MultiChoice’s director dealings slated


DStv-owner MultiChoice recently terminated a service contract with one of its “independent” directors, who had been providing consulting services to the company for which she was paid R1.5 million. 

Kgomotso Moroka was classified as an “independent director” in the company’s 2023 integrated report while receiving more than R1 million for her consultancy services for the year ended March 2023.

“After careful deliberation by the board, taking into account the ad hoc nature of services rendered and feedback from shareholders, the consultancy agreement entered into between the group and Kgomotso for professional advisory services as a senior counsel is cancelled with effect from 30 June 2023,” the company said. 

According to the Institute of Directors South Africa (IoDSA), the fact that the advisory contract was extended from a previous year points to an ongoing engagement, “thus falling foul of one of King IV’s indicators of a lack of independence”.

IoDSA said terminating the service agreement is a move in the right direction and makes it appropriate for Moroka to be categorised as an independent non-executive director. 

“However, the decision to continue paying another director for ongoing advisory services while still categorising him as independent is flawed.”

The institute explained that, while it is not necessarily wrong for directors to provide paid-for advisory services to companies on whose boards they sit, these services should be insignificant and ad hoc.

“Anything more would likely indicate that the director could no longer be classified as independent.”

MultiChoice CEO Calvo Mawela
MultiChoice CEO Calvo Mawela

This is not the only MultiChoice director that has been receiving millions for consulting.

MultiChoice’s lead independent director and chair of the remuneration committee John James (Jim) Volkwyn also received payment for advisory services during the 2023 financial year – this time to the tune of R5 million. 

“It seems inconceivable that chairing the meeting at which the remuneration of the CEO and executive committee is determined can be combined with negotiating fees for professional advisory services ‘on a regular and extensive basis’ from the very same group,” said IoDSA.

Unlike Moroka, MultiChoice said Volkwyn’s consultancy contract with the company would continue.

MultiChoice’s 2023 Integrated Report said legal opinion was taken in maintaining Volkwyn’s classification as independent.

However, according to IoDSA, “it is hard to see what the rationale would be”. 

“Even though Volkwyn does not receive a director’s emolument, the fact that he does receive payment for additional services raises doubts about him being perceived as independent in line with King IV.”

IoDSA explained that labelling a director as independent implies the director is free from any relationship and interest that may affect decision-making. 

“It is important to have the correct classification so that where there are indeed interests that may potentially cause bias in certain situations or positions, the management of these interests is explained to demonstrate that the possible conflicts are well understood and managed and that the perception of impropriety is avoided.”

IoDSA said it is arguable that neither of these two directors should have been categorised as independent in the company’s 2023 integrated report. 

“This is not to say they should be disqualified in any way from serving on the board. Almost all boards have a number of directors who are non-executive but not independent.”

IoDSA said MultiChoice must go beyond merely declaring when a director is providing advisory services: Directors who are not truly independent should not be classified as such. 

“The correct classification, together with an explanation of how existing interests are managed, will more than satisfy the requirements for sound governance.”