The Committee was briefed by the Democratic Alliance on its motion for this oversight committee to hold an enquiry on the use or misuse of funds by the National Arts Council (NAC) in partnership with the Mzansi National Philharmonic Orchestra (MNPO). It raised concern over the establishment of the MNPO and claimed that it did not comply with public finance governance, nor was it handled with openness. It suspected that the MNPO had been 'captured' with Mr Tembe at the centre of it. There was a conflict of interest arising from Mr Tembe being the MNPO CEO, NAC deputy chairperson and Artistic Director of two regional orchestras. The Committee was asked to launch a full investigation. About 11 000 signatures had been submitted for the petition against the R54 million funding for this special project of the MNPO. The Special Investigating Unit (SIU) was doing an independent investigation of the NAC on how it handled MNPO matters. The SIU requested documents from the NAC and the DSAC which were submitted. The SIU is yet to confirm if the investigation falls under its mandate.
The Committee received an overview by the Department of Sports, Arts and Culture (DSAC) on the MNPO establishment followed by the MNPO briefing the Committee on its annual report. The Committee also was briefed on the MNPO audit by Auditor General South Africa (AGSA). AGSA is investigating a potential irregular expenditure R41.5 million by the NAC. It has since received all documentation needed to conduct an assessment and is still busy with it.
The National Arts Council (NAC) responded to AGSA and spoke about the “misrepresentation of facts" on the MNPO audit during a presentation made by AGSA on 21 February 2023. The NAC disagrees that the transaction is irregular expenditure as it was in accordance with the NAC Act.
The Minister responded that a conflict of interest did not arise from Mr Tembe positions.
The Committee agreed that they would wait for the report from the AGSA, despite the DA asking that these investigations run concurrently. AGSA was asked to submit a timeframe for when the report will be finalised.
DA petition on Mzansi Philharmonic Orchestra
Mr T Mhlongo (DA) and Ms V Van Dyk (DA) briefed the Committee on the Democratic Alliance petition to investigate the Mzansi National Philharmonic Orchestra (MNPO). The dispute between the National Arts Council (NAC) and the Auditor General of South Africa (AGSA) over possible irregular expenditure of money paid to the Mzansi National Philharmonic Orchestra is still unresolved. In the past, responses from the Department and the MNPO CEO have not been clear. The lack of a feasibility study and a budget which is updated regularly, based on what is happening on the ground is problematic. The business plan has not been shared with the Committee.
It appears that the Orchestra is controlled by one dominant individual, who at his own discretion has a touring national orchestra where a third of the budget is spent on travelling. It is unethical for one individual to hold all these positions:
- CEO / Artistic Director of two regional orchestras, and thus a beneficiary of MNPO funding distribution
- MNPO CEO and Artistic Director
- NAC Board Member
- MNPO Board member.
Mr Tembe signed the MOA with the NAC and formed part of the team distributing the funding to other beneficiaries with no monitoring in place, especially since the money recently distributed by the MNPO was done without applications, motivations, or stipulations on how the money should be used.
The DA received letters confirming that Task Team members have not been reimbursed despite R1 million deposited into the KZN Philharmonic Orchestra account of which Mr Tembe is CEO, to pay for the running costs of the Task Team. The Task Team also did not receive the final report submitted to the Minister on its behalf. The Task Team was clearly dysfunctional.
Given the lack of transparency, the DA called for an independent investigation into the MNPO. The DA and others will be submitting relevant information to assist the SIU.
Department of Sports, Arts and Culture (DSAC) overview of MNPO
Dr Cynthia Khumalo, Deputy Director General: Arts and Culture Promotion, DSAC, presented a follow-up to its 16 September 2022 briefing on the establishment and status of the MNPO. In 2006/07 the responsibility for the direct funding of the three regional orchestras was shifted to the NAC. The funding was ring-fenced and stipulated in the grant allocation issued by DSAC to the NAC on an annual basis.
South African orchestras are dominated by white musicians and African practitioners have been largely marginalised. Funding was mainly to orchestras in three major cities, the KZN Philharmonic Orchestra, Cape Town Philharmonic Orchestra and Johannesburg Philharmonic Orchestra. In 2019 Minister appointed a team of experts to conceptualise and guide transformation with R1 million allocated through the NAC for conceptualisation and registration of a legal entity.
After the concept document, an advisory board was appointed with Mr Bongani Tembe who was first the project manager and then CEO of the Mzansi National Philharmonic Orchestra which was registered as a non-profit company in September 2021. The funding was R11.5m for 2019/20; R21.5m 2020/21 and R21.5m 2021/22. The total amount is R 54.6m, minus 5% for the NAC for project administration. The NAC signed an MOA with the MNPO and transferred R41,5m to it in November 2021.
The NAC followed due diligence for the MNPO audit. It had an MOU with DSAC and a MOA with MNPO. AGSA could not conclude on the audit because of NAC management not providing key outstanding information. AGSA is investigating the potential irregular expenditure of R41.5 million. NAC has stated that all documentation was submitted for the audit but its understanding was that AGSA would still undertake further investigation as it could not reach a conclusion on the MNPO audit. As part of this DSAC was requested to furnish the following: establishment and appointment process approvals; budget approval; proof of how expenditure was utilised. The NAC then provided the MNPO Annual Report Jan – Dec 2022 with financial overview and grant funding breakdown.
DSAC is aware of the criticism levelled against this noble initiative aimed at bringing transformation to this sector. However, it is implementing the RWP which requires implementation of this initiative.
Mzansi National Philharmonic Orchestra (MNPO) briefing
Mr Bongani Tembe, MNPO CEO, said that the NAC entered into a MOU with DSAC and a Memorandum of Agreement with the MNPO in 2021. The first instalment was disbursed in November 2021 with the aim of the transformation of the orchestral music sector in South Africa. Its focus is on music creation and preservation that reflects South Africa. The NAC provide oversight to ensure compliance before funds are released to it.
MNPO has a national cadetship programme to recruit national talent. It contributes to job creation by offering training and development, working directly with professional musicians who share their experience. The MNPO also has a fellowship programme which supports South African musicians who have earned scholarships at international schools.
To date, the MNPO has created more than 1000 jobs and is supporting more than 40 orchestras across the country, including universities. The MNPO has broadened financial support of orchestras to other provinces beyond Western Cape, Gauteng and KZN that were originally funded.
Mr R Madlingozi (EFF) welcomed the NAC and AGSA presentations but expressed his concern for the MNPO. It is obvious that orchestra spaces would be white-dominated as the genre is the white kind of music. The MNPO should be focussed on transforming the orchestra in South Africa towards having an “African feel”. However, this had not been the case. We are witnessing what he would refer to as the “Zulufication” of Bach and Mozart kind of music. Mr Tembe, who is at the helm of the project, is mostly interested in creating a “European washed-down” kind of orchestra. Hence, we have an audience that is black and one that is white which Mr Tembe claims is good for the rainbow nation. However, music is cultural. Unlike football, it must reflect the customs of its country’s people – indigenous people.
Mr Madlingozi asked if the MNPO had an effective supply chain management (SCM) system. Who is the SCM official who was not aware of the irregular expenditure? Seeing that the MNPO does not comply with SCM requirements, was the tender for this project published in the official government tender bulletin? If not, was it recorded by the official in charge? Does the Department and NAC believe that mutual trust and respect is upheld in the MNPO exercise? If yes, can they explain in what way they believe these values are promoted.
In accordance with the Public Finance Management Act (PFMA) regulations, Mr Madlingozi asked if there was an official who used the position for personal gain or the improper benefit of someone else in the exercise. The denial of irregular expenditure by the NAC indicates that they are not cooperating with the accounting bodies, and thus further breaking the conditions of the PFMA. He asked if this did not equate to fraud.
Ms D Sibiya (ANC) asked if DSAC followed up the allocation of funds to the MNPO. Which provinces held the community engagement programmes and what is the national distribution per province of the fellowship programme?
Mr D Joseph (DA) asked if the AGSA was still busy investigating the R41 million and R10 million respectively. What were the latest findings about these investigations? He asked if the NAC agreed with AGSA that in 2021/22 there was irregular expenditure of R41.5 million. Did the NAC chairperson write the MOI herself? Is the final draft copy available to the Committee? Was this signed copy above board according to DSAC?
There seems to be contradictory information on whether a feasibility study was done prior to the establishment of the MNPO. DSAC maintains that the study was concluded. However, there are still questions about it. He asked if the task team had been paid to date, as it was previously raised that they had not. He expressed concern to how most of the funding is spent on travel and accommodation. This means the team is dysfunctional.
Mr Joseph said that there was a plan for transformation, diversity and inclusivity in the orchestras. Had there not been such a plan in the three provinces. This follows the presentation from DSAC that the South African orchestra is widely dominated by white musicians. What is the status, size and diversity of the national orchestra?
Mr Joseph noted that the 2018 Revised White Paper on Arts, Culture and Heritage (RWP) had indicated the need for transformation change. However, the White Paper had not changed procurement compliance responsibility. Despite DSAC saying it had to follow the White Paper, it is apparent short-cuts were taken and there was a deliberate deviation from Treasury and PFMA rules. How many companies exist to date since the decision to establish the national orchestra and have new companies? What is the status of the provincial orchestras that currently exist? What will happen to their funding? Will the provincial orchestras cease to exist which they will if they do not get funding?
Ms V Malomane (ANC) asked what aspects of the RWP have not been effected? What plans exist to implement the objectives of the RWP? What support from social partners does the MNPO have? What are the opportunities that could be developed?
Ms Malomane referred to the meeting 16 September 2022 meeting and said the current meeting has been redundant as they are discussing the same issues already addressed such as appointment of the board and its structure. DSAC explained these issues to the Committee in the previous meeting and these matters were clarified then. The Committee should refer to the minutes of that meeting as it would be helpful. DSAC mentioned that AGSA asked for further documentation on 7 January 2023. Had AGSA received all the documents from DSAC and NAC? If so, how far is the investigation if it has all the supporting documents asked for?
The disbursement of the funds overlapped with COVID-19. Did this affect it in any way? Could Covid-19 be a factor for this irregular expenditure? She is looking forward to receiving the financial statements as this would allow the Committee to see how the money was spent and distributed. Why had DSAC instructed the NAC to disburse the money to only three provinces? What about the rest of the provinces?
Ms R Adams (ANC) asked for the provincial distribution of the grant funding programme? How has the programme supported many artists? Why is the MNPO not supporting orchestras from the townships? Why are worthy African composers and musicians not supported adequately?
Ms V Van Dyk (DA) asked if the feasibility study was sent to the task team members for approval before it was sent to the Minister. She asked if the minutes of the meetings in which this was discussed are available to the public. Were any findings published? Who did the task team members consult within the sector? She asked for the list of musicians from music schools or universities. On what basis does the PFMA allow the MNPO to distribute money to other entities? What are the criteria used to fund other entities? There is a list of grant recipients for professional and amateur orchestras and training groups. What was the process of engagement with these entities and did they apply for funding? What criteria was used to allocate the funding? How was the balance of R10 million from the budget used? What was the cost breakdown for the December tour and is this available to the Committee?
The MOA was signed in September 2021. How were the funds transferred from DSAC to NAC in 2019 for the purpose of the MNPO without a signed MOA? The MOA states that the second instalment of funds will be paid to MNPO after audited financial statements were received no later than September 2022. Has DSAC received these?
Ms van Dyk requested a cost schedule for marketing and advertising and specifically for the fees paid to the PR agency. What percentage of total spending was spent on marketing and PR? She asked how for 21 and 28 October 2022, there were the same number of people but the values for each day differed significantly. She asked for an explanation of how they got to these money figures. How is the grant allocation going to be different from the regional orchestra problem we are facing currently? Is this not a duplication of the same problem? What are the cost implications for having an international person in the preliminary schedule? How inclusive is the process and are there no local people that could do the same for less?
Mr M Zondi (ANC) noted that he was more interested in the previous DSAC presentation as it spoke much to the MNPO itself and the background history. He asked why the MNPO approach is not orientated to showcase orchestras across the country as part of the reorientation as outlined in the RWP. How can we Africanize the orchestra to be accessible especially to our youth? Does the MNPO partner with other music genre artists outside of the orchestra?
Mr T Mhlongo (DA) noted that the DA is not against the orchestra. However, the implementation of it is questionable. He asked the Minister if he did you not see a conflict of interest when the CEO of the MNPO is the deputy chairperson of the NAC? Do you not believe that the NAC did not follow due processes in the appointment of the MNPO CEO? Who is the accounting officer of the NAC?
Mr Mhlongo wanted to know who drafted the MOI.When was it drafted? How long after it was drafted did they wait to get funding? Who signed the MOI? Were there initials on all pages of the MOI? Does the MNPO account to the NAC? What role does the NAC executive have to ensure accountability for the R41 million transferred to MNPO?
Mr Mhlongo asked AGSA why it did not ask for the documents directly from the NAC? Is that not due process? In terms of openness, did NAC delay giving the required documents?
Mr Mhlongo asked Mr Tembe about his different name registrations at Home Affairs, DSAC and CIPC where MNPO is registered as a non profit company (NPC) with his name as Bongani Tembu. Why is it different from the name that he is using now? Who was present in the meeting with the NAC chairperson when the MNPO was approved funding? He requested minutes of those meetings where the NAC approved all the processes for them to transfer these funds.
He asked the Committee to be diligent in its oversight work. It must not find itself in a situation like the Zondo Commission where it stated that the parliamentary committees failed to do diligent oversight. He asked that they apply their minds and do a full inquiry where former and present board members are given the opportunity to give evidence including Mr Tembe, the NAC chairperson and everyone involved.
The Committee Chairperson asked what recommendations AGSA made to the Department and NAC. There is information outstanding such as the MNPO financial statements and the AGSA audit outcomes for the R41.5 million. She asked Mr Mhlongo when the SIU will commence its investigation? She asked the Committee to confirm if they have to wait for the SIU to commence its investigation before they present a progress report. She asked that everyone should contribute as there is a proposal by the owner of the motion.
Ms Mbali Tsotetsi, AGSA Deputy Business Executive, replied that in accordance with the framework such assessment of a potential case of irregular expenditure should be done by the accounting authority. In this case, this would be the NAC Council. She clarified that irregular expenditure still under investigation is not a confirmed irregular expenditure. This is why the assessment by the accounting authority needs to happen:to confirm if the amount was indeed irregular and it would thus move the transaction to a note in the annual financial statements about confirmed irregular expenditure. At this point, the 41.5 million had not been confirmed as irregular expenditure. It was agreed that the amount would be recorded the way it did on the financial statements as the NAC and AGSA could not get to an agreement on some of the matters that AGSA would raise.
The NAC management explained to them the historical background of the establishment of the MNPO. They explained why the standard criteria to receive funding was different for the specific orchestra. The two authorities could not conclude on the matter, and hence, AGSA approached DSAC for more information.
She confirmed that they had received all the documentation and are still busy with the assessment of all information. Should they find any issues; they are obliged to engage the management first before making any conclusions. It is only after this process that they would be able to report feedback.
Ms Tsotetsi noted that there is not an MOA guiding how the funding should be distributed between the NAC and the MNPO. Distribution of funds by the NAC is guided by its policies and the NAC Act. However, funding to other parties by the MNPO should be outlined in the MOA.
Ms Tsotetsi replied that the only recommendation that AGSA made to the NAC was to record the irregular expenditure amount under investigation. They would follow up during the 2022/23 audit to find out if the NAC had confirmed the amount as indeed irregular expenditure.
Mr Xolani Zicwele, AGSA Senior Auditor, replied to the questions on the PFMA, documentation and ring-fencing policy. Fund distribution is regulated through the NAC Act and through the contract that exists between NAC and a beneficiary body. However, the MNPO is different because it was established with an objective in mind and is not receiving funding sourced as a normal grant request. Due to this difference, it would have been ideal for this specific process to be agreed on by the NAC and MNPO with the inclusion of DSAC, on how these funds would be used to uphold the objectives. He did not have the information that details what these processes entail currently. However, the NAC paying the money to the MNPO would have been an action that would have been ignited by an instruction informed by such a process.
NAC made representations on the appointment and selection processes to DSAC but fell short in submitting the documents confirming that due process was followed in the appointment of the orchestra. Instead, NAC provided the White Paper and the national budget speech. The White Paper, however, informs more about the concept, and that is not the concern of the enquiry. What processes were followed that lead to the eventual appointment of the party that would then be selected to uphold the objective of the project?
Due to representations from NAC management that could not be supported at the time, due process by the PFMA framework needed to be followed and so AGSA could not instruct the NAC at that stage to disclose the amount as irregular expenditure in the financial statements. The audit concluded that the amount be disclosed as irregular expenditure under investigation and to let the NAC have engagements with DSAC to confirm that everything is above par. AGSA would be able to conclude if the transaction was irregular if it could manage to source the information needed. Its recommendation is that the transactions be further investigated to confirm if they are irregular.
Mr Tembe replied that a lot of the information stated in the meeting is highly inaccurate. It was important for the Committee to pursue the truth. The accusation that the MNPO received funding within a month was false. The Minister appointed the MNPO board in December of 2019. Hence, the board had already been working when the company finally got registered in September 2021. The funds were transferred on 11 December 2021.
The MNPO submitted a comprehensive annual report for January to December 2022. The report was submitted before the due date it was given of 16 January 2023. Most of what he will say is contained in that report. He quoted the mission statement of the MNPO. The MNPO has managed to broaden the orchestra experience throughout South Africa in 2022 by distributing R20 million to orchestras in communities outside of the three provinces, which previously did not benefit from any financial support. The MNPO prides itself in knowing that they have met their mission and still go the extra mile.
In the report, the MNPO has outlined all 38 organisations that received funding excluding the universities. Of these organisations, Cape Town Philharmonic Orchestra is the only organisation that turned the grant down. Of the R20 million, the MNPO had distributed R15 million to date. They ensure that all the organisations are tax compliant. During 2022, the MNPO had provided 1 010 job opportunities to orchestral musicians, choirs and other artists. In a space of five months, the MNPO had created over 1000 job opportunities and Mr Tembe said that this is to be commended.
The MNPO also has the cadetship programme, which work closely with regional orchestras. Thus, it is not a duplication but a partnership. The cadets are based in regional orchestras. The document details the number of cadets based with Johannesburg and Durban Philharmonic Orchestra etc. These cadets do not necessarily come from the cities in which they are based.
Mr Tembe cited his respect for Mr Madlingozi both as an artist and as a legislator and confirmed that the MNPO is doing all kinds of music. It is evident from the report that they have collaborated with non-classical musicians. They have done a concert where artists like Msaki and PJ Powers, to name a few, performed their own music with KZN Philharmonic Orchestra. It was a powerful concert. Mr Tembe confirmed that no fraud took place in the project. The project was a specific one that flows through the ring-fenced funding that emerged from the White Paper. It was therefore not through any tenders. The MNPO did a major project in Mpumalanga, in partnership with the Mpumalanga Chamber Orchestra. This featured Ehlanzeni Choral Sound, Kanyamazane Adult Choir, Mpumalanga Ensemble and Mpumalanga Music Initiative. The MNPO has been to Soweto and has now begun funding a new orchestra that is being formed in the Northern Cape. He went to note how the Eastern Cape Philharmonic Orchestra held its first concert in three years. The concert was hugely successful. The MNPO has funded the Free State Philharmonic Orchestra for the first time. The MNPO has many other events scheduled and there are many small township orchestras they are working with. During the tour, they had a performance on the Cape Flats using the local choirs and the local community.
Mr Tembe replied that there are more than 40 organisations that the MNPO works with as its social partners across the country. These included universities like UNISA and Wits.
On transformation, Mr Tembe confirmed it is true that this is a predominantly white space and there is an underrepresentation of black musicians in the major philharmonic orchestras. There had been some progress but there is still a long way to go. There are fewer than 30 black musicians employed on a full-time basis in the three major orchestras and so there is still work to do.
Mr Tembe replied that the MNPO is funding 38 organisations across the country. These organisations come from seven of the nine provinces. They are supporting orchestras from the townships as well. For example, in Johannesburg, they are not just supporting the Johannesburg philharmonic orchestra but the Ionian Musical Society based in the township of Soweto. They are also supporting the Morris Isaacson Centre for Music based in Soweto. The MNPO funded over eight projects in the Western Cape. These projects are based in Paarl, Hout Bay, Atlhone and other places on the outskirts in the Western Cape. They are also planning to meet with the Cape Town Philharmonic Orchestra to find out the reasons it did not accept the MNPO funding.
The grants were distributed by the MNPO through the Artistic Planning Committee formed by the MNPO board. The Committee comprised of “well-respected” musicians and music educators in South Africa. He confirmed that he sits in the meetings but excuses himself when it comes to the funding of the three main orchestras in South Africa. The committee deliberates and utilises their knowledge of the sector and make recommendations to the board. They follow a criterion that is in place for funding.
The feasibility study was done under the custodianship of DSAC. It is then up to DSAC what part of the study it wants to accept. DSAC is also not obliged to publish the feasibility study. MNPO has a comprehensive business plan in place.
Mr Tembe claimed that the narrative that the MNPO is not here to destroy regional orchestras is completely false and without foundation.The MNPO has funded regional orchestras and draws its members from the regional orchestras so it would not want to “kill” them as MNPO makes use of musicians on an ad hoc basis. The MNPO wants provincial orchestras to thrive.
Mr Tembe admitted to not understanding some of the questions asked by Ms Van Dyk. However, their national tour was received with enthusiasm and they would get full venues even in Mpumalanga. The tour was also embraced by the media and a study was done by an independent company. He notes that in Cape Town, their tickets were sold out 12 days before the date of the performance with hundreds of people in the waiting list.
According to the MOA between MNPO and NAC, an agreement was reached that the deadline for the 2022 annual financial statements submission should be extended until 31 March 2023 as performances of the orchestra began in July, and thus most of the funds had not been used. There had not been the distribution to the provinces and a lot of programmes had not been implemented. The annual report is therefore due to be given to NAC on 31 March. MNPO has the draft of the report and Mr Tembe was delighted to say that it had received an independent clean audit. The board approved the annual financial statements on 24 February 2023. The MNPO is finalising the report and will then send to the NAC.
The inaugural tour was not held only in the three major provinces, but in Mpumalanga as well. They are planning on touring more provinces in future. They wanted to start in the provinces with the big orchestras where they could pull in other orchestras nearby. They also partner with other genres of music like jazz and African music and commended this “great question” from Mr Zondi.
Mr Tembe expressed delight that Mr Mhlongo said they were not against the orchestra or the concept, but the rolling out of the orchestra. He noted that DSAC had explained in detail this roll-out and how it was implemented.
Mr Tembe prepared to respond to the “big question” on the conflict of interest. However, Mr Mhlongo interjected to say that the question was directed to the Minister.
The Chairperson instructed Mr Tembe to leave the question for the Minister.
Mr Tembe concluded by thanking DSAC and NAC for implementing the White Paper project. They are receiving positive feedback from people on the ground. The project has opened job opportunities and seeks to transform the sector. The project is not a heist but a good programme benefitting 38 orchestras across the country.
National Arts Council response
Ms Celenhle Dlamini, NAC chairperson, thanked the Committee for inviting the NAC alongside DSAC to the meeting to address the issues it would like clarity on. It is a pity that Council emails are being illegally distributed publicly by persons known to Members of Parliament who presented the email as said to be coming from the NAC chairperson. She told the Committee that she would go back to review the context of the email after the meeting is concluded.
She noted that the former MNPO Interim CEO sent a draft MOA for review to the NAC chairperson and that it is false and impossible that she had written the MOA from scratch. Even the email put up by Mr Mhlongo, it mentioned that it was the "final version" as per the clean-up discussion between Ms Dlamini and the Interim CEO. This shows that it is the version after all errors had been cleared and the reviews had been conducted. To say she wrote the MOA by herself is inaccurate, misleading and “quite disturbing”. The review she had done was to ensure that the MOA was in line with the Council’s imperatives and what they spoke about while they were approving the agreement. Her review was to ensure that the NAC is committed to excellence within the organisation. Review of such important agreements is exemplary evidence that the leadership of the organisation is driven by excellence at both management and Council level. They take their roles and responsibilities very seriously to ensure all the principles and controls are embedded in every area of the organisation. This guarantees deliver on their mandate.
The SIU reached out to the NAC and the NAC complied with the investigation. The NAC submitted all the documentation requested of them. The NAC will wait to hear the outcome of the ruling, albeit in confidence that all that it has done on the MNPO was in accordance with the governance principles and the NAC Act.
Ms Dlamini stated that the use of personal email addresses is not unusual. She had used her personal email address since she had started working in the NAC. All council members use their personal email addresses as this is how they interact with the organisation. It is not a requirement of the NAC that personal email addresses should not be used. This had been the case even for other entities on which she had served.
She called upon the NAC CEO and CFO to explain how the letter that was written by the Council to AGSA came about. This letter indicated how the NAC wanted to state their side of the story and why they think that they had been misrepresented. They cannot leave without clarifying the narrative that they believed to be untrue.
Ms Julie Diphofa, NAC Acting CEO, explained that MNPO funding is not a matter that applies to SCM processes and thus did not need to comply with those requirements. This is ring-fenced funding received through DSAC. It has been disbursed historically to the three main orchestras. The NAC has to ensure that processes are up to par and comply with their mandate. The NAC has received clean audits for more than six years as they always follow due process with the ring-fenced funding.
The ring-fenced funding would come in a form of an allocation letter instructing the NAC how to allocate the funding it had received. The NAC is monitoring the MNPO and its allocation of funds. Approximately R20 million had been disbursed to regional orchestras to date. These orchestras are all over the country including the rural areas and townships. The information is readily available upon request. On allocation of funding, all the information was contained in the DSAC presentation. R21 million was allocated to the MNPO in 2021 and in 2022. However, the money was not disbursed at the time but earmarked for when the MNPO was registered successfully.
There had been meetings between the NAC and the MNPO where the MNPO submitted reports of what they had been doing, including the interim financial statements pending the final audited statements. These show that 77% of the funding had gone towards artistic projects including the funding of the 38 orchestras. The remaining 22% is spent on operations, administration costs including marketing costs.
The irregular expenditure is not confirmed and is still being investigated. AGSA is engaging the DSAC as part of their due diligence. AGSA requested information from DSAC on the transfer of funds to the NAC. Even the DSAC audit had no audit findings on the funds transfer to NAC.
The NAC followed due diligence by engaging with the AGSA team and providing documents as requested. They submitted their MOU with DSAC and MOA with MNPO. They submitted other relevant documents the AG requested as part of the inquiry process as well.
Looking at section 6(1) and 6(3) of the NAC Act, the NAC is free to enter into partnership with any organisation part of fulfilling the work of the NAC in any programmes that the country requires. Ms Diphofa expressed satisfaction that it complied with those sections as discussed with AGSA.
There were discussions with the NAC Risk and Audit and it was concluded that these transactions should be recorded as an ongoing assessment which was done. The SIU reached out to the NAC through DSAC, and requested information and documents including the MOA, registration details etc. This information was submitted to SIU through DSAC, and the NAC is waiting for further engagement from them.
Ms Reshma Bhoola, NAC Acting CFO, referred to the irregular expenditure framework. A transaction is to be constituted as irregular expenditure when it does not comply with legislation. AGSA had found that the NAC did not follow proper process on the funds disbursement to MNPO. However, the NAC went through the legislation and this was in accordance with section 6 of the Act and relevant policies. Hence, it thought that the transaction could not be irregular expenditure.
Previously, AGSA informed the NAC that it was yet to conduct further assessments with DSAC. NAC noted it will wait on guidance and engagement on how to handle the transaction and whether to record it as confirmed irregular expenditure.
NAC submits their ENE to the Treasury. In this, they stipulate the funding that will be ring-fenced: the disbursing of it and the following of proper processes. NAC received funding of R54.6 million which they put aside. They allocated R11.1 million to 2019/20, R21.5 million to 2020/21, and another R21.5 million to 2021/22 year. NAC follows its due process and diligence before allocating these funds. The balance of R10 million will also undergo the same treatment.
The Chairperson expressed the hope that Committee members are comparing the presentations with their notes.
Dr Khumalo confirmed that DSAC received correspondence from the SIU forensic investigator on 1 February 2023. The SIU indicated that they needed certain documents to assess and establish if the allegations fall within the SIU mandate. There were two classifications of documents required by SIU and this took DSAC some time to put together. This is because they had to compile the file physically and have the accounting official sign off on them. This was unlike AGSA where they could just email the documents. The exercise has now been completed. However, the SIU investigating officer opted for physical collection of the file which they would do on 2 March. It is only after this that DSAC is expecting SIU to confirm if it will pursue the investigation.
Dr Khumalo responded to the allegations against MNPO board members that they do not attend meetings and events. This is not true as DSAC had been invited to attend board meetings by Justice Theron. She had attended an event that was part of the tour and was welcomed by Ms Luhabe and Prof Nkondo.
On specific implementation plans Dr Khumalo repeated that DSAC has categorised the implementation of the RWP to short-term, middle-term and long-term implementation goals. Currently, they have started implementing some of the middle-term actions.
Mr Charles Mabaso, DSAC Chief Director: Cultural Development, replied that the feasibility study was necessary to assess how the MNPO was to be established and funded, given the unique history of South Africa and thus deliver according to the demands of the country. The task team is comprised of experts in the field. They presented various models on how to best approach the establishment of the MNPO in South Africa. The report containing the research and recommendations from the task team is available. The kind of orchestra that exists is thus based on the contribution made by the feasibility study.
According to National Treasury, the grant is to be given to NAC to be disbursed annually, including the ring-fenced funding.
Mr Israel Mokgwamme, DSAC CFO, noted that DSAC has never had an issue with non compliance over the past five years, including the transfer of funding to NAC as a DSAC entity.
Dr Khumalo said that most questions were directed to NAC and the Department has tried to cover those that it believed were directed to DSAC.
Deputy Minister of Sports, Arts and Culture Nocawe Mafu noted the questions presented and said that the Ministry would wait for the AGSA audit outcome.
Minister Nathi Mthethwa explained that the main objective expected from the MNPO is to indigenise and “Africanise” the genre. This is not debatable. The White Paper is clear and explicit on the matter. He quoted section 1.3 of the White Paper and said that it indicated no ambiguity. This is a point that is to be respected. The Department had been funding orchestras since the “dawn of democracy”. However, in 2004 the Department entrusted this responsibility to NAC. Thus, it ring-fenced the funding. The MNPO has ensured inclusivity of the orchestra in South Africa beyond Cape Town, Johannesburg and Durban. Previously, they would get one individual as the CEO of two orchestra programmes within these cities. This was unacceptable as there are many other orchestras in different provinces not included in the scope that would not benefit from this funding. However, this did not mean that the three cities would be deprived of funding. The expansion beyond these cities has enabled other cities like Mbombela, Kimberley, Mahikeng, Gqeberha and Bloemfontein, to name a few, to benefit from the funding. He expressed dissatisfaction at not seeing Limpopo benefitting and said it was an anomaly needing correction.
The Minister emphasised that this is progressive as 38 companies are benefitting all over the country instead of the three cities that were funded previously. He commended the number of job opportunities, noting that is what they look at as government.
The Minister replied on the MNPO funding, Mr Tembe holds no conflict of interest. He had been only responsible for the Durban Philharmonic Orchestra, but the Johannesburg Philharmonic Orchestra demanded him too. Perhaps because they have confidence in his abilities?
There can be no conflict of interest with Mr Tembe being responsible for the MNPO and the NAC. This is because the funding is ring-fenced. NAC gets an instruction but it does not sit and adjudicate. Holding multiple positions is normal if the funding is ring-fenced. Who the NAC council members are has no bearing in how the funds are disbursed.
Mr Mhlongo welcomed the responses. He noted the correction that it was two months instead of a month after registration that the MNPO got funding. He asked how Mr Tembe could have received funding within two months of registration when he was doing work that the Committee had no knowledge of.
He asked if the NAC had addressed the irregularities identified by AGSA. He applauded the MNPO for its “clean audits” with reservation, asking for the name of the auditor. He asked if it was a clean audit with no material findings at all. Did they get material findings on non compliance? He asked that they forward the audit statements to the Committee.
He agreed with the Deputy Minister that they must wait for AGSA to conclude its work. He proposed that the Committee do its work as an oversight committee to assess the allegations and move from that position.
He differed with the Minister, stating that Mr Tembe can be biased towards KZN. The instructions that NAC receives still opens room for Mr Tembe to use his discretion. For example, NAC was not instructed to fund Limpopo. The conflict of interest exists.
Mr Zondi said that he is covered by the responses received from DSAC. He seconded Mr Malomane on the petition and the AGSA report. He suggested that they give the SIU space and would talk about it after it had finalised the matter. He proposed that they wait for AGSA to finalise its assessment. He acknowledged the work that AGSA has done to date.
Mr Malomane asked Mr Tembe why the Cape Philharmonic Orchestra refused the funding. Mr Tembe was free to respond to this in writing.
Ms Adams applauded DSAC for the work done through sponsorships and activity programmes. Mr Madlingozi and his band had benefitted from the Joy of Jazz festival, sponsored by DSAC in 2022 and is due to benefit again from that sponsorship in 2023.
Mr Mhlongo interjected that the Chairperson had called him to order the previous time he raised that sponsorship of Mr Madlingozi.
Ms Adams wished Mr Madlingozi good luck and expressed her hope that the Committee would receive complimentary tickets. She told DSAC to keep doing the good work – although it is alleged that they are “useless” – the good work does not go unnoticed.
The Chairperson assured Ms Adams that Mr Madlingozi will receive the minutes of the meeting.
Ms van Dyk requested that the MNPO audited financial statements be sent to the Committee by DSAC and NAC. If NAC had the budget that MNPO has, it would have been able to fund all the orchestras. Why was the responsibility to distribute the funding moved from NAC as this is the NAC mandate according to NAC Act? There was no response on what the process was in allocating the funding to the 38 companies. Will these companies now be monitored by the MNPO? What was the criteria for the funding? How will the MNPO know that the money is used for its intended purpose?
Mr Sibiya reiterated that the Committee wait for the full AGSA report before they come forth with questions.
The Chairperson asking if AGSA had follow-up questions to the responses given.
Ms Tsotetsi replied that AGSA did not.
Ms Diphofa replied that the NAC will not close off the regional orchestras from applying for funding. They will also continue funding and supporting the bursary programmes. She thanked the Chairperson, stating that was the question she found most relevant.
Mr Mhlongo interjected that there is another relevant question.
The Chairperson reprimanded Mr Mhlongo.
Mr Tembe replied that it must be noted that the MNPO is not a grant agency. It is responsible for more than granting funds. Its other responsibilities include broadening the orchestral experience of South Africa, bringing people of different races and backgrounds together, ensuring that its culture is reflected in the South African orchestra space.
Mr Tembe replied that the MNPO will monitor the entities that it funds. The agreement is clear on the expectations and requirements of these entities. The process has already started.
Mr Tembe explained that the Cape Philharmonic Orchestra (CPO) wrote to the MNPO chairperson stating three reasons for their refusal of the R3.2 million funding. They stated that they wanted to see the MNPO business plan, to which the MNPO chairperson replied that it is an internal document but they are willing to discuss CPO concerns in a meeting. They did not want to meet with preconditions. The MNPO had been asking for a meeting with CPO for a year to no avail.
The CPO also stated that they did not know Mr Tembe’s plan for the MNPO. The MNPO board cautioned against personalising the matter with Mr Tembe. The MNPO has a board and an Artistic Planning Committee. There is also NAC, DSAC, and the vision is outlined. Mr Tembe’s plans held no bearing – but the plans of the MNPO and the country.
Mr Tembe said that he could not remember the third reason that CPO stated. However, he knows they refused the board-to-board meeting with the MNPO and the money.
Dr Khumalo acknowledged the comments from Ms Adams. They know they have not been “reaching every corner” in the country but are doing their best to support artists.
Dr Khumalo said that the Act outlines the rules and responsibilities of the NAC and the CEO explained they follow these processes. Nothing was particularly taken away from the NAC. DSAC is in the process of implementing the RWP which stipulates around the issues of the MNPO.
The Chairperson asked the Committee to guide her on how best to approach Mr Mhlongo’s petition that it must launch an investigation.
Mr Joseph agreed to wait for the AGSA report. However, the investigation idea is open as there are possible irregularities due to a difference of opinion between AGSA and NAC. The Committee needs to put in some work and contribute to the investigation while respecting the work of AGSA. They should request explanations and accountability from Cape Philharmonic Orchestra.
Mr Sibiya suggested that the details of the meeting be reported to the Speaker and it be noted that the Committee is still awaiting the finalisation of the investigation by AGSA.
Ms van Dyk supported the motion for an investigation as there has not been transparency because there is information the Committee has not received. However, she agreed that the Committee should wait for the AGSA report.
The Chairperson asked Ms van Dyk to confirm if she meant that there has been no transparency in this meeting.
Ms van Dyk replied that there is a lot of information the Committee had not received such as the feasibility study. When she asked for the budget breakdown allocated to the task team she was given parts of it. Not getting requested information is lack of transparency and it is “problematic”.
Ms Malomane agreed with Ms Sibiya that the Committee should wait for the AGSA report and take it from there. However, they should send a Committee report to the Office of the Speaker for now.
Mr Mhlongo said that AGSA must provide timelines. When does AGSA think the report would be ready? SIU should do its work. The Committee cannot be guided by only one institution to do the Committee's oversight work. An inquiry is a process. The Committee must proceed to do an investigation as there are processes to follow before a full investigation is launched. It could start with the process while awaiting the AGSA report. All processes can occur simultaneously. The investigation is necessary. The information requested is not yet received. NAC chairperson must send the requested minutes of the meeting. The feasibility study has also not been received. All processes must go on. AGSA must do their work. SIU must do their work. The parliamentary oversight committee must also do its work.
The Chairperson stated that AGSA will write to them within a few days detailing the timelines. The motion is that the Committee should wait. They are not closing the matter but will come back to it.
The Chairperson thanked the presenters and noted that there were gaps between AGSA and DSAC. They will discuss and address these at the next meeting.
She closed by saying the MNPO has done good work. The regional orchestras are receiving what is due to them. The Committee has started getting the tools to propel transformation within DSAC.
The meeting was adjourned.
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