to $4 000 for a semifinal), where executives will have to do without the nubile servers, and feeding and drinking happens off-site in a marquee near the stadium.
Saunders said that many of these hospitality tickets were now being made available "at a reduced rate to the general public in this final ticket phase".
She added that these would not be sold to the public as luxury box seats, but that would probably see Fifa reclassifying seat categories and downgrade business seats to the upper end of the market available to ordinary punters.
Concerns have long circulated in football and tourism circles about the inability of Match Hospitality to move expensive tickets in an economic climate that has seen corporates cutting back on their entertainment budgets.
Both Fifa and Match Hospitality have consistently refused to divulge the number of hospitality tickets sold, and did so again this week.
Said Match Hospitality spokesperson Peter Csanadi: "We don't want to release any figures because these numbers are changing [as tickets get sold] and we would prefer not to have different numbers floating around in the media, causing confusion."
Csanadi also declined to comment on Fifa general secretary Jérôme Valcke's admission in February that fewer than half of the hospitality tickets had been sold.
Valcke also said that sponsors like Sony and Coca-Cola -- who have the opportunity to entertain their guests with their own catering and hospitality arrangements -- had returned a "significant amount" of their initial allocation of 550 106 tickets.
Grant Thornton estimates that 1,4-million match tickets -- almost twice the initial allocation -- have already been purchased through public channels and expects this number to increase to as much as 2,2-million. Good news for ordinary football fans; bad news for those service providers who put their faith and profit prospects in Fifa's hands.
Blatter's link to Match
Match Services AG, Match Hospitality AG and their wholly owned South African subsidiaries -- which appear to have control over large chunks of tickets for the World Cup -- are linked to Fifa president Sepp Blatter through his nephew, Philippe Blatter.
In 2007 Match Hospitality AG was awarded the hospitality rights for both the 2010 and 2014 World Cups. One of its shareholders is Infront Sports & Media AG, the president and chief executive of which is Philippe Blatter.
Blatter, according to British media reports, is a longtime business associate of the Byrom brothers, Jaime and Enrique, whose Byrom Holdings plc is also responsible for ticketing matters related to the World Cup through another subsidiary, Match Services AG.
Infront is responsible for marketing Asian media rights (including television, radio and internet broadcasts) for the two World Cups. It shares the rights with Dentsu, a Japanese firm that also has shares in Match Hospitality AG.
According to the New York Times, an Infront subsidiary, Host Broadcast Services, also won a contract to manage television and radio signals for broadcasters during the 2010 World Cup.
» » » » [Mail & Guardian]
Corruption in Fifa and 2010 World Cup exposed
Corrupt dealings within Fifa and questions on how do ordinary South Africans benefit from 2010 World Cup laid out.
Apr 30, 2010 6:36 PM
By Amukelani Maphophe, Sunday Times
The 2010 soccer world cup, dubbed ‘ the African world cup’ is constantly advertised as belonging to all Africans. But a new book titled, Player and Referee Conflicting Interests and the 2010 FIFA World Cup, published by the Institute for Security Studies, reveals corrupt dealings within Fifa and the tournament and also questions the claim that ordinary South Africans will benefit.
So far the government has spent over R33 billion in preparations for the world cup, and expects a 0.5 percent GDP growth this year.
Amongst the corrupt dealings the book looks at are concerns about accommodation, stadium venues and at the centre of everything else to do with the world cup, the issuing of tenders for the various services.
Match Event Services AG’s principal shareholder, Byron PLC has been the official accommodation provider for six previous world cups.
Match has the mandate to provide accommodation to fans at “fair prices and reasonable terms”.
However an investigation by Rob Rose, Sunday Times Journalist, has “confirmed that tourists will have to pay 1000 percent more than they would normally pay for accommodation in certain cases”.
The book also reveals that the City of Johannesburg has signed a contract with a company called National Stadium South Africa (NSSA) which was awarded the contract to manage Soccer City before and after the World Cup for a period of ten years.
The contract signed between FIFA and the city states that FIFA will have to pay the City 10 % of its ticket sales for matches and events held at the stadium during the world cup.
However, Rose questions whether the R3.4 billion spent upgrading the stadium will actually yield any return for the city of Johannesburg and the tax payer.
This because, the contract between the city, and the management company NSSA, requires the city to relinquish “all the cash it will earn for the world cup from FIFA to ? NSSA”, said Rose.
Strong contenders for the Cape Town stadium venue were Athlone and Newlands.
But Sam Sole, contributing author, said that Sepp Blatter signed the agreement to have Green Point as the venue, on 15 March 2006, a day before FIFA’s executive committee met to consider the six contending venues.
As of that day, Cape Town was legally bound to deliver Green Point as the venue despite it being the most expensive of the other six.
Revelations of corruption on FIFA’s side do not seem to be much of a surprise to contributing author, Andrew Jennings.
He said of FIFA: “The unaccountable structure they’ve installed is honed to deliver the game to the needs of global capitalism – with no checks or restraints. Just cheques.”
» » » » [Sunday Times]
Fifa playing dirty game: study
Published: 4/29/2010 20:54:09
Paul Kirk, The Citizen
JOHANNESBURG - The Institute for Security Studies, South Africa’s most influential security think-tank, has released a study of the Fifa World Cup which drives home the point that “the beautiful game” is often downright ugly and crooked.
Titled Player and Referee, Conflicting Interests and the 2010 World Cup, the study is sure to incense many South Africans.
In a chapter titled Fifa’s ‘official’ suppliers: Shadowy tenders and conflicts of interest at Match, veteran financial journalist Rob Rose makes alarming discoveries. He describes Fifa’s official accommodation provider, Match Event Services, as “shadowy”. Match Event Services buys up accommodation from local hotels and lodges and sells it on to soccer fans. While Match Event Services have persuaded SA hotels and lodges to peg their prices on 2007 rates, Match have been very generous in their own profit margins, which they refuse to make public.
Rose discovered that Match have charged massive “premiums” on some accommodation – premiums so large that in some cases they have increased the cost of accommodation in certain Kruger National Park camps by 1 000%.
Rose discovered that the sole shareholders of Match are a family- owned company, Byrom PLC, which is totally owned by the Byrom family from Cheshire in the UK.
Match won the exclusive contract to provide accommodation to the World Cup in shady circumstances where there was no tender. The contract was awarded after negotiations in the back rooms of Fifa offices in Switzerland.
SA hotels and guest houses will, thanks to being pegged at 2007 prices, make less than if they had charged their normal rates.
Fifa and Sepp Blatter have also refused to reveal any information on their incomes, profit margins or the bonuses Fifa executives get.
Fifa has long been linked to bribery and investigative journalist Andrew Jennings, who is banned from Fifa meetings, press conferences and events, also contributes a chapter to the study. He has made damning claims of corruption against Fifa yet it has never brought a defamation action against him.
» » » » [The Citizen]