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The SAMRO Board of Directors commissioned the forensic investigation as part of the organisation’s unwavering commitment to ensuring the integrity of its operations and safeguarding the rights and royalties of members. This investigation, conducted by independent experts, revealed fraudulent activities by certain members, who are composers, authors, and publishers, in collusion with a former employee, which led to irregular royalty claims and payments.
Nicholas Maweni, Chairperson of the SAMRO Board, reiterated that SAMRO has taken swift and decisive action to address the findings in the report. The case has been handed over to the South African Police Service (SAPS), with the Hawks (The Directorate for Priority Crime Investigation) currently investigating the matter, and SAMRO is cooperating fully. Due to the ongoing investigation, the forensic report cannot be released at this time to ensure the integrity of the process and ultimate findings. The Board and Executive of SAMRO understand the public's interest in this matter and commit to providing a substantive update on the progress of the investigation as soon as notable updates are received.
In addition to the updates on the findings from the forensic report, SAMRO members have been kept abreast of all pertinent developments including the 2024 AGM where members were informed of the remedial measures to strengthen our internal controls and prevent future irregularities.
These additional measures include enhancing governance by appointing additional independent non-executive directors and strengthening internal processes to address any wrongdoing promptly.
Since our establishment in 1961, our mission has been to ensure that music composers, authors, and publishers receive the royalties they deserve. While challenges have arisen, we remain resolute in upholding transparency, accountability, and integrity in our operations.
About Undocumented Works
● One of the persistent challenges SAMRO faces is the issue of undocumented works, which has garnered significant attention in the media over the years. Unfortunately, there is often a misunderstanding about what undocumented works truly entail, with some inaccurately referring to them as a “SAMRO slush fund.”
● Undocumented works arise when musical data cannot be adequately verified or matched to its rightful owners (rightsholders). Works remain undocumented until the necessary information is provided to process the claim legitimately.
● Undocumented works include music used in the broadcast of radio or television programs, advertisements, or motion pictures where essential details—such as cue sheets, sound clips, or metadata—have not been submitted.
● As a result, these works cannot be processed during the scheduled royalty distribution due to the absence of complete information linking them to their rightful owners. However, once these works are identified, validated, and claimed, the accrued royalties are released during the next distribution cycle.
Royalties for Undocumented Works
“Distributions in progress amount/undocumented works"; are royalty distributions payable to SAMRO members but cannot be paid out due to the fact that SAMRO has incomplete information.
● It is treated as a liability on the balance sheet.
● Efforts are made to identify the rights holders and to obtain the required documentation for 3 years.
● If after 3 years SAMRO is not successful, it is written back to the Income statement in line with the organisation's accounting policy as well as prescription rules.
● Once it is written back to the income statement, it forms part of the distribution allocation to be paid out in the following financial year.
● This information pertaining to distributions in progress amount/undocumented works in presented to members at the annual general meeting.
Undocumented works as a pool of money kept in an interest-bearing account
As per SAMRO's accounting policy:
● Distributions in progress comprise amounts pertaining to royalty allocations made in the previous three distribution periods, as well as works or rights-holder shares that cannot be distributed in accordance with established distribution rules, standards, practices, and procedures.
● These allocations are retained to allow ongoing research, including identification of the works and rights-holder shares, obtaining the necessary documentation, and complying with the required documentation update procedures.
● Until the necessary identification, contractual information, and other documentation is 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.
● 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.
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