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Transnet paid millions to sponsor an insert in the Gupta-owned New Age newspaper back in 2012, and the deal cannot be justified, the state capture commission heard.
Briefing the commission – which has been investigating allegations of state capture, corruption and fraud at state entities since August 2018 – Transnet's internal communications specialist Joseph Jackson on Friday provided evidence on the deal which would see Transnet sponsor the "Big Interview" insert in the newspaper.
Then-group CEO Brian Molefe had ultimately approved the deal on February 23, 2012.
Deputy chief justice Raymond Zondo's was frank in his view on the deal, saying: "Transnet was just robbed."
Zondo questioned Jackson on the motivation behind the sponsorship, given that Transnet is an entity which is already widely known. In Zondo's view, the sponsorship would not add more value to Transnet's brand awareness. "Transnet is known, has been known for a long time. Why would you want to be known more than that for?" he asked.
To this Jackson said he agreed with Zondo. "In this situation, I cannot defend it. That is what I want to make clear," he said. "From a business point of view, you are right to question it," he told Zondo.
Jackson explained that sponsorships are useful in keeping a brand top-of-mind among consumers. However, in this case it could not be justified because the New Age (TNA) was a little-known newspaper at the time and the extent of is reach could not be determined.
At the time, Jackson was brand and publicity coordinator and he reported to the general manager of Transnet Group Corporate and Public Affairs, Mboniso Sigonyela. Jackson shared how Sigonyela had pressured an external advertising agency, The Agency, which handled advertising agreements on behalf of Transnet to secure the deal at TNA.
He explained that advertising proposals made were handled by The Agency. Advertising agreements could not be established directly with Transnet Corporate and Public Affairs, he clarified. If Transnet was approached with a proposal, it would be referred to The Agency.
One of the sales representatives of TNA had put forward an advertising proposal to Transnet, which was handled by The Agency. The proposal was for Transnet to sponsor the "Big Interview".
The "Big Interview" was a weekly insertion in the TNA newspaper which profiled a media personality, showing both their public and private life, Jackson said. The choice of the media personality was entirely up to the newspaper and Transnet would have no say, he added.
However, Transnet would have its logo on the front page of the newspaper, advertising space in the paper as well as "naming rights" for the "Big Interview". The deal would cost over R370 000 for a month, about R1.956m for six months. The contents of the interview would have nothing to do with Transnet, the commission heard.
The Agency then had an advisory firm, Planet Media, evaluate the proposal to determine if there could be value in Transnet sponsoring the insert.
Referencing emails exchanged between Transnet and The Agency at the time, Jackson recalled Sigonyela had pressured The Agency to finalise the process quickly. Ultimately, Planet Media's evaluation found that the deal would not yield a suitable return on investment for Transnet.
Initially, a decision was taken not to pursue the deal. However, a day later, the decision was changed. Further negotiation led to Transnet getting additional, free advertising space, to justify the costs, said Jackson.
He said that he was "suspicious" of the change. Despite getting free advertising, it did not solve the problem that TNA was an unknown newspaper and that the extent of its reach could not be assured.
"The spending of money was at risk, [there was] no way to justify it," said Jackson.
He raised concerns that there was no information on TNA's circulation with Sigonyela, who in turn said this was not important "at this stage", Jackson recalled.
Sigonyela had recommended the sponsorship of the Big Interview to Molefe, who ultimately approved it.
The inquiry has adjourned and will resume on February 4, 2020.
