In a decisive move toward transparency and accountability, the South African Music Rights Organisation (SAMRO) has concluded a forensic investigation led by Fundudzi Forensic Services. Covering the financial years 2020 to 2022, the investigation uncovered fraudulent activities amounting to R3.4 million, involving certain members and a former employee.
This misconduct, flagged during SAMRO’s internal processes, stemmed from irregular royalty claims. Out of a total of R60 million claimed, R30 million was disbursed, with the remaining amount retained in SAMRO’s Undocumented Works pool.
Swift Action to Restore Integrity
SAMRO’s Board and Management responded swiftly, referring the findings to the South African Police Service (SAPS) and the Hawks (Directorate for Priority Crime Investigation). While the forensic report remains confidential to protect ongoing investigations, SAMRO has implemented key recommendations to prevent future irregularities:
- Governance Improvements: Appointing additional independent non-executive directors.
- Process Enhancements: Strengthening internal processes to mitigate risks.
- Member Briefings: Keeping members informed at Annual General Meetings (AGMs).
SAMRO is fully cooperating with law enforcement and remains committed to ensuring ethical practices and accountability within the music industry.
Understanding Undocumented Works
Undocumented works present a unique challenge for SAMRO. These arise when essential details, such as cue sheets, sound clips, or metadata, are incomplete, preventing the identification of rightful royalty recipients. Despite occasional misrepresentation in the media, these funds are not a “slush fund” but are instead retained for rightful distribution.
Key Facts About Undocumented Works:
- Royalties are held in interest-bearing accounts until rightful owners are identified.
- SAMRO conducts research for up to three years to locate rights holders.
- If unsuccessful after three years, the funds are written back to the income statement per SAMRO’s accounting policy and distributed in subsequent cycles.
SAMRO actively presents updates on undocumented works at AGMs to maintain transparency with members.
SAMRO’s Accounting Policy for Undocumented Works
Royalties for undocumented works are treated as liabilities on SAMRO’s balance sheet and retained for up to three years. During this period:
- SAMRO works to identify rights holders using all available data.
- Funds are held in accounts with favorable interest rates.
- Interest earned contributes to future royalty distributions.
When identification is successful, royalties are distributed at the unit rate applicable to the original distribution period.
Commitment to Members
SAMRO remains steadfast in its commitment to fostering an ethical and transparent organization. As the forensic investigation findings continue to unfold, SAMRO assures members that all individuals involved in wrongdoing will be held accountable under the law.
The organization appreciates the trust and support of its members and pledges to uphold the integrity of the music industry through improved governance, transparency, and member-focused initiatives.
