The Southern African Music Rights Organisation (Samro) has expressed “grave concern” over a failed R47 million investment in a music rights initiative in the United Arab Emirates (UAE).
The deal was initiated years ago and signed in 2015 when the Arab Emirates Music Rights Organisation (Aemro) was recognised as a potential partner in line with Samro’s strategic growth priorities, reports Music In Africa.
According to Samro, the deal was then terminated after their board concluded that “the deal was unprofitable amid tough economic conditions,” and Aemro was not licensed to operate in the UAE.
At the time, the deal, which was introduced by former Samro CEO Sipho Dlamini, was based on a projected return on investment north of R1 billion for Samro.
“This investment was made after due consideration at the time but developments in the UAE, with our global partner collective management organisations [CMOs], coupled with an adverse economic environment in South Africa has heightened the risks. Hence, in the interest of Samro members, Samro has decided to terminate this venture,” read a statement released by the organisation shortly after the deal was terminated.
The deal has been subject to scrutiny by various parties for years and Samro has lost $3.5 million (R51 million) to date.
A report published by Fin24 details delays to the release of a forensic report into the investment and a gross lack of risk assessment on the part of management prior to signing off on the deal.
In a recent statement, the organisation confirmed that they were investigating a series of legal steps to recover the funds and take action against those involved.
“We are totally committed to ensuring this happens, to ensure accountability and responsibility. We have added additional financial controls and will use the lessons learnt from this project to introduce structural changes to the way management reports to the board, eliminating single points of failure and ensuring the integrity of information presented to the board,” said Samro.
They went on to add that although they did not agree with all aspects of the forensic report, and they had been constrained by the sensitivity of the process, they respected the findings and were already putting mechanisms in place to address possible shortcomings in the organisation’s governance and risk management processes.