National Heritage Council funding & impact; National Arts Council state of governance; Settlement agreement between Department and South African Roads Association

Meeting report

The Chairperson noted two notices of absence from Mr VP Mogosti (ANC) and Ms NK Bilankulu (ANC), who were absent due to ill-health.

In emphasizing the importance of the meeting, it was pointed out that 80% of the Department’s Budget went to entities. It was for this reason that the Committee conducted extensive oversight on the Department.
Complaints had been made on the way some boards and councils were being paid lower than some others, but the department was looking into resolving this issue. The DAC was expected to be at the center of society. It was important for people to understand what the department was all about. It was also important for entities to fulfil their mandates.
The NHC was welcomed and departments were asked to present inputs relating to the entity’s performance.

Briefing by National Heritage Council (NHC)
Mr Vusithemba Ndiwa, Acting Director General of DAC, said that the NHC had been able to achieve 88% of its targets. The council had also performed excellently in terms of the three year overview.
An improvement was also noticed in the expenditure compared to the problems identified in 2014/15.

The performance of the audit outcomes was sustained. The Audit opinion had deemed 31% of NHC’s audit indicators as without definition.  It too highlighted supply chain and tender issues were present

It was pointed out that NHC was facing some labour court issues, amongst several other challenges and problem facing it. Some of these challenges included weak financial provision and uncertainty regarding the implementation of the recommendations made by the forensic Investigation.

Dr Marcus Malusi Balintulo, Chairperson of the NHC, noted that at the previous meeting, the Committee offered to assist with issues relating governance within the entity.
 
Speaking on the NHC’s funding model, Mr Sonwabile Mancotywa, the Chief Executive Officer (CEO) of the NHC, pointed out that NHC had four sectors. The aim of the council was to ensure that South Africans gained knowledge, access and pride in their heritage. Section 10 of the NHC Act dealt with the funding mandate of the council. This mandate comprised of specific elements to support, nurture and develop access to institutions and programmes that promote and bring equity to heritage management. The onus therefore, lied on NHC to utilize resources in a way that would promote section 10.

In terms of the sources of funding, NHC was mainly funded by the Department. NHC had largely benefitted from lottery funding before the lottery reviewed its model. In the past, NHC utilized lotto money to fund a number of events such as “SATMA awards” and “unsung heroes” before the funding door was closed.
However, there were inconsistencies in terms of the rise and fall of funding throughout the years. There was a 22% decrease in funding in some years. These inconsistencies affected NHC’s planning, as the growth capacity could not align with funding from the Department. This was part of the reason for the deficit recorded due to the contractual obligations of the entity that could not be changed irrespective of funding considerations. In terms of the allocation for 2014 to 2018, it was hoped that the department would not decrease funding towards the multi-year framework, since there had been no significant changes in the allocation.

Still on the funding model, it was noted that the entity had disbursements over 11 years. NHC funds were diverted to areas such as research and publications; heritage and education; heritage and youth; heritage of koi-san; and traditional issues.
 
In terms of the funding structure, NHC’s counsel had set parameters of funding before going for council committees. The CEO and funding committee were responsible for looking into certain recommended projects, while the funding unit issued calls for funding and was responsible for implementation and evaluation. NHC funding was mainstreamed according to heritage programmes, heritage interventions and heritage projects. In a nutshell, there was a distinction between strategic heritage projects and heritage programmes.

With regards to disbursement of funds, NHC placed emphasis on accountability and oversight. It had been noticed that rural communities had no proper facilities that would help with the application of funds.
As far as resource mobilization was concerned, it was pointed out that NHC also raised funds for itself apart from the funds gotten from the department. NHC had tried to establish a heritage fund but there were legal obligations to be considered. Some partnerships sought with municipalities had yielded positive results. These partnerships added value to municipalities and contributed to the entity’s off-balance sheet.

In terms of the funding impact, it was noted that South Africa needed an impact study. Without an impact scientific study, it would be impossible for the entity to request for additional funding. Plans were underway to carry out a study on the impact of heritage on the society. At the moment, NHC had been able to place heritage at the centre of the country.
NHC had won both public and private sector awards for its magazine, and this was part of the reason why heritage increased in monetary and awareness value. NHC had made important contributions including knowledge production, but quite a number of complexities surrounded the issue of impact.

The entity was striving to work with other entities on issues relating to heritage development opportunities. NHC was looking into resolving issues of double dipping. The review of the white paper would help with resolving the confusion of funding duplication, as well as streamline funding. It would clear up what the role each entity needed to play.

Another challenge that was being faced was the effect of the fees must fall campaign on the money that should be disbursed to the organisation, particularly because heritage was excluded from most funding. Nevertheless, NHC was taking steps to reposition itself and intensify its work on a number of projects and programmes.


Discussion
The Chairperson noted that the presentation contained quite a number of relevant information that would assist the Committee. It was also noted that entities needed to stop working in isolation, but should work together instead. The issue of double-dipping was problematic.
The department was asked to submit its funding model which the Committee had been requesting for quite some time.

The Chairperson also wanted to know what concrete actions had been taken by the department to resolve all income and expenditure trends alluded to in the presentation; what steps were being taken to rectify the audit findings; and explanation on how the proposed interventions by the department was going to improve the entity, especially because most of the interventions did not seem workable.
 
Mr T Makondo (ANC) hoped that the Department would not shift its responsibility for funding issues on other occasions. He wanted to know if it was possible for the Department to interact with the NHC and entity before money was disbursed; the content of the terms and conditions of the contract for the service provider on resource mobilization; whether NHC had plans of collaborating with local governments to source for funds; details of purchases that culminated to improper purchases; and details of other programmes NHC was involved in.

Mr G Grootboom (DA) asked for the shortfalls experienced by NHC; reasons for implementing forensic investigation; clarity on governance issues; and explanation for why the audit committee which had met only a couple of times.

Mr P Moteka (EFF) wanted to know what steps had been taken to improve the achievement of targets; how rural communities accessed funding; how NHC ensured that people knew their rights; what steps would be taken by NHC to prevent individuals from benefitting unduly in place of community beneficiaries; how NHC gained accessed to community historians and what identification requirements were used; and if NHC possessed powers to redirect communities to provinces to seek assistance.
 
Mr Ndiwa clarified that in terms of the expenditure trends, the CEO was referring to the real fluctuation in 2008. However, there had been some consistency in funding since then. Nevertheless, similar fluctuations could occur based on budget cuts. The Department tried to take most of the cuts rather than its entities. December reports would indicate if the Department was able to protect its entities.

The Department had engaged with various institutions to ensure an improvement in audit findings. Boards and councils had been created to deal with audit findings since they were accounting authorities, and also because the Department did not want to interfere with the work of entities.

The Chairperson interjected and noted that the Committee gave money to the Department and expected an account of the money to be submitted to the Committee instead of the entity. The Committee would not entertain any issue of interference raised by the department.

Mr Ndiwa said that the department was working on resolving all issues relating to funding. Discussions around the white paper already established that clear role allocations were needed for entities. The responsibility of the department was to formulate policies and monitor funding.
The department agreed that all its forums should be used to mitigate a large number of funding risks.

Mr Moteka sought more clarity from the response given by Mr Ndiwa on issues of funding. He wanted to know if Mr Ndiwa implied that Treasury should no longer giver the department money because of failure on the part of the department to provide proper accountability.

Mr Ndiwa replied that the issue was not about the Department. Resources could be disbursed to funding agencies, and funding could be dealt with by entities if viewed from an implementation functional point of view.
 
Mr Moteka expressed dissatisfaction with the answer. He stressed the need for the department to remain accountable, since the Committee dealt directly with the department and not entities.

The Chairperson noted that the Department transferred 80% of the budget to entities. However, the department needed to increase the percentage and employ more people to handle monitoring and evaluation. Greater accountability for funding should also be established.

In responding to the entity’s approach to deficit, Mr Balintulo said that NHC inherited a situation where the council had responded to all sorts of requests and taken on a lot of unsustainable tasks. The new board tried to focus the work of the council. The deficit was however, deceptive as there were lots of positions yet to be filled, and which would constitute a worse situation if left unattended. A review of the structure was underway, and would be completed at the end of November. 

According to the Act, the heritage council was mandated to provide advice to the minister on funding. Although the NHC was failing in carrying out this mandate, this failure would be attended to in the white paper review discussions.

The audit finding was carried out with a review of risk register. At every meeting held, the management made presentations on the steps that would be taken to rectify the issues.

As far as issues around governance was concerned, dysfunctional committees remained a threat. The major threat to the organization was funding.  At the last council meeting, the council observed that NHC’s efforts into the disbursement of R3 million was unreasonable. There was a need to put in more effort into increasing the disbursement amounts.

The funding service provider had been abandoned. Partnerships remained an important aspect.

In terms of the issues around the special investigative unit (SIU), it was noted that after a decision was made by the council to seek legal advice on the matter, a resolution was made to accept the legal opinion received on this issue. The council had since embarked on corrective measures, and the matter could no longer be raised. The council of the NHC noted that the matter had been closed and records would be updated. No criminal investigation was pending on any individuals.

Mr Makondo asked about corrective measures.

Mr Balintulo replied that corrective measures was a view held by the council’s predecessors, which could not be changed.

Mr Makondo asked if this view was understood by the present council and what was meant by corrective measures.

Ms S Tsoleli (ANC) opined that the comment on the stance of the council’s predecessors had set a bad precedence. She asked if the parliament carry out a review on the matter.

Mr Balintulo said that the Committee might need to study a detailed legal opinion on the issue before an approval was given for the suggestion made by Ms Tsoleli’s suggestion. The issue could be taken up on judicial review but not by NHC.
 
Mr Makondo said that the Committee would interact with the Minister. Mr Balintulo was however, asked to provide a clear articulation of what corrective measures entailed.

Mr Balintulo said that it would be a demerit to discuss the matter at the Committee meeting. The main issues surrounded supply chain management. Council had benefitted from mal-administration but no fraudulent evidence had been found. A training agenda and staffing of that division was underway; and this approach was part of corrective measures.

Mr Makondo expressed worry on how the procedure had been carried out, noting that due process was not followed. There were people saddled with the responsibility of ensuring the smooth running of transactions, but this responsibility did not reflect in their personal files.

Mr Balintulo acknowledged this and said that the matter was at a point of legal opinions. The opinion which the counsel based its actions on was also under legal opinion, for which outcomes needed to be waited upon.

The Chairperson asked the department to address the aforementioned issue.

Mr Ndiwa said that the Department suggested the use of the principle of Functus officio. The principle however became problematic at the instance where the council dealt with the matter without acting on the basis of the SIU. The department was not in a position to test the SIU report and check whether the principle of Functus officio applied.

The Chairperson said the Committee had looked into a similar situation in the past. It was important for the Department to ensure that any activity within the entity was carried out under its mandate. Including such matters in the auditor general’s report would further complicate matters.
NHC was asked to submit documents alluded to, to the Committee in order to allow the Parliament’s legal unit examine such documents and provide legal advice to the Committee; after which issues arising would be resolved.

Mr Balintulo said that the proposed solution was not the best option.

The Chairperson interjected and stressed that the Committee had powers to request information from the NHC. The document requested would be would be sent to the Committee’s legal unit for legal advice.
 
Mr Balintulo apologised for his reaction to the suggestion, and noted that it took the NHC a full year to get the documents from the Department.

Mr Moteka said that the entity was accountable to both the Department and the Committee. He expressed surprise on the way questions were posed by the department to the chairperson of NHC.
 
Mr Makondo said that the Committee was not done with the matter. He suggested that the PC proceed with the meeting.

The Chairperson said that the matter would be further dealt with in the next meeting. It had been previously suggested that a department should give a general overview before a presentation by the entity of such department.
The Committee wanted to know how long it would take the DAC to develop a legal opinion on the matter.

Mr Ndiwa replied that it should be ready in one week’s time.

The Chairperson thanked the NHC.

Briefing by National Arts Council (NAC)
Mr Ndiwa said that 90% of NAC targets had been achieved. Notable progress had been recorded since 2013. There was a rise in performance.

With regards to income and expenditure trends, a deficit was noted in finances. However, there was a great deal of improvement in terms of audit outcomes. A clean audit had been achieved.

In relation to the status of governance, it was pointed out that the council had a CEO and 5 managers that reported directly to the CEO. The Minister appointed an accounting authority board that battled with some issues.  Two important steps were not followed, namely the publishing of names to members of the public and publishing of dates of interviews. The Minister had since dissolved the board in 30 August of 2016, after which section 49 was applied. The CEO was currently acting as the accounting official. More money was needed for disbursements.

Ms Rosemary Mangope, the CEO: NAC said that even though NAC was not in an ideal situation, everything was under control.

In terms of governance, NAC subscribed to the philosophy that leadership and governance were interwoven.
 
The Chairperson noted that the presentation being made by the NAC was different from what MPs previously had and the new presentation was only just received at the meeting. The difficulty would be in proceeding with such new presentation.

Ms Mangope said that the presentation was sent through in time.

Mr Moteka said that communication breakdown between Department and entities needed to come to an end. It was imperative for the NAC to come before the Committee to explain and deal with the issues within the presentation.
Mr Makondo expressed his displeasure in the version of the document previously distributed to MPs, noting that the meeting may be delayed if no other presentation was to be made asides that from NAC. The Committee understood the communication breakdown but would not be a victim of it.

The Chairperson allowed the presentation to be made but noted that the Committee needed to carry out extensive research on presentations.
In terms of governance and council, she wanted to know what happened to the board.

Mr Ndiwa said that the mistake made was on the Department’s part. The law required names to be published and dates of interview made known to members of the public, but the department failed to fulfil this requirement.

The Chairperson asked for the person responsible for ensuring a fulfilment of the requirement.

Ms Tsoleli asked for the cost of the mistake caused by the department.

Mr Mateka asked if the Department was not previously aware of the laws to be followed; the culprit that made the mistake; and consequence of this action on the person.

Mr Ndiwa said that the matter was taken very seriously, and a written warning had been issued to the relevant official on the matter.
 
Mr Sakiwo Tyiso, Chief Director: Monitoring and Evaluation: DAC said that he could not give the specific cost by heart. However, the cost was less than R100 000. The Department was aware of the laws. The issue occurred as a result of numerous vacancies and delays that occurred as a result. However, the department ensured that the official responsible was issued a written warning for committing the mistake.

The Chairperson said that the Committee needed the exact amount. Making the CEO the accounting officer was a lot of work, with attendant implications.

Ms Mangope apologised for the incorrect presentation. It was pointed out that interviews were currently taking place and NAC was now aware of the final dates.

The Chairperson asked if the entity only found about the dates today.
 
Ms Mangope replied that she only knew of final dates during the meeting.

The Chairperson emphasised the need for stronger communication amongst entities, stressing that entities were a part of the department’s family. It was therefore necessary for communication to be strengthened.
 
Ms Tsoleli said that there were complaints about the high number of board members within NAC. There were 18 members and this was alarming for such a small entity. The Department needed to sit down and amend this.

The Chairperson agreed that this was a concrete proposal. All legislations needed to be looked into and appropriate amendments made.
 
Briefing on settlement agreement between the Department of Arts and Culture and the South African Roads Association
Ms Monica Newton, the Deputy-Director General: Arts and Culture Promotion and Development: DAC said that the DAC had summited an updated report on the South African Road Association (SARA) with an exact indication of how much money had been contracted between the Department and SARA. Mr Freddie Nyathela of SARA had also submitted an audit report containing irregularities to the Committee. Since 2013, SARA held contractual obligations to the tune of R21 million, out of which R15 million was directed to the renovations of SARA house.

DAC attempted to disaggregate all the information it had and clarify the concept of feasibility, as well as the impact of projects. However, feasibility could not always take place. A variety of impact studies were currently being conducted. A consolidated report would be developed by the end of the fourth quarter.

The Committee asked DAC to indicate a time when the report would be produced. DAC was also asked if it could provide all cultural events since the Mzantsi  Golden Economy Programme in the first meeting in February 2017, with all the reasons for supporting such events.
A consolidated view could be provided for in June with substantive information.

Mr Makondo asked for the last time DAC met with SARA.

Ms Newton said that she last met with SARA in April 2016. However, there were several other on-going interactions with SARA.

Mr Makondo asked for the person meeting with SARA as a representative from the Department.

Mr Moteka said that the question previously asked by Mr Makondo was yet to be properly answered. He commented on the renovations to SARA house, noting that there was a settlement agreement. He wanted to know if the settlement agreement was the department’s idea, and if it referred to the R15 million already alluded to

Mr Ndiwa said that he was not sure of the exact date and month that Mr Nyathela came to his office for a discussion on this issue. He also noted that the R15 million was part of the implementation for the settlement agreement, even though the department differed with SARA on how to achieve this.

Ms Newton said that there were various levels of engagements with SARA but the engagement on the issue of settlement was more formal and structured.

Mr Moteka pointed out that dispute resolution required multiple meetings in order to reach an understanding
He asked for the terms of agreement for the renovations, and enquired whether the terms stated that the department should give money to SARA or that SARA should carry out renovations on its own. Explanation was requested on what R10 million would be used for.

Mr Makondo said that it was clear that this matter would not be resolved due to the lack of willingness on both sides. It was necessary for both the department and SARA to resolve the challenges being faced. The Committee understood the character it was dealing with but DAC needed to commit to resolving the issue, by holding a meeting.

The Chairperson noted that the DAC sometimes acted outside its legal framework. There should be consequences for this. The DAC was asked to engage with SARA. It was pointed out that the agreement was last discussed in April. The department was asked to update the Committee on what steps had been taken in the intervening period.
The Committee was more interested in seeing a willingness to resolve this issue, and it stressed the need for engagement to be held at different levels.

Ms Newton said that engagements were complex and difficult. It was frustrating for the department to be working on implementing a settlement agreement when the other side seemed unwilling. However, the DAC said it would do its best to resolve the matter.

In terms of the issues around renovation, it was pointed out that the first request made was R39 million. The DAC however, refused the request for such funding after carrying out an assessment. The request was then amended to R10 million. From the Department’s perspective, there was a legal opinion to the effect that the settlement was not enforceable. Based on that opinion, the DAC was not of the view that such work could be taken on. SARA on the other hand, continued to emphasise that DAC was not enforcing issues.

The Chairperson said that she was aware of the above developments, but emphasised that meetings needed to be conducted. The Parliament’s legal team had to look into matters; and consultations should be held with SARA.

Ms Tsoleli said that the matter needed to be resolved soon. The legal department would need to speedily attend to this matter, as it constituted an overlap from the previous year.

Mr Moteka noted that the Speaker mentioned a clause to be included in the agreement by DAC, but according to legal opinion, it was not enforceable. This was what Mr Nyathela was basing his argument on. The legal opinion came afterwards.  It was therefore, important for the department to hold a meeting with SARA, and attempt to provide a compromise at such meeting.
Mr Ndiwa was asked to make an appointment with Mr Nyathela.
 
The Chairperson asked the Department to do what was needed. 

The set of minutes to be considered at the meeting would be considered and adopted at a later date. The report on joint oversight would be considered on 30 November 2016.
Cluster activities should be looked into and suggestions were needed to make the cluster operate appropriately.

The meeting was adjourned.