South African musicians have lost more than R40m due to bad investment

2017-10-29 08:39
 
Music

Johannesburg - South African musicians have lost more than R40 million due to a bad investment decision approved by the board of their music rights organisation.

Members of the Southern African Music Rights Organisation (Samro) accused their board of having invested their money in a Dubai association, called the Arab Emirates Music Rights Organisation (Aemro), without their consent.

The investment had promised potential returns of more than R1 billion. But it has all gone pear-shaped with no one able to explain whether the investment was ever genuine, said three members who asked not to be named.

Speaking on condition of anonymity, three Samro members told City Press this week that members were demanding answers from the fourteen-member board. They confronted the chief executive officer, Nothando Migogo, and the board members who were attending the meeting demanding an explanation on what happened.

Samro members and the board held a marathon executive general meeting on Friday at the organisation’s headquarters in Braamfontein where “heated arguments” were exchanged when the board admitted that the deal went sour and that the money was lost, said another member.

Some members demanded that the whole board resign, accusing them of negligence. Others wondered why the board had not considered investing money in the development of the South African music industry before going global. The board also failed to produce a financial report.

Samro’s primary role is to administer performing rights on behalf of its members through the collection of licence fees, which are then distributed as royalties. The organisation has an estimated 15 000 members but only a few hundred attended the meeting on Friday.

Members attending the meeting included former Bula Music boss Tshepo Nzimande, jazz musician Selaelo Selota, Malaika’s Bongani Nchang, founder of Native Rhythms Records and Moshito chairman Sipho Sithole, Arthur Mafokate, and Bala Khumalo.

Samro CEO Migogo admitted to City Press that the organisation lost almost R40 million because it had sought to expand beyond the country’s borders, hoping to become a leading organisation in Africa and globally.

She said two years ago they invested in an establishment that was an 80% subsidiary of Aemro. In the end, some of the money went to operational expenditure, which included paying two permanent Dubai-based employees their salaries.

It all started two years ago when Sipho Dlamini, who was then the CEO, presented the strategy to the board, proposing the possibility of expanding the business.

At the time, the then board had approved in principle that the opportunity should be explored.

However, she argued that the then board informed the members about the investment.

Migogo said although they were aware that the South African music industry was not leading in Dubai, Samro’s business model believed it would receive a negotiated administration fee on all collections and contributions directly to the South African company’s revenue.

She explained that Samro was to secure the rights for licensing in the Middle Eastern region. Samro was to assist Aemro to apply to become a member of the International Confederation of Societies of Authors and Composers (Cisac).

“The application was duly completed and submitted to Cisac for approval.

“Several Cisac members were not in favour of the Aemro application and it was rejected by the organisation executive governance committee at its meeting in May 2017.”

Cisac rejected Aemro’s application because it did not have the requisite licence to operate in the United Arab Emirates. The board has endeavored to provide members with more details and will reopen the discussion on the termination of Samro’s investment into Aemro at their annual general meeting in November.

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