PanSALB & Performing Arts Centre of Free State: status report
Arts and Culture
16 August 2016
Chairperson: Ms X Tom (ANC)
The Department of Arts and Culture Deputy Director-General of Institutional Governance gave an overview on the status of the Performing Arts Centre of the Free State and where the DAC has intervened.
The Interim CEO of PACOFS gave a presentation on the details of PACOF’s status. PACOFS had received an unqualified audit outcome in 2012/13; 2013/14 and 2014/15. It received a qualified outcome in 2015/16. There has been an improvement in the attendance rate of council meetings as this was 43% in 2012/13 and was 85% in 2015/16. Challenges relate to relations with provincial and local government counterparts and the union Salipswu that is trying to be recognised but does not represent the majority of the staff.
The DAC was to provide an update on the South African Roadies Association (SARA) settlement agreement. However, the DAC Acting Director General was unable to attend the meeting as he was unwell. The DAC DDG: Institutional Governance said she was made to understand that DG would brief the Committee on this matter. She understood that she would not have to deal with the matter. The Chairperson rebuked the DAC saying that it knew that the South African Roadies Association was on the agenda and that it had to update the Committee.
The Department of Arts and Culture Deputy Director-General of Institutional Governance gave an overview on the status of Pan South African Language Board (PanSALB). She reminded the Committee that the previous council had been dissolved and one of the reasons was it had not performed as it should have because it had to spend money and time dealing with lawyers, rather than with core matters of the Annual Performance Plan.
The PanSALB CEO provided a more detailed report. Looking at the 15 year expenditure trends one could see that the organisation was not operating as it should have been and recommendations of government were not being implemented. PanSALB is facing major financial issues and is technically insolvent. Audit outcomes for the past three years were: 2012/13 PanSALB received a qualified outcome; in 2013/14 there was a disclaimer; and in 2014/15 there was also a disclaimer.
One of the challenges is that it is not clear whether PanSALB is a ‘constitutional institution’ and this needs to be clarified by the Committee, the DAC and PanSALB. In the PanSALB Act, PanSALB is described as an independent organ of state. The entity finds itself in a Catch 22 position, because of the ambiguity over whether it is a ‘constitutional institution’, it means that it does not know to whom it is accountable. A further challenge is the amount of money owed for litigation as the total outstanding amount is R22 billion. PanSALB apologised to the Committee for its ineptness and sheer abandonment of the language mandate.
Members were concerned that PanSALB had bypassed DAC and gone to Treasury and Parliament and asked for funding; that vacant positions at PanSALB were not being filled by those staff members who were being dismissed which would allow employees that would otherwise be dismissed be absorbed back and would prevent litigation about their dismissal; the amount of litigation involving both entities and the huge amount of money PanSALB still had to pay for litigation.
The Chairperson welcomed everyone and said that the Committee encourages people to be open and honest with them and to add value to the meeting. She said that the Committee was "not making anything personal" when they asked questions but rather that when members asked questions it is for the benefit of the people that they serve because they are an organisation that functions for the public good.
The Chairperson said the second item on the agenda was an update by the Department of Arts and Culture (DAC) on the South African Roadies Association (SARA) settlement agreement. She had been receiving a lot of emails and smses about the settlement and the Committee wanted to hear from DAC about how far they are in implementing the agreement and what the challenges are that DAC is facing in this matter going forward.
Ms Kelebongile Sethibelo, DAC Deputy Director-General: Institutional Governance, said that she was made to understand by the Acting Director General (ADG) that his unit would brief the Committee on SARA. The ADG had written a letter explaining that he was unable to attend the meeting and she understood that she would not have to deal with the matter in this meeting. She did not know if the Committee had received this letter.
The Chairperson rebuked the DAC saying that it knew that the SARA settlement was on the agenda and that it had to update the Committee. The fact that the DG could not attend the meeting did not mean that the Committee need not do its work. The Committee had received the letter from DAC but that situation was totally unacceptable as the Committee needed to get information from DAC about the progress made on the SARA settlement. All the Committee members were receive these taunting emails and smses about the situation and felt abused by these emails and smses.
Ms V Mogotsi (ANC) said that she did not know what letter Ms Sethibelo was referring to and asked what specifically was in the letter. She asked if this was simply a letter stating that DAC would not be briefing the Committee on the status of the SARA settlement. She also asked if the Committee had received the letter. She said that DAC should have known that they would be presenting an update on the SARA settlement and that there is no excuse for them not to do so. According to her understanding, the request for DAC to brief the Committee on the status of the SARA settlement had been sent to DAC at least a week ago and everyone involved knew that DAC was coming to brief the Committee as it was on the agenda.
Ms Sethibelo said that the relevant programme manager would normally report to the Committee on the programmes and units that they are responsible for within DAC. When the DG had asked her to present the update on the SARA settlement to the Committee she had told him that she was not responsible for SARA and indicated that it would be more appropriate for him to present this to the Committee at a later stage.
The Chairperson said that the fact that the DAC was not able to update the Committee on the SARA settlement showed the Committee that the DAC is not well organised. If they were well organised, the Director General (DG) should have been able to ask the Deputy Director General (DDG) to represent him to the Committee in his absence. She said that Ms Sethibelo represented the whole of DAC and not just a unit within it and that the DAC is made up of all its units. This was a serious problem as Ms Sethibelo should have been briefed on what she should have been presenting to the Committee. It was not acceptable to simply write a letter about this to the Minister.
The Committee would get a briefing on PACOFS from DAC next and then PACOFS would give a presentation providing detail on its status. When the Committee had gone to PACOFS on an oversight visit, the Committee saw that there were serious problems within PACOFS at the time. In the same way that the Committee has identified PACOFS as a very important institution, it has also identified it as a very problematic institution.
Overview of status of PACOFS by Department of Arts and Culture
Ms Kelebongile Sethibelo, DAC Deputy Director-General: Institutional Governance, said the presentation document shows income and expenditure trends for the last three financial years. There has been a decline in terms of the deficit. In 2013/14 PACOFS generated R41 million and spent 48 million. In 2014/15 it generated R41 million and spent 44 million and in 2015/16 it generated R44 million and spent 46.1 million. There was a deficit of R1.8 million between income generated and expenditure in 2015/16. With regard to audit outcomes, PACOFS had received an unqualified outcome in 2012/13; 2013/14 and 2014/15. It received a qualified outcome in 2015/16.
Page five of her presentation shows the number of council members, the number of meetings held and the attendance rate at council meetings. There has been an improvement in the attendance rate of council meetings as this was 43% in 2012/13 and was 85% in 2015/16. However, there are still serious problems relating to meetings as there was only one audit committee meeting in 2015/16.
On the appointment of executive management, the former CEO has been suspended and currently PACOFS has an interim CEO, Ms Annabelle Lebethe, who was appointed on 1 June 2016 for a period of six months. The CEO and Artist Director positions are still outstanding. The CFO position is also outstanding and needs to be advertised urgently. The case regarding the suspension of CEO should be finalised by the end of August.
A further challenge relates to relations with provincial and local government counterparts. DAC has intervened by following up on how partnerships are created in the Province. Relations have improved and partnerships are forged with the Provincial and Local Government through MoUs.
One of the biggest challenges relating to audits is that there is no internal audit function to do quality assurance before Auditor General South Africa (AGSA) does the audit. This function should be institutionalised. In addition, two executive positions, CEO and CFO, were acted upon by one personnel, Mr Salamani. Also, the CEO's appointment was without delegations and this led to all transactions he had done being irregular. A further area of concern is consequence management as irregular and fruitless and wasteful expenditure was not investigated.
Commenting on the presentation, the Chairperson wondered how PACOFS hoped to receive an unqualified outcome if it did not have an audit committee. She then allowed PACOFS to give their presentation.
PACOFS presentation on its Turnaround Strategy Progress
Ms Annabelle Lebethe, the Interim CEO of PACOFS, said that a presentation was done to the Committee in April and that this presentation follows on from that one. The Committee had given PACOFS feedback and recommendations after that meeting and that herself and Ms Africa would be talking about remedial actions that have been put in place.
The purpose of the presentation was to update the Committee on progress with addressing matters raised with the Committee since the last report of 12 April 2016; to update the Committee on progress with implementing the Turnaround Strategy; and to update the Committee on governance and strategic decisions to stabilize PACOFS.
A large portion of implementing the turnaround strategy is at an operational level.
It was decided that risk should be included in the audit committee and that the responsibilities of the audit committee need to be aligned. There is no internal audit function but an internal audit is out on tender and was advertised on 29 July 2016 and an appointment would be made by mid September as it is difficult for the organisation to progress without a functioning internal audit.
On the policy environment, policy issues have been raised by the AGSA. Council approved a policy approval framework to fast track the development and approval of policies. The aim is to have policies approved by the end of October 2016.
With regard to Human Resources matters, no performance agreements are currently in place however the process of drafting performance agreements is underway. PACOFS has relied on managers to update job descriptions. Job descriptions need to be created to adapt to the change in the organisational structure and for new positions such as head of corporate services.
Regarding staff meetings, a memo has been issued to staff members informing them of the planned staff meetings for the rest of the year. Management meetings will take place on the first Tuesday of every month and the first meeting was held in June. These meetings will improve the way messages are communicated in the organisation and improve service delivery.
On salary discrepancies, an internal review of the current payroll is being undertaken to find out where those discrepancies exist. A salary benchmarking exercise is also underway.
On qualifications verification of staff, most members of staff have been able to provide proof of their qualifications. Some staff members have not been able to provide copies of their certificates or school results for various reasons; for example the school that they had attended has closed down. These staff members have provided affidavits.
On the lack of skills development, the EE and Skills Development Committee will also be responsible for monitoring the progress of organisational training and there are some staff that are currently undergoing training.
On management/union meetings, a meeting was held on 19 July 2016. However, there was a slight disagreement from management side on representation and a follow up meeting did not continue.
Lack of managerial experience is a further HR matter that needs to be dealt with. One manager is studying towards a post-graduate diploma in Business Administration. Personnel Development Plans will be used to identify areas of individual development.
Low staff morale is also an HR matter of concern. Management has realised that a trust deficit exists. To combat this, a decision has been taken to regularise staff meetings and regularise management/union meetings to deal with staff issues. A further intervention has been to provide support to employees through an external employee wellness programme.
On the relationship breakdown between provincial and local government levels, a management working group has been set up to work on an activity schedule for an MOU with the Free State Department of Sports, Arts, Culture and Recreation (SACR). A draft MOU is being reviewed by the PACOFS/SACR team and the intention is to have a finalised document presented to the HoD and CEO for signature by 31 August 2016.
On operational matters, there has been misuse of funds on certain projects. This is an ongoing problem and management will ensure that service requirements are clearly defined in specification and submission documents. Service level agreements will be signed where appropriate and no contract will be signed without legal review being undertaken. All service contracts will be centralised in Supply Chain Management. Consequence management will be implemented for incidents where managers and staff members do not adhere to controls.
A second operational matter relates to the fact that no revenue is generated from staged shows. PACOFS needs to invest in productions that attract and ‘speak’ to its audiences as some productions are purist in nature. PACOFS has therefore implemented the approach of a venue specific repertoire to cater for different audiences. There needs to be a development of partnerships with DAC theatres such as the State Theatre, through the Performing Arts Institutions CEO Forum.
With regard to the relationship breakdown with the Free State government; a management working group has been set up to work on an activity schedule for a memorandum of understanding (MOU) with the Free State Department of Sports, Arts, Culture and Recreation.
The State Security Agency is handling the management vetting process and interviews have commenced. On the artistic business model, PACOFS is working on rebuilding the brand and reminding the artistic community and larger community of why it exists. Council will approve the revised business model that seeks to, among other things: redefine the artistic repertoire for each space; and present a diversified programme that caters for the different needs of the market. An additional operational matter worth noting is that a second union, Salipswu, has requested recognition from the employer.
Management has drafted and presented the organisational structure to council on 28 July 2016. Critical posts to be filled are the CEO/Artistic Director; and the CFO and Fundraiser.
Areas of concern in the audit outcomes for the past two years are:
1) Leadership as there was no CFO at year end however PACOFS is currently advertising for a CFO
2) Governance as there is no internal audit function
3) Consequence management as irregular and fruitless and wasteful expenditure was not investigated (this will be the first assignment of the internal audit function)
4) A Statement of Financial Position discloses a net loss of R1,759,726.
Mr J Mahlangu (ANC) asked about the organisational structure: how and why this is changing. While he is aware that PACOFS deals with audience development, in view of the SABC’s latest announcement of screening 90% local content, he asked if there is an opportunity for entities like PACOFS to participate in programmes such as those for the benefit of artists. On the lack of formalisation of the relationship between the province and the municipality, this is something that has been lacking for quite some time. He asked why it has taken more than a year to finalise that relationship. This does not make sense to him. He also wanted to see a finalisation of the relationship between PACOFS and the unions.
Mr G Grootboom (DA) thanked PACOFS for their presentation. On the relationship breakdown between PACOFS and the Free State government, he found it difficult to understand why PACOFS does not have a Memorandum of Understanding (MoU) with the Free State DAC and with the municipality. One would expect that they would be working in unison and he asked if the Committee could get details on the MoU.
On the three year performance overview and income and expenditure trends, he asked how, if PACOFS had not achieved 44% of their targets in 2013/14, there was an almost R2 million deficit between income generated and expenditure. He asked what the money had been spent on if PACOFS had not been performing activities related to achieving its targets.
On the lack of revenue from theatre shows, he did not understand why shows were not generating income and asked if all the shows that PACOFS produces are free. The last time he had gone to the theatre he had paid so he could not understand why PACOFS is not generating money from ticket sales.
He asked what the ideal structure or balance should be between salaries and the core business as Ms Lebethe had said that about 50% of income generated goes to salaries.
Ms Mogotsi asked if there was a budget to finalise job descriptions, because a lack of job descriptions will create uncertainty. On the lack of skills development, she asked how many policies there are.
Ms S Tsoleli (ANC) said that PACOFS is one of the most problematic entities that the Committee oversees. She asked how far the process of the suspension of former CEO, Teboho Macholo, was; as he has been suspended for a year. This case had gone to the Council for Conciliation, Mediation and Arbitration (CCMA) once or twice, and one of the managers had refused to testify on behalf of the institution. It is a serious issue if a senior manager did not want to testify on behalf of the organisation. She therefore wanted a written status report on the PACOFS CEO suspension because the Committee wants this matter to be closed. The more cases that go to court, the more taxpayers have to pay for these cases.
Besides the case of the CEO, there are other cases pending and she asked what the status of those cases is. At some stage the Committee was briefed by the PACOFS board that the lawyers representing PACOFS at the time had said that PACOFS was not going to win the case. Why was PACOFS then continuing with the case because taxpayers were having to pay for these court cases.
She asked why no resolution had been taken by the PACOFS board on the CFO. When the Committee had gone to PACOFS on an oversight visit it was told a resolution on the CFO was taken by the board at that time,. She asked PACOFS for a briefing on this.
On the artistic director post that was advertised, she asked what the status of that post is. She had seen the post advertisement which had a March or April closing date for applications. She asked why the advertisement had been withdrawn and a new strategy followed for filling this executive position. On the unions, the Committee has not yet been briefed by PACOFS and she wanted information on whether PACOFS have an agreement with Salipswu. PACOFS could not recognise unions that are not supposed to be recognised. It cannot be negotiating with unions that it does not recognise.
She wished the new CEO and Chairperson good luck as CEOs have not been ‘sticking around’ in the institution for the past 10 years. CEOs would be appointed one day and be gone the next. The management in the institution is highly divided and some of the management are manipulative and habitual liars. The Committee always finds it an unpleasant experience to go to PACOFS on oversight visits because the situation at PACOFS is very bad and the management includes some people who are very manipulative and do not want to see services delivered to the people of the Free State and the country as a whole. She wanted the Chairperson and CEO to apply their minds to the problems in the institution without any negative influence from the management or council. They needed to study the institution and not become a part of the problem.
The Chairperson wished the interim CEO luck saying that the situation at PACOFS is a very complex one but she knew that she and the Council Chair would do a do a good job in the entity. The Committee warns people when they take up positions in PACOFS that it is a difficult position. The Committee does not try to ‘paint a great picture’ of the situation in PACOFS as it knows what is really happening there. Instead, it will tell new executive staff exactly what it has found in the organisation. What Ms Tsoleli had warned the new CEO and council chair about were exactly the problems in the organisation and the new CEO and council chair would find those problems there too. However, the Chairperson knew that they would be able to handle it.
Ms Afrika Msimang, Chairperson of the PACOFS board, replied about the organisational structure, saying there was a combined workshop with the management team in which it was agreed that PACOFS is not delivering on its mandate, so the management team looked at the context that PACOFS is operating in and decided that the organisational structure had to change. PACOFS is already in a position where almost 50% of the income generated goes to salary costs. A discussion was held with the union before council was approached, so that they can also assist in that specific area as this has been a long standing issue, since 2009. The ability to couple artistic and public sector knowledge is nuanced and not readily available, but PACOFS will start the process of specifically looking for the CEO/Artistic Director as the skills required for both of these positions are equally important.
On the case of the suspended CEO, the Chairperson initiated an independent disciplinary process with an independent person presiding over it. Proceedings have been presided over since last year and the hearing was concluded in early July and findings were issued at the end of July. However, the person presiding over the case is still waiting for input from both parties that is needed before he can write a report.
She said the CFO post has been advertised and prioritised and council should make an appointment by early October.
With regard to the relationship with Province, PACOFS has joint programmes, particularly with Province and to a lesser extent with the city. The signing of the MoU is important for guiding how requests for collaboration with other organisations are received. The relationship with the Province is being built at the moment but it is not 100% there yet and hopefully the MoU will help guide it. The MoU will provide a framework for how PACOFS engages with and manages agreements with other institutions. The signing of the MoU will make relationships between PACOFS and other institutions official.
Ms Msimang said the recognised union at PACOFS is Nehawu. When she started her term as Interim CEO Ms Lebethe had a meeting with the South African Liberated Public Sector Workers Union (Salipswu) as they had been requesting recognition. PACOFS then sought legal advice and based on this advice told Salipswu that they have only partial representation and as such PACOFS cannot recognise them in the same way that it recognises Nehawu because it does not represent the majority of the staff. PACOFS is still debating whether to allow Salipswu into the collective bargaining agreements. PACOFS said to Salipswu that it has the right to organise staff but that it does not have bargaining rights until it can demonstrate that it represents the majority of the staff. Salary negotiations were held only with Nehawu and Nehawu is the only union that sits when PACOFS has union / management meetings.
A great proportion of the salary budget, about 42%, goes to services. She told the council that this needed to change and gave council a revised business model that will put service delivery at the core.
To clarify what she had said about reducing the salaries budget, she said that PACOFS is not downsizing the staff complement, but where it has more than one employee doing a similar function and one of them leaves, that employee’s post will not be advertised or filled.
Ms Msimang explained that conservatively, theatres only make back about 30% of the cost of a production from box office sales, that is simply the nature of the industry. Theatre tickets are heavily subsidised and PACOFS never breaks even from theatre specific activities.
On the policy environment, Ms Lebethe and Human Resources will draft new strategies. Each strategy will go to its respective department for approval. For example HR strategies will go to the HR department for approval, finance strategies will go to the finance department for approval, artistic strategies will go to the artistic department for approval.
With regard to job descriptions, PACOFS is currently in the process of costing the new organisational structure to see where the organisation is at before it finalises job descriptions.
On skills development she said that she had initially included a page in her presentation on skills development but that she had decided to remove it from the presentation as she thought that it was too detailed. PACOFS currently has about 50 policies and the bulk is in Human Resources. The number of polices is also going to increase slightly. The core that it is focusing on currently is HR policies and the Turnaround Strategy task team will look at another eight policies.
She had already answered the question about the case of the former CEO. She confirmed that there are some other labour court cases pending and that there is a case that is five years old. About three weeks ago she had received an invoice from a legal firm asking for payment for the PACOFS vs. L Marks labour court case. She replied to the legal firm saying that she wanted a comprehensive report on the case before PACOFS would pay the money. Another case that PACOFS lost is PACOFS vs. Wits. PACOFS took that case under review and is appealing the case but has not yet received a court date.
Follow up questions
Ms Tsoleli asked for more details on why the resolution about the CFO had not been acted on. She asked when this resolution had been reviewed, when it was reversed and why it was not implemented. PACOFS had reported in about March that the resolution had not been taken before the new CEO and Chairperson were appointed.
Ms Tsoleli said the Committee wanted more information on the situation with Salipswu because the explanation that was given was not sufficient. Saying that Salipswu has been trying for some time to be recognised is too vague as this does not specify the actual amount of time that they have been trying to be recognised. She asked how long “some time” could possibly be if the union had only been in existence for six months. She asked how PACOFS could have a workshop with a union that it does not recognise. And it could not recognise them as a union if they did not represent the majority of employees; they were then just a forum of workers that are trying to organise themselves. Having meetings with a union that is not recognised leads to tensions between the organisation and the union that is recognised. The recognised union will be suspicious about what happens at these meetings and what was being said to the union that is not recognised. A similar situation had happened with PanSALB when a union pushed for recognition even though it knew that it would not be recognised by law. When PACOFS has workshops with unions it needs to bring all of the unions together at the same time. When you talk to one union and not another one you have a problem. PACOFS had to be especially careful as it is not a normal organisation. If PACOFS continued in this vein, it would encounter the same problems that PanSALB had experienced with unions.
Ms Mogotsi said that PACOFS had to take numbers into consideration when recognising unions. If PACOFS had 100 employees, for example, then they had to see which union represented 51 of them. It is very important for organisations to take numbers into consideration. She noted that Ms Lebethe had mentioned in her presentation that some low level positions would be shed, such as that of the person selling tickets as tickets were available online. PACOFS must not shed jobs as unemployment is already too high and it would not be shedding jobs in top management.
Mr Grootboom asked what the ideal ratio between staff and services is when it comes to expenditure.
Ms Msimang replied that council’s mandate is to find a recovery plan because the organisation is sick. One of the biggest issues, as the Committee knows, is that the corporate culture has been poisoned by many factors. PACOFS is aware that the Committee has provided guidance on how the Turnaround Strategy should happen.
On the CFO, the reason that PACOFS requested a process of external mediation is because it felt that it would create acrimony within the organisation if it was handled internally. Matters had already arisen from this case and it was obvious that it could not be handled professionally within the organisation. It was also in the interests of finance that this approach was taken. Therefore, a decision was taken to handle this case outside of the council. PACOFS is awaiting feedback on this case.
On the structure of the organisation, she said that members were correct when they asserted that PACOFS has to make sure that employment happens. However, they also needed to inculcate a culture of a good work ethic and that this was difficult because of the current council that is in place and the Committee is aware of how problematic this council is as it has been exposed to the council for a much longer time than she has been. The current setup is so challenging that she feels as if she needs to fire everyone but obviously cannot do that. She thanked the Committee for its patience in PACOFS’s attempt to resolve the challenges that it faces.
On the relationship with the Province of the Free State, she asked members to encourage their colleagues in the Province to give consistent support to PACOFS. It is aware that it has lost the artists in the business when the community of the art lovers stopped using the services of PACOFS and started using the services of the university instead. They are doing this because the university’s services are much cheaper as the university is highly subsidised and is therefore in a position to ask for lower fees. Moving forward she is going to appeal to the Province, and particularly to the Minister of the Province, to show more commitment to PACOFS.
Ms Sethibelo said that in the past council members were chosen by the CEO without being verified and this presented a challenge. What is happening now is that the new members are being taken through an interview process. She decided that this was necessary because she has dealt with council members before who were not mature enough to fill that position. When this had happened she had asked the CEO how they could deal with council members who were not mature enough to fill those positions.
Ms Lebethe said that after a thorough consideration of the context in which the entity finds itself, it was decided that the ideal structure is one in which the strengths and functions of both the CEO and the Artistic Director are considered to be equally important, so therefore a decision was taken to combine the two roles and not proceed with the Artistic Director position that had been previously advertised. She added that Salipswu is not recognised but it had the workshop with them because Salipswu wanted to engage with PACOFS concerning how it could be recognised.
Ms Tsoleli said that even though PACOFS may want to recognise everybody when it comes to unions, there is an Act that governs who can and who cannot be recognised. The Committee would appreciate it if PACOFS goes back and looks at that Act. She asserted that the Committee is there to help PACOFS and wants to see the continuation of the organisation. Members would take PACOFS on board and promote it to their colleagues in the Free State.
The Chairperson said that members realise that they must not try and push forward their own agendas as the Committee is not about the individual members, it is about serving the public. She was sad to admit that DAC has been dragging its feet because it has not achieved what it needed to achieve in the last five years. But now DAC is moving as it should be again. She reiterated that the Committee was not attacking or against anyone or any entity but that it said things so that entities would do the things that they were supposed to be doing. She hoped that this meeting had given the entities more information to assist them to be able to move forward. As the DAC and PACOFS, one cannot see everything so the Committee is there to be their ‘eyes at the back of their head’, so to speak. As the Committee is able to see issues objectively, from the outside, it is better able to see what is going on and is therefore able to advise the entities. She emphasised that if PACOFS succeeds then the people succeed. She therefore hoped that PACOFS would work together with the Committee for the benefit of the people.
She thanked PACOFS and the DAC for their presentations and said that the Committee was then going to hear a presentation from DAC giving an overview of PanSALB and a presentation from PanSALB on the details of its status. PanSALB was the Committee’s baby from day one, and as any mother wants a baby that grows up, the Committee wanted PanSALB to get to the stage where it can be independent and can do things for itself. However PanSALB is still ‘breastfeeding’ and she does not like the fact that it is not independent.
Overview of status of PanSALB by Department of Arts and Culture
Ms Sethibelo started by reminding the Committee that the previous council had been dissolved and that one of the reasons why it had not been able to perform as it should have, is because it had to spend money and time dealing with lawyers, rather than with core issues related to the Annual Performance Plan.
The presentation shows an improvement in performance. For 2015/16, 82% of targets were achieved and 12% were not achieved. In 2014/15 and it achieved 73% of its targets and 27% were not achieved. This was compared to 2013/14 where PanSALB achieved 56% of its targets while 44% were not achieved.
Income and expenditure trends were shown for the last three financial years. There was a surplus of R4.2 million in 2014/15 because in 2014 there was an increase in the government grant to R95 million and PanSALB incurred surplus due to the dismissal of 40 employees in December 2014. The entity therefore managed to save R4.2 million. In 2015/16 the income was R92 million, however the deficit is R7.3 million. On the dismissal of 40 employees in December 2014, no provision had been made for this liability should the dismissed employees win their case.
On audit outcomes for the past three years, in 2012/13 PanSALB received a qualified outcome; in 2013/14 there was a disclaimer; and in 2014/15 there was also a disclaimer. DAC will engage with PanSALB on the audit outcomes.
On the status of board appointments, the legal matter challenging the dissolution of the previous board is still before the court. Relevant papers have been exchanged between the parties and DAC is waiting for the matter to be heard. Legal opinion was sought with regards to appointment of the new board. A legal opinion was given to the executive authority to proceed with the process of appointing a new board as the matter outweighs individual interest of the dissolved board members. An advertisement was published in the national newspapers (the New Age and Sunday Independent) in all official languages, calling for nomination, with a closing date of 5 August 2016. Advertisements in all official languages were published in the government gazette with the closing date of 21 August 2016. The difference in dates is due to the delay in publishing the government gazette. All nominations will be forwarded to the Committee for further processing.
On the status of management, the two posts of Chief Financial Officer (CFO) and Head of Languages have been filled. There has been litigation and the dismissal of employees is still pending in the Labour Court. Some of the employees approached PanSALB to negotiate for settlement. DAC has not received information from PanSALB on this matter. A request for financial assistance was submitted to the National Treasury by the PanSALB CEO. National Treasury referred the request to DAC for a submission.
The Chairperson said that the Committee would then get a presentation from PanSALB and handed over to PanSALB for their presentation.
Dr Rakwena Monareng, CEO of PanSALB, thanked the Committee for the opportunity to present to them and said that in the presentation he would discuss where PanSALB is currently, the desired future state and what needs to happen to get the organisation from where it is now to where it desires to be.
He started the presentation with a prelude and then took the Committee through some of the entity’s anecdotal highlights. He directed attention to the diagram on page nine of the presentation, showing the concentric coaxial structure of the entity. Aspects of PanSALB’s work include: Language Development and Use; Equitability of Language Use; Linguistic Human Rights; Language Research; and Language Development. Of these, it focuses on Language Development and Use.
PANSALB’s mandatory delivery organs are PANSALB’s management and staff; National Lexicography Units (NLUs); Provincial Language Committees (PLCs); and National Language Bodies (NLBs).
The programmes for the 2015/20 Strategic Plan are: Language Use, Development and Equitability; and Administration and Institutional Support. These are the focus of the core.
Language Use and Development focuses on the activities of the LSUs, NLBs and PLCs. The Equitability of Language Use programme focuses on placing previously marginalized indigenous languages in public and private institutions. The Linguistic Human Rights programme focuses on conducting relevant research into language related issues in collaboration with reputable research institutions or persons.
With regard to the Administration and Institutional Support programme, finance and supply chain management services are two areas that PanSALB will be focusing on.
Page 20 of the presentation clarifies the essence of PANSALB as a ‘constitutional institution’, meaning that it cannot be referred to as a public entity. DAC, through its legal division, requested legal opinion with regard to its position with PanSALB. This clarity was sought so that PanSALB could progress without confusion. He appealed to the Committee to assist in helping to clarify PanSALB’s position. This would create space for PanSALB to determine what it needs to be doing because it might be seen to be underperforming as it is being asked to achieve ends that do not relate to it. This was not about blaming other people or entities but merely about achieving clarity for PanSALB.
On the tenets of PanSALB’s constitutionality, Section 4 of the PanSALB Act states that PanSALB is an independent organ of state, only subject to the Constitution and this Act and accountable to Parliament. The Public Finance Management Act (PFMA) Schedule 1 lists constitutional institutions, which includes PanSALB, among other institutions such as the Public Protector and the Municipality Demarcation Board. In the Constitution, in Item 20 of Schedule 6 (Transitional Arrangements), it states that PanSALB is among the institutions that support democracy (it is 8th on the list).
Section 36(2) of the PFMA states that (a) the head of a department must be the accounting officer for the department; (b) the Chief Executive Officer of a constitutional institution is the accounting officer for that institution. The issues regarding the essence of PanSALB as a ‘constitutional institution’ and the tenets of its constitutionality are issues that he wanted to discuss with the Committee so that these issues could be clarified and PanSALB can know where it stands going forward.
Dr Monareng presented the financial requirements for the fulfillment of PanSALB’s mandate. Administration and Institutional Support requires R33 million but only R18 million could be allocated, resulting in a shortfall of R15 million. Language Use, Development and Equitability requires R133 million but only R73 million could be allocated, resulting in a shortfall of R60 million. The total shortfall for both programmes is R75 million.
He provided a summary of PanSALB’s litigation amounts. R18.2 million still needs to be paid relating to former employee litigation and R3 million has been settled. The former CEO has demanded his salary of R1.3 million and PanSALB owes the Department of Justice R2.8 million. The total outstanding amount that still needs to be paid for litigation is R22 million.
With regard to the impact of the National Lexicography Units’ unfunded financial support on PanSALB, each of the NLUs was directly given R100 000.00 by Treasury to establish themselves individually as Section 21 companies so that each generates income and stands on its own as a profitable company whose sustenance shall, beyond the year of inception, depend on the performance of each within the defined business realm.
Despite not being provided with funds, PanSALB was compelled to carry the financial responsibility of the units. In desperation and hoping that funding would be advanced for this responsibility, it has been compelled to divert a substantial amount of money originally and officially budgeted for the PLCs and NLBs, resulting in the accrual of a deficit since 2001 hitherto. The annual increase of this “borrowed” allocation to NLUs, incrementally gnaws to extinction the financial capacity of PLCs (Provincial Language Committees) and NLBs (National Language Bodies) to carry their mandated responsibilities.
The 15 year allocation/expenditure trend showed Treasury’s annual allocation to PanSALB and PanSALB’s allocation to the National Lexicography Units. The total allocation to NLUs since 2004/5 is R155 million. The overall percentage of the money that goes to NLUs is 22%.
PanSALB is technically insolvent. PanSALB had approached DAC and requested a meeting to ask for financial assistance and advice. DAC had promised that it would be able to assist in this regard however this assistance was not forthcoming. Hence PanSALB ended up paying money on its own. The route that it took to try and get out of the mess that it is in was to approach the DAC and give them the story, however, when money was not forthcoming from DAC, Dr Monareng had ultimately had to write a letter directly to the Minister asking to have a meeting with the Minister. The Minister said that he would meet with PanSALB and in his reply indicated that no financial request was submitted by PanSALB.
The SA Constitution, the PFMA and the PanSALB Act aver PanSALB as a ‘constitutional institution’. The establishment of the Office on Institutions Supporting Democracy (OISD) upholds this stance. PanSALB requests that the Committee and OISD reaffirm this point in principle and expression to government departments so as to put end to the existing misconception or misreading that treats PanSALB otherwise. This is imperative as it shall maintain PanSALB’s integrity, credence and confluence in executing its constitutional mandate independently. In the meantime, PanSALB is also asserting this stance. PanSALB requires urgent financial intervention and requests that the recommendation made by both the Finance Minister in 2011 and the Review Committee with regards to the transfer of NLUs be acted upon to alleviate PanSALB’s state of being technically insolvent. There needs to be a review of the PanSALB Act to align it with the PFMA and the Constitution.
He thanked the South African Language Users for their patience and goodwill throughout the past seven years of PanSALB’s lull, ineptness and sheer abandonment of the language mandate that the Constitution entrusted it with. He consequently, and in unison with the rest of the PanSALB team, pronounced its deepest regret and humbly requested the Committee’s kind acceptance of its apology.
Ms Tsoleli thanked Dr Monareng for the presentation and said that when he does analysis and introspection he does not hide the problems that PanSALB is facing. She had hoped that PanSALB would have been able to improve the situation related to the amount of litigation it is facing but even the board is taking the institution to court. Things in the institution would have to change drastically if it was to achieve the desired results.
She asked from Dr Monareng why PanSALB could not hire people from within the entity to fill vacant posts as there were employees that were being dismissed. This way it could avoid law suits related to dismissals. She asked whether advertisements for posts were advertised internally and whether current employees could apply for these posts. She asked if PanSALB was going to be able to move forward concerning the amount of litigation that it was currently facing. It needs to get to the point where people stop taking the institution to court.
Regarding the PanSALB posts that are advertised, she asked again why these posts could not be filled by employees who were technically still employees of the institution. This would allow employees that would otherwise be dismissed to be absorbed back into the institution and would prevent litigation relating to their dismissal. Not using those employees that are being dismissed to fill vacant posts has, and is, going to cost the institution in litigation. On the former CEO that was suspended, she asked why PanSALB continued to fight this case if it could not win the case.
Mr Grootboom thanked PanSALB for their report and said that it was a better presentation than the last one. However, unnecessarily complicated language was used in the report and asked if this had been done deliberately to obfuscate the information in the report. It would have been better to have written the report in plain and simple, official government language so that it could be understood. Using such complicated language in the report works to hide the actual issues. This was the biggest problem that he had with the report.
One of the problems that the entity has is that it finds itself in a Catch 22 position, because, if he had understood the analysis of the CEO correctly, the ambiguity over the position of the entity and whether it is a ‘constitutional institution’ means that it does not know to whom it is accountable. If it is a ‘constitutional institution’ then it is not accountable to DAC; but it is currently considered to be accountable to DAC.
A second issue relates to the institution bypassing the DAC and going to Treasury and then asking Parliament for funding. It seems that PanSALB had asked everyone for financial assistance and went straight to Treasury when its entry point for financial assistance, according to his understanding, should have been the DAC.
Ms Mogotsi asked if PanSALB has an audit committee and if it does, what the audit committee is doing as it should be guiding the organisation so that it can achieve good audit outcomes. She asked how often DAC meets with the audit committee. DAC needs to have a meeting with the council of PanSALB on the issues of finance.
She asked if DAC could be available for consultation. She reminded DAC that the interim CEO is only going to be with the organisation for six months and could only do so much in that time. She asked whether PanSALB was going to go to the labour court again – even though she does not think that it would win - about the litigation amount owed to former employees or whether it was going to pay the R18 million rand owing.
Looking at the 15 year expenditure trends on page 27 of the presentation one can see that the organisation was not operating as it should have been and recommendations of government were not being implemented. This page tells the Committee the ‘story’ of PanSALB.
She also asked why vacant positions could not be filled by current employees, or why amicable solutions could not be reached with employees that were dismissed so that PanSALB was not constantly involved in litigation with these employees.
She ended by thanking the CEO for the work that he has done, however, an audit disclaimer shows the Committee where the problem in the organisation lies.
Response from DAC
Ms Sethibelo said that DAC acknowledges the challenges in PanSALB. If PanSALB is a ‘constitutional institution’ then its funding issues need to be resolved by other bodies, but at the moment PanSALB’s requests for funding always come back to the DAC. If PanSALB is recognised as a ‘constitutional institution’ then this might open the door for funding from other bodies, allowing for the allocation of funds to those programmes that really need funding because they have proved that they are successful.
Ms Sethibelo said that the audit committee of DAC had done an audit of PanSALB but that DAC’s audit committee has not extended its report to PanSALB yet. There is a CEO Forum designed to resolve issues around these and other related matters.
Ms Mogotsi reminded members that the Committee had asked DAC to do an analysis of PanSALB’s position as a ‘constitutional institution’.
She asked for PanSALB to be frank with the Committee and tell the Committee the ‘whole story’ so that the Committee could see the ‘big picture’ of what is going on. After everything is said and done, the Committee needs to know what the situation is so that it can help to resolve it. She also said that PanSALB should tell the Committee about those things that it has not done, or does not do, as it seems that much of the presentation was about defending PanSALB. The discussion should not be a game of finger pointing and blaming and arguments because at the end of the day a resolution needs to be found to deal with PanSALB’s financial issues. And PanSALB’s financial troubles are as much a reflection on the Committee as they are on PanSALB’s management.
She asked about the grievance between DAC and PanSALB because the Committee had not received any information in writing to say that there was a grievance between DAC and PanSALB.
The Chairperson said that there needs to be an analysis of the relationship between DAC and PanSALB.
With regard to the position of PanSALB and whether it is a ‘constitutional institution’ or not, DAC must present a document to the Committee that states what the Constitution states and what the PanSALB Act says in this regard and where the grey areas are. PanSALB has tried to do this on their own, to say that this is what the Constitution says and this is what the Act says and these are the grey areas that we have to deal with. This clarity was needed so that the Committee could determine what exactly can be done to assist PanSALB as it cannot continue operating the way it has been. The Committee needs to be decisive and get assistance from legal fundis to find out where to go to from here and this needs to be done now.
Ms Tsoleli applauded Dr Monareng for bringing issues to the Committee’s attention because even as a Member of Parliament she had not been aware of some of these issues and that this meeting was the first time that she was hearing about them. This is the first time that she has been able to understand some of the issues taking place in the institution. She asserted that not knowing about the institution’s problems was not going to help the Committee and these problems would still come back to the Committee. The Committee needed to know about these problems to assist PanSALB to move forward. Even if one is not a lawyer or an accountant, one can still see that if something is not done to assist the entity the country is going to lose it. Furthermore, the relationship between the DAC and PanSALB needs to be corrected so that DAC could see where it can make contributions to PanSALB’s success. The Committee could not keep on coming back, year in and year out, and discuss the same problems relating to PanSALB. The problems that arise in the entity actually need to be solved otherwise the Committee could come back tomorrow and be seated in a meeting again and hear the same problems from PanSALB again. She asked how the DAC monitors this entity to see if they are doing well or not. She emphasised that she is very worried about the route that was being followed.
Response from PanSALB
Dr Monareng replied that PanSALB decided to dismiss the former CEO as he was not productive. The former CEO then took PanSALB to court over the matter and PanSALB lost the case. However, PanSALB is still fighting the case in court and will continue to do so until it wins the case.
On whether vacant positions are available to current employees, he said that the advertisements are public and the positions are open to everyone to apply and people are appointed based on their performance and qualifications.
Dr Monareng replied that PanSALB went to Treasury because the DAC provides only junior officials for meetings with PanSALB.
Follow up questions
Mr Grootboom said that the DAC needed to determine the position on PanSALB and whether it is a ‘constitutional institution’. In the PanSALB Act, PanSALB is described as an independent organ of state and he thinks that this is where the problem and the grey area is. This needs to be clarified from the Committee’s side, the DAC and PanSALB.
In summary, the Chairperson said that PanSALB should be working with the Office on Institutions Supporting Democracy (OISD). PanSALB has already done their homework on what their position is and whether they are a ‘constitutional institution’. The DAC, PanSALB and the Committee need to come together, sit in one room, and discuss this issue and come to a resolution so that they are all reading from the same page, so to speak. This matter needs to be resolved as a matter of urgency and this meeting should happen before the end of September. She suggested that this meeting happen on 15 September and asked if that date was acceptable as the matter needed to be dealt with once and for all. She reiterated that anything that the Committee said was not a personal attack on an individual or an entity; it was said merely because the Committee wants things to be done in the right way for the people that it is serving.
She thanked the DAC, PanSALB and PACOFS for availing themselves to the Committee. The Committee needed to do more during this term to ensure that everything that it is doing comes to a conclusion.
The meeting was adjourned.
Tom, Ms XS
Bilankulu, Ms NK
Grootboom, Mr GA
Mahlangu, Mr JL
Mogotsi, Ms VP
Mulder, Dr PW
Rabotapi, Mr MW
Tsoleli, Ms SP
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.