Pan SA Language Board crisis: further reports, Departmental 1st quarter 2011 performance

Meeting report

Pan South African Language Board crisis: Further deliberations
The Chairperson stated that this meeting would try to elicit the truth about the situation at the Pan South African Language Board (PanSALB).

The Chairperson stated that she had been invited, by the personal assistant of the Acting Chief Executive Officer (CEO) to a meeting at a hotel. The invitation letter was neither signed by PanSALB’s Chairperson, Prof Sihawu Ngubane, nor did it contain an agenda describing the purpose of the meeting, and for these reasons she had declined to attend.

The Chairperson then spoke to a media statement released by PanSALB, which claimed that the Chairperson had inaccurately stated that the Board Members were “hiding in the Director General’s kitchen” during the meeting of 31 August 2011. She noted that the Board Members had confirmed with her that they were indeed made to wait in the kitchen, and that the CEO and Chairperson should have informed the Committee about the whereabouts of these members.  Several Members of this Committee had, during the meeting on 31 August 2011, asked to meet the Board. At that point the whereabouts of the Board should have been revealed. The Chairperson and the Deputy Chairperson of PanSALB misled the Committee by withholding information.

The Chairperson expressed displeasure to Prof Ngubane regarding the absence of senior managers from the previous meetings, and wondered if management had something to hide and was preventing the senior managers from attending the meetings to answer the questions raised by the Committee Members.

The Chairperson then expressed displeasure that the former Chairperson of the PanSALB, Dr Elias Malete, was not present at the meeting.

The Chairperson noted that the Committee had to approach the Speaker of the House to seek guidance and explain the Committee’s frustrations.

The Chairperson informed the Committee that she was in possession of the records of all the legal costs incurred by PanSALB. The Chief Financial Officer, Mr Lovell Sing, had informed her that there was an attempt to prevent him from releasing financial information by the lawyers representing the Acting Chief Executive Officer, Mr Chris Swepu. She said that this was evidence of a further attempt to undermine the Committee.

The Chairperson also noted that she was misquoted in a media report that had indicated that she had said that the legal fees of PanSALB amounted to R121 million, as this was the deficit figure. She had not released any statement on the matter and had only responded to questions raised by the journalist. The actual legal costs must be disclosed to the Committee, although she added that the Committee had lost faith in the veracity of information given by the PanSALB staff. Despite the unqualified audit reports, it still seemed that PanSALB was being mismanaged and was on the verge of collapsing.

The Chairperson then noted that PanSALB had submitted documents on the morning of the meeting only. She, and other Members, expressed their displeasure. She asked if there was any new information that was contained in this presentation.

Prof Sihawu Ngubane, Chairperson, PanSALB, stated that there was nothing new in this presentation, and much of the information was reproduced from the presentation on 22 June 2011.

The Chairperson interrupted Prof Ngubane, asking for an explanation on the letter that was circulated which threatened to sue the CFO if he disclosed any financial information.

Prof Ngubane said that this letter was an internal matter and he was not aware of any threats made to the CFO. The CFO, at the request of Prof Ngubane, had brought all the financial documents to disclose to the Committee. He also added that the matter with the CFO was resolved.

Prof Ngubane then clarified that he had only recently been appointed as the Chairperson of PanSALB. He added that the Chairperson of the Portfolio Committee was invited for a meeting with the staff of PanSALB prior to the meeting, and the purpose of this meeting was to allow the Chairperson of the Committee and Prof Ngubane to meet, and exchange some ideas about how best to bring PanSALB back on track. However, the meeting did not take place because the Chairperson of the Committee had declined the invitation.

Prof Ngubane wanted to clarify the allegations that the Board was “hiding in the kitchen”. He noted that the Board had travelled to Cape Town to meet with the Director General of the Department of Arts and Culture (DAC). The DAC had sent formal invitations to PanSALB Board for a meeting at 2 pm on 31 August 2011. The Board was not invited to meet with the Portfolio Committee.

Prof Ngubane also noted that the reason this presentation document was not submitted earlier was that PanSALB had received information up to the evening preceding the meeting, and was unable to draft a final presentation until late the previous evening.

Prof Ngubane stated that he was still relatively new to the organisation and was not aware of any senior manager who was invited to, yet did not attend, any meeting of the Portfolio Committee.

Prof Ngubane outlined that the legal costs of the three cases were in excess of R6 million, and he tabled the attached documentation.

Prof Ngubane said that, for the purposes of this meeting, he thought that it would be irrelevant to explain the reporting lines of PanSALB, and to deal with whether it must report to the Portfolio Committee, the Ministry or the DAC. PanSALB was responsible to Parliament.

The Chairperson interrupted Prof Ngubane at this point, and wanted him to explain why he felt that it would be irrelevant to discuss the reporting lines. She argued that many of the problems emerged because the reporting lines were not clearly identified.

Prof Ngubane countered that at a previous PanSALB Board meeting, decisions were made by the Board, in conjunction with the Director General (DG) of DAC, to address the concerns within PanSALB and to stabilise that entity as soon as possible. A task team was set up to look into the entity’s finances, and it was decided that discussions on the reporting lines should be deferred to another date, as this would require an analysis of the Constitution, the PanSALB Act and the amendments to that Act. It was felt that this could be done after PanSALB had been able to stabilise its other internal problems.

Mr Chris Swepu, Acting Chief Executive Officer, PanSALB, stated that all the managers and staff present at the meeting were attending at the request of the Portfolio Committee. He said that his team had previously apologised to the Committee for the absence of the Chief Financial Officer (CFO) during the past few meetings. He claimed that he was not aware of any threats to the CFO that claimed that the CFO would not have his contract renewed or that he would face legal action if he were to release certain documents, and, on the contrary, he had informed the CFO that he could get the documents from National Treasury and present those documents to the Portfolio Committee. In addition, the Board had taken a collective decision that the financial statements received by National Treasury could, and should, be presented by the CFO to the Committee.

Ms Masindi Sadiki, Deputy Chairperson; PanSALB, stated that Board was seeking information from the Minister of Arts and Culture on the case relating to the dismissal of the previous CEO, and the Board also wanted to clarify whether a timeline could be set for the appointment of the new CEO.

Prof Zodwa Motsa, Member of the Board, PanSALB, added that the Board had continued to fulfil its goals of promoting and preserving the languages of South Africa. She argued that an investigation into the Board should have proceeded, in order to ensure that the Board and the entity were exonerated of any wrongdoing. Once the findings of such an investigation were revealed, the Board could take measures to ensure that PanSALB could become functional again.

Prof Ngubane stated that there was an investigation being conducted already by the Public Protector and PanSALB was assisting fully in this.

Another Board Member stated that she was shocked by the statements released by the Portfolio Committee suggesting that the PanSALB Board was dysfunctional. She added that the Board was meeting on a regular basis to ensure that PanSALB would remain a viable and functional institution. She stated that once the allegations about the dysfunctional nature of PanSALB were made by the Committee, the Board had met to address the concerns that were raised and to examine whether the allegations were true. The Board was of the view that the entity was not dysfunctional. She also added that the media had published incorrect inaccurate information. On 31 August 2011, the Board Members were invited to meet the DAC to discuss budgetary and governance related issues. The Board was not aware that it should also be meeting the Portfolio Committee. She urged the Committee to support the Board, and claimed that the Board was working hard to ensure that PanSALB could get back on track. Other Board members could confirm these points.

The Chairperson stated that the Committee had the power to summon any person for questioning and deliberations. She wanted the PanSALB Board to clarify how it could facilitate the functioning of PanSALB mandate without funding. She also wanted to know how, if the Board was functional, as claimed by the Board Members, it could justify an expenditure of over R5 million on legal fees. She also wanted the Board to explain the reasons for suspending PanSALB projects. Finally, she said that if indeed the Board was functional, then she wanted to know why it had written to the President requesting additional funding.

The Chairperson then addressed the remarks about the 31 August meetings, saying that even if the Board was attending a meeting with the Director General, and had to wait somewhere until he arrived, then the Committee should have been informed of the fact that the Board was in Cape Town. She reiterated that several Members of the Committee had, at the meeting on 31 August 2011, requested to meet the Board. At that stage the Chairperson and Acting CEO should have informed the Committee of their whereabouts. She again expressed frustration that Mr Swepu had not brought the senior managers to the meeting, despite being repeatedly asked to do so by the Committee.

The Chairperson asked Ms Nomadhlangala Ndabezitha, Senior Manager, PanSALB, to explain her absence from previous Committee meetings.

Ms Ndabezitha responded that she was never made aware of any meetings at Parliament.

Mr Israel Molosankwe, Senior Manager, PanSALB, stated that he had been with PanSALB for twelve years and never received any invitation from the Portfolio Committee.

The Chairperson then requested the Chief Financial Officer to explain what he knew of the meeting of 31 August and give the reasons behind the absenteeism of senior managerial staff of PanSALB

Mr Sing stated that he had not been invited to any meeting except for that held on 31 August 2011. He said that the total revenue for 2010 was R 56 815 000 and the expenditure was R65 357 000 leaving a deficit of R8 065 000. He confirmed the figure of R8 065 000, not R121 million as had been stated by others in the executive body.

He then outlined all the legal fees that had been incurred by staff of PanSALB [see attached documents], and stated that these were incurred in the 2010/11 financial year.

The Chairperson questioned the figures, noting that PanSALB had stated, in its Annual Report, that the deficit figure was R121 million.

The Chairperson expressed her frustration at the statements made by some of the Board Members that there was no crisis within PanSALB.

A Trade Union representative stated that there was indeed a crisis in PanSALB, and when the employees raised their concerns with the Board these concerns were dismissed without being resolved. The employees had identified several areas of gross violation that included administrative and resource-related issues.

The Chairperson interrupted to call for more details on the violations.  

The Union representative stated that the staff members passed a vote of no-confidence in the executive body. The employees had often asked to see the minutes of Board meeting, but their requests were declined. The employees were told, in 2010, to stop all activities and programmes because the institution was in financial crisis. The regional managers in all provinces had asked to meet with the senior management to discuss a solution to end the crisis, but this request was never met.

The Union representative added that an acting officer of a public institution was not supposed to receive an Acting allowance, but said that this was in fact happening at PanSALB.

The Chairperson wanted to know who in PanSALB was receiving the special Acting allowance.

The Union representative responded that Mr Swepu was receiving these allowances, and in addition the Acting Executive Head of Corporate Services and Acting Executive Head of Language Services received back-dated packages. The Auditor General had said that the executive staff were not supposed to receive the back dated packages, but under the current executive, this had become common practice.

He noted that the core mandate of PanSALB was to run language programmes. The employees were told that that there were insufficient funds to run the language programmes, but at the same time PanSALB was spending large sums on legal fees. He maintained that there had been abuse of power and the Union was concerned about the lack of information about the institution’s finances being passed on to the employees.

Dr A Lotriet (DA) asked the Acting CEO to explain why the Members of the Committee were not informed about the whereabouts of the PanSALB Board, despite being repeatedly asked about this by the Chairperson on 31 August. She wanted to know whether the Board was aware that Dr Malete and Mr Swepu were attending a meeting with the Portfolio Committee while the Board was waiting elsewhere.

Dr Lotriet noted that in the previous meeting, the Chairperson had raised issues about a letter of complaint submitted by the employees’ Union. Mr Swepu, at that time, had stated that the “employees Union” consisted only of three “rogue employees”. However, it had since emerged that 95% of the employees were indeed part of the Union. She asked Mr Swepu to explain why he had previously stated that there were only three employees in the union.  

Ms M Morutoa (ANC) wanted to know why there was a new Chairperson and Deputy Chairperson at PanSALB.

Ms Morutoa asked who was ordered to pay the legal fees for the court case on 16 September 2011.

Ms L Moss (ANC) wanted to know when the current Board was appointed. She wanted to know the reasons for hiring more staff when there was a looming financial crisis within PanSALB. She also wanted details why the vacant CEO position was not advertised. She added that the Committee should resolve the matter quickly so that PanSALB could restart its programmes as soon as possible.

Mr S Ntapane (UDM) wanted to know whether Dr Malete had given reason for his resignation. He wanted to know why PanSALB agreed to pay the lawyers’ very high costs. He asked whether the legal fees charged by the lawyers were accurate, and if someone from the institution had examined the breakdown of the fees. Finally he too wanted to know the outcome of the Court hearing on 16 September 2011.

Ms P Duncan (DA) asked why the Portfolio Committee in its entirety was not invited to the meeting in the hotel that had been mentioned. She wanted the Board to explain and respond to all the questions that had been raised. She asked specifically if there was a crisis between the Board, the executive body and the administrative staff.

Ms F Mushwana (ANC) was concerned about the contradictory statements made in the meeting, particularly the Board’s assertions that there was no crisis in PanSALB, and yet there were financial constraints. She wanted the Board to explain its reasons for maintaining that there was no crisis in PanSALB.

Mr D Mavunda (ANC) said that the Committee was not satisfied with the answers given by PanSALB. He added that if there was no crisis, then there would not have been any reasons to have this meeting. He wanted to know what triggered all the conflicts. He argued that it was important to understand the root causes of the conflict.

The Chairperson wanted an account of PanSALB’s daily duties, since all the programmes had been suspended. She also asked how the Board had justified approving a deficit budget. She asked whether PanSALB would be able to survive, given the institution’s current financial situation.

The Chairperson speculated that there were suspicious reasons behind the resignation of the previous Chairperson of PanSALB, saying that if Dr Malete had nothing to hide it was unlikely that he would have resigned.

Mr Sisubu Xaba, Director General, Department of Arts and Culture, acknowledged that a meeting had been arranged for 31 August 2011 between the Director General and the PanSALB Board. This meeting was to take place after the meeting with the Portfolio Committee. He added that the allegations regarding the Board being locked in the kitchen were unfounded and baseless.

Mr Xaba stated that no entity was, in terms of the Public Finance Management Act (PFMA) allowed to plan a deficit budget. He then explained that the organisations created a budget and the DAC submitted these to National Treasury. In almost all cases the organisations would receive less that what they requested. Mr Xaba claimed that PanSALB was spending the money for which it had budgeted yet which it had not yet received from National Treasury. In a case where it received less than what was asked, it would have to record a deficit. Mr Xaba explained that in the case where the money had been spent before receipt, an organisation would record this not as a budget deficit but as over-expenditure. He wanted to clear the misperception that money had not been received.

Mr Xaba noted that the governance structure of PanSALB needed to be re-examined. The DAC had hired a governance expert to assist the institution in resolving its governance related issues.

Prof Ngubane stated that the current Board was appointed in October 2007 and became operational in June 2008. Eleven members out of a possible fifteen were appointed, and soon after the Board became operational, two members had left the Board. He noted that Dr Malete’s letter of resignation did not specify why he was resigning. He added that the PanSALB Act required appointment of a new Chairperson of the Board every two years, which was a problem as if affected the continuity. Prof Ngubane had been the Chairperson two years prior to this, was replaced by Dr Malete, but was then asked to resume the Chair again on Dr Malete’s resignation.

Prof Ngubane then dealt with the question relating to the advertising of the Acting CEO’s post. Mr Swepu was, at the time, the Deputy Chief Executive Officer, and no formal application process was necessary to appoint him as Acting CEO. The roles of the Deputy CEO and CEO were similar, and the Board decided that Mr Swepu was not most qualified to lead as an Acting CEO.

Prof Ngubane dealt with the legal matters relating to the suspension and the dismissal of Mr Simelane and Adv Feni, saying that because the Board did not feel that the court had addressed all the issues properly, it was necessary to spend the additional funds to ensure that the individuals did not make claims for reappointment. When the Acting CEO was appointed, Adv Feni had protested and attempted to oppose that, and these protests coincided with Adv Feni not being appointed as Head of Corporate Services in PanSALB. The Board felt that Adv Feni’s actions were harmful to the organisation and moved to dismiss him. On 16 September 2011 Adv Feni moved the case from unopposed role to the opposed role, and the case had now been reallocated to 10 October 2011. Prof Ngubane assured the Committee that there were no additional costs incurred by PanSALB as a result of the postponement of the court case.

Prof Ngubane stated that the programmes were suspended for a specific period of time, and that suspension had since been lifted. He added that there was no crisis in PanSALB at ground level, and most of the concerns were in higher management and the Board.

The Chairperson interrupted and stated that the Committee was shocked at Prof Ngubane’s claims that there was “no crisis in PanSALB”. She added that during the previous meeting the Committee was informed that there were no programmes taking place, and that PanSALB was unable to achieve its mandate. The Chairperson added that it seemed that the employees were being oppressed. She added that the Committee was not fighting political battles and had nothing against Prof Ngubane for being a member of the IFP.

Prof Ngubane responded that he was not part of the IFP, and the Chairperson was inaccurate in her assessment on this point.

Prof Ngubane added that the Board had documents that proved that activities and programmes were taking place on the ground, which were supported by PanSALB.

Ms Angie Netshiliem, Manager: Languages, PanSALB, stated that the Board was meeting twice a year instead of four times, as indicated by the PanSALB mandate. She stated that while it was true that the programmes were operational, the budget constraints were limiting the effectiveness of these programmes. She added that PanSALB had a high employee turnover and there were several vacancies within the organisation which were critical to the functioning of PanSALB as whole. She added that PanSALB was undergoing a difficult transition, but that the staff was willing to work and support the office of the CEO and the Board, to ensure that PanSALB could get back on track.

Ms Ndabezitha stated that on the provincial level there were many national language units (NLUs) that were cash-starved, and did not have sufficient funds to pay salaries. When she investigated the matter further she was told that it was common practice that salaries might not always be paid on time.

Ms Namande Lekhu, Shop Steward, PanSALB, stated that management was not budgeting properly, which was affecting all operations of the organisation. On a personal level she wanted the Board to address and resolve all the personal issues within PanSALB.

The Chairperson urged Ms Lekhu to speak openly without any fear.

Ms Lekhu stated that Mr Swepu had abused his power. He had sent out an e-mail claiming that there were people in PanSALB that had become a threat, and stated that he would weed out those individuals. She was concerned that if people did speak out, they could be “weeded out” by Mr Swepu.

Mr Sibusiso Nkosi, Senior Manager: Communication, Marketing and Information Technology, PanSALB, stated that role of the staff was to support the Board. However, there were issues of accountability within the organisation that needed to be addressed. For example, some staff arrived late at work and left early. This culture should not be underestimated, as it was harming the functionality of the organisation as a whole.

Prof Motsa explained that in terms of the Staff Charter, the staff would report to management, and the management would then report to the Board. As a result of this hierarchy, the Board was unable to communicate directly with the staff and gain an understanding of the issues being faced. She expressed concerns that each section of the organisation saw the other as a threat. There was a lack of cohesiveness in the group. This was preventing the organisation from achieving its goals. She emphasised that a way forward should be mapped out, so that PanSALB could recommence its full operations.

The Chairperson interrupted and claimed that the Board seemed to be “clueless” about the ongoing problems within the organisation. Although the Board apparently met four times a year, it seemed to have been unaware of the mismanagement. The Chairperson expressed frustration that Dr Malete had resigned from his position as Chairperson and Board member, reiterated that this seemed to be suspicious, and raised many questions.

Prof Ngubane concurred with the Chairperson and stated that there was information that Dr Malete did not give to the Board, which was the reason that many of the Board Members were unaware of the ongoing problems at the management level.

The Chairperson then invited Mr Sing to respond to questions raised by the Committee.

Mr Sing stated that, as instructed, he had brought with him all the invoices that related to legal matters. He reiterated his earlier assertion that he had received threats from the lawyers hired by PanSALB that he would be sued if he provided these invoices to the Portfolio Committee. He expressed fear that this might happen. The lawyers had apparently also threatened that he could be fired, and his contract would not be renewed. He said, contrary to what Mr Swepu said, that Mr Swepu had told him that it would be incorrect to reveal these invoices. Mr Sing himself had contacted National Treasury, who advised him that when the Portfolio Committee called for documents, it was his duty to provide them. He sought protection from the Portfolio Committee and the Chairperson from the threats made by the lawyers.

Mr Sing maintained that PanSALB was experiencing the worst financial crisis in its entire history. He stated the PanSALB did not even have the required funds to pay its creditors or suppliers. While the funding had increased by 5%, the staff salary expenditure had increased by 7%, and the rents on the local offices had risen sharply as well. PanSALB had no money to pay for any of these increases in expenses.

Mr Swepu stated that the challenges faced by PanSALB were already in existence before he became the Acting CEO, and he proclaimed that the allegations about the way it was being run were incorrect. He had had little communication with the Union and was only made aware of the grievances once a letter had been sent to the Board. He then had suggested to Mr Nkosi that the Union should be involved in discussions. He stated there had been four meetings with the Union in 2011 and it was the responsibility of the Union to bring complaints to the management.

Mr Swepu denied the allegation that he had previously suggested that the Union only consisted of three members. He explained that the grievance submitted by the Union was in fact sparked by the complaints of just three employees. He felt that Mr Sing was “being economical with the truth”. He stated that Mr Sing had been invited to the last meeting with the Portfolio Committee, but had informed Mr Swepu that he was ill and could not attend.

Mr Swepu said that Mr Sing’s contract was due to end in the following year. The HR Office had mislaid the contract, and, coincidentally, Mr Sing also seemed to have lost the copy of his contract. Mr Sing had apparently demanded that he should be appointed permanently. Mr Swepu said that PanSALB was unwilling to give Mr Sing a new contract, but was intending just to re-sign the old one. Mr Sing was apparently exerting pressure on management to make his post permanent. He denied that he had made any threats and said again that he had told Mr Sing to submit the financial details.

Mr Swepu added that he had been extremely accountable to the Board and he was willing to comply with all the requirements of the Board. He also stated that he was not being paid any ‘Acting’ allowances and he was receiving the same salary as he had in previous post as the Deputy CEO. This matter had been explained to the Union members.

Mr Swepu said that he was not involved with organising the Board Members’ meeting in Cape Town. The meeting had been organised by the DAC, and he was not aware of anything to do with the arrival of the Board members.

Mr Swepu responded in relation to the charges. Initially, PanSALB had not gone into any detailed investigations in relation to the fees, but the Auditor-General had audited the service level agreements and the fees charged by the lawyers. It was confirmed that PanSALB had not been overcharged.

Mr Swepu asserted that he would be willing to return to his original position as the Deputy CEO when the Board was able to find a suitable candidate for the CEO position.

The Chairperson wanted to know whether PanSALB had a strategic plan.

Mr Swepu stated that the Board had a three year plan. However, the Auditor-General had isolated several flaws and had recommended that these be fixed. Management had taken cognisance of those issues and was producing a new strategic plan.

Dr Lotriet wanted to know if there was a full time employed advocate in PanSALB and, if so, then why it had been necessary to seek legal advice outside.

Dr Lotriet noted that the previous Annual Report cited 37 complaints registered in relation to language programme delivery. This number was not big enough to justify a full time advocate on staff. 

Mr Mavunda stated that while it was the duty of the Portfolio Committee to conduct oversight, it was the responsibility of the Board to ensure that PanSALB was running efficiently and effectively.

Ms Lekhu and Mr Moremi wanted to raise their concerns but the Chairperson stated that it was important to determine a way forward.

Prof Ngubane concluded by suggesting that the new strategic plan would be an improvement on the previous plans. He believed that the crisis was not over, and there was much work to be done, but many of the concerns and issues that were raised by all parties would assist in resolving the matter. He requested the Chairperson that PanSALB be given a chance to return to the Portfolio Committee in one month’s time with concrete measures to resolve the matters in PanSALB. PanSALB would work with the DAC and the task teams to improve the governance structure, and could, at a later stage, provide a progress report on all the concrete measure taken to strengthen the organisation and make it completely functional.

The Chairperson granted the request to meet in one month’s time. She also added that the Speaker of the House had been informed of the current issues.

Several Members expressed concerns that PanSALB had made similar promises before and had failed to comply with them. Members wanted the Committee to make a decision whether PanSALB should continue to exist or not. 

Mr Xaba stated that it was important to understand the root causes of the problems, saying that many of the issues raised in this meeting were symptomatic of the problems. Decisions had to be taken and the governance structure of PanSALB must be re-organised.

The Chairperson stated that the Committee would meet in one month’s time when a final decision about the future of PanSALB would be taken. However the Chairperson wanted assurances that no more money would be used for legal costs.

Prof Ngubane stated that he could not promise that there would be no other legal costs, but he assured the Committee that he would try to minimise the costs.

The Chairperson concluded that an overhaul was needed in PanSALB. The Committee might seek the support of the Special Investigating Unit to investigate all the issues that were not yet cleared. The Chairperson also requested the Union to raise their concerns with the Board if it did not receive help from management.

Department of Arts and Culture Performance reports: Fourth quarter 2010, and First quarter 2011
Mr Sibusiso Xaba, Director-General, DAC, introduced the delegation from the Department.

The Chairperson enquired where Ms Lisa Combrinck, Chief Director: Communication and Liaison, DAC, was.

The DG replied that he had asked her to represent the Department in a briefing taking place in the President’s Office.

The Chairperson remarked that Ms Combrinck had never attended any meetings, even the budget vote, and questioned whether she was undermining the Committee.

Mr Xaba replied that he was not aware that she had never appeared before the Committee. She would have attended had it not been for the briefing in the President’s Office. This meeting was being held with various ministries concerning the upcoming visit by the Deputy Prime Minister from Turkey. The DG wanted to appear before the Committee and therefore asked someone else to represent him at the other meeting.

The Chairperson advised that the Department should have sent the Media Liaison Officer instead to that meeting.

Mr Xaba accepted that he had made an error.

The Chairperson cautioned that this should be the last time that Ms Combrinck did not attend a committee meeting. In future, if she was not in attendance then the Department should not bother turning up.

Mr Xaba said that, in view of the time constraints, he would run through the presentations quickly.

4th Quarter Budget and Expenditure 2010/2011
Mr Xaba highlighted the virements and roll-overs for each programme during the 2010/2011 financial year. Programme 1: Administration started with a budget allocation of R154 million. A roll-over of R23 million and virements amounting to R18 million meant that the final appropriation totalled R196 million. There were also movements on Programme 2: Arts and Culture in Society Programme. Here the initial allocation was R327 million and the final figure, after adding the roll-over and virements, amounted to R482 million. The presentation included a breakdown for the remaining programmes as well (see attached document).

Mr Xaba then presented a graph that showed the breakdown per economic classification, noting some movements, particularly due to the adjustments, roll-overs and virements. In total the adjustments and roll-overs amounted to R34 million, which was added to the budget of the Department. Most of it was directed towards the Department’s Agencies and Accounts and Non Profit Organisations, and for goods and services.

All funds relating to capital works projects had historically been budgeted for under Programme 5: Heritage. This principle also applied for the 2010/11 financial year. The Department also contributed to capital works projects at its Playhouses and other institutions, by means of a direct transfer. The National Treasury indicated that the funds transferred needed to be allocated as subsidies to these institutions, and should be accounted for under the Programme where they resided. For this reason, and after obtaining National Treasury approval, an amount of R100 million was shifted from Programme 5: Heritage Promotion, Transfers and Subsidies, Capital Works to Programme 2 and was promulgated in the Adjustments Estimates of 2010/11.

During the Adjustments Estimates of 2010/11 an amount of R10 million was shifted from Programme 5 to Programme 1, to supplement the Property Management budget, which became inadequate due to high increases in municipal services. After the adjustments, the National Treasury approved virements of R44 million from Programme 5 to various public entities, who were permitted to use them directly on infrastructure spending. In addition the National Treasury approved transfer of an amount of R36,1 million from Programme 5 to Programme 2 in order to pay off a Pension Fund debt which accrued to the Playhouses, due to retrospective amendments to the Pension Fund Act.

During the adjustments, funds that were incorrectly classified in the 2010 Estimates of National Expenditure (ENE) were reclassified. Also, a total amount of R30 million was rolled-over from the 2009/10 financial year. This included R12 million from the 2010 FIFA World Cup and R18 million from the Investing in Culture Projects.

The overall amount voted was R2,4 billion. The actual expenditure was R2,2 billion and there was an under-expenditure of R192 million. This was a significant reduction in the surplus, in comparison to the previous financial year.

The report gave a breakdown of expenditure per programme. Programme 2 spent 100% of its allocation. The programme with the least expenditure was Programme 4, which showed spending of 82,2%. This was largely attributed to the Investing in Culture Project. The Department had to put a moratorium in place on transfer and approvals as it was subject to Special Investigations Unit (SIU) investigations. The overall expenditure was 92,1%. This meant that the Department underspent its budget by 7,9%.

According to economic classification, the Department had spent most of its allocation for Compensation of Employees. A substantial amount of under-expenditure related to the goods and services. The transfers to provinces and municipalities stood at 90% (see document for further breakdown)

First Quarter 2011/12 Expenditure Trends
Mr Xaba then presented a summary of the Department’s budget per programme. The total appropriation for the current financial year was R2,4 billion. Most of the funds were allocated to Programme 4: Heritage Promotion (R763 million) followed by Programme 6: National Archives and Library (R694 million). Programme 3: National Language Services was allocated the least amount (R101 million).

According to the economic classification, compensation of employees accounted for R164 million and the goods and services budget for R228 million. The transfers to provinces and municipalities of conditional grants for community libraries was R543 million. The Department Agencies & Accounts (Current: Public Entity Subsidies) was allocated R861 million. Other amounts allocated were more fully set out in the attached document. He noted that most of the money in the budget was not spent directly by the Department but was transferred to other agencies and organisations for spending. However, the Minister still remained the executive authority for the entire vote and the DG the accounting officer for the entire vote. Whilst it delegated expenditure, the Department did not delegate accountability. He showed that 84% of the budget was spent outside the Department and only 16% within. Most of the budget was spent on Public Entities (34,9%) followed by Community libraries (22%) and capital works (18%). Only 6.7% was allocated for compensation of employees. However, this could be misleading, because many of the entities paid salaries as well out of funding.

Mr Xaba explained that according to the breakdown of the budget, the Department should have spent 25% of its budget at the end of the first quarter. The Department had managed to spend slightly above that 25% benchmark for the Administration (28%) and National Language Services (27%) programmes. However, there was under spending in other programmes, particularly Programme 4: Cultural Investment and Development Programme (13%). He explained the variance between what should have been spent and what was actually spent. Compensation of employees accounted for only 23% at the end of the first quarter, but he noted that in the remaining quarters, the Department would incur additional costs for performance bonuses, general salary increases and pay progression. This would not exceed budget, but there would be a very small margin for appointment of any additional staff. Programme 1 was over-sending but this would be offset by anticipated savings in Programmes 3, 4 and 5. This was due to incorrect budgetary allocations in the past, which would be rectified for future years.

The goods and services expenditure was at 22% for this quarter, and this was largely because only R7,553 million (11%) of the total budget of R67,3 million for Property Management was spent. He explained that this related to the reimbursement of payments made by the Department of Public Works (DPW) for the municipal accounts and property leases on behalf of the Department and its entities. The DPW delayed in submitting the monthly accounts for payment, but it was anticipated that the full amount would be paid by the end of the financial year.

No final over or under expenditure was expected and expenditure would be carefully managed. The Department was expecting approval for rollover funds of R8,706 million.

Mr Xaba then dealt with the transfers, noting that 17% of the budgeted amount was transferred to the provinces in the first quarter, and said these transfers were based on provincial needs, rather than the Department spending for them. The Department was working closely with the Technical Assistance Unit of the National Treasury, and had encouraged the provinces to increase their capacity to spend.

Discussion
The Chairperson wanted to know how the DAC was going to resolve the issue of under expenditure, what was to be done with roll over funding from previous years, and the reduction of funding for culture and culture related programmes.

Mr Xaba stated that the Department had not stopped investing in the culture and culture-related programmes but it was scaling down its investment in the sector. The additional funds were being used for other programmes that were part of the job creation strategy. The main problem about investing in culture was that there was no way to monitor and evaluate the projects, even if they were “successfully” delivered.

Ms P Duncan (DA) said that under expenditure and roll over of funds indicated bad planning. She wanted the Chairperson to send out a warning that such matters were unacceptable. She also wanted to know why all the institutions under the DAC umbrella received funding every quarter, and asked how the DAC was monitoring use of money by the provincial departments.

Mr Xaba explained that the reason for funding quarterly was to ensure that the institutions were responsible with their money and the DAC could monitor the progress of the particular institutions. The DAC was also working closely with the Auditor General to help ease the rising costs of compliance.

Ms L Moss (ANC) wanted an explanation on the high vacancy rate. She urged the DAC to stop all roll-overs.

Mr Mavunda (ANC) wanted to know whether the vacancies were vital for the operation of the Department. He too wanted to know whether there were any plans to curb roll-overs of funds.

Mr Xaba noted that the DAC had restructured and had reduced the number of positions in the Department, because it had become aware that it would not get funding to fill some of the vacancies. It was now structured to try to achieve maximum efficiency. It was working with National Treasury to reorganise the funding structure. It hoped, by doing so, to fill some of the most important vacancies, especially in the information technology sector.

Mr Xaba then explained the position with the rollovers. He said that money that was allocated, but could not all be spent in one financial year, would be requested to roll over, and he noted that all the money received was in fact allocated to projects.

He added that the DAC was also looking to decrease its reliance on the Department of Public Works and were now in the process of developing a structure where all the consultation work that was done by public works for the DAC would be done by the DAC itself.

Ms Moss wanted to know whether the DAC was had any special programmes for disabled people

Mr Xaba stated that the DAC was funding several projects that were assisting disabled people, especially young children with disabilities, and those programmes would continue to receive funding.

The Chairperson reiterated points made by Members in previous meetings, urging the DAC to continue funding underdeveloped areas and work towards generating employment in these areas. She also said that the DAC should work towards strengthening its monitoring and evaluation process.  

The meeting was adjourned.