DAC, National Arts Council, National Film and Video Foundation, SAHRA 2016/17 Annual Report, with Auditor-General input

Meeting report

Apologies, Adoption of Committee Agenda and Chairperson Opening Comments

Apologies were noted from Mr J Esterhuizen (IFP) and Dr P Mulder (FF+). The apologies were accepted by the Members.

The Committee then adopted its agenda for the day.

The Chairperson pointed out that since 2014, the Committee worked well with the office of the Auditor-General of SA (AGSA) and Members took a decision to focus on the work of the entities and evaluate each entity. There were Committee Members who were serious about their work while others felt their oversight function was disrespected by the entities. When the Committee started its work, the Annual Performance Plans (APPs) of the entities were not aligned with the Department of Arts and Culture (DAC) mandate and it was the Committee which corrected those mistakes. She said the Committee encouraged people to talk in its meetings about what was happening in the entities.

AGSA Budgetary Review and Recommendations Report: Arts and Culture Portfolio

Mr Stephen Kheleli, Senior Manager, AGSA, complimented the Chairperson for her message on the work done by the AGSA in her opening remarks - the AGSA intended to continue focusing on accountability. The AGSA annual audit focused on three areas, namely, financial statements received from the entities, regression in financial statements and predetermined objectives in the Annual Performance Plans of the entities to assess if they were complying with their plans. The audit projected financial statements of the past three years and compare improvements in each year. While there were challenges in some entities that regressed, others improved. Some entities retained clean audits. In the last two years, seven entities had clean audits but now four entities were not doing well. Last year, there were 11 entities with qualified audits but this year there were eight. Again, this year, there was no disclaimer of opinions. There was regression in some entities while others improved significantly. This year, there was no disclaimer but there were two adverse opinions.

The AGSA expressed there were problems of compliance and quality of financial statements received from some entities. The South African State Theatre showed improvement although there was room for further improvement. The AGSA looked at 26 entities and identified challenges entities faced, namely lack of accounting experts to comply with accounting standards and clear guidance to help entities provide quality and complying with financial statements. However, there were entities performing well, like the Nelson Mandela Museum, while some entities, like Freedom Park, were regressing. The AGSA also looked at factors contributing to better accounting systems for the operation of entities, namely, good leadership, financial performance management systems and governance structures or oversight. The AGSA further assessed executive authorities of entities and their audit committees to ensure there was constant compliance with set targets and APPs. The AGSA always gave the executive authority the benefit of the doubt.

Mr Kheleli apologised for not preparing a presentation on the budgets of the entities and endeavoured to brief the Committee on whether budgets of the entities were in line with their APPs in a future meeting. On the quality of the APPs of the entities, the APPs reviewed were accurate, complete and reliable, for instance the KwaZulu-Natal Museum, South African Library for the Blind and Nelson Mandela Museum. Freedom Park had challenges with business development but performed well in public engagement.  Entities like the South African Arts Theatre, Performing Arts Centre of Free State (PACOFS) and English Medium had items in the APPs that were unreliable.

On the financial health of the entities from 2014/15 - 2016/17, Freedom Park’s current liabilities exceeded current assets but most of the entities were doing well. Freedom Park’s creditors were, at times, paid after 30 days – this was not in line with the prescribed period for payment of creditors. This entity was challenged from a liquidity point of view. Furthermore, there was also irregular, fruitless and wasteful expenditure within the entities. However, the wasteful expenditure had reduced in comparison to the previous years. This year it was R800 000 as compared to R4 million in 2015/16 and R9 million in the 2014/15 financial year. However, the disclosure of information by entities decreased.

The biggest contributors to wasteful expenditure were Freedom Park and Iziko in that they incurred costs which were not in line within their plans and budgets. Freedom Park overspent by R7 million and this consisted of deviations made without approval and not going on tender where required. For Iziko there was also an overspending problem.

The AGSA interrogated financial statements of entities and found that some financial decisions made might have been based on unreliable information. Entities were required to give full disclosure of irregular expenditure, motivate why and what was done to remedy the situation and any disciplinary proceedings taken. The AGSA noted there were no disciplinary measures taken against authorities who spent more recklessly. The root causes of this non-compliance and irregular expenditure were slow responses by management, instability in leadership and lack of consequence management

The AG made recommendations to the Committee which were not prescriptive but to help entities improve financial performance.

Discussion

The Chairperson thanked the AGSA for the presentation and highlighted that the entities that abided by the AGSA’s and Committee’s findings and recommendations will most likely have an unqualified audit, like Nelson Mandela Museum. She reiterated that the Department and AGSA must ensure they monitored all entities underperforming.

Mr T Makondo (ANC) commented that Members should consider fruitless and waste expenditure of entities. He asked what the AGSA did to consider the issue of wasteful of expenditure since a lot of money was being wasted. He further asked if there was any improvement in entities that the AGSA audited. The AGSA must mention the entities incurring wasteful expenditure. The AGSA presentation highlighted that although Freedom Park’s performance improved, there were still challenges – what were these challenges?

Mr J Mahlangu (ANC) found the presentation by the AGSA unclear on the specific entities that had improved and those that regressed. He agreed with Mr Makondo’s concern and stated the AGSA and Committee should work together to help the entities be accountable. The Heritage Asset was a national initiative and some entities were not being funded by the state. The Committee visited the KwaZulu-Natal Museum and discovered it was doing exceptional research work - some of its assets were very small insects and, in most cases, there was not much value attached to them. There should be rigorous discussion about the value of those assets. The AGSA and Department should be engaged to understand the environment in which the assets lived in and how its value was evaluated. Some entities faced the problem of syndicates stealing valuable assets to sell in Europe.  

The Chairperson said emphasis of thorough interrogation was on entities which achieved unqualified audit outcomes. The Committee’s recommendations about fruitless expenditure must be taken seriously. Again, consequence management in the Department and entities was important. There should be a list of perpetrators for the purposes of the Committee’s oversight to determine who was liable. The Department had a duty to bring to book the perpetrators who spent millions which was unaccounted for. She asked the AGSA to explain what was meant by accounting authority or accounting manager in its presentation. Again, the issue of payment of creditors was crucial and must be revisited.

Mr G Grootboom (DA) asked the AGSA if he was of the opinion that government was getting value for money with regards to the wasteful expenditure. He pointed out the Committee required guidance from the AGSA on how to assist the entities that were failing to comply with the accounting standards and ended up incurring wasteful and fruitless expenditure.

Mr Kheleli replied to Mr Makondo’s questions about findings on improvements and regressions of entities by stating Parliament was currently reviewing regulations – the Committee would receive all detail on this once was finalised. He commended Mr Mahlangu for raising the question of the heritage assets - the AGSA considered assets of entities but there was still a lot of work to be done.

The Chairperson pointed out the Department was responsible for reporting to the Committee and must make it clear how the issue of heritage assets was being handled so that Members had clarity. Entities were experiencing pain and the Committee needs to know what the Department was doing about it.

Mr Kheleli clarified the accounting authority and accounting officers referred to senior management i.e. CFO and CEO - if an entity did not have a Board, the CEO became the accounting authority. With the question of value for money, the AGSA did not do assessment of how much money, if any, government was getting but had only audited financial performance of the entities. There was however need for further interrogation.

The Chairperson asked the AGSA to touch on the question of consequence management – why was there no consequence management? When the Committee questioned the AGSA, detailed answers were expected and not short sentences – it was a criminal offence to impede the work of the Committee. The AGSA must also provide information about entities receiving money from the Department but were not recognised as entities within the Department. For the Committee to do its work, the AGSA must make sure it provided detailed information which will make it easy for the Committee to perform its oversight function. The Chairperson said she would write a letter to the Department to ensure it also complied with the Committee’s requests. The Committee was responsible for convincing the House to adopt the budgets in Parliament and, as such, it should follow up on how the money was spent by the Department and its entities.

The Chairperson was further concerned that the Department waited for Parliament to act against the entities where people were not doing their work. When the Committee visited entities, it was not interfering with the entities or Department since the Committee had an oversight function to execute. This oversight function entailed detecting unconstitutional behaviour and holding the Department accountable on how tax payer’s money was used so that efficiency was improved. It was also to ensure policies announced by government were implemented and enhance public confidence in government. She emphasised that when the Committee was conducting its oversight function, it was not interference. The Committee may also visit the Department to evaluate its work, the same way it visited entities. Accounting authorities of the entities must do their work and not wait for the CEO because when the Committee visited it could speak to anyone working in the entity.

National Arts Council (NAC)

Ms Kelebogile Sethibelo, DDG: Institutional Governance, DAC, presented an overview of the National Arts Council (NAC). The Department reviewed performance of the NAC for the last three years. In 2014/15, the NAC achieved 87% of targets while 13% were not achieved. In 2015/16, there was 100% achievement of targets while in the current financial year, as of March, the NAC achieved 75% of targets while 25% had not yet been achieved - the Department would continue to monitor progress. In general, however, there was a drop of performance.

In terms of income and expenditure trends, in 2014/15, there was income of R966,084 million and expenditure of R99,441 million. This meant there was a deficit of R3,327 million. In 2015/16, there was an income of R98,983 million and an expenditure of R102,567 million. This meant there was a deficit of R3,584 million. For the 2016/17 financial year, there was income of R104,627 million and expenditure of R107,859 million. The deficit was R3,232 million.

There was improvement of current assets of the NAC and its liabilities. Surplus funds for the 2016/17 financial year was attributed to funds earmarked for projects contracted but not yet fully paid and projects approved for funding but not yet contracted.

The NAC achieved a clean audit for the past three years from 2014/15. A fully functional audit committee was in place which comprised of two Council members and two external members. The attendance rate for Council meetings was at 80% which showed commitment.

Ms Sethibelo said the Department received an appeal from Eskhaleni Arts and Culture Initiative, situated in Manguzi, KwaZulu-Natal, pertaining to the funding decisions of the NAC in 2016. The Minister appointed two independent assessors to assist him in handling the matter. The Minister approved the recommendations of the two assessors and instructed the NAC to review its decision and engage the beneficiaries.

The Department also received a complaint from Mr Freddie Nyathela alleging that a grant application submitted by the South African Roadies Association was not handled properly. Thereafter, the Department instituted a forensic investigation against NAC Management. The forensic investigators, Business Innovation Group (BIG), revealed that Mr Nyathela’s application did not comply with requirements outlined in grant policies and procedures of the NAC. Mr Nyathela further took the matter to the Public Protector for further investigation and the Minister advised that a new investigation be conducted.

Another investigation was carried out concerning allegation on salary increases of both CEO and CFO for the 2016/17 financial year. The Department directed the NAC to investigate and make findings. The Council found that the CEO’s salary was structured and only included a car allowance and no performance bonuses or increases were paid to both CEO and CFO in 2014/15. The increase of the CEO salary by 18%, from R1 296 226 to R1 664 326, was found to be incorrect. However, the CEO received a performance bonus of R137 902, which was more than the stipulated 5% as per the Remuneration and Reward Policy of the NAC.

Ms Sethibelo said another challenge in the NAC was the Lalela Project where investigations had to be done. The Council concluded the project did not comply with requirements since it had not submitted the previous close out report and there was non-disclosure from the CEO when she became aware that Lalela was owned by someone linked to her family. The Council concluded it would take disciplinary action against the CEO for non-disclosure.  

Furthermore, there was a challenge of the Molemo’s Letter of Appeal and leakage of confidential information to the media. The NAC conducted a forensic investigation, through services of Grant Thornton in 2017, and the NAC started to implement recommendations from the forensic investigators. Disciplinary action was taken against implicated officials for leaking confidential information and contravening the NAC Code of Ethics - officials involved were currently on suspension. In addition to the findings of Grant Thornton, the Council conducted its own internal investigations pertaining to its Secretary and found that the Secretary breached the Council Charter and worked against best interest of the Council.

Discussion

The Chairperson expressed her embarrassment about the handling of documents by the Department because it had not presented the same document sent to Members.

Ms S Tsoleli (ANC) asked what the Council Charter principles were which were breached by implicated officials. The Committee visited the NAC, as part of its oversight function, and heard some employees of the NAC were being investigated for having shared information with Members of the Committee.

Mr Mahlangu found the information presented difficult to understand as it was not well-crafted. He asked why the Council appointed an assessor in the first investigations of the Eskhaleni Arts and Culture Initiative funding decisions and why it commissioned the BIG forensic investigators in the case of Mr Nyathela. The information was unclear on why the process of investigation was distinguished. He further asked whether BIG was qualified to conduct a forensic investigation since investigations did not go well. Who was responsible for the costs of forensic investigation? On the question of salary of the CEO, why was the Board not involved? On the allegation of Molemo’s Letter, he asked why the Department commissioned the investigation. Why was the Department interested in this specific matter? Why was it not handled by the NAC itself?

Ms Tsoleli asked whether there was any action taken for increased salary of the CEO.

Mr Grootboom also questioned the salary of the CEO and asked how the negligent employee who leaked the information was handled. Who had the final decision on salary increases?

Mr Makondo said the Committee visited DAC in March 2017 and the issue of salary increase was raised but the presentation made today was different to what Members saw previously. He asked for clarity on whether it was a performance bonus or salary increase.

Ms Sethibelo replied to Mr Mahlangu’s question on the Molemo’s Letter by promising to send the report to Members containing all information pertaining to charges, contravened NAC policies and the information leaked. BIG was an audit firm that internally audited NAC.

Mr Mahlangu asked if BIG had a relationship with the official being investigated.

Ms Sethibelo replied that there was understanding that a relationship existed.

Ms Tsoleli asked who appointed the auditing firm because its relationship with the implicated official obstructed objectivity of the audit process. She expressed her concern that the information presented was also not clear and complete.

The Chairperson asked how it was known that BIG had a relationship with the official being investigated. It was important for the Committee to assess objectivity of the process.

Mr Sethibelo replied that Mr Nyathela was not happy with the results of his application for grant funding and the MEC was asked to reconsider it. On the issue of bonuses and salary increases, all salary increases and performance bonuses were approved by the Board and the Board looked at what could be afforded by the entity. The salary was not increased to R1.6 million but when the bonus was added it totalled R1.6 million.

Mr Makondo said he would treat the DDG’s information with caution because of the confusion on the percentage increased and how it was calculated. There was allegation of salary increase but the investigation was not clear on what happened.

Ms Tsoleli shared the same view as Mr Makondo about how the salary increase and bonus were handled.

Ms Sethibelo accepted the discrepancy on the amounts in the report and promised to rectify the errors.

The Chairperson noted the report from the Department was public so it was imperative that information reflected was accurate. She expressed her concern that the Department had not prepared a proper presentation. The Committee made findings and recommendations on the information presented and if the report was unreliable it was difficult for the Committee to do its work.

Mr Mahlangu asked the Department to justify the information in the report. On the issue of Molemo’s file, the Department must disclose information in the file to make it clear for the Committee.

Mr Makondo suggested the Chairperson open a case against the Department and NAC because the information of salary increases and bonus was unreliable. There must be proper investigation to ascertain if there was an increase of salary and of what percentage. This must be done by a reputable institution - information presented to the Committee may be used as evidence to show discrepancies.  

Ms Sethibelo replied that at the time of the investigations there was no Council Board, since it had been dissolved, but the Minister later instructed the new Board to investigate allegations of salary increases.

Mr Mahlangu said it was unprofessional for one to investigate oneself. An independent Board must be set up, or the previous one should have been brought forward, to investigate the allegations. Members of the previous Bard could have been on the new Board. The CEO cannot investigate himself or herself.

Dr Sakiwo Tyiso, Chief Director, DAC, said the Department was not disputing that there was a salary increase. There was a 7% increase across the board for all employees but there was no 18% salary increase for the CEO and CFO.

The Chairperson pointed out that the Department was not prepared to learn and it provided a bad example for the entities supposed to learn from it. The Department must go back, redo the report and re-present it to the Committee.

National Arts Council 2016/ 17 Annual Report and other matters

Mr Hartley Ngoato, Chairperson of the NAC, presented the Council Annual Report and began by noting 70% of its budget allocation was disbursed to arts organisations and 30% was used for operating costs, including salaries. The NAC prioritised funding to increase support of indigenous art and to acknowledge diverse art forms in society. 13.92% of funds were allocated to support indigenous arts forms. The NAC exceeded achievement of targets by 9%.

In the provinces, targeted rural areas were supported with 25.32% of funding with the aim of addressing geographical inequalities. In this regard, the target was exceeded by 0.32%. Furthermore, in terms of gender redress, 19.96% was allocated to support women and women-led organisations. In terms of funding priorities for women, the NAC exceed its target by 9.96%. For youth, 26.78 % of funding was disbursed to youth projects and the NAC surpassed its target by 11.78%. Furthermore, in terms of funding people with disabilities, 2.25% was allocated to organisations working with people living with disabilities and the NAC exceeded its target by 0.25% in this regard.

It terms of financial administration, the NAC achieved a clean audit since 2014/15. However 2016/2017 was a financially challenging year for the Council. Some of the challenges it faced included, reduced funding from government, reduced contributions from private organisations and significantly reduced donations from foreign countries. Another challenge the NAC faced was that it received a high volume of deserving applications for projects and bursaries but its budget was insufficient to fund all deserving applicants.

Mr Ngoato said the accumulated surplus also decreased by 7.3% to R41,1 million, for the 2016/17 financial year, from R44,3 million in the previous financial year. The deficit for the 2016/17 also decreased by 9.8% from R3,6 million to R3,2 million from the previous year. The revenue contribution increased by 6.2% from R 96,1 million to R102,1 million.

Investment revenue decreased significantly. Total expenditure increased by 5.2% in 2017 which was higher than the 3.2% increase of last year. Employee costs remained the biggest cost component of total expenditure after project expenditure. Operating costs remained flat with a 0.7% increase compared to the previous year’s increase of 6.7%. Management of the NAC made concerted efforts to keep spending to a minimum.

The NAC also supported the Minister’s 10-point plan which focused on Africa. 28 artists were taken to Senegal to participate in the Goree Island International Diaspora Festival. The NAC hosted the 19th Assitej World Congress and Performing Arts Festival in May 2017. Collaboration between the NAC and Brazil, Russia, India, China and South Africa (BRICS) was also achieved.

Mr Ngoato mentioned that when the Committee visited the NAC, there were issues raised concerning the CFO’s salary. There were allegations the CFO’s salary doubled in a year and allegations the CEO’s salary also increased by 18% in the 2013/14 financial year. When the NAC assessed the actual salary that went into the CFO’s bank account, it was discovered the amount was in line with circular requirements for salary increase.  In the 2014 annual financial report, there was a typing error of the salary of the CFO - this error was corrected and the AGSA confirmed this information. When the CEO received a performance bonus in the 2015/16 financial year, the Chairperson of the Board approved it. However, when the payment was made, it was supposed to be 5% - the CEO received 10% as result of a wrong application of the applicable circular method. Thus the information that the CFO and CEO received an 18% salary increase was incorrect.

The issue of Lalela Project was not handled in a professional manner. Lalela was owned by person who had a close relationship with the CEO. The CEO did not disclose that she was related to the owner of Lalela. However, the report indicated that, at the time the CEO approved the project, she had no knowledge of the owner. In 2012, Lalela was funded by the NAC but, at that time, the CEO had not been appointed. However in 2013, when the CEO was appointed, Lalela submitted another application for funding and its application was approved. The CEO said she did not know when she approved the Lalela project since she was only dealing with the Project Director.

Discussion

Ms Tsoleli said the Committee should have its own inquiry on the issue of salaries to ascertain what transpired. She was not convinced by how the Chairperson of the NAC presented the issue of salaries. Lower level employees should have a higher percentage increase than the high level as was within the ambit of the law. The Committee should test the authenticity of the reports and investigate by having its own inquiry.

Mr Mahlangu pointed out that when the Council Board was making decisions about money, it should be very careful. The Committee visited some entities and there were people who were suspended for sharing information with the Committee. The Committee was governed by the rule of law which governed the responsibility of the Committee. The information given by employees in entities should not be subjected to any other law except if it involved criminal activities or when the information was false. Thus anyone who gave information to Parliament or the Committee was protected by the supreme law of the country.

Mr Makondo agreed with Mr Mahlangu and argued the Committee should start calling people under oath to come and give evidence before Members. He found Mr Ngoato very defensive while making the presentation.

Ms N Bilankulu (ANC) questioned criteria used for funding. There was no equal distribution of funds for projects within all provinces, e.g. KwaZulu-Natal had more projects being funded, followed by Northern Cape, Western Cape, Gauteng and Mpumalanga, but other provinces seemed to be neglected. What were the criteria used for funding?

Mr Ngoato welcomed the comments made by Members. He replied to Ms Bilankulu’s question by saying funding of projects was not done through nominations but through calls for individuals to submit applications - successful applicants received funding. Some provinces did not bring any application or brought non-complying applications. That was why some provinces had fewer projects funded than others.

The Chairperson pointed out that the NAC should not fold its hands and wait for people to apply on their own because at times the way application criteria were crafted made it difficult for people in rural areas to understand. The NAC should go to the provinces where there were no applications and help women in rural areas to apply. It was not enough to say there were no applications from these provinces. In other words, there should be effort on the part of the Department and NAC to look for projects that needed to be funded in rural areas because this was where the rural people were represented. It was surprising how entities achieved clean audits when the Committee was receiving information about bad management of funds in those entities. Furthermore, officials in entities did not disclose financial discrepancies but the Committee will disclose it. She further advised chairpersons of the represented entities to help each other to ensure best practices and accountability. She emphasised there was a need for the Committee to work with the Legal Unit to ensure consequence management.

National Film Visual Foundation 2016/17 Annual Report, and other matters

Mr Phil Molefe, Chairperson of the National Film Visual Foundation (NFVF) Council, presented the entity’s 2016/17 Annual Report. The NFVF had a developmental goal to work towards improving local film production. It worked with several stakeholders, like the South African Broadcasting Corporation, Ster-Kinekor, KwaZulu-Natal Film Commission etc, to build local infrastructure for ensuring there was local film production and encouraging people to watch films by local producers. The NFVF set up some Cinema Hubs to make it possible for local communities to access the films. The Media Information and Communication Technologies Sector Education Training Authority (MICT SETA) funded NFVF with a grant R20 696 896 for bursaries and internships. The Gauteng and Durban Film Office also contributed a significant amount to the NFVF projects. In terms of recoupment, NFVF received funds from the following films, Khumba, Happiness is a Four-Letter Word, Love the One You Love, and INumber Number.

Ms Zama Mkosi, CEO, NFVF, said the Foundation received private funding from many partners. The biggest sponsor was My Café, which assisted it in funding the South African NFVF Annual Awards. In terms of its Annual Performance Plan, the NFVF met most its targets for training and skills development and received a good report from the AGSA. The Foundation failed to achieve one project in terms of its plans while other targets were exceeded.

The NVFV conducted road-shows in all provinces and there was an increase in terms of applications from various provinces particularly in provinces like Limpopo and the Eastern Cape. NFVF categorised its funding model into three tiers to ensure the money was well spread across experienced, inexperienced and emerging filmmakers. This was done to address inequalities and bring previously disadvantaged people to the same level with those previously advantaged. The Foundation funded more black people than white and, in terms of gender, there was improvement.

Through the partnership with MICT SETA, the NVFV approved many more bursaries from 64 to 102. It also made progress by partnering with universities to improve their film curriculum and offering internships to emerging filmmakers. The Foundation placed 60 more interns than its initial target of 20. However it underachieved by one training initiative. It also funded 14 more projects in development and production than its initial target. Additionally Foundation funded 35 more filmmakers than the initial target to attend the Markets & Film Festival. It terms of human resources, the NFVF trained 14 more staff members.

Ms Mkosi said that in terms of its audit outcomes, the NFVF achieved an unqualified opinion for the 2016/17 financial year. In terms of its grant expenditure, there was a variance of R31 480 000 sourced from various stakeholders. Administration expenditure mainly consisted of increased computer expenses due to software renewals, support calls, internet costs, travelling costs and increased application that impacted on panellists’ fees, printing and courier posts.

In terms of challenges, many issues were raised by staff members such as, salary levels, workload, retention, succession planning and the role of staff in internal policy development. Payment of bonuses, tax implications, annual leave, internal adverts to give staff preferential access to positions, issues on international travel to ensure integration, confidentiality of issues with Human Resources were also major concerns. Several steps were however taken to address these issues. The NFVF addressed the issues through engagements with staff members and in consultation with other stakeholders like the SA Revenue Services and National Treasury.

Currently there were some concerns which were not yet addressed such as salary scale, performance management system, policy approval without consulting staff members, favouritism within different departments, conflict of interests, workload and study leave for career growth - these concerns were still being addressed.

Discussion

The Chairperson said that communication was important for both entities and the Committee so that both parties knew what was happening. There was a problem in entities when management did not share with its employees which led to people being suspicious of activities of the Executive Authority.

Mr Grootboom asked Ms Mkosi to explain what black meant for her since the term could mean many things. The Member knew a boy who applied for a bursary in the NFVF and owed the university a lot of money.

Mr Makondo asked Mr Molefe and Ms Mkosi why the NFVF regressed and steps being taken to improve the current situation.

Ms V Mogotsi (ANC) suggested that road-shows should be taken seriously and include all genders. What was the entity doing in terms of recruitment of women? Development of women should be prioritised.

Mr Mahlangu asked what was being done on irregular expenditure. It was worrying that the NFVF’s staff members were leaving the entity when the entity was already small. What were the issues surrounding labour practices? The Committee had not visited the entity – this should be prioritised.  Leadership was about small things that made a great difference.

Mr Molefe agreed with the Chairperson that communication was important. He pointed out that the NFVF took development very seriously - it was moving away from the historically empowered filmmakers to less privileged ones. There were now more Black people, Indians and Coloureds in the film industry being funded by the NFVF. In Limpopo and Mpumalanga there were now improvements and the NFVF engaged with all stakeholders in the provinces. He replied to Mr Grootboom’s question stating that Black meant African, Asian, Indian, Coloured and all historically disadvantaged groups. In response to Mr Mahlangu’s question on staff challenges, he said the Minister instituted an action for forensic investigation together with the Board to consider the challenges among the staff. A report will be submitted to the Committee when completed.

Ms Mokgotsi asked Mr Molefe to explain the gender issue and indicate the numbers showing improvements made.

Mr Molefe replied that the NFVF was pushing female applicants to submit applications for bursaries, productions funding and film projects. He emphasised the NFVF took gender seriously and its executive management now had more women than in previous years. The NFVF had also been encouraging women to be active in animation production. The film that won awards recently in Durban was a female-owned production.

Ms Mokgotsi asked Mr Molefe to come with numbers showing improvements on gender balance.

Mr Molefe replied that the NFVF funded more women than in the previous three years.

Ms Mkosi reiterated that the NFVF took gender seriously. There was a pending project for office renovation. The NFVF was working with the internal audit committee to assess whether there were any internal policies it may need to change to make improvements to bring more women into the film industry. The NFVF had also funded production content in Gauteng and other provinces. On the question of labour practices and why staff members were leaving the entity, she highlighted no staff members received any warnings so as to avoid employees leaving the entity.

Mr Mahlangu said there must be disclosure between management and employees to lessen the burden on each other. The approach should be friendly to employees and include them in making critical decisions. It helped when auditors come because employees will know what was happening within the entity.

The Chairperson asked the NFVF to respond to the issue raised by Mr Grootboom about a student who was in huge debt to a university. It would also be of assistance if Mr Grootboom wrote a letter to the CEO of the NFVF providing her with full information relating to this bursary.  She expressed that the Department and entities must respond to Member’s questions even when the responses would not be positive. People want to know the Department and entities cared about them.

Ms Mkosi replied that the NFVF was feedback driven even when it was not favourable. Rejections and feedback had increased because the Foundation was now receiving more applicants.

The Chairperson said the Department should communicate with all CEOs and chairpersons of the entities to know what was going on within the entities. She was concerned that communication methods seemed to be ineffective.

Ms Sethibelo said the Department did communicate directly with the entities and had programmes for interaction with all entities. There were also forums to encourage entities to communicate with the Department.

The Chairperson said that when the Department communicated with the CEOs of entities it should copy the chairpersons in as well so that the boards knew what was happening. This did not apply only to the NFVF but to all entities.

South African Heritage Resources Agency (SAHRA) 2016/17 Annual Report, and other matters

Prof Susan Bouillon, Chairperson of the South African Heritage Resources Agency (SAHRA), began by noting the SAHRA Council took office in August 2016 which was in the middle of the financial year under review. From a report received from the DAC, there was recommendation from the Minister to investigate the CEO and open a case. The SAHRA opened a criminal case which was currently being investigated by both forensic investigators and the South African Police Service. The CEO was currently on suspension. An interim CEO was however recently appointed. The SAHRA was underperforming due to lack of funding and human capital. It was also struggling to pay its staff members market-related salaries.

Ms Mamakomoreng Nkhasi-Lesaoana, Executive Officer” Corporate Affairs, SAHRA, highlighted that performance of the Agency had generally been impressive because of limited staff. It however achieved 0% of its heritage resources re-assessment and grade target. A new Grading and Declaration Plan was developed for the 2017/18 financial year to address the backlog of undeclared heritage sites. More so, one heritage resource was declared and nine additional sites on the Liberation Heritage Route were declared. In terms of public engagement, SAHRA facilitated a youth capacity programme on heritage management and achieved six of its eight programmes. It also achieved four out of 11 business development programmes.

Mr Kgomotso Sekhabisa, Chief Financial Officer of the SAHRA, presented the financial statements and audit outcome. SAHRA received an unqualified audit outcome. General expenditure increased and the entity had irregular expenditure R49 182 336. This was a result of goods and services with a transaction value below R500 000 procured without the required price quotation and contracts awarded to bidders who did not submit supply chain practices such a fraud. The SAHRA did not receive funding.

Discussion

The Chairperson asked the SAHRA which funding it received. There was a worrying concern of the reckless spending of money while the entities achieved clean audits. The same matters the Committee tried to address in 2014 were still happening in the entities. The Department must ensure it assisted all entities when it came to management of funds.

Mr Sekhabisa replied that general expenditure increased while expenditure per programme showed irregularities.

The Chairperson found some of the goings on in the entities shocking. Councils of the entities must know what was happening in their entities and not leave the work to the accountants or CFOs.

Mr Mahlangu asked what the procedures were for arriving at a decision of declaring a heritage site. Which heritage sites were being celebrated? There should be a balanced appreciation of human, cultural and wildlife heritage celebration. There were some places in Mpumalanga and KwaZulu-Natal which were assumed as heritage sites but were not protected and celebrated. The Committee went to Makhonjwa Mountain where it seemed the site fell under the Department of Tourism or Department of Environmental Affairs - these two Departments were active also in heritage while the SAHRA was passive in that area.

Mr Makondo asked who was a member of the Board now that the old CEO was suspended and a new CEO was appointed.

Mr Grootboom asked if the SAHRA has a hotline phone number which people could call when they saw any vandalism or destruction of heritage sites taking place, e.g. the demolition of a house which was a heritage site.

Prof Bouillon replied that an interim CEO was appointed and the appointed CEO was previously an external member of the audit committee. With regards to the hotline raised by Mr Grootboom, SAHRA was governed by the National Heritage Resource Act and there were three grades of heritages sites. The first grade consisted of national heritage sites managed by the SAHRA, the second were provincial heritage sites and thirdly municipal heritage sites. All three categories were controlled either by provincial or municipal authorities. There were provincial authorities that managed provincial heritage resources and the same applied to municipal. If there was any demolition or vandalism, the respective authorities can be contacted to stop the destruction. However some provinces did not have active Provincial Heritage Resources Authorities like in the Eastern Cape, KwaZulu-Natal and Northern Cape. She requested MECs of those provinces ensure provincial authorities were active.

Ms Nkhasi-Lesaoana added that any member of the public may nominate a site for it to be approved as a heritage site. The SAHRA and the Grading and Declaration Committee will decide the grade under which the heritage site fell. The process involved public participation. If it was agreed that the site was a grade two, it was then referred to the Provincial Authority to consider while if the Grading and Declaration Committee decided it was a grade one site, it became the mandate of SAHRA to ensure the site was declared a National Heritage Site. The process of declaration involved all interested authorities depending on the type of the site. There were however challenges with local authorities as they were still not competent and did not have capacity. Furthermore, in terms of heritage sites celebrated, there was imbalance which the SAHRA was addressing and currently there were more buildings celebrated as heritages sites. The Minister commissioned a survey of statues to understand the heritage landscape in this regard. Within a period of three to five years, the heritage landscape may change.

Prof Bouillon stated the Liberation Heritage Route was the responsibility of the National Heritage Council but it also collaborated with the SAHRA. Currently there was a joint committee between the National Heritage Council and the SAHRA in considering liberation sites.

Ms Nkhasi-Lesaoana pointed out the process of declaration of national or provincial heritage sites were the same, however, archaeological sites were generally protected areas. She said Makhonjwa was declared a national heritage site. Currently Botshabelo heritage site was a provincial one and if members of the community wanted it to be upgraded to a national site, they may nominate it and the same process of declaration will have to be followed.

Prof Bouillon stated that national heritage sites in the form of property were being managed and controlled by the Departments of Economic Developmental and Tourism - these sites were therefore outside SAHRA’s authority.

The Chairperson stressed the importance of consequence management and that entities must learn from each other.

The meeting was adjourned.