14 June 2014

South Africa: An Open Letter On the Safa-Sascoc Matter

SAFA is quite disappointed by the manner in which SASCOC continues to disrespect the Association through its continuing disparaging actions through its insistence on dealing with the Association in a very adversarial manner. It continues to engage SAFA through the media on SAFA matters without first addressing matters of the moment directly with the Association.

We were called by the media asking us to comment on remarks by SASCOC on matters that the Association, FIFA and the South African government had already agreed on the way forward, but which SASCOC now refers to in direct opposition to these agreements.

In April 2013, SAFA, the South African Government and FIFA agreed that all financial matters will be dealt with by SAFA and FIFA and that the match-fixing matter will be dealt with by the South African Government.

SASCOC appears once again to raise the spectre of the match-fixing issue, but, the State President, the Honourable Jacob Zuma, issued an instruction in March 2014 that this matter will no longer be dealt with by the South African Government, instead handing it over to FIFA as it forms part of FIFA's world-wide investigation into match-fixing.

By instituting an investigation into SAFA's finances, SASCOC is directly defying an agreement made between the South African Government and FIFA on 5 April 2013 that SAFA and FIFA will deal with all financial matters involving SAFA. This agreement was reported throughout the world as the biggest story of that period.

SAFA is cooperating fully with FIFA's investigator, Mr Michael Garcia, on this matter and will continue to do so.

FIFA also issued two clear instructions in February 2013 that any financial matters are to be dealt with by itself and SAFA because the money being rumoured to have been misappropriated, in an anonymous dossier given to SASCOC in February 2013, belonged to FIFA. FIFA clearly stated that it was satisfied that all its funds had been fully accounted for and congratulated SAFA for the manner in which it managed the R3.2 billion FIFA gave it to run the 2010 FIFA World Cup in South Africa.

To date, SASCOC has still not given SAFA a copy of the dossier where these outrageous claims were made. Instead of protecting its Member's reputation by first discussing the matter with SAFA, they forwarded the dossier to the Hawks to investigate the matter. Yet, everyone who has laid their eyes on the dossier has deemed it utter rubbish. We worry why SASCOC is the only entity who so readily believes in the "explosive" nature of the dossier delivered to its premises by a nameless and faceless individual/s.

SASCOC also enquired from SAFA in February 2013 about allegations of financial illiquidity and bankruptcy that it said it read about in the media - without telling SAFA which media outlets had made these claims so that SAFA could respond to it in the manner in which it was placed in the media. SASCOC has to date refused to divulge to SAFA which media outlets made these allegations.

SAFA therefore had no basis on which to respond as it was neither bankrupt nor "financially illiquid" as confirmed by its auditors.

Following the two definitive statements by FIFA and SAFA's request to SASCOC to furnish it with more details on the basis for its request, SASCOC then changed its reasons, pointing out that SAFA had suffered two consecutive years of losses and that this warranted an investigation.

SASCOC has also refused to inform SAFA who the complainant is in respect of SAFA's finances and the reasons for their investigation as SASCOC admitted that they had not seen any evidence of any financial wrongdoing and no incriminating information had been put in front of the SASCOC Board for them to arrive at the decision to investigate SAFA's finances.

First it was an anonymous dossier, then media reports of financial illiquidity and bankruptcy, then two consecutive years of losses. The goalposts keep on shifting.

Truth be told, SAFA has given SASCOC its unqualified audited financial statement and its turnaround strategy containing the break-even budget for the current financial year on 3 separate occasions in the last 8 months. Yet, SASCOC continues to claim that SAFA had not done so.

The President of SASCOC, during a meeting on 11 November 2013 went as far as making detailed suggestions on how SAFA can supplement that turnaround strategy through a joint partnership with SASCOC on 6 fronts. We are therefore thoroughly perplexed by his failure to share that information with his Board.

The CEO of SASCOC also attended the SAFA Congress in September 2013, along with government, FIFA and CAF representatives, where he received a full pack of information containing all the documents needed by SASCOC to satisfy itself that SAFA was still a going concern. He also witnessed the transparent manner in which the SAFA Members approved the turnaround strategy and the unqualified audited financial statement. Yet, he appears to have failed to inform his Board about this.

The leadership of SAFA met the SASCOC President again in March 2014 to give him a further progress report on SAFA's recovery plan. Yet, he appears to have failed to inform his Board about this.

In the last 7 months SAFA has very publicly announced sponsorships by EY (Ernst & Young), Nike, Grand Parade Investments/Burger King, the Motsepe Foundation and will soon announce a vehicle sponsorship and a groundbreaking broadcast deal that will be the biggest financial deal in the history of SAFA.

Along with continuing financial discipline that has seen spending reductions of more than 30%, a more than 50% reduction in staff, the new sponsorships, together with continuing votes of support by Sasol and South African Breweries, demonstrates a turnaround strategy that has yielded tremendous results.

We are therefore left to wonder why SASCOC is not running to congratulate the Association for the positive work done after the 3 reports it had received and the widely-covered sponsorships that SAFA has secured since the 2013 SAFA elections.

SAFA believes that there is nothing new that it can tell SASCOC that it had not already informed them about and which can be found in the public domain and that our auditors are best positioned to inform the SAFA Membership and the general public on SAFA's financial management - unless SASCOC is questioning the veracity of our auditor's opinion and believes media reports of financial illiquidity over that of a qualified auditor's opinion.

The bulk of SAFA's R46 million loss in the last financial year was as a result of depreciation of its vast vehicle fleet, non-productive assets it inherited from the 2010 FIFA World Cup Local Organising Committee and provisions for expected losses during the 2013 Africa Cup of Nations. These were therefore not cash losses. The non-productive assets have since been sold or written off and will not appear on SAFA's books again. The 2013 Africa Cup of Nations and the CHAN Tournament loss provisions will be reversed and will reflect in the Association's consolidated balance sheet in the current financial year. These facts were reported to SASCOC, Parliament and the media in great detail throughout 2013 and were accepted by our auditors as grounds to declare the Association a going concern.

It also bears noting here that SAFA has never received a qualified audited financial opinion from any of its auditors in its 23 years of existence.

Indeed, SAFA is the only sports federation that does not control its own finance department and who, in the interest of good governance and transparency, has outsourced its financial management to EY (Ernst & Young) for the past two years. This is the same period that SASCOC claims there was something wrong with SAFA's finances - unless SASCOC is questioning the veracity of EY as well.

SAFA also finds it very strange that SASCOC would call an urgent meeting in May 2014 to discuss SAFA's finances one day after the SAFA Executive approved a groundbreaking broadcast sponsorship that will forever change the financial fortunes of the Association.

The timing of SASCOC's action is very suspicious, coming during the kickoff week of the 2014 FIFA World Cup in Brazil. It tarnishes the efforts of our State President. President Zuma has been receiving high praise for his highly successful oversight of the 2010 FIFA World Cup considering the difficulties faced by Brazil and because of his magnanimous handover of the mantle to Brazil on 5 March 2014. SASCOC's actions have now placed the country in a very negative light during a time when it should have been basking in the success of the 2010 FIFA World Cup.

Moreover, many of SAFA's officials are assisting FIFA in Brazil to ensure the success of another FIFA World Cup, but SASCOC's behaviour has now cast a shadow over their efforts.

It appears quite clear to the Association that SASCOC has been monitoring the acquisition of the commercial deals the Association has been signing and then acting to ensure that these do not happen by continuing to publicly cast suspicion over SAFA's finances in the hope that it would scare away potential sponsors.

The Association has revived its Under-17 and Under-19 inter-provincial competitions system, activated the junior national teams, kept the Men's Senior National Team (Bafana Bafana) busy, and has just seen the Women's Senior National Team qualify for the 2014 African Women's Championship in Namibia.

Our Under-17 National Team are the current titleholders of Region 5 (formerly Zone 6 - Southern Africa) of the Supreme Council of Sport in Africa and have recently participated in an international tournament in Namibia to gain more international experience. Our Under-20 National Team are the current champions of COSAFA. SASCOC has not congratulated SAFA on these seminal achievements.

SAFA also seeks to establish 9 provincial academies to develop elite football talent throughout the country - something that falls within SASCOC's mandate but which it has not partnered with us to make this happen.

Also, as the legislated custodian of elite sports in the country, SASCOC has not seen it fit to send a single letter or note of congratulations to the Association on its achievements and even less material support for these very programmes that it is charged with developing and promoting.

Instead, SASCOC seems to directly contradict an instruction from our State President by raising matters that had already been agreed, between the South African Government and FIFA, should be dealt with by FIFA's fiercely independent Investigatory Chamber of the FIFA Ethics Committee.

SAFA will proceed to deliver on its mandate to turn the national sport around to succeed internationally and it is grateful to its partners for the support it has given it to do so. Indeed, SAFA's membership were satisfied that the Association was on the right track and gave the current leadership of the Association a mandate to turn the Association around after presentation of the unqualified audited financial statement and the turnaround strategy.

It is only SASCOC who seems to believe that the Association is incapable of turning around its fortunes. We are concerned by SASCOC's behaviour and worry that SASCOC seeks the collapse of the Association by its ever-changing reasons for why it must investigate SAFA, completely disregarding the very visible progress the Association has made.

SAFA will seek an urgent meeting with the Honourable Minister of Sport and Recreation to discuss the way forward because SAFA's continued membership of SASCOC has become untenable as SASCOC has chosen to place itself in a clearly adversarial relationship with SAFA and many of its other members instead of working with them to grow elite sport in this country and to be supportive of the very membership who voted the current SASCOC leadership into office.

However, notwithstanding these problems, the Association is still desirous of a dialogue with SASCOC in early August as agreed with them on 2 June 2014 where both sides pledged to work together to improve SASCOC's terrible communication and relationship with its Members, SAFA being one them. It is in nobody's interest that this negative environment prevails between the country's biggest sports organisation (SAFA) and its Olympic body.

However, our patience is wearing very thin with the imperial behaviour of the SASCOC leadership.

Sincerely,

DENNIS A. MUMBLE

CHIEF EXECUTIVE OFFICER

SOUTH AFRICAN FOOTBALL ASSOCIATION

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