No news was bad news for Gauteng, CNBC

Nor was the alleged dismissal of GFC head Tony Sauls for signing the deal made public. And secrecy was also the chosen way of handling things when the Gauteng government cancelled the contract with CNBC Africa in January.

Instead, the public learnt of the cancellation of the US$3m a year contract via a press release from an independent film producer body, the South African Screen Federation (Sasfed), on March 28.

Sasfed had heard about it unofficially and did not realise the matter was not meant for public consumption.

Details of the deal — which would have cost an additional R60m had it run its course — have emerged over the past two weeks and are not yet all in the public domain.

The GFC refers in its 2009 annual report to a deal to “secure CNBC Africa's main studios and operating facilities in Gauteng” and says that the province in return would receive free advertising.

CNBC Africa, which has refused to speak to the media since the story broke but has promised to make a statement in the near future, declined to appear on Radio 702 yesterday (14 April 2010).

Instead it issued a brief statement saying it had merely “produced a series of programmes called Business Spotlight with sponsorship and associated advertising via the GFC”.

The two contrasting versions of events call for an explanation. Some clarity was provided by Gauteng economic development MEC Firoz Cachalia yesterday (14 April 2010), in an interview with Radio 702. But he made no mention of programmes produced by CNBC Africa.

According to Cachalia, the deal was that CNBC Africa would receive about R22,8m a year in return for investing R170m in the province and carrying regular slots about Gauteng to market the province, locally and internationally.

CNBC Africa, in its statement to Radio 702, said Gauteng did not receive favourable treatment in any news reports, insisting it retained editorial control at all times. This was supported by Cachalia, who said the contract gave editorial independence to CNBC Africa.

The five-year contract with CNBC Africa was cancelled after the auditor-general issued negative findings two years in a row about the deal, and legal opinion sought by Cachalia found the contract was contrary to the provisions of the Public Finance Management Act.

Cachalia was already reviewing several contracts signed during Mashatile's term as part of a “rationalisation” exercise to reduce unnecessary expenditure.

Among the contracts cancelled were R117,5m in motorsport agreements, details of which were made public.

According to Cachalia, apart from the fact that the CNBC Africa deal “should not have been entered into in the form it was in”, the GFC did not have the power to enter into a “foreign currency” agreement.

Cachalia says he did not know why Sauls apparently entered into an agreement with CNBC Africa and then chose to keep it from the GFC board, an act which had allegedly led to his dismissal.

Cachalia came to the defence of his predecessor Mashatile yesterday (14 APril 2010), saying it would have been hard for Mashatile to know about CNBC's deal as the GFC was an independent agency with its own board and CEO.

This does not explain how the additional R20m, allegedly over and above GFC's budget, was approved.

Marc Schwinges, an independent film producer and Sasfed spokesman, says that until Sasfed raised the issue of the contract with the GFC, no one had questioned the payments.

Sasfed had requested that this funding now be used to assist local film producers. However Cachalia yesterday (14 April 2010) rejected this, saying that cuts had been made across the board and GFC was no different.

Vernon Matzopoulos, MD of Summit TV, CNBC Africa's competitor, says that is unacceptable that a competitor was receiving provincial funds.

Source: Business Day