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MultiChoice battered by ANN7 debacle

Publish date: 06 December 2017
Issue Number: 1712
Diary: Legalbrief eLaw
Category: Competition

Legalbrief reports that the fallout from the relationship between MultiChoice and the former Gupta-owned news channel ANN7 continues to spread with Parliament now considering launching an inquiry into the scandal. And international law firm Pomerantz yesterday (Tuesday) announced it is investigating claims that MultiChoice was involved in securities fraud or unlawful business practices relating to the ANN7 payments. Communications Committee chair Humphrey Maxegwana earlier confirmed that ‘the matter needs to be discussed and a decision needs to be taken’. The television giant is on the ropes over allegations that it bought influence over government policy on encryption for its digital migration project by paying the SABC for a 24-hour news channel and access to archives. Business Day reports that the public broadcaster could also not encrypt its channels when the country switched to digital television. Maxegwana’s comments followed calls from commentators such as Corruption Watch and the SACP for an inquiry. MultiChoice was also accused of paying former Gupta-owned TV station ANN7 to host its news channel in exchange for influence in the government. SACP central executive committee member Yunus Carrim said the party ‘fully supports encryption. It’s about how far should business go when seeking to influence government policy. It has to be done within some sort of business ethics. You can lobby but you can’t buy government policy.’ Legalbrief reports that the ANC’s head of the sub-committee on communications, Jackson Mthembu, said he agrees with calls for an investigation into the allegations. 'If there were any attempts to influence government policies by anybody, that matter should be investigated,' said Mthembu. According to a TimesLIVE report, Pomerantz said the fraud claims were being investigated on behalf of investors‚ who could contact Robert Willoughby at the firm. The Pomerantz probe could result in the firm launching a class action lawsuit against Naspers, MultiChoice's holding company, suggests a Moneyweb report. Pomerantz, with offices in New York, Chicago, Los Angeles and Paris, is active in the areas of corporate, securities, and antitrust class litigation. Recent securities litigation includes cases against AOL TimeWarner, Avid Technology, Lucent, Groupon and Tesla. The firm appears to have pioneered the field of securities class actions, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct and has recovered more than $1bn on their behalf, says the report. Naspers investors have been invited to express interest in joining the class action.

Full Business Day report (subscription needed)

Full TimesLIVE report

Full Moneyweb report

MultiChoice confirmed that it will conduct an internal investigation into the matter. A Moneyweb report says this follows widespread criticism that neither MultiChoice nor parent company Naspers responded adequately to the damning allegations, including that MultiChoice paid ANN7 R141m a year and a once-off amount of R25m to air the channel on its digital platform, while the SABC was paid R100m a year to host its 24-hour news channel. MultiChoice’s Don Eriksson said the company’s board is aware that the ANN7 channel ‘has caused real public concern because of the allegations of corruption levelled at the former owners of the channel’. He added that the board had instructed the audit and risk committees to assess whether there were any ‘corporate governance failures’ related to the ANN7 agreement, as well as whether the amounts paid to ANN7 are comparable to the payments to other locally-produced channels.

Full Moneyweb report

Former Communications Minister Yunus Carrim waded into the debate on Friday, saying Naspers chair Koos Bekker lobbied him to drop set-top box encryption when he was in Cabinet. He said it was ‘bizarre to suggest Bekker was hands-off from MultiChoice’s vigorous campaign to change government policy on encryption’. But Bekker, speaking to radio host Bruce Whitfield of 567 Cape Talk and 702, dismissed claims he had applied improper leverage to change government policy as ‘crap’. A Fin24 report says the latest back-and-forth between Bekker and Carrim comes after the Naspers board put out a statement, decrying what it termed the ‘persistent baiting of Naspers (the holding company) to intervene in the affairs of MultiChoice’. The Naspers statement also referenced ‘a suggestion’ made by Carrim about a meeting between him and Bekker, but did not say when or where this ‘suggestion’ was made. Carrim, however, reportedly told Fin24 that it referred to comments he recently gave to the Mail & Guardian. ‘Koos Bekker was aggressively involved in pushing for dropping encryption. That’s the only issue he ever discussed with me,’ Carrim reportedly told the M&G. On the MultiChoice-SABC deal, Bekker noted he took the minutes of the SABC interim board meeting with MultiChoice – that the DA wants investigated – to two lawyers and asked if they showed any representation of criminal activity or wrong. Bekker said the lawyers responded that there was nothing criminal or wrong included in the minutes.

Full Fin24 report

ANN7 was in the news for other reasons as well after ANC Chief Whip Jackson Mthembu last week laid a formal complaint against the channel for a segment alleging he ‘colluded’ with the DA. Mthembu blasted insinuations by six ANC MPs that he ‘colluded’ with the DA to schedule a debate on state capture in Parliament on Tuesday last week, says a News24 report. The ANC MPs had held a press conference, aired last Monday by ANN7, slamming Mthembu, the inquiry into Eskom and lead evidence adviser Advocate Ntuthuzelo Vanara. Mthembu laid a formal complaint with the Broadcasting Complaints Commission (BCC). He took offence to the allegations that he ‘decided to side with the racist DA on a biased parliamentary debate on state capture’ and that it showed a ‘pro-white monopoly capital faction’ had emerged inside the ANC caucus. ‘ANN7 repeatedly ran this broadcast over two days and published defamatory comments without having afforded the ANC Chief Whip a right of reply to these allegations,’ Mthembu said in his letter to the BCC. Mthembu also claimed he had proof the press conference had been ‘staged’.

Full report on the News24 site