State Theatre & PanSALB on their Annual Reports for 2012/13; Update on PanSALB HR matters

Meeting report

State Theatre 2012/13 Annual Report briefing
Mr Abrey Sekhabi, Artistic Director and Acting Chief Executive Officer, State Theatre, spoke to the mission, values and visions of the State Theatre. He outlined the vital statistics of the State House Theatre, giving the figures (see attached presentation) for revenue, self-generated revenue, grant funding and capital and operating grant funding. The total employees were 118, total performance venues were six, and there were 477 performances. There were audience figures of 183 261.

The Chairperson’s report stated that there were some changes in the arts economy, which was facing a tough time because there was a great deal of competition in the sector. he stated that it was a tough economy as there was a great deal of competition in the sector. The State Theatre (ST) was  happy with its development work and had done a great deal of outreach. However, it was not yet where it wanted to be on the fundraising, admitting that more needed to be done.

The Chief Executive Officer’s report spoke to audience attendance, administration, financial results, strategic performance, facilities and maintenance, patron experience and partnerships.

The Acting Chairperson asked whether the Chief Executive Officer and Chairperson were present.

Mr Sekhabi said that they were not. The Chief Executive Officer was on leave. There was no Chairperson at present in the ST.

Mr Sekhabi continued that financially not as much money had been raised as hoped, and not as many tickets had been sold as the ST had wanted. There had been a number of financial challenges, especially since the ST had also done renovations. The facilities had not been rented to the full capacity. Partnerships had been made with television stations as well as other theatres.

Mr Sekhabi then spoke to his Artistic Director’s report, saying that the offerings were diverse, with musicals, theatre in various languages as well as various genres of music and drama. The launching of young artists gave a platform to young and up and coming artists and directors. There had been presentations at the National Arts Festivals, with productions such as Mies Julie and Drama Queen. These, although not optimised as best as hoped, had been important contributions to South African theatre. The ST had also contributed to the 2012 MzansiFela Festival, the London Olympics and offerings in the Edinburgh Festival in Scotland.

Mr D Mavunda (ANC) asked if there was information that backed what was being said.

Mr Sekhabi replied that it was in the annual report.

The Acting Chairperson agreed that it was included in the package with all entities’ annual reports.

Mr Arthur Mokoena, Chief Financial Officer, State Theatre, spoke to the statement of the financial performance. Total revenue was R82.3 million. The total expenses were R85,79 million. The ST had received a qualified audit finding, with qualifications on Property, Plant and Equipment, Revenue from Exchange Transactions, Fruitless and Wasteful Expenditure, Irregular Expenditure, Emphasis of Matter and Restatement of Corresponding Figures.

Mr Mokoena outlined the key focus areas. The ST was urged to clean up its administration, through the centralization of procurement and implementation of compliant asset management processes and controls. It needed to improve income from self-general productions. The market research had indicated that the State Theatre lacked client entertainment experiences, and this would be a major focus in the future offerings. The ST’s approach to sponsorship had changed and it was embarking on a process to assess the value of its facility as well as the market, and would in future trade these values in exchange for sponsorship. Scope of development would receive attention. The ST intended to explore partnerships. It would be introducing a Human Resources grading and performance management system, and career development programmes for staff.

Discussion
Poor presentation
The Acting Chairperson said that the presentation preparation had been weak and she had become lost.

Mr N van den Berg (DA) said that he thought the presentation was “a disgrace”. He got the impression that the speakers had no idea what was on the presentation or what was to be outlined for the Committee. The fact that the Chief Executive Officer had gone to the United States just when this was due to be presented showed the cavalier nature with which the officials were doing their jobs.

Mr Van Den Berg asked why more money was not being made as there was the talent in South Africa. He remembered a time when the State Theatre had been closed, as it had been seen as being ‘too Eurocentric’. He wanted to know what the state of the Theatre was now, and whether it was still offering Eurocentric productions. He felt that this was generally poor performance.

Mr Sekhabi replied that the Theatre had six theatres which took a great a number of people. Productions were quite diverse, as there were comedy gigs, poetry gigs, and rock and roll gigs taking place frequently in one of the venues alone. There were also jazz nights and African nights. The rock nights had struggled; perhaps they did not appeal to the audiences, or there might have been a marketing problem. Various other productions had included the production on the Presidency of Thabo Mbeki. Dance productions had been showcased. There had been attempts to accommodate a whole number of artists and have offerings on a regular basis, but this meant that the budget was sometimes spread thinly. The different productions brought about variety. This sometimes meant that the budget was spread thin. A number of various productions had been brought about in order to give variety in offerings, and gave opportunities to a whole host of artists within South Africa.

Mr S Ntapane (UDM) asked what was being done about not meeting Strategic objective 1. Targets were set according to a benchmark, and he asked what, in general, was being done about targets that were not met, especially those on income generation. He asked for more explanation on the emphasis of matter. He also asked for an explanation on intangible assets and non current revenue.

Mr Ntapane also asked why expenses were higher than budget, and noted that this was still the case, despite the fact that it had received more than originally budgeted.

Mr Mokoena replied that when additional money was given for a production the additional grants were used in their entirety for the production, and did not complement the grant given to the State Theatre.

Mr Ntapane asked what would be done to remedy the situation that the State Theatre was now running at a loss, and if there was a turn around strategy.

Mr Sekhabi replied that there had been a turn around strategy put in place. The Department of Arts and Culture (DAC) had indicated that it was not happy with the governance of the State Theatre and not enough productions were taking place. The strategy was drafted and submitted, in draft form, and part of it was that the State Theatre needed funding to produce productions on the main stages, such as opera, which was expensive, but would help with competitiveness.

The Chairperson asked if the Council was still effective, and whether its issues were resolved.

Mr Sekhabi replied that the Council would be working hard to make sure that  the State Theatre “ship could be steered in a new direction”. There had been various meetings, as well as workshops. Although there had been challenges there was work being done to address them.

The Chairperson noted that the State Theatre’s negative publicity was a cause for concern.

The Chairperson asked what was being done in terms of the matters raised by the Auditor General, such as the issue of complimentary tickets and rental issues?

Mr Mavunda said that it seemed a number of issues seem to be recurring, such as nothing being done to address employees that were involved in irregular expenditure.

The Chairperson asked if there was a risk or audit committee was present in order to add internal controls.

The Chairperson asked about the employee who had business interests in a contract that had been awarded. She particularly wanted to know what had been done about this matter and what measures had been taken about the employee, as this was close to corruption.

Mr Sekhabi replied that the employee had been part of the events portfolio and she had resigned before the matter had been discovered. After this, the State Theatre had followed her up in order to recover the money, and there would be criminal charges laid.

The Chairperson asked if there were performance contracts, and if there was any supply chain management to ensure controls. She found it unfortunate that the Chief Executive Officer was not present to explain the issues. She said if there were no internal controls then this cast doubt on whether the institution should exist.

Dr H Van Schalkwyk (DA) asked for elaboration on the term ‘selling and distribution costs’.

Dr van Schalkwyk wanted to know the reason for the huge increase, from R9 million to R21 million.

Dr Van Schalkwyk asked what research had been conducted to prove programmes were not appealing to audiences?

Dr Van Schalkwyk, and Mr L Khorai (ANC) asked what strategy was in place to recover the deficit.

Mr Mokoena replied that the budget for 2012/13 had been prepared with a ‘no percentage increase and an increase of the Department grant of 6%. Management knew, when taking the decisions, that not all might be realistic. There had been a need to address the challenges in one or another way. The problem had been that a great number of expenses were semi-fixed. The increase on expenditure had been capped at zero.

The Acting Chairperson commented that there seemed to be a lack of leadership within the entity and this was obvious by the fact that there had been issues raised within the Auditor General’s report, as well as the problems the entity faced. She urged the DAC to ‘sit down’ with the State Theatre and tackle these issues.

Mr van den Berg raised the issue of terminology in the report. He was under the impression that when the entity could not state where money had been spent, it had merely put everything under ‘other expenses; and he questioned, firstly, if this was legitimate, and commented that several of the itemised expenses, such as refreshments, were far too much, and also that there were figures that did not seem to ‘add up’.

Ms F Mushwana (ANC) agreed that a full explanation was needed of what the ‘other expenses’ were.

Mr Mokoena stated that utility and maintenance and other such funds fell under the banner of ‘other expenses’. There had been an appeal to the Department of Arts and Culture to look at the maintenance cost of the theatres against the core costs, as the amount for maintenance was very high.

Mr Van Den Berg stated that there was very little information on the type of productions. He wondered if there had been any comedies, dramas or musicals. Very little information had been given on the core functions of the State Theatre. The core function was not making money out of parking.

Mr L Khoarai (ANC) asked what were the targets in terms of persons with disabilities?

Mr L Khoarai also said that the report did not reflect the total number of staff members who had resigned and were under review, could this information be provided?

The Acting Chairperson made some specific recommendations. She suggested that the Director General and the Department looked into the issues so that evidence of quarterly change eventually emerged. She said that it would be good to see changes in the entity.

Pan South African Languages Board 2012/13 Annual Report briefing
The Chairperson said that the Pan South African Language Board (PanSALB) had been called as there had been issues of governance that had come to the Committee’s attention, in respect of the 2012/13 reports. In addition, she reminded the Committee that there was still an issue, which had first arisen in 2010, around Advocate Zixolisile Feni, who had been the Head of Legal Services at PanSALB. The Committee had taken a resolution to deal with the original Board of PanSALB, and had thought that the labour issues were settled. However, Advocate Feni had now written to the Committee expressing that he was not happy with the way the matter had been handled, in a very ‘harsh tone’ and disputed the Committee’s report to the House that the issues had been resolved.

The appointment of the new PANSALB Board had to be concluded as soon as possible.

Presentation by PanSALB 2012/13 Annual Report and performance plans
Mr Mxolisi Zwane, Caretaker Chief Executive Officer, PanSALB, presented on the mandate of the Pan South African Languages Board, and gave an overview of the annual report. He said his presentation sought to present the status of implementation of the 2012/2013 Turnaround Strategy of PanSALB, which had been adopted in August 2012 after extensive consultation with internal structures, staff members and stakeholders. The 2012/2013 Turnaround Strategy had also been presented, with costing, to the Committee, who supported the funding of that Strategy.

The 2012/2013 fiscal year had been a period in which PanSALB had had to meet ever-increasing needs of the Turnaround Strategy, with very limited resources. Despite the unfavourable audit outcome, this fiscal year had proven to be an optimistic and exciting year. This was due to the proper planning and vigorous implementation of the programmes adopted through the turnaround strategy and the support received from other structures, as well as the collaboration with some of the provincial departments of Arts and Culture. He said the report would focus on highlighting achievements and on-going challenges the current leadership continued to experience, despite the visible achievements made to date.

In the nine months, and in respect of overall performance, 33% of targets had not been achieved, 37% of targets had been achieved and 30% had been partially achieved. In terms of the performance score card for strategic objective one: relating to Performance Information, 50% of targets had not been achieved, 25% had been achieved and 25% had been partially achieved.

In terms of Strategic Objective One three outputs had not been achieved. The first was achieving a stable financial environment; PanSALB faced additional expenditure because of the turnaround strategy and its Revenue Generation unit was established only in April 2013. Proposals had been sent to donors for funding. Promotion on language products had been effected to create sales. It had not complied with governance imperatives, because the Board, Audit & Risk and ICT committees had not appointed. The Audit & Risk Committee was to be appointed on 15 March  2013. The final output not achieved was the formation of the Functional Revenue Generation Unit, but the remedial action was that personnel were now to be appointed, and the Revenue Generation Strategy had been approved. The Revenue Generation model was conceptualised and launched in April 2013, with the appointment of fundraising agencies.

In terms of Strategic Objective two 50% had not been performed, 17% had been achieved and 33% had been partially achieved. He went through the outputs not achieved, and summarised that these included revised governance structures, which were not achieved because the norms and rules and articles of association for private companies were not approved. That was now being done, with funding of the national language units being done.  The language framework was not developed, due to limited human and financial resources, especially lack of specialized skills to provide technical support, but the unit was being capacitated and the languages framework workshop was to be conducted in September 2013.

In terms of Strategic Objective three 20% had not been achieved, 20% had been achieved and 60% had been partially achieved. Non-achievement was seen in research in languages, where monitoring and evaluation (M&E) personnel were not appointed, although this had since happened.

Under Strategic Objective 4, 50% had been achieved, 25% had not been achieved and 25% had been partially achieved. Outputs not achieved included the construction of a Performance Management System (PMS), due largely to resistance by staff, but performance contracts would be drawn up at the end of the 4^th quarter, after all the workshops had been conducted. PMS was implemented after induction of both the TA strategy and the PMS. The Labour Forum had been established to create a conducive environment to resolve labour related issues.

All outputs under Strategic Objective 5 were achieved.

Mr Zwane spoke to the key achievements. These included the implementation of the 2012/2013 Turnaround Strategy, establishment of the Chairpersons Forums, revival and engagement of PanSALB structures, the launch of the Dr Neville Alexander Language Scholarship (Gauteng and Western Cape), the launch of International Mother Tongue Day (celebrated in all provinces), the launch of the Linguistic Tribunal, International Translation Day (celebrated in all provinces), Deaf Awareness Week (celebrated in all provinces), the revival of the Book Clubs, and the Grade 12 language Awards. Staff morale was improving. There had been more stakeholder engagement.

Mr Zwane outlined the human resources (HR) numbers. There were 102 Africans and one white person, with an almost equal gender split. The staff turnover was affected by the resignation of two men and five women, ending of contract and medical boarding.  The total approved staff structure was 120, and so far 106 posts (88.3%) had been filled. There were 14 vacant posts, which was an 11.67% vacancy rate.

Mr Zwane outlined the governance structure, the management structure, the executive structure as well as that of the office of the CEO. He also outlined the languages services structure, provincial operations structure, Policy, Regulations, Linguistic Human Rights, M&E  Services Structure, the corporate services structure and the finance structure (see attached presentation).

Ms Mpelegeng Myambo, Chief Financial Officer, PanSALB, outlined the financial aspects (see attached slides for exposition of the allocation, the expenditure and the variations). She noted that after the PanSALB received the Auditor-General’s report, an action plan was developed to address matters raised. The action plan had been monitored and updated on a monthly basis by the Chief Financial Officer, as verified by the Internal Audit Unit.

Mr Zwane said that PanSALB had done its utmost in light of the budget constraints and other problems, and moves were afoot to get PanSALB back on its feet. There were some challenges that he wanted to point out to the Committee. The most significant was under-funding, which resulted in over spending of R4.2 million. The under-funding had resulted in capacity challenges within PanSALB, including its structures. However, PanSALB felt that its achievements would show reasonable results, and it was committed to improving this record in 2013/14.

The future projects would include a colloquium on an academic debate, the Provincial Language Indaba, verification and authentication of various language products, the development and standardisation of terminology. The PanSALB would be conducting awareness advocacy programmes, community outreach programmes, and establishing book clubs and story-telling programmes on all media platforms. The Dr Neville Alexander Language Scholarship would continue. Four provincial language committees would be formed, with the MECs of Arts and Culture.

Mr Zwane reiterated that PanSALB had been tasked with a constitutional mandate that is not adequately funded and therefore sought the intervention of the Portfolio Committee on Arts and Culture.

Adv Feni issues
Mr Zwane gave some background on the matter involving Advocate Feni, who was employed in June 2008 and subsequently suspended on 13 May 2010 and 08 June 2010. The disagreement between Advocate Feni and PanSALB emanated from his dismissal.

Adv Feni took PanSALB to the Commission for Conciliation, Mediation and Arbitration (CCMA) and then the Labour Court, which issued an order requiring PanSALB to retrospectively re-instate Advocate Feni, on the same terms and conditions that governed his employment relationship before his dismissal. When he was reinstated, he underwent an induction programme to assist him to familiarise himself with the changes the organisation has undergone in the meantime, and also to familiarise himself with roles and responsibilities of his position, and to clarify the reporting lines. The organisation had arranged a counseling programme for him, but he refused to attend.

Since his reinstatement he had been making unreasonable demands, through emails and had declared different disputes at CCMA, demanding compensation, had obtained a Labour Court Writ of Execution to freeze the PanSALB bank account and demanded that the bank make payment into the Sheriff’s trust account.

Advocate Feni had threatened employees, but assured those who had approached him that nothing would be done. He had caused disturbances through his negative attitude.

The Chairperson asked if PanSALB had honoured the payment of his salary.

Mr Zwane said it had been honoured.

The Chairperson said she was a fair person and she had assured Advocate Feni that he would be reinstated and get his money, which it seemed had happened.

Advocate Feni said that Mr Zwane had been less than frank in stating what happened. On 26 July 2013, the Labour Court dismissed the review application brought by Mr Zwane. The question of reinstatement then arose. PanSALB asked him to report for duty on 1 September, and he agreed, should the amount owed to him be paid over. He had been forced to obtain a Writ of Execution to get that money, after PanSALB had delayed. Mr Zwane then sought dismissal of the Writ with a declaration that it was null and void, submitting a letter to the effect that the money would be paid. The judge had ordered that the money be paid on or before 15 September, with an order that he be reinstated by 1 October and be paid the equivalent of two months salary. The money had been paid around August.

Advocate Feni continued by saying that he knew, when he reported for duty on 1 October that there would be ‘shenanigans’ and indeed during the time of the labour disagreement, the legal services structures had been restructured, and he was ‘invited’ to join the Office of the CEO. Previously, he had headed all corporate services, which included corporate legal, so to his mind this was not a complete reinstatement. He had brought an application to court, claiming contempt of court on the part of Mr Zwane, because Mr Feni was not in fact reinstated to his previous position, but appointed to corporate legal services, which was tantamount to a demotion. The Labour Court agreed with him and had requested Mr Zwane to come and explain himself. By 2 October the money due to him had still not been paid. He also discovered that the salary was far less than he was expecting. He was told that PanSALB had been instructed to deduct R375 000, granted by a high court in 2011 and tax had been deducted from that amount. He argued his salary could not be tampered with, without his consent, and that tax was deducted twice. There was another problem with the Provident Fund deductions, although he had withdrawn from that when he had resigned, and in any event, more money was deducted than necessary.

Adv Feni denied having threatened staff, although he did concede that he had had an altercation with one employee who had physically wrenched a laptop from him, and this employee had then said that Advocate Feni was in need of counselling. He said that he did not need to be counselled, in terms of the labour laws, as he had done nothing wrong.

It emerged that PanSALB was again using private legal services.

The Chairperson said that this was a practice that she thought had been halted. The whole matter was shocking, and the recordings of proceedings needed to be taken to the Parliamentary Legal Advisers. The Committee had been very clear that PanSALB no longer use private legal services. There had also been an understanding that Advocate Feni would be reinstated to his old position as Head of Legal Service. The idea of tampering with the restructuring of structures had been raised.

Advocate Feni said that restructuring had taken place in the time he had been refused to go back to work.

Discussion
Mr van den Berg said that the Committee could not judge these matters, which were legal issues. This was a matter for the courts, and any non-compliance must be handled by the courts; all that this Committee could do was ask that the court orders be complied with. This issue had probably cost PanSALB a large amount and he was extremely upset about this; private battles should not be fought with taxpayers’ money and the whole saga was a disgrace.

The Chairperson said that by next week Wednesday there needed to be a breakdown of how much the private lawyers had cost.

Mr Ntapane thanked the Chairperson for letting Advocate Feni come before the Committee, as it was important that he had told his side of the story. It had been made clear long ago that the matter needed to be resolved. Something needed to be done, as the waste of taxpayers’ money could not go unchallenged. Mr Zwane should refrain from taking matters to court unless he was willing to pay from his own pocket, and legal advice would probably have told him to settle the issues out of court.

Ms L Moss (ANC) said that it had been intended that the appointment of a caretaker CEO would resolve issues, and not add to them. Mr Zwane had been appointed in order to provide leadership and not to be involved in in-house fighting. The Board needed to be appointed so that PanSALB could have leadership.

The Chairperson asked how much had been spent on private lawyers.

Ms Myambo said that R3 million had been spent on private lawyers.

The Committee registered a strong protest that this was far too much over a personal vendetta.

Ms Myambo said that R180 000 on legal fees was used on all matters within PanSALB, within the financial year.

The Chairperson said that these matters would be taken to the Parliamentary Legal Unit. There was clearly something very wrong.

Mr Zwane replied that he felt that the Committee was taking a defined stance and decision on this matter, despite Mr van den Berg’s assertion that the matter rested with the courts.

The Chairperson became increasingly angry as she said that the Committee had only previously heard Mr Zwane’s side of the story, and had believed him, but now was hearing Adv Feni’s side.

Mr Zwane replied that he had never addressed the Committee before on the Feni matter. When he had received the court order, he had implemented it. He was told to pay him back his salary, as if he had been working all the time, and this was done. He was obliged, therefore, to deduct tax as well as contributions to the Provident Fund. The back pay had not been budgeted for and this had been an issue.

Mr van den Berg said that Mr Zwane had not listened to the courts.

Mr Zwane said he had listened to the courts, and what was being discussed was a CCMA position.

The Chairperson asked Mr Sibusiso Xaba to address the issue. He and the Minister of Arts and Culture had assured the Committee that everything was fine and now it seemed that “he and the Minister were liars” because clearly, it was not. She in turn had conveyed this wrong assurance to Parliament.

Mr Sibusiso Xaba, Director General, Department of Arts and Culture, asked if he could speak at this point, as he would have to leave the meeting shortly. The DAC had been given to understand that Mr Feni had been reinstated. If there was a technical issue with that, then this was another point that would have to be addressed. As far as the Department understood, there was no position called ‘Head of Legal Services’, and it could be expected that in any organisation there could be restructuring. Sometimes, miscalculations or delays in payment “just happened”. The Department was willing to avail its HR resources to help with the various human resources issues that arose. He did not see that the matter was very complicated, and did not see there was any need for the matter to be taken back to court. He assured the Committee that the matter would be resolved. He had not known that the matter had returned to court. In answer to the Chairperson, he asked for two weeks to try to resolve the matter.

Mr Zwane said the matter in court at the moment was the question of the Writ against the bank account of PanSALB. This was affecting the employees. There was not a dispute around reinstatement. There were internal channels that spoke to issues of reinstatement. He said that he had never been instructed by the Committee to reinstate anyone. He had not been present in the meeting where this instruction had been given.

The Chairperson said that this denial would lead to disagreement between Mr Zwane and the Committee, as they supported him in what had been said about resolution of the issues in previous meetings. Advocate Feni should not be trying to ‘black mail the Committee and PanSALB.’ She asked that people leave personal issues out of the matter. She said that the Writ against the bank account meant that Advocate Feni ‘was fighting against us and the state.’ She asked that he withdraw the legal issues, for the sake of South Africa and its citizens. South Africans had fought for everyone to reach the stage where they were, and this was a source of immense frustration for her. She requested that the matter be resolved for the sake of South Africa.

Advocate Feni said at one point he had suspended his litigation against PanSALB and approached Mr Zwane, who had instead fought with him, instead of having a meaningful deliberation. On more than one occasions they had nearly come to blows in the office. Mr Zwane had a vendetta against him. If Mr Zwane was willing to sit down and talk about the matters, he would be happy to move forward. No one had met with him but instead had talked about him, although he had been willing to make himself available for discussion.

Mr Zwane replied that he had performed to the best of his ability, to pay and reinstate Mr Feni. He had no personal vendetta and he was willing to work with the Director General so that the matter moved away from the two parties themselves, and would be happy to negotiate with Mr Xaba. He was willing to work with the Departmental HR employees and the Director General. PanSALB did not merely “fly to court” and since he had taken up his post, there were no matters initiated in the courts; he had simply continued with matters initiated before his appointment. He would move matters forward in the way the Committee suggested, through channels set up by the Director General.

Members agreed that there was no time in which to engage with the Annual Report, and Dr van Schalkwyk requested that the CEO be emailed questions and he reply.

The Chairperson said it was clear that work had been done and there would be support for funding requests.

The meeting was adjourned.