Eden FM, one of the Southern Cape’s community radio stations will soon have to face the music – and it is not a pleasant song! If they cannot prove that their finances are sound and being handled by themselves – and not a private company – and that they have not contravened the act governing community radio stations, they face the loss of the station’s licence.
During February ICASA (Independent Communications Association of South Africa) had asked for explanations regarding two complaints about the governing of the finance of the station, which is owned by the community.
Rumours have been flying around that the finances of the community station was being handled by a private company which is run by some of the directors that sit on the station’s Board.
The whole situation came to the surface when one of the founder members and the financial director, Mr Avril Ahrends decided to resign and make the whole matter public.
Ahrends resigned on 11 January 2012 and in a letter to the secretary of the Board Ahrens request that all illegal Board members including the chairperson and station manager resign from Southern Cape Community Fm t/a Eden Fm, registration number 2003/005521/08, with immediate effect failure to do so it will have legal implications.
He approached ICASA and requested them to look into the matter and make it public to the listeners.. He gave the following reasons for his resignation.
The chairman of the Board, Pastor Leon Prinsloo was removed from the Board of directors by majority vote two weeks before the AGM in November 2010. As per the constitution the only four Board members were Mr Avril Ahrends, Mr Josie Domingo, Me Alivia Brown and Pastor Welda Biegnaar.
The AGM held on 25 November 2010 was unconstitutional because a resolution was accepted without the 14 days submission prior to the AGM. Advocate Stephen Lourens and four directors, Ahrends, Domingo, Brown and Biegnaar distanced themselves from the resolution, stating that the constitution is the highest authority. Furthermore a resolution was pass with a vote of nine to five. The voting session was conducted by the station master, Mr Pietersen. The constitution was then changed to allow 11 Board directors.
According to Ahrends the chairperson signed an illegal document with a private company Eden Broadcasting (Pty), of which the station manager, Pietersen, is the managing director. According to their letterhead they handle all administration and control of the Section 21 company now trading as Eden Fm
In a letter dated 3 February 2012 ICASA addressed the station manager Mr Morne Pietersen regarding the Unlawful and Illegal Conduct : Transgression of Articles of Association of the station. According to ICASA their Compliance Unit had received two complaints that Eden FM had illegally reconstructed themselves and had allowed a private company to take over the finance and administration of Southern Cape Community FM trading as Eden FM by a company known as Eden Broadcasting (Pty) Ltd..
According to the letter a Section 21 company cannot be controlled directly or indirectly by another company nor can it outsource its functions as a Class (community) Radio Station to a third party.
Not only has EDEN FM acted unlawfully in this regard, it is also non compliant with the Regulations on Standard Terms and Conditions for Class Licensees and it has also contravened its own Articles of Association and Constitution in the way the Board has acted in this and other matters.
Some of the contraventions include the fact that no AGM was held during 2011. Since 2010 no minutes of Board meetings have been submitted to the Compliance Unit as per the station’s licence. The chairman of the Board, Pastor Leon Prinsloo had already been voted off the Board in 2010 and was illegally chairing the meetings. An AGM was unconstitutionally conducted in November at which he was apparently re-elected, but this is not acceptable to ICASA.
The elected Board was unconstitutionally elected and increased to 11 members. EDEN FM has also failed to furnish the Authority with audited financial statements since 2009.
According to the letter ICASA perceives the station’s finances to be in a poor state. Sentech, the company that handles the station’s signal distributions has not been paid for some time. “The station is rumoured to be insolvent” the letter states. It also states that the directors of the Board are jointly and severally responsible for debts incurred by the Company.
“Your attention is also drawn to the King Report on Corporate Governance III. It is my submission that the Board of Eden FM has failed to act with due care and diligence. Despite the resignation of Mr Avril Ahrends, all the members of the Board are being held accountable for the failure to practice due care and diligence in respect of their fiduciary duties” it reads.
Mr Pietersen was requested to circulate the letter to all Board members. He was also requested to respond to all the allegations within seven days of the date on the letter. Failing to do so the matter would be referred to the Complains Compliance Committee (CCC) for a hearing into the contraventions and a possible revocation of the station’s licence.
It has been established that during February 2012 Pastor Prinsloo had subsequently resigned the position of chairman of the Board.