Saturday, January 30, 2010

ANC still owes R17.5m for election campaign

Ad agency says it does not trust ruling party's promises

Jan 30, 2010 8:22 PM | By Kim Hawkey
The ANC has another delivery problem - this time for failing to cough up millions of rands for an election campaign bill.

'It is extremely disappointing that we cannot rely on the ANC's promise to pay'

Advertising agency Ogilvy was granted a default judgment against the ANC to the tune of R17.5-million by the High Court in Johannesburg earlier this month for the balance of a R56-million invoice for the ruling party's 2009 campaign.

The bill was for developing a media strategy and "look" for the ANC's campaign and covers print, radio, television and billboard advertising costs.

The ruling party pulled out all the stops in the run-up to last year's general election, brandishing cars and motorcycles in ANC colours. It also held numerous colourful rallies and glamourous parties with champagne, gourmet food and live entertainment, and took full advantage of the Independent Communications Authority's decision to allow political parties to advertise on television.

The campaign also went online as the party launched an interactive website and used social networks and blogs to garner support.

But by the end of May, after being back in office for over a month, the ANC had still failed to settle an outstanding balance of R21.5-million.

When the party commissioned Ogilvy in August 2008, the original estimate for the work was R42-million, but the total spend in the end was R56-million.

This included almost R7.9-million to pay models and actors who featured in adverts, together with other production costs and a R3.3-million fee for Ogilvy.

Despite Ogilvy pleading for the money, the court papers detail how it was met with "sorrys", broken promises and delaying tactics. Eventually phone-call messages and e-mails to party representatives were ignored.

Ogilvy's chief financial officer, Dave Livie, describes in the papers how the company was fobbed off by former ANC spokesmen Steyn Speed and Jessie Duarte to party chief financial officer Bongani Mahlalela and treasurer Mathews Phosa.

In a letter to Duarte in May, Livie pointed out that the late payments had left Ogilvy with "a serious cash-flow shortage".

"We cannot continue with this situation and it is extremely disappointing that we simply cannot rely on the ANC's promise of payments," he wrote.

Two urgent requests for a meeting were ignored.

Livie then wrote to Phosa in June, complaining how the company had been "forced" to foot suppliers' accounts, yet the ANC had not bothered to respond to his urgent requests for payment.

"It is extremely unfair that we now find ourselves in this position with little or no feedback from the ANC," the letter reads.

The requests became ever more urgent as Ogilvy's financial year end approached in December with mounting pressure to clear the huge debt before then.

When the money was still not forthcoming, Ogilvy filed court papers in November asking for the R20.5-million it was still owed.

The ANC did not oppose the matter and Ogilvy was granted a default judgment for R17.5-million, plus interest and legal costs, after taking into account a R3-million payment by the ANC in December.

ANC spokesman Brian Sokutu said the debt had not yet been paid because of "budgetary constraints".

"The matter of Ogilvy is receiving the attention of the ANC treasury and will soon be resolved. Due to budgetary constraints following the 2009 elections we regret the delay."

Ogilvy's attorney David Oshry said his client had "no comment to make".

6 Opinion(s):

Dachshund said...

I'm surprised that any one advertising agency would expose themselves to this amount of business risk when the ANC are known for not paying their bills.

Anonymous said...

To trust the ANC with that much money can only mean one thing. They are even bigger idiots! Goodluck to them trying to get their cash back


Lunacy to work for this ANC rubble without a 100% up front payment.

Anonymous said...

Please explain how the ANC can justify spending so much money when their people are starving. Surely they could have done some good with that amount of money which would have probably done more than their publicity campaigns. I just don't get it.

Anonymous said...

lets hope this finishes off ogilvy once and for all!

Anonymous said...

I hope this company goes bankrupt. Anyone producing a publicity campaign for the ANC deserves no better. They were defrauding the electorate with lies, and now it´s their turn to be defrauded. What goes around comes around.
Payback´s a bitch.