Investigations & Outcomes: SAHRA, National Arts Council & National Library of South Africa briefing

Sports, Arts and Culture

19 November 2019
Chairperson: Ms B Dlulane (ANC)
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Meeting Summary

Three entities of the Department of Sports, Arts and Culture – the National Arts Council, the National Library of South Africa, and the South African Heritage Resources Agency -- appeared before the Committee to report on progress on investigations into irregularities within their operations.

The National Arts Council’s (NAC’s) investigations involved corruption by senior board members who had inflated their salaries and given themselves bonuses for which they could not account. The investigations were concluded in 2018, and the chief executive officer (CEO) had been found not guilty and had to be called back to duty. The disciplinary hearing against the chief financial officer (CFO) had been halted after he resigned. The secretary of the board was dismissed after the disciplinary hearing.

Members were not satisfied with the lack of detail in the NAC’s presentation. They questioned the replacement of the first investigating body by another, and suggested that an independent entity like the Hawks should be used in cases like this. They also proposed that the original whistle-blower should be invited to give his side of the story.

The National Library of South Africa (NLSA) said two allegations within the entity had been investigated and concluded, leading to the appointment of a new CEO. It had received six recommendations on the outcomes of the investigations, some of which had already been implemented. Regarding a case of sexual harassment in the work environment, the Commission for Conciliation, Mediation and Arbitration (CCMA) had ruled that the alleged perpetrator be reinstated.

Members were again dissatisfied with the lack of information provided by the NLSA, and expressed concern at the fact that the investigations had cost over R140 000. As sexual harassment cases were a serious matter, they wanted to know why the entity had not appealed the CCMA’s ruling.

The South African Heritage Resources Agency investigation was focused on corrupt senior board members who were linked to the construction of the second phase of the Delville Wood museum in France, where the costs had been irregularly inflated. SAHRA had charged the CEO with ten charges, and she had been found guilty on all counts following a forensic investigation. She had been dismissed on 14 January 2019, after which she had approached the CCMA, and the matter was still awaiting a ruling. Three other implicated officials had been given written warnings and disciplinary action had been taken against them.

A Member asked what SAHRA’s policy on deviations was, because the project had been for R24 million, but the entity had ended up spending R56 million. The entity was also asked what action had been taken to recover the lost money.

Meeting report

National Arts Council: Investigations

Mr Hartley Ngoato, Chairperson: National Arts Council (NAC), said that there were investigations under way regarding the applications of Mr Freddie Nyathela (President of the SA Roadies Association) dating from the year 2016. The investigations had been dragging on for years, and the allegations had dented the entity’s reputation.

Following the whistle blower’s signal and subsequent investigations, the forensic report showed that the chief executive officer (CEO) and chief financial officer (CFO) of the National Arts Council (NAC) had inflated salaries and were receiving bonuses that could not be accounted for. Business Innovations Group (B.I.G.) was appointed to carry out the investigation as an independent body, but then conflict had arisen between the CEO of the entity and B.I.G.

Gobodo Forensic and Investigative Accounting (GFIA) had then been appointed to assume investigative duties on the matter at hand. The CEO, Arts Development Manager and Secretary of the board had undergone a disciplinary hearing, and recommendations were made regarding salary and bonuses.

Investigations were concluded in 2018, and the CEO had been found not guilty and had to be called back to duty. The disciplinary hearing against the CFO had been halted after he resigned, and the CEO’s disciplinary hearing was then concluded after the investigations. The Secretary of the board was dismissed after the disciplinary hearing.

He said that only one investigation was pending for the year, and it was that by the Public Protector.

The investigations incurred huge costs for the entity, since some were based on false allegations.

Discussion

The Chairperson said that the NAC should have informed the Committee earlier about the investigations and help would have been provided, such as advice on the matter and what procedures to follow when undertaking such a case.

Mr W Faber (DA) suggested that there should be an independent investigation body to treat cases such as the NAC one, to improve reliability. For example, the Hawks had independent investigation units. He would like to have a copy of the investigation report from the NAC so that it could be scrutinised.

Mr T Mhlongo (DA) complained that the presentation was a summary, lacking content and detail. He requested the NAC to provide detailed financial accounts indicating how much it had spent on the investigations.

Ms V van Dyk (DA) asked about the action that had been taken against the whistle-blower on the case. The salaries of the CEO and CFO seemed to have been inflated and combined, accounted for about 32% of the bonuses. She said the Hugh Masikela Foundation did not exist, and the other organisation was potentially not legitimate. Why had they granted R270 000 to the bank that had applied -- why where they deserving? What had happened to the money that had led to the investigation?

Mr B Madlingozi (EFF) asked what the Chairperson had meant by the words, “the Freddie Nyathela case died a natural death”. He asked why the entity was dealing with a lot of investigative bodies, having jumped from B.I.G to GFIA. He suggested that Mr Nyathela should also be invited to come and tell his side of the story, as it was not clear as to why his application had been ignored. He agreed that the NAC had provided the Committee with a summary of a presentation, instead of an actual presentation.

Mr M Seabi (ANC) said the matter at hand was a very serious one. The CEO was supposed to have made sure that the Committee got a full report. It was a major concern that there were five investigations targeting top management. Why had the NAC not done a background check on the accused CEO before his appointment? Why were the hearings stopped just because the accused resigned? Why were investigations into the cases paused and not continued? He asked what fate had befallen the secretary of the board after the investigations. Had the board ever held key performance factor reviews in order to restructure?

The Chairperson asked for more information on the NAC’s relationship with Gobodo, and why the investigation had been moved from B.I.G to them. She said that GFIA was an independent organisation and the issue of accountability was of concern. She emphasised that the NAC board should honour minutes, and always adopt and sign them for keeping records. The point had been made by the Committee Members that the presentation had been too brief and more information was required, Documents should have been submitted to the Committee prior to the meeting, as those would have helped them to understand the presentation.

The Department was there to help the NAC, so the entity needed to keep the Committee informed on matters such as the investigations. It should submit the supporting documentation for the investigations so that MPs could have a look at them.

NAC’s response

Mr Ngoato said the reports on all the investigations would be made available to the Committee. He said that B.I.G and Gobodo were independent bodies. The Public Protector had started work on the Nyathela investigation and its report would also be submitted once concluded. He asked the Chairperson how many independent bodies the NAC had to consult in order to show that it was taking the matter seriously.

Mr Mhlongo interjected, saying that the report from the NAC had stated that the document could not be used in court.

The Chairperson asked Mr Mhlongo to wait to be afforded an opportunity to speak.  

Mr Ngoato said he would do his best to give the Members as much detail as possible. The National Treasury had received a lot of communications from Mr Nyathela, who had now approached multiple investigative bodies, including the Public Protector, in an attempt to find a settlement. He stressed that the matter had to be concluded quickly because the investigations were costing taxpayers’ money.

He said that the presentation had been summarised as the entity had been allocated only one hour for presentation.

The first investigation regarding the application of Mr Nyathela had been conducted by B.I.G. in 2016. The forensic report had confirmed that the NAC had done nothing wrong, after which the Mr Nyathela made the allegation that the lead investigator of B.I.G. was allied with a board member of the NAC.

The second investigation was therefore based on that allegation. The NAC had made its relevant submissions.  The previous board had been responsible for inflating the salaries of the CEO and CFO, and the investigation had found that the secretary of the board had manipulated minutes of the board meetings, and hence was let go based as the charges were found to be credible.

The NAC had submitted the report required by the Committee, and two individuals had been dismissed base on the investigation of GFIA. The NAC had asked the Public Protector if there were any names available of the people accused of the allegations.

GFIA were not appointed by the NAC, but rather by the Department, and the NAC had complied with all the Department’s requests. Mr Nyathela’s allegations had not been substantiated, and the forensic reports would be provided to the Committee.

The Chairperson interjected, stating that time was running out and the Committee had two more presentations had to be heard. She asked the NAC Chairperson to give more concise feedback.

Mr Ngoato said that the media was reporting false information about the NAC, and this was where people were getting their information about the Council from. He had been the Chairperson of the NAC board since inception, and could provide all the investigative reports of the entity at the Committee’s request.

Mr Mhlongo interjected on a point of order, arguing that Mr Ngoato was giving irrelevant information that was not providing answers to the questions asked.

The Chairperson stated that Mr Ngoato had stated that he would provide the Committee with information and documentation, so she did not see anything wrong. She asked him to continue his response. Members would be given a chance to raise further questions and the responses would be sent in writing, because time was running out.

Mr Ngoato said an investigation’s results did not imply that the court would rule in favour of the investigation, and the entity followed a court ruling. The forensic investigations had been funded by the Department of Arts and Culture. The NAC did not have any right to take legal action against the CFO, because she had already resigned from the entity.

He stated that the reports would be made available to the Committee.

Mr Mhlogo insisted that the NAC chairperson was hiding information, and had not accounted for the question on how much had been spent on GFIA. How had it been possible that the minutes were not given to the Chairperson to sign, and confirm they were correct? The Committee had the report on the investigation, and it stated clearly that it could not be used in court.

Ms Van Dyk asked what the planned remedial action on the matter was. She agreed with Mr Mhlogo that the board must approve minutes. She requested an indication on what the salary increases for the board members for the previous five years had been.

The Chairperson proposed that the answers to the question not be given at the meeting, but rather be submitted in writing since time was running out.

Mr Madlingozi said that Mr Nyathela had played an instrumental role in exposing the corruption within the entity, and supported her proposal.

Mr Seabi also supported her proposal that the questions raised be submitted in writing, and said the entity should be called again in the future to account. The presentation had not given enough information. He appealed to the NAC to provide more information prior to meetings, emphasising that details were essential.

The Chairperson asked the NAC if the application of Mr Nyathela had been complied with.

Mr Mhlogo said the Chairperson was moving accountability away from the NAC, and it needed to be held accountable.

The Chairperson told Mr Mhlongo that he should show a little more respect to the Committee, and not speak whenever he felt inclined to do so. She reiterated that the NAC had promised to submit all the requested reports, and it would be called to another meeting to come and account.

Mr Ngoato repeated that the NAC would provide the necessary forensic reports to the Committee, and provide minutes of the meetings and financial reports.

The Chairperson requested the Members to be more respectful when engaging. She thanked the NAC for presenting, and said the report had to be closed as it had dragged on for too long. 

National Library of South Africa: Investigations

Mr Themba Dlamini, Chairperson: National Library of South Africa (NLSA), said two allegations within the entity had been investigated and concluded, leading to the appointment of a new CEO. It had received six recommendations on the outcomes of the investigations, some of which had already been implemented. He emphasised that the board could not implement some of the recommendations, as they had been found to be contradictory to the entity’s mandate. For example, the investigation regarding unprofessional behaviour had not provided conclusive evidence, and recommendations could not be taken on inconclusive reports. However, the NLSA had taken the other relevant recommendations into account.

Regarding the investigation into financial misconduct, a whistle-blower had informed the entity on 16 October 2018, and an investigation had been carried out. The outcomes were that:

  • Mr Mashudu Mavhungu had decided to settle the matter out of court;
  • Dr Khomotso Marumo was suspended and reappointed upon conclusion of the investigation.
  • Prof Rocky Ralebipi-Simela was implicated, and was the former CEO of the entity.

Regarding the human resource (HR) management case involving Mr Mandla Matyumza, in connection with sexual harassment in the work environment, the Commission for Conciliation, Mediation and Arbitration (CCMA) had ruled that he be reinstated. This reinstatement had since been delayed to let time pass and to allow for a healing process to take place in the work space.  

Discussion

Mr Mhongo said that the presentation had been too brief, and had not provided all the necessary information. No mention was made of the financial statements and the entity seemed to be operating without a financial policy. Why had the chairperson had made absolutely no mention of the fact that the Auditor General (AG) had given the NLSA a qualified audit report? Who had come up with all the recommendations that had been made? Was Mr Matyumza getting paid while at home waiting for the restoration of dignity at the entity?

Ms Van Dyk asked which organisation had been appointed to handle the investigations, as these had cost the entity R142 000. She asked it to provide a summary of the labour relations case, and asked about a reported high court case, wanting to know what that was about.

Mr Madlingozi asked the NLSA to submit documents that described the investigations, as he specifically wanting to know how the R142 000 had been allocated during the investigations. He asked if a settlement had been made with the whistle-blowers, and if there were any plans in place to avoid such cases from occurring in the future.

Ms V Malomane (ANC) said the presentation had been too short and did not provide the Committee with much information, and requested more content and detail in the NLSA’s next presentation. She asked why the board was mainly composed of males. There was no clear indication as to when the board was planning to appoint a new secretary who was qualified for the job. She also requested the entity to present a brief financial report at its next engagement with the Committee.

Mr J Mamabolo (ANC) asked what marketing method was being used by the entity to popularise itself.

Mr Seabi said that the CCMA ruling was not a final ruling, and could have been appealed given the gravity of the allegations at hand, especially as it was a sexual harassment case. He asked why the board had been comfortable with a ruling of this nature without appealing it. He requested the entity to clearly state what the whistle-blowing had been about.

The Chairperson said the Department was dealing with too many fruitless entities, funding 26 to be exact, and whose reputations were high levels of irregular expenditure and unaccounted for financial transactions. The Department was therefore looking into reducing the number of entities, and the cut would start with those entities that were not performing. She urged the NLSA to become professional and send in reports before arriving at a meeting, to allow the Members time to go through them.

NLSA’s response

Mr Dlamini said that the financial policies were available and were being used within the entity.  The recommendations arising from the investigations had come from an external service provider. The NLSA would submit a financial breakdown of the R142 000 that had been spent on investigations. A second investigation coming up had been quoted at R193 104 by another external service provider.

Regarding the appointment of an interim CEO, he said that the appointment had been made by the board, since none of the board members had felt fit to take up the position.

The Chairperson interjected, informing the Members that time was not on their side. An announcement should be made to the Committee Secretary to reduce the number of entities that came to present to the Committee per day.

Ms Van Dyk agreed that the time allocated was indeed too short to deal with three entities.

Mr Madlingozi asked what the Department was doing to come up with better ways of dealing with sexual harassment, and also agreed that three entities per day was too much.

Mr Mhongo concurred that the Committee could not deal with three entities in one day. 

The Chairperson apologised to the entities and their presenters, stating that the fault came from her office. She requested NLSA to give the final comments.

Mr Dlamini said that all the questions asked had been noted and the replies would be sent through. He promised success in the new financial year that would inspire the reading population, as the NLSA would be working on popularising itself.

The Chairperson said that it would soon be the start of “16 days of activism,” so sexual harassment cases could not be taken lightly. She asked the entity how the victim was feeling, having to come to work in the same environment, knowing that the accused would be coming back to work.

South African Heritage Resources Agency: Investigations

Mr Moses Makhweyane, Chairperson: South African Heritage Resources Agency (SAHRA), said that the council had approved the appointment of a service provider to implement the second phase of the Delville Wood Memorial in France. There had been allegations of irregular expenditure, non compliance with supply chain management policy and a breach of oversight responsibility.

The Council of SAHRA had charged the CEO with ten charges, and she had been found guilty on all counts following a forensic investigation performed by Pricewaterhouse Coopers (PWC). Recommendations in PWC report included:

  • Taking disciplinary action against the offenders;
  • Suspension of the SAHRA CEO;
  • Recovery of monies owed to SAHRA;
  • Quantification of the loss suffered by the entity.

The CEO had been dismissed on 14 January 2019, after which she had approached the CCMA, and the matter was still awaiting a ruling. Three other implicated officials had been given written warnings and disciplinary action had been taken against them.

Discussion

Mr Mhlongo asked what the entity’s policy on deviation was, because the project had been for R24 million but the entity had ended up spending R56 million.

Ms Van Dyk said that there were allegations all over the media against SAHRA to the value of R82 million, and requested clarity on that. She asked where the previous board chairperson was, and what action had been taken to recover the lost money. What their status of the three who were implicated within the entity?

The Chairperson asked Ms Van Dyk to adhere to the time constraints, and she replied that she would forward written questions to the entity.

Mr Madlingozi asked if the Committee had any knowledge of who was running the big companies that were ‘chowing’ money, with no accountability or responsibility.

Mr Seabi asked whether the SAHRA had an internal audit function which should have picked up this irregularity from the beginning.

The Chairperson stated that the three entities that had appeared before the Committee were bad at what they did and had poor monitoring systems. She encouraged them to go back and re-strategise.

She commented that it had been SAHRA’s internal audit that had raised a flag and caused it to act.

Adv Lungisa Malgas, Acting CEO: SAHRA, referred to the money spent on the memorial in France in March 2016, and said that the company involved, Anix Consulting, had asked the SAHRA council to review the R24 million and increase it to R39 million, due to the economic meltdown. The scope of the project had been increased without prior knowledge, hence inflating the costs. The entity had no information about the deviation.

The Chairperson reminded the entities that they should always prepare properly before coming to meetings, and should bring all the relevant information to help the Members follow the proceedings better.

The meeting was adjourned.

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