Mzansi Golden Economy missing R100 million; Moral Regeneration Movement

Sports, Arts and Culture

29 October 2019
Chairperson: Ms B Dlulane (ANC)
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Meeting Summary

The Committee were briefed by the Moral Regeneration Movement (MRM), for the first time since 2015, and the Department of Arts and Culture on the alleged missing R100 million in MGE funds. A presentation by the Department on the repeat fees for actors was postponed due to time constraints.

The MRM gave an overview of the historical background of its genesis to its current projects. It had taken five years to consult and develop shared values and to arrive at the Charter of Positive Values document. The need for moral regeneration was reflected in the current challenges of corruption, violence against women, xenophobia and dysfunctional health and educational services in the country. The MRM had established structures in some but not all provinces, notably the Western Cape, North West province, Gauteng and KZN. It had developed a Charter of Ethics for local government elections and, launched an anti – Femicide campaign. Funding had remained static at R3.5 million per annum for the past five years and the lack of resources was a stumbling block for the MRM to run projects.

Members questioned the absence of any report or presentation on the financial statements as the MRM was asking for more funds but said nothing on how it had spent the R3.5 million given to it. Members expressed support for the work of the MRM but said that the SA Constitution and the Bill of Rights in it meant that SA was a democratic country where discrimination was prohibited and where different people had different moral values.

Members said the work of the MRM was what government departments should be doing, but were not doing as part of their jobs and questioned the need for the MRM to exist. Members expressed concern on the impact of foreign pastors on the moral fibre of the country.

Members asked why there was no presence in the Western Cape; what other funds it received from sponsors and partners; a breakdown of the MRM’s operational costs and of the staff employed; and why branches were moved from the Department of Arts and Culture to the office of the Deputy Minister.

The Department noted that the title in the agenda line was misleading as it would be speaking about the alleged missing millions as the Department had interacted with the newspaper that printed these allegations and had responded to their questions. The newspaper had delayed the publication of the story and printed a whistle-blower story approximately a week later. The presentation also covered the overall strategy of the Mzansi Golden Economy (MGE) before dealing with the various allegations made by the City Press. The MGE strategy was to reposition the arts and culture sector in terms of creating jobs through its arts and culture heritage and addressing unemployment and assist in the growth path of the country through open calls in public art, cultural events and touring ventures. Members were relieved to be informed about the various issues making up the R100 million. The issues dealt with funding for Ladysmith Black Mambazo, the National Empowerment Fund, Indoni Youth Empowerment, USIBA awards, and the Living Legends Trust.

Members asked why the City Press was not taken to court for defamation. Members wanted a list of the requests for funds and the minutes of the committee meetings when the request was decided. Members declared that they had proof of instances where the DG had signed documents in two capacities. ‘Was this not clearly a conflict of interest’? Members asked further who sat on the special bid committee of the Department; who signed off on the successful bid documents; who received loans via the National Empowerment Fund; who signed off on payments made after the Indoni Youth cultural festival’; the Cultural and Creative Industries Federation of South Africa (CCIFSA) was under investigation by the SIU, how many beneficiaries were there for the venture capital and how much was given per beneficiary; and were the wives of the Minister and the Deputy Minister involved in any way with any MGE project. Members felt that some of their questions were misinterpreted and requested answers in writing.

The Chairperson then spoke to letters she had received personally and letters which she had been copied into in her capacity as the Chairperson of the Committee and she had received a letter from Ms Van Wyk on the national museum Bloemfontein. 

Meeting report

Moral Regeneration Movement (MRM)
Father Smangaliso Mkhatshwa, Chairperson of the Board of the MRM, said that the MRM was not a statutory body but was determined by a moral agreement with government in 2003. The MRM sought to promote local action and commitment from communities. He gave an overview of the historical background of the MRM from its genesis to its current projects. He said that the MRM had to be managed and led by civil society. It had taken five years to consult and develop shared values and to arrive at the Charter of Positive Values document.  The need for moral regeneration was reflected in the current challenges of corruption, violence against women, xenophobia and dysfunctional health and educational services in the country.

Mr Selaelo Nkube, Head of Finance Subcommittee, said that the MRM had to be a movement driven by civil society. It had established structures in some but not all provinces, notably the Western Cape, North West province, Gauteng and KZN. It had developed a Charter of Ethics for local government elections, launched an anti – Femicide campaign, the ‘I Care We Care’ campaign in Gauteng and a land summit. It had entered into partnerships with the SABC, UNISA, The Ethics Institute SALGA and government departments.

Funding had remained static at R3.5 million per annum for the past five years which mainly covered operational costs. The lack of resources was a stumbling block for the MRM to run projects. Marketing and communication was very important. He listed a number of projects the MRM would like to run and the attendant estimated budgets.

Discussion
The Chairperson asked if there was any report or presentation on the financial statements because the MRM was asking for more funds but said nothing about how it had spent the R3.5 million given to it.

Mr Nkube said that the books were audited by an independent auditor and the MRM would send the audit statements to the Committee.

Mr W Faber (DA) supported the MRM’s work but said that the SA Constitution and the Bill of Rights in it meant that SA was a democratic country where discrimination was prohibited and people had different moral values.

He said the work of the MRM was what government departments should be doing, but were not doing as part of their jobs. Minister Gordhan would shortly be talking about where cuts should occur in the budget. The MRM program should be incorporated into the work of government departments. He questioned the need for the MRM to exist.

Mr B Madlingozi (EFF) echoed the comments of Mr Faber. He added that foreign pastors were a bad influence and shredding the moral fibre of the country. He asked what the MRM position on land was and if the MRM had protected itself from being used as a propaganda vehicle.

Ms V Van Dyk (DA) admitted that it was the first time she had heard of the MRM. She asked why there was no presence in the Western Cape; how the MRM measured its success; if the MRM worked with community radio stations; did it get money from its partners and for a breakdown of the MRM’s operational costs and of the staff employed. The MRM was asking for big amounts of money for projects yet there was no breakdown of the project costs. She said five years was spent on developing a six-page booklet whose content was already in the Bill of Rights of the Constitution.

Mr J Mamabolo (ANC) thanked and gave his appreciation to the MRM for its work. He asked how the MRM focussed on high schools because he was concerned about the kind of music that the youth were listening to which promoted dagga and drugs. ‘How did MRM relate to SAMRO on this issue’? He asked why branches were moved from the Department of Arts and Culture to the office of the Deputy Minister. He asked why the branches were moved from the Department to the Premier’s office. He said the budget of R3.5 million was a small budget and the MRM had to budget to do a good job.

Mr T Mhlongo (DA) acknowledged the work of the MRM but he said the MRM had not presented its financial statements to the Committee, which was questionable, yet it was asking for more money. He asked why there were different figures given in slide 8. He wanted to know the total annual expenditure, what the staff complement and structure was, what other funding the MRM received, what the names of all private sector funding it received were, and what its relationship with the National Heritage Fund and the National Heritage Council were. He said the public perception was church-like or Christian – like rather than religion- and a duplication of the work of the Cultural, Religious, Linguistic Rights Commission (CRL). ‘What were the reasons for the lack of programs in the Western Cape’?

Ms N Nkabane (ANC) welcomed the MRM but said that the demographics of the Board were not representative. She asked when the MRM would expand its footprint to other provinces. Regarding the ‘I Care We Care’ program in Gauteng, she said that the MRM should not only look at protests but also vandalism. On the finances, she asked if there were spikes noted by the private audit firms.

Ms V Malomane (ANC) said the MRM was a doing a good job. She asked to which provinces the project campaigns were going and how was the budget being allocated. She also wanted to know about the structure and vacancies of the MRM. She echoed earlier questions around the lack of financial statements.

Mr L Ntshayisa (AIC) asked if the MRM was winning the war on morality. If it was not winning what changes would the MRM make to its approach? He was concerned about the foreign pastors and religious leaders operating in South Africa because they were misleading the people. ‘What was the MRM’s comment on this’?

The Chairperson echoed the issue of foreign pastors and the lack of financial statements. She said the Committee could interact better when the financial statements were made available.

Ms Nosandi Mhlauli, Board member and Deputy Chair of the NHTL, said the last time the board met with the Committee was in 2015. She said she would be presenting from the point of view of the NHTL sector because the NHTL was responsible for the restoration of culture and customs. She expressed her appreciation to Parliament for having held the ‘man’ parliament and providing a description of who was a man and that these Parliamentary sittings would be happening in all provinces and districts. She said there should also be a ‘boys’ parliament held. She said the religious sector was regarded as a key sector therefore it was identified to lead regeneration. The MRM had come to Parliament to ask for its support for a lot of programs in different provinces. Initiation schools were used as a platform to address moral issues. The NHTL was working on issues around family structures and decay and asked for support for these programs and for the one before. Gender based violence had its roots in patriarchy and cultural practices. The churches operating in an area had to be known and recognised by the National Council of Churches. Sport could be used in moral regeneration.

The Chairperson supported the comments of Ms Mhlauli around the boy child.

Mr Mkhatshwa quoted from the reformation period that the voice of the people was the voice of God. He said 3 000 delegates from all communities took the decision to create the MRM in 2002 and deliberately did not want it to be run by government. He admitted that the MRM was not perfect, but it was trying its best. He said the Christian church was in existence for over 2 000 years yet there were still sinners but there was no call for it to close shop.

He thought that the meeting would be an engagement more about the strategies of the MRM rather than the practical information that it was being requested to provide. The MRM was present not just to report back but to engage in what direction the MRM should take.

Mr Mkhatshwa said in the past, there were street committees to help communities to get by. Communities stood together as they could not just rely on the police. It was important though that street committees were not politicised.

On why the Charter took five years to complete, Prof Paulus Zulu, MRM Researcher and Director of the Maurice Webb Race Relations Institute at UKZN, said the production did not take five years, it was the processes leading up to the production that took five years because it could not exclude anybody and therefore it went to the Constitution to extract values to generate a draft document. The name Charter of Positive Values came from Minister Naledi Pandor. He said that consultations were held in all provinces and with key stakeholders and launched in 2006.

At present there had been constant dialogue with Father Mkhatshwa and other members to look for an implementation framework for moral regeneration. Moral regeneration could not be reduced to events or launches. The campaign had to have access to the greater SA community. The MRM came to agree to create booklets which would be used as a flash points to strengthen the various sectors and it would be used in schools as it was learning about citizenship in the life orientation period and would be used buy all schools. There were eight booklets, for schools, youth, trade unions, Parliament, political parties, public private sector servants, servants in the public sector, and gender violence.

Ms Van Dyk raised the point that it was not right for the Committee to have to hear another presentation, when it wanted answers to the questions it had posed.

The Chairperson said the response was not a repetition.

Mr Faber said that the meeting had to follow procedures. The Chairperson had to stick to the meeting procedure which she had enforced in previous meetings. There was no follow up to the questions.

Mr Zulu said this was the MRM’s response to the question of the turnaround strategy. He said books lent themselves to easy dissemination through the media and through discussion.

Mr Mhlongo raised the point that the MRM had not responded to the question on the financial statements.

On representivity of other religions, a board member said that all religions were welcome as the MRM was non-discriminatory.

On the question of gender on the board, she said that there were two females on the Board of directors, both of whom were present, plus there were others.

The Chairperson said she had not forgotten the financial statements.

Mr Mhlongo raised a point that the Chairperson could not allow the Board to leave without giving answers to the questions posed would be a waste of tax payer’s money. ‘Did the secretary not tell the MRM the purpose of the meeting when extending the invitation to the MRM to meet with the Committee’? ‘'What was the MRM’s relationship with UNISA’? He said the questions asked by the Committee were not answered. He repeated the questions raised and he said Father Mkhatshwa’s response regarding an expectation of discussing strategy was not right. The Committee in asking these questions was just trying to do its oversight work.

Points of order were traded between Mr Mamabolo and Mr Mhlongo.

Mr Mamabolo said the Chairperson had to be allowed to give the Board a date for a further meeting with the MRM so they could present their financials and give answers to the questions raised.

Mr Mhlongo asked if Mr Mamabolo’s proposal was an order.

Ms Malomane said that if it was seen that the organisation was not ready, the organisation had to be given time and the Chairperson’s decision had to be accepted. She said there were also other time challenges facing the current meeting. The MRM had to be given space to respond to the questions.

The Chairperson said that in other meetings when questions were not fully answered, an opportunity was given to either meet with the entity again or allow it to respond to the remaining questions in writing.

Mr Mhlongo said he respected the position of the Chairperson; he was making an issue of a procedural point because 90% of the questions were not answered.

Department of Arts and Culture Presentation on the Alleged Missing R100m in MGE
The Chairperson said she wanted to share with the Committee some correspondence she had received after the presentation.

The Director-General, Mr Vusumuzi Mkhize, said the title in the agenda line talking of missing millions might be misleading and he wanted to correct that. He said the presentation was not about the missing millions of Rands as stated in the media but only about the alleged missing millions.

Mr A Seabi (ANC) said he would accept the presentation and would use the discussion period to probe if need be.

Mr Mhlongo said the agenda title was the ‘missing millions’ and the Parliamentary website also used that term. He proposed that the Committee be able to raise questions on what the DG presented.

Mr Mkhize spoke to a revised presentation. He discussed the overall strategy of the Mzansi Golden Economy (MGE) before dealing with the various allegations made by the City Press. The MGE strategy was to reposition the arts and culture sector in terms of creating jobs through its arts and culture heritage and addressing unemployment and assist in the growth path of the country.

Mr Mhlongo raised a point that the presenter needed to summarise his presentation.

Mr Mkhize spoke to the MGE work streams which were through open calls in public art, cultural events and touring ventures and submissions were subject to a review panel. Ten percent of what was allocated was retained for administration costs. The City Press stories were propaganda to influence people. City Press had asked the Department questions and the Department had responded yet the City Press had postponed the story and then come up with a whistle-blower story around the alleged R100 million ten days later. The Department had then noted its response on its own website. He then spoke to the various issues making up the R100 million. The issues dealt with Ladysmith Black Mambazo, where there were false allegations that the money was being used to record an album with Mr Jacob Zuma and the National Empowerment Fund, Indoni Youth Empowerment, USIBA awards, and the Living Legends Trust.

Discussion
Ms Van Dyk said that given the Department’s view of the claims being false, why was City Press not taken to court for defamation. She said the funding thresholds was R1 million for individuals and R2 million for events and tours which were decided by a committee. She wanted a list of the requests for funds and the minutes of the committee meetings when the request was decided. She said she had proof of instances where the DG had signed documents in two capacities. ‘Was this not a conflict of interest that he both decided and signed off on projects’? She said the Department had requested Treasury to condone over R400 million which included irregular expenditure incurred in previous years. She wanted the Department to state explicitly what of the R100 million was condoned. ‘Who sat on the special bid committee of the Department and who signed off on the successful bid documents’? ‘Who received loans via the National Empowerment Fund’? ‘Who signed off on payments made after the Indoni Youth cultural festival’? She also wanted to see the evaluation documents that related to this bid. On the USIBA awards, she asked if the CCIFSA was under investigation by the SIU. ‘FNB offered to make a contribution of R8 million to the Living Legends Trust, what happened to this money and what progress was made to recover funds stolen from the Trust’s programs’? She wanted to see the request for funds to the Indoni Youth Project. The Committee wanted to see the allocations where the committee sat and decided not just one or two individuals.

Mr Mhlongo said the DG had not given all the information. He said the Chairperson of the previous committee was vocal on the issue. On the USIBA awards, he asked if the Cultural and Creative Industries Federation of South Africa (CCIFSA) was in partnership and what happened to the money that was not used. He said there was a lack of transparency, dishonesty and the Department did not do an evaluation. ‘Was the CCIFSA structure legal’? ‘Was there any records or documents that the Department could share with the Committee’? ‘Was the USIBA awards and Western Cape cultural awards not a duplication’? ‘How much was allocated for the USIBA and for the Western Cape awards and how much was used? How much was allocated and how much was payed before and after the event for the National Heritage Council Shield awards’? ‘Was there any type of investigation being conducted against CCIFSA’? ‘If not why not’? ‘Did the Department have the financial policies of the institutions’? ‘Did the Department have any MOU with the Living Legends Trust’? ‘How many beneficiaries were there for the venture capital and how much was given per beneficiary’? ‘Were the wives of the Minister and Deputy Minister involved in any way with any MGE project’? On Indoni, he said the Department said it had given them money and would be giving them a further R10 million. ‘What did Indoni do for the total of R18m allocated to them’?

Mr Madlingozi asked what Paul Mashatile’s role was and who the DG was when MGE was launched. ‘Was there any risks regarding the people being funded’? ‘Up to 2013, was there a permanent CFO in the Department? What was the role played by Treasury in all these years MGE was operational and who was approving the funding’?  ‘Did the department have a stable management and who were they’? ‘On what grounds did the government give CCIFSA an additional R13 million without CCIFSA accounting for the monies? ‘Could the financials of CCISA be made available’?

Ms Malomane asked Ms Van Dyk to share her proof with the Committee.

Ms Van Dyk said she would email the information.

On why City Press was not taken to court, Mr Mkhize said the Department’s spokesperson did engage with them on how the story was crafted and projected, ignoring the Department’s responses to their questions. Going to court, the Department would have to follow certain procedures. 

He said the minutes would be made available including the amounts adjudicated.

He said the allegation that Mr Mabaso was an acting DG was false, he was a Chief Director and was now an acting DDG.

The policy of the MGE was open calls with a threshold of R2 million, it did not talk to other programs which were unsolicited proposals which were for higher amounts.  This was explained to City Press.

Details of the adjudications would be made available.

The Department had the records and reports of what Indoni spent the money on and would provide that.

He said there were no files missing; the files were in the office. This was another lie peddled by the City Press.

On CCIFSA, he said that SIU wanted the Department to provide them with reports so that they could determine whether the matter falls within their ambit. The Department had responded to the SIU and were awaiting their response.

As the Department was in the final stages of negotiations with FNB, it could not at present disclose the amount of money involved and the conditions attached. 

He rejected the notion that there was minimal disclosure of information. The Department responded to what was requested.

He affirmed that CCIFSA was created by a former president because government could not talk to many individuals or groups, there had to be a representative body. CCIFSA was a legal entity.

On the two award ceremonies, he said the Western Cape for example could recognise people of the Western Cape but not from another province and vice versa. There were many awards in the sector and not all were government awards, therefore this was not regarded as duplication.

There were approximately 66 legend awards. The Trust itself identified the legends via subsectors. There were nine subsectors.

The Department could provide all legal documentation regarding venture capital. This issue was perhaps why the City Press article was written because it was open knowledge that the wife of the Minister was the CEO of a company which did work with the Department.  The Department would provide a report on what the company had done with the money to date. There were clear rules of engagement when the Department was working with venture capital companies.

The Department would provide a report on how the R18 million of Indoni was spent.

On the questions around the former Minister, Mr Mashatile, and a Mr Green was new information to him and he would have to respond at a later time.

The National Treasury’s role was to provide a director during the venture capital adjudication process.

The Department would provide CCIFSA’s records to the Committee.

He said he believed the Department had a stable management.

On the irregular expenditure report of R432 million, Mr Makoto Matlala, CFO, said the issues of MGE were not part of the R432 million. This amount reflected accumulated amounts over a number of years for instances where investigations were still taking place on what action to take regarding certain transactions. The Department appointed the firm, Gobodo, in 2016 to do forensic investigations on irregular expenditure. Of their findings was that some transactions should not have been regarded as irregular and therefore to condone these transactions. The condonation request was not a Departmental decision, but was based on advice received.

Any member of the adjudication panel had to declare any conflict of interest when adjudicating.

On the SIU investigating CCIFSA, he said the SIU only investigated government entities not private entities, but they had received queries from the public regarding the financial management at CCIFSA. He said that for every funding there was a MOA which included a clause that the beneficiary had to produce proof of expenditure. The Department had employed an independent auditing company to investigate the expenditure claims and would report to the Committee when it received the audit report.

On the permanent CFO, he said he joined in 2015 on a permanent post basis. For five years prior to that the Department did not have a permanent CFO.
 
Mr Charles Mabaso, Acting DDG: Arts and Culture Promotion and Development, said the Department would present a report on the impact of Indoni.

On the balance earmarked for CCIFSA, he said that the balance would be released once the report was evaluated to ensure that the agreement was abided by before a further tranche was released.

On the question regarding the NEF, Mr Matlala said there were six beneficiaries who benefited to a total of R11 million. 

Mr Seabi said that due to time concerns, he suggested that the last item on the agenda be stood over and that the meeting adjourn.

Mr Mhlongo said that his questions had not been answered. There was no openness or transparency.

Mr Seabi said to the Chairperson that his proposal was not considered.

Ms Van Dyk seconded Mr Seabi’s proposal. She said she had written a letter to the Chairperson and wanted clarity on the issue.

Ms Nkabane also supported the proposal and said the outstanding items be referred to the following meeting.

Mr Mkhize said his response was misinterpreted by Mr Mhlongo. 

General
The Chairperson then spoke to letters which were addressed to the Minister, Deputy Minister or the DG, copies of which she had received as the Chairperson of the Committee and she had received a letter from Ms Van Wyk on the National Museum Bloemfontein. She said she would not be able to respond to Ms Van Wyk’s letter immediately but would respond. On the letters to the Department she said that she would look into matters addressed to her but would also be doing oversight on letters addressed to the Minister, Deputy Minister or DG. 

Mr Mhlongo said the Committee’s proposal was that it did not meet on Friday. The Committee was prepared to meet on Tuesday and Wednesday.

The Chairperson said that was not the role of the House Chairperson, meetings would be held on Tuesday and Friday and the Committee would still meet on Friday.

The meeting was adjourned.

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