“If nothing is done now, Two Oceans will not exist in two years’ time,” warns James Evans, one of the original founding members of the Two Oceans Marathon NPC, in an open letter to the Board of Two Oceans Marathon NPC. The marathon has financial problems, having lost major sponsors adidas and Old Mutual, not being able to pay its credits and reporting operational loss at its 2019 AGM.
What are your thoughts? Do you agree with Evans’ concerns summarised below – and do you think the loss of this expo would have any impact on running sales? Tell us by emailing Carin Hardisty.
Evans’ concerns include that at least one board director is being paid, the chairperson is linked to two companies that benefitted from the organisation, money was wasted on an unnecessary building and books that aren’t being sold, the race has lost its IAU Gold Label status and there is a brain drain with senior staff members leaving the organisation due to board interference.
The loss of the IAU Gold Label status means that records set won’t be accepted for record purposes, which does nothing to encourage international athletes to take part.
Future sponsorship agreements will be impacted by this and the fact that the 2019 race was not broadcasted.
Irregularities from the Board of Directors
The MOI (Memorandum of Incorporation) states that a director may not be an employee of the company, yet there is evidence that at least one director was (and more might still be) paid.
Board chairperson Rodney Maharage is linked to Parch Properties that renovated the new property the organisation bought (despite already having a property) and is also the group chairman and managing director of Associated Printing, which published the race’s 50-year commemorative book and brochure and was apparently the person who said they should print 10 000 copies.
The new property cost R3-m and renovations a further R1.7-m. Two Oceans has now “tied up cash in property and one of those properties has been standing vacant for the past seven months, whereas that cash could have earned interest in the bank,” says Evans. “It has not even been earning income via rental, but standing vacant, attracting the cost of security and normal rates and services.”
Associated Printing was allowed to put in a publishing quote after the original three quotes had been received (and seen). It also appears as though the majority of the books haven’t been sold, and many were given away for free to members of the Blue Number Club. The books might have even be sold below cost at the expo, he says and estimates that the print run cost in the region of R1 730 000.
Two Oceans also printed a thick, glossy magazine and he asks why this was produced at all given that a book was already being printed and due to be out before the race.
The majority of its assets are tied up in the two buildings, which aren’t generating income, and the remainder of the books. An operational loss was incurred and, if you take out the interest it received on investments and cash in the bank, the loss is R5-m.
Several parties had not yet been paid before the AGM and the board said that the above companies were among these. Evans questions whether this is true (had they been paid before the AGM and before other outstanding creditors?) and is told Two Oceans is embroiled in litigation with more than one creditor, which may have a negative impact on the financial situation. “The amounts paid to the two companies related to the chairperson of the board amount to over R3,5m. The operating expenses for the race were R35,7m. So those two transactions alone come to close to 10% of the expenditure of the company.”
Two Oceans appears to be in more trouble than the board let on, he says. “If one does a simple sum of the figures on the balance sheet, looking at Investments, Cash and Trade Receivables and deducting outstanding creditors, it is apparent that Two Oceans is worse off in 2019 than it was in 2018.”
Treatment of staff and positions
Four staff members left the organisation during 2019, including senior staff. “The loss of institutional knowledge within Two Oceans over the past few years has been alarming. I have been informed, again by several sources, that the core problem is the continuous interference of the board with the operational management of the race. The word ‘bullying’ was used by several people who spoke to me.” James was also told that the board has a lack of respect for female members of staff.
There are also questions surrounding the appointment of a new Race Director following Sue Forge leaving – the position was not advertised and the new appointment is a former board member. “The fact that a board member became an employee and then the race director, without any transparent process to appoint the race director obviously raises questions in the mind of a reasonable observer. This places pressure on the race director, as she is placed in a position where there are questions over her appointment. The board must have foreseen this problem but thought that no-one would ask questions.
“Two Oceans seems to have become something akin to a family business, where the board looks after its own and trades with its own.”
To date – two months after Evans first wrote the Open Letter – the Two Oceans management and persons named refrained from commenting.