Samro claims to be cracking down on corruption within its ranks but fails to prove it

The Southern African Music Rights Organisation (Samro) claims to be cracking down on corruption within the organisation, but police cannot verify the claims.

A 2023 investigation, commissioned by Samro and conducted by Fundudzi Forensic Services, revealed fraudulent activities involving certain members, including composers, authors, and publishers, in collusion with a former Samro employee.

The forensic investigation focused on the financial years 2020 to 2022.

This misconduct resulted in irregular royalty claims amounting to R3.4 million, flagged during Samro’s internal processes, from a total of R60 million claimed.

R30 million was paid, while the remaining undisbursed amount remains in the Undocumented Works pool.

“The Samro Board and Management are resolute in rooting out corruption, strengthening governance and restoring trust in the music industry,” said Samro board chairperson Nicholas Maweni in a statement shared with The Citizen.

Following the investigation, the report indicated a legal obligation to report the matter to the police.

According to Samro, the matter has been referred to the South African Police Service (Saps) and the Hawks (Directorate for Priority Crime Investigation). However, the Saps and the Hawks couldn’t confirm the investigation without a case number, which The Citizen requested from Samro to no avail.

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Samro criticised

A newly formed organisation of concerned citizens and industry professionals, Music Makers United (MMU), has been a sharp critic of Samro.

MMU has called on Samro to make the full Fundudzi forensic report available to its members. The organisation has also claimed that it made several unsuccessful attempts to obtain this document through the Protection of Access to Information Act requests (PAIA).

The Citizen requested the full report, but Samro said it was maintaining the integrity of the ongoing process.

“The forensic report cannot be disclosed at this time. However, the board remains committed to providing members and stakeholders with substantive updates as the investigation progresses.”

“At the 2023 and 2024 Annual General Meetings (AGMs), Samro members were informed of the findings and the remedial actions taken to strengthen internal controls and governance.”

According to Samro, these measures include the appointment of additional independent non-executive directors and improvements to internal processes to mitigate future irregularities.

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Controversial undocumented works or slush fund

Another point of contention has been the issue of undocumented works, which is, in essence, music that can’t be verified or matched with its rightful owners.

In a statement released a week ago, the MMU criticised Samro and accused it of treating the above-mentioned unclaimed funds as slush funds.

In 2023, Samro created and distributed nearly R600 million, of which more than R87 million is listed in those statements as ‘undistributed royalties written back’.

“It is a highly suspect, murky practice that is not sufficiently explained in Samro’s annual financial reports. Figures detailing interest accruing on these monies and other information about its use, or about why these huge sums cannot be paid to the rightful owners, is not made available to members,” said MMU.

The undocumented works include music used, among other things, in the broadcast of radio or television programmes, advertisements, digital platforms, or motion pictures where essential details — such as cue sheets, sound clips, or metadata — have not been submitted.

Samro said distributions in progress/undocumented works comprise amounts about royalty allocations made in the previous three distribution periods, as well as works or rights-holder shares that cannot be distributed by established distribution rules, standards, practices, and procedures.

“Until the necessary identification, contractual information, and other documentation are obtained and processed, such royalties cannot be correctly distributed. The amounts are retained until they are duly distributed as royalties or written back to income,” said Samro.

According to the royalties-collecting body, amounts that cannot be distributed are kept in interest-bearing accounts where Samro can attract the most favourable interest rates.

“Once the organisation is able to identify and pay out any amount sitting in the undocumented works account (referred to as distributions in progress), Samro pays out the amount at the unit rate applicable to the distribution it initially relates to.”

The interest earned forms part of the organisation’s total investment income and forms part of the distribution allocation to be paid out in the following financial year.

Samro said it makes an effort to identify the rights holders and to obtain the required documentation for three years.

If Samro is unsuccessful after the three years, it is written back to the income statement in accordance with the organisation’s accounting policy and prescription rules.

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