Sports Illustrated investigates: Cricket South Africa
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Sports Illustrated investigates: Cricket South Africa
13 years 3 months ago
By Firdose Moosa
In a battle between two powerful men, it is their egos that take the most bruising. For all the allegations Cricket South Africa (CSA) chief executive Gerald Majola and the body’s president Mtutuzeli Nyoka have hurled at each other – cries of corruption, open-ended lying, jealousy, conspiracy and violating protocols from the organisation’s media code to the law of the land itself – when the saga ends, irrespective of who come out on top, all that will remain are two run-out reputations.
The pair have come a long way, from the days of playing club cricket together in the Eastern Cape, to their ascendancy to senior positions in cricket administration and their ugly public spat which threatened to break the spine of the third-most popular sport in the country.
Majola is seen as the people’s man, world cricket’s longest serving CEO, the son and brother of two dedicated servants of the game, Eric and Khaya, and the reason for South Afria’s many lucrative dealings in the sport, from television rights to their status as the only country to have hosted every major, multi-team tournament on offer.
Nyoka is harder, more academic in his approach and has had a rocky ride through cricket, from his days as the loathed president of the Gauteng Cricket Board, where he emerged as a Malcolm X, championing the cause of transformation only to be ousted after a claim that he had done the exact opposite. He is the lone public voice of dissent and had made serious allegations against his former teammate, which have been met with little support from inside CSA but have attracted major public attention and concern.
Background
The scandal began in July last year when CSA’s auditors, Deloitte, found irregularities with their accounts. An amount of R4.7 million was paid in bonuses to 40 staff members, of which Majola’s was close to R1.8 million, after the hosting of the 2009 Indian Premier League and Champions Trophy. Both these events are regarded as external, because they took place outside of the regular incoming tours that CSA holds. The bonuses were not declared to CSA’s remunerations committee (remco) but were taxed.
On discovery of the bonuses, CSA announced they would hold an external inquiry, chaired by (former Chief Justice) Pius Langa, to investigate the payments. But after a board meeting held in August 2010, they changed tack and opted for an internal inquiry instead. At the time, CSA said that would allow them to exhaust their own procedures first, before seeking outside intervention.
The switch immediately aroused suspicion that CSA had something to hide, especially when the commission, under vice-president AK Khan, cleared Majola of any wrongdoing, save for making an “error of judgment”. His mistake was not declaring the bonuses to Remco, something some insiders said was a precedent that has applied in CSA from other external events such as the World T20 in 2007.
In a retaliative move, CSA removed the whistleblowing Nyoka by a vote of no confidence in February. He challenged the decision in court, won the case and was reinstated. He made up with Majola in a farcical press conference, where the pair said they would move forward as brothers. Brothers whose peace depended on the promise of a forensic audit.
KPMG were called in to scrutinise the books. After two months, in which insiders said the auditors they were constantly hindered in their attempts to secure information, KPMG eventually concluded their investigation with a seven-hour grilling of Majola.
The findings of their inquiry were made available to the board on June 30. It was decided that, although the inquiry could find no evidence of pilfered funds, CSA would seek legal advice on four possible breaches of the Companies’ Act by Majola. KPMG, in their capacity as auditors, did not recommend remedies to CSA, only that they employ the services of a lawyer. KPMG’s report was due to be released the week after that, for changes to be made, but, at the time of writing, had not seen the light of day.
Advocate Azhar Bham was appointed, in consultation with the South African Sports Confederation and Olympic Committee (SASCOC) and delivered legal opinion to CSA’s board the day before their AGM on August 20. Nyoka did not attend the meeting for personal reasons but the board decided to reprimand Majola “severely” after hearing various legal opinions.
Nyoka battled to get access to Bham’s opinion with CSA saying his advice exists only in an original document. The tapes of the meeting in which Bham addressed the board were allegedly corrupted. The play’s final act was due to be CSA’s launching of a second motion of no confidence in Nyoka, which was due to be deliberated on October 15.
CSA’s motivation for wanting to rid themselves of Nyoka is based on his conduct, which they consider to be unbecoming for a president. “Nyoka has only attended five minutes out of the last 25 hours the Board has spent deliberating various matters which has meant that he is not providing any leadership to the Board,” Michael Owen-Smith, CSA’s executive consultant, said. “He did not attend the annual meeting nor did he send through his presidential address. He also did not put in an appearance at the two-day annual conference in spite of the fact that transformation was a key issue on the agenda.
The findings
Details remain sketchy, primarily because of CSA’s refusal to disclose documentation. Despite promising the media copies of the KPMG audit report, they have not released it or the Bham opinion. “Both documents are the intellectual property of CSA,” Owen-Smith said. “The key aspects of the KPMG report have been made known – the fact that no monies are missing from CSA’s accounts and the recommendation to appoint a legal counsel to provide a legal opinion on various matters. Making the legal opinion public would only lead to a trial via the media which would be highly undesirable.” [Is public speculation preferable? – Ed.]
CSA simply expect to be believed as acting in the best interests of the game but their actions do not prove that. Bonuses of obscene amounts were paid for the 2010 financial year as well and although CSA is chalking up record revenues and profits, their failure to explain why such large sums are awarded does not do them favours when they plead innocence.
Nyoka’s camp has been more cooperative with the media and their biggest finding has come from a report drafted by Keith Lister, a non-practicing lawyer who is the chief executive of Sony Music Entertainment and a former director of the Gauteng Cricket Board (GCB). Lister looked into CSA’s dealings with India’s BCCI in relation to the IPL and found that an account owned by CSA containing R238 million has not been accounted for in any of its reports. “This does not mean that money is missing,” Lister said. “It simply means what is says, that is has not been accounted for, it has not been audited or investigated.”
The findings of this report are serious because part of Nyoka’s court victory was that CSA provide him with information relating to various IPL accounts, including the one Lister mentions. Because CSA have not done this, Lister believes them to be in contempt of court and says that furnishing Nyoka with details of the account would be an “essential step to getting the issue resolved.”
Nyoka has also informed the police about possible violation of the Companies’ Act. “If a director of a company breaches their duties, Majola has done, and the amount involved is worth more than R100, anyone who has knowledge of that breach has a duty to inform the police,” Lister said, explaining what Nyoka’s charge related to. It is up to the authorities to decide whether to investigate and prosecute.
The GCB connection
The county’s richest province has played a significant role in the scandal, because it was this province who initially took issue with the CSA regarding its negotiation of the IPL contract and who have a long-running problem with Nyoka.
Nyoka was president of the GCB for two terms, starting in the late 90s and running to the early 2000s. Nyoka rose up to the presidency through the Soweto Cricket Club (SCC) and spun a rhetoric around his commitment to transformation and changing the fortunes of those who were previously marginalised by Apartheid. “Nyoka used the SCC and transformation to serve on the national body,” Gordon Templeton, chairman of SCC said. “We at SCC are perplexed as to how an individual that had two terms as Chairman of GCB, could not increase the number of cricket playing facilities in previously disadvantaged communities in Gauteng. It is our perception that only lip service was paid to transforming cricket in Gauteng.”
Because of Nyoka’s poor transformation record, traditionally black clubs threatened to walk out of the GCB during his tenure, an issue that lasted even after Nyoka was voted out of office at the GCB. The ongoing racial issues in the province proved to be the last straw after the GCB accused CSA of allowing the IPL to violate norms at the Wanderers during their tournament. CSA punished the GCB by dismantling its board and placing it under administration. They inserted veteran administrator Ray Mali as president and instructed the GCB to redraft their constitution to become more inclusive.
However, when the GCB’s allegations that there was some irregularity in the way the IPL was handled proved true (as the bonuses showed), Nyoka wanted to reverse the sanction placed on the GCB. He offered Mali R2 million to vacate his post because he wanted to “give the GCB back to its clubs.” The proposal was met with horror from the GCB, who believed that Nyoka was trying to destabilise them just as they were starting to get on track. “Mali had in seven months achieved more than what the GCB had failed to do in 20 years of unity in cricket,” Templeton said, referring to the infrastructure upgrades that have taken place in Alexandra, Diepkloof and Delfos and the promotion of two more so-called black clubs to the premier league. “I am of the humble opinion, that cricket as a whole, is far better off without a Nyoka. He has not once delivered on any of his promises to transform cricket at provincial or national level.”
On the pitch
As expected, the implications of the financial scandal have been most harshly felt on the pocket. CSA spent the off-season struggling to secure sponsors after Standard Bank and MTN pulled out at the end of last season. Commercial manager Richard Glover said that sponsors wanted to hold off announcing their affiliation to CSA until they “draw a line under the bonus saga.” Two weeks before the international season kicked off, CSA had not named sponsors for the Twenty20 (T20) team, T20 events, ODI and Test events, domestic 50-over competition and domestic T20 competition. Only Castle Lager had been confirmed as Test and ODI team sponsor.
National team manager Mohammad Moosajee has also weighed in with claims that Nyoka’s behaviour is rubbing off badly on the team. He wrote a letter to the board, which has also not been released, in which he said that Nyoka’s actions in the media will make it difficult to him to regulate player behaviour. “If the most senior office bearer of the organisation is breaching media protocols, I will not be able to hold players accountable if they do the same,” Moosajee said. His letter was used as part of CSA’s motivation for their second no-confidence motion in Nyoka.
The players have, though their association, distanced themselves from the spat with Tony Irish, chief executive of the South African Cricketers’ Association saying that the players “expressed no views in favour of, or against, on side or the other.” Before the World Cup, Graeme Smith was quoted in a CSA press release as voicing support for Majola. Smith denied making the comments.
The good news
Although it will likely be a while before the financial maze at CSA is untangled, once it is, better measures of corporate governance can be put into place. “This includes certain remedial measures such as the appointment of a full-time company secretary or legal adviser to tighten up procedural matters,” Owen-Smith said. Instead of adhering to principals that applied years ago, all payments, whether from internal or external sources should be processed through remco and declared to the board. It will mean that if external events are hosted and staff are paid for working on those tournaments, they will not be rewarded with hefty internal bonuses as well. In the long run, this will hopefully mean more money is available to the organisation and, ideally, that surplus will be ploughed back into the development of the game.
In a battle between two powerful men, it is their egos that take the most bruising. For all the allegations Cricket South Africa (CSA) chief executive Gerald Majola and the body’s president Mtutuzeli Nyoka have hurled at each other – cries of corruption, open-ended lying, jealousy, conspiracy and violating protocols from the organisation’s media code to the law of the land itself – when the saga ends, irrespective of who come out on top, all that will remain are two run-out reputations.
The pair have come a long way, from the days of playing club cricket together in the Eastern Cape, to their ascendancy to senior positions in cricket administration and their ugly public spat which threatened to break the spine of the third-most popular sport in the country.
Majola is seen as the people’s man, world cricket’s longest serving CEO, the son and brother of two dedicated servants of the game, Eric and Khaya, and the reason for South Afria’s many lucrative dealings in the sport, from television rights to their status as the only country to have hosted every major, multi-team tournament on offer.
Nyoka is harder, more academic in his approach and has had a rocky ride through cricket, from his days as the loathed president of the Gauteng Cricket Board, where he emerged as a Malcolm X, championing the cause of transformation only to be ousted after a claim that he had done the exact opposite. He is the lone public voice of dissent and had made serious allegations against his former teammate, which have been met with little support from inside CSA but have attracted major public attention and concern.
Background
The scandal began in July last year when CSA’s auditors, Deloitte, found irregularities with their accounts. An amount of R4.7 million was paid in bonuses to 40 staff members, of which Majola’s was close to R1.8 million, after the hosting of the 2009 Indian Premier League and Champions Trophy. Both these events are regarded as external, because they took place outside of the regular incoming tours that CSA holds. The bonuses were not declared to CSA’s remunerations committee (remco) but were taxed.
On discovery of the bonuses, CSA announced they would hold an external inquiry, chaired by (former Chief Justice) Pius Langa, to investigate the payments. But after a board meeting held in August 2010, they changed tack and opted for an internal inquiry instead. At the time, CSA said that would allow them to exhaust their own procedures first, before seeking outside intervention.
The switch immediately aroused suspicion that CSA had something to hide, especially when the commission, under vice-president AK Khan, cleared Majola of any wrongdoing, save for making an “error of judgment”. His mistake was not declaring the bonuses to Remco, something some insiders said was a precedent that has applied in CSA from other external events such as the World T20 in 2007.
In a retaliative move, CSA removed the whistleblowing Nyoka by a vote of no confidence in February. He challenged the decision in court, won the case and was reinstated. He made up with Majola in a farcical press conference, where the pair said they would move forward as brothers. Brothers whose peace depended on the promise of a forensic audit.
KPMG were called in to scrutinise the books. After two months, in which insiders said the auditors they were constantly hindered in their attempts to secure information, KPMG eventually concluded their investigation with a seven-hour grilling of Majola.
The findings of their inquiry were made available to the board on June 30. It was decided that, although the inquiry could find no evidence of pilfered funds, CSA would seek legal advice on four possible breaches of the Companies’ Act by Majola. KPMG, in their capacity as auditors, did not recommend remedies to CSA, only that they employ the services of a lawyer. KPMG’s report was due to be released the week after that, for changes to be made, but, at the time of writing, had not seen the light of day.
Advocate Azhar Bham was appointed, in consultation with the South African Sports Confederation and Olympic Committee (SASCOC) and delivered legal opinion to CSA’s board the day before their AGM on August 20. Nyoka did not attend the meeting for personal reasons but the board decided to reprimand Majola “severely” after hearing various legal opinions.
Nyoka battled to get access to Bham’s opinion with CSA saying his advice exists only in an original document. The tapes of the meeting in which Bham addressed the board were allegedly corrupted. The play’s final act was due to be CSA’s launching of a second motion of no confidence in Nyoka, which was due to be deliberated on October 15.
CSA’s motivation for wanting to rid themselves of Nyoka is based on his conduct, which they consider to be unbecoming for a president. “Nyoka has only attended five minutes out of the last 25 hours the Board has spent deliberating various matters which has meant that he is not providing any leadership to the Board,” Michael Owen-Smith, CSA’s executive consultant, said. “He did not attend the annual meeting nor did he send through his presidential address. He also did not put in an appearance at the two-day annual conference in spite of the fact that transformation was a key issue on the agenda.
The findings
Details remain sketchy, primarily because of CSA’s refusal to disclose documentation. Despite promising the media copies of the KPMG audit report, they have not released it or the Bham opinion. “Both documents are the intellectual property of CSA,” Owen-Smith said. “The key aspects of the KPMG report have been made known – the fact that no monies are missing from CSA’s accounts and the recommendation to appoint a legal counsel to provide a legal opinion on various matters. Making the legal opinion public would only lead to a trial via the media which would be highly undesirable.” [Is public speculation preferable? – Ed.]
CSA simply expect to be believed as acting in the best interests of the game but their actions do not prove that. Bonuses of obscene amounts were paid for the 2010 financial year as well and although CSA is chalking up record revenues and profits, their failure to explain why such large sums are awarded does not do them favours when they plead innocence.
Nyoka’s camp has been more cooperative with the media and their biggest finding has come from a report drafted by Keith Lister, a non-practicing lawyer who is the chief executive of Sony Music Entertainment and a former director of the Gauteng Cricket Board (GCB). Lister looked into CSA’s dealings with India’s BCCI in relation to the IPL and found that an account owned by CSA containing R238 million has not been accounted for in any of its reports. “This does not mean that money is missing,” Lister said. “It simply means what is says, that is has not been accounted for, it has not been audited or investigated.”
The findings of this report are serious because part of Nyoka’s court victory was that CSA provide him with information relating to various IPL accounts, including the one Lister mentions. Because CSA have not done this, Lister believes them to be in contempt of court and says that furnishing Nyoka with details of the account would be an “essential step to getting the issue resolved.”
Nyoka has also informed the police about possible violation of the Companies’ Act. “If a director of a company breaches their duties, Majola has done, and the amount involved is worth more than R100, anyone who has knowledge of that breach has a duty to inform the police,” Lister said, explaining what Nyoka’s charge related to. It is up to the authorities to decide whether to investigate and prosecute.
The GCB connection
The county’s richest province has played a significant role in the scandal, because it was this province who initially took issue with the CSA regarding its negotiation of the IPL contract and who have a long-running problem with Nyoka.
Nyoka was president of the GCB for two terms, starting in the late 90s and running to the early 2000s. Nyoka rose up to the presidency through the Soweto Cricket Club (SCC) and spun a rhetoric around his commitment to transformation and changing the fortunes of those who were previously marginalised by Apartheid. “Nyoka used the SCC and transformation to serve on the national body,” Gordon Templeton, chairman of SCC said. “We at SCC are perplexed as to how an individual that had two terms as Chairman of GCB, could not increase the number of cricket playing facilities in previously disadvantaged communities in Gauteng. It is our perception that only lip service was paid to transforming cricket in Gauteng.”
Because of Nyoka’s poor transformation record, traditionally black clubs threatened to walk out of the GCB during his tenure, an issue that lasted even after Nyoka was voted out of office at the GCB. The ongoing racial issues in the province proved to be the last straw after the GCB accused CSA of allowing the IPL to violate norms at the Wanderers during their tournament. CSA punished the GCB by dismantling its board and placing it under administration. They inserted veteran administrator Ray Mali as president and instructed the GCB to redraft their constitution to become more inclusive.
However, when the GCB’s allegations that there was some irregularity in the way the IPL was handled proved true (as the bonuses showed), Nyoka wanted to reverse the sanction placed on the GCB. He offered Mali R2 million to vacate his post because he wanted to “give the GCB back to its clubs.” The proposal was met with horror from the GCB, who believed that Nyoka was trying to destabilise them just as they were starting to get on track. “Mali had in seven months achieved more than what the GCB had failed to do in 20 years of unity in cricket,” Templeton said, referring to the infrastructure upgrades that have taken place in Alexandra, Diepkloof and Delfos and the promotion of two more so-called black clubs to the premier league. “I am of the humble opinion, that cricket as a whole, is far better off without a Nyoka. He has not once delivered on any of his promises to transform cricket at provincial or national level.”
On the pitch
As expected, the implications of the financial scandal have been most harshly felt on the pocket. CSA spent the off-season struggling to secure sponsors after Standard Bank and MTN pulled out at the end of last season. Commercial manager Richard Glover said that sponsors wanted to hold off announcing their affiliation to CSA until they “draw a line under the bonus saga.” Two weeks before the international season kicked off, CSA had not named sponsors for the Twenty20 (T20) team, T20 events, ODI and Test events, domestic 50-over competition and domestic T20 competition. Only Castle Lager had been confirmed as Test and ODI team sponsor.
National team manager Mohammad Moosajee has also weighed in with claims that Nyoka’s behaviour is rubbing off badly on the team. He wrote a letter to the board, which has also not been released, in which he said that Nyoka’s actions in the media will make it difficult to him to regulate player behaviour. “If the most senior office bearer of the organisation is breaching media protocols, I will not be able to hold players accountable if they do the same,” Moosajee said. His letter was used as part of CSA’s motivation for their second no-confidence motion in Nyoka.
The players have, though their association, distanced themselves from the spat with Tony Irish, chief executive of the South African Cricketers’ Association saying that the players “expressed no views in favour of, or against, on side or the other.” Before the World Cup, Graeme Smith was quoted in a CSA press release as voicing support for Majola. Smith denied making the comments.
The good news
Although it will likely be a while before the financial maze at CSA is untangled, once it is, better measures of corporate governance can be put into place. “This includes certain remedial measures such as the appointment of a full-time company secretary or legal adviser to tighten up procedural matters,” Owen-Smith said. Instead of adhering to principals that applied years ago, all payments, whether from internal or external sources should be processed through remco and declared to the board. It will mean that if external events are hosted and staff are paid for working on those tournaments, they will not be rewarded with hefty internal bonuses as well. In the long run, this will hopefully mean more money is available to the organisation and, ideally, that surplus will be ploughed back into the development of the game.
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