Department of Arts and Culture Annual Report 2013/14 on its public entities

Meeting report

Chairperson's introductory remarks
The Chairperson welcomed everyone and said that the Committee would do whatever it could to assist the Department of Arts and Culture (DAC) and ensure that the Department and its entities, together with Committee Members, worked together to achieve common goals as a unified team.

Department of Arts and Culture Annual Report on Public Entities
Mr Vuyo Jack, Acting Director General, DAC, tabled the 2013/14 annual report on public entities. There were four areas tabled for discussion, which were the performance review, income and expenditure, the report of the Auditor-General, and the status of Councils.

He highlighted some of the key achievements for the year under review. The number of exhibitions per year had increased by 32, the number of educational interactions with schools per year increased from 146 221 to 153 541, the number of projects assisted financially per year – the South African Heritage Resources Agency (SAHRA) -- had increased from 18 to 22, and the number of SAHRA permits issued per year had also increased, from 190 to 200.

The DAC was still faced with some challenges.
- There was a significant decline in projects supported by the National Arts Council (NAC);
- The number of performing arts companies supported by the NAC had dropped from 55 to 47;
- There had been a significant decrease in the local content of films;
- The number of local content scripts developed per by the National Film and Video Foundation (NFVF) dropped from 49 to 37;
- The intangible heritage projects also dwindled by a margin of five.

The Chairperson intervened and asked the DAC about the implications of all the challenges.

Mr Jack raised the issue of increased production, but emphasised that production was not at the same rate as the increase in audience. This posed a very concerning and disturbing challenge to the DAC, because production was increasing faster than the audiences. There was need to improvise better strategies to increase the audiences. He raised the issue of digitalization, and said that digitasation was a good investment which had also increased. Digisatisation was important, because books did not lose their value. There had been a significant drop in books donated, from 43 210 to 7 600.

With PANSALB, there had been consistency in the number of language policies reviewed per year, and a significant rise in dictionaries and CD’s -- from zero the previous year, to 11 in 2013/14. More discussion was needed on PANSALB over key problems identified by DAC.

The Department reported on the income and expenditure trends for the past 5 financial years. Expediture had increased from R1.1 billion to R1.4 billion in 2013/14.  The surplus had declined from R191 million to R9 million in 2013/14. The challenge was on the mechanisms to curtail expenditure since there was no correlation, as had been pointed out in the previous meeting.

The report by the Auditor General painted both good and bad pictures. Two entities had clean audit reports, but the unqualified reports had decreased from 14 to nine, thereby increasing the qualified opinions to seven. However, there was a disclaimer for one entity – PANSALB -- in 2013/14. In other words, there had been some progression and some regression in the entities. Some of the findings for disclaimer and qualifications were as follows:

- Insufficient audit evidence to support payments to trade and other payables (NAC);
- Insufficient audit evidence to support a post-retirement Medical Aid Library, and the use of inaccurate data to calculate average retirement age and accrual of benefits for retired employees (National Library of SA)(NLSA);
- Property, plant and equipment not accounted for in terms of GRAP 17 (NLSA, National English Literary Museum (NELM), Ditsong Museums of SA (DMSA), and PANSALB);
- Insufficient audit evidence to support heritage assets (NLSA);
- Insufficient audit evidence to support payments on conditional grants (Nelson Mandela Museum)(NMM);
- Leases not classified as financial leases, as required by GRAP 13 (PANSALB)
- Insufficient audit evidence to support irregular, fruitless and wasteful expenditure disclosed in the annual financial statements (PANSALB)

Mr Jack said that money was being paid, although there was nothing to support why and for what the money was being paid. There was lack of completeness.  Windybrow Theatre was an issue that was discussed on its own entirety. In 2012, the PANSALB board had been dismissed and reappointed in May 2014. Some figures did not balance, and little supporting evidence was given. A task team had been appointed to solve issues and implement immediate solutions. There was a need to bring management stability, since PANSALB did not have a CEO. The acting CEO was on maternity leave. A forensic audit was to be instituted to determine what had happened in the past. This would determine the action to be taken against the wrongdoers. A lot of litigation had taken place, claiming the illegality of the external structure and the lack of following due process. The task team was to plan a turnaround strategy to stop the bleeding of PANSALB.

Discussion
The Chairperson said that the DAC was only alleging the lack of sufficient funds to make tangible progress. She raised the fact that it was already two months into the financial year, and asked whether or not there was a budget in place for board members within PANSALB. She needed more clarity on the issue. She was disgusted with the report, looking at the work that was not being done and the implications for ordinary people. She asked why the Department funded less money when it was not supposed to.

Mr J Mahlangu (ANC) asked whether the DAC was doing anything to preserve the history and heritage of South Africa lying in Zambia, Angola and Tanzania. The failure to trace the nation’s heritage in other countries resulted in finding no meaning in the nation’s heritage. The DAC had mentioned the progress made in KZN and Limpopo on name changes. He acknowledged that the issue of name changes was emotional, but it should be discussed once and for all. The failure to retain some of the names would leave South Africa terribly skewed, and called for a balancing effect. He emphasised that the country’s landscape should reflect the nation’s heritage. Transformation should not be done recklessly.

Mr Vusithemba Ndima, Deputy Director General, Heritage Promotion and Preservation, DAC, acknowledged that the Department had a responsibility not to forget sites outside South Africa which were part of the nation’s heritage. He said there was work in progress in Matola, Mozambique, the upgrading of graves in Mazimbo, Tanzania, and visits had been made to Angola and Kolfe Barracks, Ethiopia, ensuring that the history and heritage were preserved. He could not agree more with Mr Mahlangu on the issue of name changes. There was a need to strike a balance between the transformation agenda and an agenda that preserved the nation’s heritage.

Dr P Mulder (FF+) concurred with Mr Mahlangu on the need to preserve the nation’s history. He commented on the Mozambique monument, and raised the difficulty of keeping a monument administered in another country. He asked how the DAC was keeping up with the Mozambique monument.

Mr Ndima said that the DAC had learnt its lessons and agreed with Dr Mulder’s assertion that there was a great challenge in administering monuments outside South Africa.

Ms A Matshobeni (EFF) asked about progress at the Constitutional Hill precinct.

Mr Ndima said that Constitutional Hill was under the management of the City of Johannesburg, so the DAC was not necessarily directly involved.

Ms V Mogotsi (ANC) said Members were hesitant to ask questions because the report was shocking. She asked whether the target on job creation had been achieved. The decrease in education was worrisome, as education was viewed as a pillar of development in the country.

Ms Matshobeni said the regression in audit outcomes was problematic. More entities had qualified reports, which questioned the ability of the DAC to improve. Some entities had fruitless and wasteful expenditure, and she needed clarity on why disciplinary action had not been taken. The Minister had not appointed boards at five entities -- why was that so, with some boards having to rely on acting CEOs? The Minister was not taking the matter seriously and the Committeeneeded clarity on those issues.

Mr T Makondo (ANC) asked why there had been a decline in the performance of the entities. The situation was alarming, especially in performing arts, because a decline in that area meant less job creation. Did the DAC have a plan to assist entities? A lot had happened at PANSALB, and he needed to understand what had happened and what would happen. The Acting DG needed to take responsibility and give a quarterly briefing on progress at PANSALB. He asked that since the Acting CEO for PANSALB was on leave, who was in charge?

The Chairperson said she needed clarity on whether the Acting CEO of PANSALB was actually on maternity leave, or had resigned. She recommended the DAC should give the Committee a clear plan and time frame, so that monitoring and follow up at PANSALB could be done. She was disheartened, and described PANSALB as “an entity in Intensive Care Unit.”

Ms S Tsoleli (ANC) discussed the income and expenditure trends said Committee Members would have to assess whether or not they were in line with standard norms and requirements. She wanted to know the audit outcomes of entities in previous years in order to ascertain progression or regression. She asked the amount of irregular expenditure which had been incurred.

Mr Mahlangu said something was not right with the DAC, and he was concerned about the under-achievement of the entities. Corrective measures were needed, especially at PANSALB, in terms of the Public Service Act, as it painted a bad picture internally and externally. There was a need to trace the mess in PANSAB back to its source, and the role DAC had played in PANSALB. He warned that the two CEOs would have to come before Committee and account for every detail of what had transpired. He urged the delegation not to take the matter personally. The differences should not make the entities become stagnant. He urged the DAC to learn from South Africa’s history and emphasised the need for financial intervention. He would wait patiently for the Acting CEO to give birth, and then the perpetrators must be treated hastily. He was happy to hear that the DAC intended to stop the bleeding at PANSALB. He encouraged the Department to be proactive.

Dr Mulder agreed with Mr Mahlangu, and said the DAC needed external assistance to facilitate recovery in those entities which did not do well. He discussed the importance of implementation, while thanking the Department for its detailed performance overview. He emphasised that local content films were very important. He questioned whether the DAC and the Department of Trade and Industry (DTI) worked together, or if the DTI did its own thing and the DAC another. He wanted clarity on the role of the two departments.

Mr G Grootboom (DA) was concerned about the expenditure on court cases, and needed clarity from the DAC on efforts to recoup the funds.

Ms N Bilankulu (ANC) was concerned about the numbers of development agencies. She questioned whether the numbers were merely to please the Committee Members, and said the issue of numbers should be more indicative in future. She asked what measures the DAC would be taking to remedy the problem of audit findings.

The Chairperson raised the issue of libraries where the DAC had donated fewer books, and asked for the location of ten book clubs.

Ms Monica Newton, Deputy Director General, said she was distressed about the general decline in audiences. There was incredible competition for attention in the entertainment market, and declining audiences were seen, irrespective of what the DAC offered. She was grappling with a sector that was changing very rapidly. The number of productions had increased, but the Department still saw declining audiences. The reality was that having more productions did not generally generate more audiences, and vice versa. The number of festivals had increased due to their nature -- they were multi-disciplinary and attracted a bigger and more diverse audience.

The Chairperson asked what the DAC was doing on audience development. She asked if the DAC included theatres there had been excluded before.

Ms Newton raised the issue of funding as impeding progress in taking productions to the people. Although festivals brought in a large audience, they had been struggling recently. On the issue of theatres, she said this was done on a case by case basis, and the lack of civic theatres made the problem much more challenging. However, the national theatres had started working together, which would boost the sector.

Mr Jack added that incentives and discounts had been tabled to encourage audiences as an experiment as part of the Mzansi Golden Market.

Ms Maseapo Kganedi, Deputy Director General, Institutional Governance, said the DAC had set up a task team to assist PANSALB. She confirmed that the Acting CEO was on maternity leave, but before she had gone on maternity leave, she had resigned. The boards of a number of entities had expired in September 2014. Advertisements for recruitment, short listing of possible candidates and interviews were at an advanced stage. Recommendations were made to the Minister to appoint new boards.

The Chairperson asked why DAC was still receiving recommendations in October when the boards had expired in September. She said the DAC was putting the Minister on the spot, and warned the delegation that the issue of PANSALB was a matter of urgency. She questioned why the process was still incomplete.

Mr Mahlangu recommended that the DAC identify areas where people had concerns -- for example, those had been employed without due process, and who those people were. The implications of those actions must be outlined. The instability at PANSALB was because of the division between the old and the new boards.

Ms Mogotsi asked if the DAC knew the requirements stipulated in the Public Finance Management Act (PFMA). She warned that another disclaimer was on its way. She further pressed the question; who is the Acting CEO?

Ms Kganedi did not seem to answer who the Acting CEO was, but talked more about a financial injection for PANSALB.

The Chairperson intervened, telling Ms Kganedi that she was not addressing the problem, which was to tell the Committee how the DAC was going to address the issue of people who were not supposed to be employed at PANSALB, and the implications.

Ms Tsoleli completely agreed, and said that the Department had still gone on to employ other people. There was a need to give a clear picture of what had to be done by the DAC.

Mr Mahlangu ridiculed PANSALB as being super big-headed and lean at the same time, hence the result was instability. The new employees did not have the requisite qualifications for PANSALB, and there was no CEO. He warned that the Committee would not be kind and a line would be drawn.

Dr Mulder asked what the Department’s core business was.

Ms Kganedi revealed that the Acting CFO was Mr Vukile Mbilini. She said employees who did not support the role of PANSALB’s mandates would be retrenched.

Ms Mogotsi asked if the DAC would also change the constitution if it changed the mandate of PANSALB.

Ms Kganedi said the DAC was aligning the mandate to be consistent with the constitution. When PANSALB was sinking, where was the DAC? She urged the delegation to realise it was business as usual, and not time for playing games.

Mr Makondo asked if the person who had resigned was back at PANSALB.

Mr M Rabotapi (DA) asked who the CEO was. He wanted to ascertain if Mr Vukile Mbilini was the Acting CFO or CEO. He said it was better to know the CEO rather than the Acting CEO, as it turned the department into a department of actors.

The Chairperson said no finality had been reached, much to her disappointment. She said the Department lacked urgency and that was the reason PANSALB was in a mess. The DAC should be supporting PANSALB.

Mr Sakiwo Tyiso, Chief Director: Monitoring and Evaluation, said SAHRA had developed a turnaround strategy which had guided it from a disclaimer to an unqualified situation in 2013/14. The same approach used by SAHRA would used by other entities which were suffering at the moment.

The Chairperson warned of a repetitive pattern occurring again and again, where some entities progressed and others regressed. She recommended that the DAC use a holistic approach which encompassed all entities together. It must have learnt a lesson from SAHRA.

Mr Tyiso shared the same sentiments and said re-configuring the CFO forum would strengthen the entities when they met to discuss the issues related to compliance, among others.

Mr Conrad Greve, Chief Director, Corporate Services, was able to provide employment equity figures for the department. The DAC had set a target of 50% for employment of women at senior management and had achieved 44.8%, while a target of 2% for people with disabilities was shy by 0.65%. However, in the current year both targets had been exceeded -- by 2% and 0.4% respectively. Mr Greve emphasised that the DAC had its own employee systems programme regulated by the Public Service Act and the Public Service Regulations. Entities had their own employment policies and legislation. He would provide the Committee with statistics on employment equity.

Ms Newton said the National Video Foundation had slightly outdated video equipment, and service provision was on a small scale. The DTI focused on a larger commercial scale, although funding had not been readily available. There was concern by the Minister on the need to support local content.

Chairperson asked where funding had taken place. A response was not given.

Mr Tyiso could not say where the book clubs were located, as he did not have any information.

The Chairperson reiterated the sentiments echoed by fellow Committee Members, that full information must be given. She asked the DAC if it had any targets on book clubs and urged the Department to have information at its disposal in order to answer questions vividly and convincingly.

Mr Rabotapi asked about the amount spent on the festivals.

Mr Tyiso said he was uncertain, but with PANSALB it was R38 million, which was fruitless and wasteful expenditure. There was a need to re-structure to recover that lost money.

Mr Jack promised to give a report on the previous and current irregular expenditure.

Mr Tyiso said the investigation of the irregular expenditure was a work in progress, with forensic auditors being brought in to trace the root problems, and to prevent them from recurring. This helped accountability and the bringing to book of the wrongdoers.

Ms Matshobeni asked for the names of consultants the Department had used during the 2013/14 financial year. She asked why the consultants had been paid as “goods and services.”

Mr Jack said the previous consultants’ contract had expired. For the current consultants, the Department would consult with them to plan the budget and determine if this provided value for money. If this was not the case,, other channels would be used to prevent civil or criminal litigation. The R Kelly case was in court. The Department had been offered a settlement in terms of recovering the money. DAC was still looking at the settlement offer, and the case was still ongoing. The payment to consultants as “goods and services” was purely for tax purposes.

Mr Mahlangu noted that the DAC had denied any dealing with R. Kelly, and did not want the DAC to be involved in those matters.

Mr Jack said that the problems with irregular expenditure and compliance had some root causes. There were gaps in supply chain management which had been responsible for a large amount of irregular expenditure. A lack of planning was among other problems identified by the Department. Contract management was also problematic. Training was being carried out to solve some of the major problems. The system was inadequate in respect of compliance and consequences.

The Chairperson explained that the issue of interpretation of accruals was crucial and problematic. There was a need for clarity in that regard.

Mr Mandla Langa, Financial Director, DAC, explained on the need for the completeness of disclosures. He said some invoices had not been submitted on time, and some had been brought only after the close of the financial year.

Mr Jack said that this was due to lack of planning, and there was a need to address that challenge.

Mr Rabotapi said he needed a breakdown on the costs of structural developments at Windybrow.

Ms Kganedi explained that Windybrow was involved with the Heritage House and Theatre, where both constructions were incomplete. The CEO and the CFO had been dismissed for irregular expenditure and had taken the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA). A criminal charge had been filed, investigating R60 million which was never spent.

Dr Mulder, speaking softly, alluded to the Nkandla scandal, which raised laughter in the room.

The Chairperson assured Members that they would not be drawn into the Nkandla scandal.

On the question of flags at schools, Mr Ndima acknowledged that there was need to do more teaching on the importance of national symbols. Contacts of service providers would be provided in due course. The Deputy Minister was not present, although she had promised to come, to explain on the actual roll out of flags in schools.

Mr Grootboom asked whether art teachers were paid by the Education Department or DAC.

Ms Mogotsi asked about a 78-year-old artist in Danzani, and how he was being paid.

Mr Grootboom asked if the DAC was giving service providers money to dump the flags.

Mr Ndima said that the Department of Education guided the DAC, and should provide education on national symbols such as flags. Service providers just installed the flags, and nothing else.

The Chairperson asked if the DAC was paying R3 000 to dig a hole and install flags.

Ms Tsoleli said she had not been taught anything about flags when she was once a teacher. She said, flags were always left flying every day unless they were instructed to lower them due to the deaths of prominent people. Other than that, flags were left flying every day, week in and week out. She said the Department should do more on the matter.

The Chairperson said the Department needed to look at the way it spread its resources. She urged it to involve the provinces in what it did. Thorough introspection was needed, and weak areas had to be strengthened. She urged the DAC to engage with PANSALB through monitoring, advising and support. The issue of the budget also needed to be addressed.

The meeting was closed.