NBC dismisses N$184m Huawei liability flagged in audit

The Namibian Broadcasting Corporation (NBC) has dismissed a N$184 million liability to Huawei flagged in audit findings, with outgoing director general Stanley Similo telling lawmakers the sum is “not an amount that we owe Huawei”.

Similo, who is scheduled to leave the national broadcaster next week, conceded, however, that a much smaller exposure of about N$3 million may exist, although it could no longer be legally enforceable because too much time has passed.

He was responding to questions from MP John-Louw Mouton, a member of the National Assembly’s standing committee on public accounts, during a public hearing on auditor-general reports reviewing NBC’s finances for the years ending 31 March 2023 and 31 March 2024.

Mouton raised the issue based on audit findings, which indicated that NBC had previously disclosed a substantial outstanding amount linked to the Digital Terrestrial Television (DTT) migration project.

The audit shows that NBC’s integrated business plan and correspondence with the minister of information and communication technology stated that completing the DTT rollout would require N$499 million. This included roughly N$183.9 million in outstanding Huawei invoices, N$168 million for civil works and equipment, and an exchange loss of N$95 million.

Auditors also noted that NBC had indicated it owed Huawei about N$184 million for equipment ordered and manufactured as part of the migration project.

However, the amount was not recognised or disclosed in the corporation’s annual financial statements in line with International Accounting Standard (IAS) 37, and insufficient evidence was provided to substantiate the liability.

As a result, auditors said they could not confirm the completeness and valuation of payables and related financial statement items.

Mouton pressed NBC on whether the liability still exists and why it is not reflected in the current financial records.

Amount conditional, not owed

Similo said the figure must be understood in the context of Namibia’s transition from analogue to digital broadcasting, a process driven by the International Telecommunication Union (ITU).

“The Huawei project needs to be put into context for lawmakers. This project has its roots in the ITU, which decided globally that all broadcasters must move away from analogue spectrum to enable technologies such as 5G,” he explained.

Namibia appointed NBC to implement the migration and the country has since achieved about 75.5% television coverage. However, the project was halted due to high costs, Similo noted.

“When the decision was taken in 2016 not to proceed, we had to restructure our approach. Naturally, Huawei, as the appointed service provider, had existing agreements with us. The N$184 million referenced is not an amount we owe. It would only have been payable if the DTT project had continued,” he said.

“This has been communicated to the auditors. The amount is conditional and not an actual liability, as the agreement was terminated.”

Similo acknowledged that a smaller amount remains under discussion.

“I will agree that there is an amount of about N$3 million at issue, which Huawei has also acknowledged. From my perspective, this amount is nearly 10 years old and may have prescribed,” he said.

Materiality debate and board response

Similo attributed the omission of the N$3 million from the financial statements to audit materiality thresholds.

“In this case, the threshold is about N$12 million. From a business perspective, N$3 million falls below that threshold and is considered immaterial,” he said, adding that NBC would nevertheless disclose it if required.

He also questioned why the issue was raised as an audit finding despite falling below the materiality threshold.

AG singled out

NBC board chairperson Lazarus Jacobs said the amount is accounted for internally.

“We make provision for it in our financial statements. It is documented; nobody is ignoring it. It would be irresponsible not to reflect it in the books,” Jacobs said.

He criticised the auditor general's approach, arguing that treating the matter as material could have serious consequences for the institution.

“An adverse opinion is dangerous for any institution. It can effectively declare you bankrupt and makes it difficult to raise capital or secure credit," he noted.

"We are looking at an organisation with a budget of over N$400 million, yet an amount of N$3 million is being used to affect the entire financial standing of the institution.

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