Namibia: NBC Finances in Shambles

Investment

Despite millions of dollars of taxpayers' money afforded to the Namibian Broadcasting Corporation (NBC) for its turnaround strategies, the national broadcaster not only failed to successfully 'turn around' the company, but has also run up huge financial losses.

In a public hearing before the Parliamentary Standing Committee on Public Accounts, the Ministry of Finance reported that NBC's turnaround strategy had cost half a billion Namibian dollars, above and beyond the subsidy received from Government coffers. On top of that, reported Calle Schlettwein, Permanent Secretary of the Ministry of Finance, NBC has failed to pay out PAYE to Inland Revenue offices, and did not pay VAT (value added tax) on imports.

The NBC, said Schlettwein, has run up a debt of N$250 million, with a N$177 million tax liability, and an outstanding balance of N$20.1 million on VAT. According to the Income Tax Act, non-payment of PAYE - for both private and public entities, stressed Schlettwein - is punishable at N$500 or six months in prison.

This, he said, is not implemented on State-Owned Enterprises (SOEs), but added that criminal or disciplinary action could not be ruled out to - at the very least - instil a culture of compliance to the law. Schlettwein described these failures to pay PAYE as due to "deliberate ignorance", suggesting that one institution - still to be conceived and instituted - look into the financial state of affairs and compliance to the laws one by one to root out such problems.

The last year the NBC was profitable was reported as 2003, but since then, the broadcaster had not submitted PAYE, according to the report by the Ministry of Finance. In 2004, the Ministry of Finance received a request from the Ministry of Information and Broadcasting [as the ministry was then called] to waive some penalties on late tax. In 2005, the NBC did not pay any taxes "up to now, with the exception of some odd months".

For 2001 to 2003, Government accepted the broadcaster's turnaround strategy, which it funded to the tune of N$105 million, above the ordinary subsidy it receives from Government. After that period, said Schlettwein, other amounts were given to NBC, above and beyond the yearly subsidies.

"We do not have much confidence that within the current set-up, the NBC has the ability or intention to become a well-managed company," deduced Schlettwein, adding: "While we consider the NBC as an important institution that needs to provide good services, there seems to be little coordination and management seems unorganised; the problems of the NBC is bigger than meets the eye."

He criticised the exorbitant rewards given to board members - N$600,000 per year, which amounted to N$2.6 million according to the figure given by Schlettwein at the hearing - per year. "And this for an institution that is in such a situation and it is so generous to itself, is not in keeping with reality," he said.

The Finance Ministry further suggested a complete audit of the State broadcaster to make informed decisions on how to take it into the future. "We cannot live without it [NBC], but we cannot live with it in its current state," Schlettwein concluded.

New Era (Windhoek) 7 November 2008