Johannesburg — THE SABC's financial crisis is the result of years of poor implementation of strategy, and often poor decisions, according to its chief financial officer, Robin Nicholson.

In some cases decisions were taken against the advice of the financial team.

A few weeks ago, the SABC revealed that it was facing a R784m loss for the financial year which ends at the end of this month. It is negotiating with the Treasury for a guarantee from the government in order to extend its overdraft facilities.

"If the SABC continues on the same route, it's going to be so dysfunctional that you can't fix it. It can't be managed and governed like this," Nicholson warned in an interview with Business Day yesterday.

The SABC's core problem is that of human capacity and skills, Nicholson maintains.

He says the broadcaster suffers from surplus headcount, leading it to spend far too much on remuneration, which makes up 70% of the budget.

"If you're not managing people, you're not controlling costs. People cost money and spend money. The link between remuneration and output is a core debate that's taking place right now," he says.

"Human capital services fail the SABC horribly. There are too many people in the wrong jobs, without the skills and capacity to do those jobs. And it's from the board down."

According to Nicholson, Gemini Consulting estimates that the SABC spends R50m more than it needs to on its management structure.

"The core problem is how you manage people. There are 22 cases where current and former employees are suing the SABC. That's got to say something."

About R400m of the SABC's loss is the result of a nosedive in sales. The global credit crunch has hit the SABC hard as advertisers drop off, but Nicholson also blames a "real underperformance" from SABC3, the public commercial channel.

An expanded mandate, received in 2006 from the Independent Communications Auth-ority of SA, has put much more pressure on the bottom line. Under the mandate, the SABC had to provide more local content, especially in African languages, more educational programming and documentaries, and expanded news coverage. This led to an expansion of African bureaus to gather news for domestic audiences, and to the formation of SABC News International, in an attempt to exploit this content.

News is a "difficult" environment to manage, says Nicholson. Infrastructure, facilities, and editorial staff have to be provided for 13 languages in nine regions.

"The way news is organised needs to be looked at. It's a R700m a year business. We need to fix the news structure."

The SABC is struggling to fund the public services it is mandated to provide, including local content. There is an argument that it cannot afford to implement the mandate until it has fixed the business and cost structures, Nicholson says.

Nicholson's own conduct came under scrutiny in a July 2007 Deloitte & Touche report on alleged irregularities in the technology division.

Deloitte was investigating a new content-scheduling IT system which had been approved without a proper budget being presented to the board and where costs escalated with apparently very little control.

But Nicholson says he had tried several times to discuss the project in the board's finance sub-committee meetings and produced e-mails as evidence.

Should Nicholson have been able to prevent the current mess?

"My job is to make sure the systems and controls are in place. The fact that they're overspending their budgets, I can only tell you.

"Finance is a consequence of strategy and actions. Don't hold me to account for what others have done, unless I could have influenced it," he says.