Arts & Culture Budget: Minister’s briefing; Department & National Film &Video Foundation: discussion on Areas of Concern

Arts and Culture

12 June 2006
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Meeting Summary

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Meeting report

ARTS AND CULTURE PORTFOLIO COMMITTEE
13 June 2006
ARTS AND CULTURE BUDGET: MINISTER’S BRIEFING; DEPARTMENT AND NATIONAL FILM AND VIDEO FOUNDATION: DISCUSSION ON AREAS OF CONCERN

Acting Chairperson:
Mr M Sonto (ANC)

Documents Handed Out:
Briefing by Department on Budget: PowerPoint presentation
Minutes of Committee on Arts and Culture for 30 May 2006
Minutes of Committee on Arts and Culture for 06 June 2006
Entities that participated in the Department of Arts and Culture Budget Hearings
NFVF Funding Constraints
Letter to Mr Vundla from Director General of the Department
Letter to Mr Sonto from Chairperson of the Audit Committee, Mr S Kajee

SUMMARY
The Minister briefed the Committee on the Department’s mission, its six programmes and the challenges it faced in implementing them. The budget of the Department was also presented. Committee Members sought clarity on the women’s day celebrations being organised as well as the number of entities that fell under the Department. The Committee was concerned over the fact that smaller entities did not receive funding and that the arts and culture of African societies were not given any exposure. Lastly, the Department was also questioned on the progress made with regards to entities that had qualified audit reports.

The Committee then facilitated a meeting between the Department and the National Film and Video Foundation (NFVF) in order to resolve a dispute that had arisen between these two parties. The NFVF believed that the core of the dispute was the lack of interaction that occurred between the Department and itself. The Department proposed that it meet with the NFVF without the Committee being present in order to resolve the problems that existed.  The NFVF was concerned over the fact that Committee Members believed its Audit Report was qualified and wished to clarify this issue. However, the Committee requested that the meeting between the NFVF and the Department takes place and that both parties return to the Committee in order to brief it on the outcome of this meeting.

MINUTES
The Acting Chairperson pleaded with the Committee that its future meetings begin at nine o’clock. Members should not start arriving at nine but rather a little earlier so that they can help themselves to refreshments and the meeting could then start on time.

The Committee adopted the Minutes of its proceedings on 30 May. It adopted the Minutes of its proceedings on 6 June 2006 with grammatical corrections.

The Committee then had a discussion on the approach it should take in the meeting between the National Film and Video Foundation (NFVF) and the Department of Arts and Culture.

The Acting Chairperson felt that the role of the Committee was to facilitate discussions between the two parties which would hopefully emanate in the understanding of one of the parties or both. He also read the letter sent to himself by the Chairperson of the Audit Committee, Mr Kajee, in order to highlight some of the issues that existed.

Mr K Khumalo (ANC) believed that the approach of the Committee should be to find an amicable solution between the parties. It was also important to emphasis to other entities that it would become difficult for Parliament to pass their budgets if they were not accountable to the Department. The Committee should try to bring a close relationship between the Department and the NFVF in order for the film industry in South Africa to flourish. He felt that the most appropriate approach would be for the Committee to listen to the opinions of both parties and then to decide on the appropriate way forward.

Mr H Maluleka (ANC) agreed with Mr Khumalo. He felt that the Committee’s intervention would be informed by the parties’ input at the meeting. The Committee should listen to both sides and then weigh up what had been presented and decide on an appropriate intervention or advice.

Mr Sonto highlighted that it was important that the entities falling under the Department complied with the Public Finance Management Act (PFMA) and that the Department did not compete with these entities as this had been happening.

Briefing by Minister on Department Budget 2006/07
The Minister of Arts and Culture, Mr P Jordan, informed the Committee that the Department had six programmes namely Administration, Arts and Culture in Society, a National Language Service, Cultural Development and International Co-operation, Heritage Promotion and lastly, National Archives, Records, Meta-Information and Heraldic Services.

The manner in which the Department’s Budget was divided was not necessarily based on the needs of the country but on hard facts. The Heritage Promotion programme took up sixty seven percent of the Budget during the previous financial year. This had been reduced to 48% for the following year but a more affordable spread was still required across the programmes as this programme still took up nearly half of the budget. The Department had also taken great care to keep its administration budget to a minimum and it therefore only made up seven percent of the final budget.

The mission of the Department was to develop and preserve South African culture to ensure social cohesion and nation-building. This mission was directly related to its objectives. The development and preservation of South African culture was extremely difficult as it was a multi-ethnic, multi-cultural and multi-racial society and what the Department had inherited had not taken into account these different spheres.

Since 1994 the Department had not seen this multiplicity of identity as a problem but rather as an asset. It recognised the past South Africa had come from so its preservation measures also entailed the redress of the neglect of certain elements of society that had been made inferior in status.

The National Language Service programme was extremely challenging as it had to protect eleven official languages. Constitutionally South Africa was a multilingual society but in reality it was bilingual as Afrikaans and English enjoyed a superior status which was given to these languages in the past. This situation is present even in Parliament as special arrangements needed to be made in order for discussions to take place in the other official nine languages. However, the Department was not planning to relegate these two languages but was aiming to promote the other nine. This can be seen by the new telephone service provided where people could now communicate with the Department in any of the official languages. The Department has also encouraged the promotion of the official languages in the literary sphere.

The Minister then presented the objectives of the Arts and Culture in Society programme as well as the Cultural Development and International Co-operation programme. This latter programme had been used by the Department to secure a number of operational agreements with a number of host countries. For example it had entered into a Memorandum of Understanding (MoR) with Britain and it had just reviewed an agreement with France. Lastly, the Department was also entering agreements with a number of South American countries and also had agreements with a number of African countries and with China and India in Asia. These agreements had given exposure to a number of artists especially in the performing arts.

The National Archives Programme was the collective memory banks of South Africa and it contained all national records and published material. These archives included the National Library of Cape Town and Pretoria. Unfortunately like many other institutions inherited by the ANC Government these archives were extremely lopsided. Ethnic and racial resources were neglected and the Department had tried to redress this and is making headway. Finally an example of its symbolic and heraldic programmes was the national flag in schools programme. It was imperative that the Department build the foundation that had been put in place in order for solid institutions to be created in the future.

Prof I Masala (Director General of the Department) presented a summary of the budget of the Department which totalled R1, 318 billion. He gave a further breakdown of the budget for each of the six programmes run by the Department. The Arts and Culture in society programme made up 17.28% of the budget while the National Language Service programme made up 6.9%. The Cultural Development and International Co-operation programme made up13.95% while Heritage Promotion had 48.18% of the budget allocated to it. The National archives and heraldic services programme made up 6.62% of the budget and lastly, its administration programmes totalled 6.62% of the budget.

He highlighted that the funds allocated to the NFVF had increased to R35 million and this increase was as a result of an intervention which had been made by the Minister. He also drew the Committee’s attention to the fact that the Department had made a bid to the Treasury for funding for Women’s Day which included the fiftieth anniversary of the women’s march to Pretoria and youth day celebrations. It had asked for R38 million but had only been given R5 million for the women’s day celebrations while R5 million for youth day celebrations had been given to another Department. The Department had been trying to align these celebrations with its other programmes in order to raise the funds that were needed.

Finally additional information on the budget was presented such as additional funds received by the Department and the estimated budget required by the Department up to 2008/2009. The Department hoped that its budget would reach R2 billion sooner rather than later.

Discussion
Ms D Ramodibe (ANC) sought clarity on the woman’s day celebrations that had been highlighted by Mr Mosala especially regarding the amount of R38 million he had mentioned in relation to this issue.

The Minister replied that this year there were a number of anniversaries marked by the country. The Department has been tasked with the responsibility of co-ordinating these celebrations. It had therefore requested funds for the commemoration of the fiftieth anniversary of woman’s day, the thirtieth anniversary of the Soweto uprising, the fiftieth anniversary of the start of the treason trial, the sixtieth anniversary of the mine workers strike as well as a number of other anniversaries. The funds that had been reflected in the briefing was the funding that had been allocated to the Department for these celebrations and consisted only of R5 million for the woman’s day celebrations. The Department has had to scrounge around in its Budget for further funding for the other anniversary celebrations. 

Ms Ramodibe wished to know if the Department had initially requested R38 million.

The Minister responded that the Department had requested much more than the R5 million it had been allocated. However, the Department accepted that the amount that had been allocated was what the Treasury could afford and that it did not pay to argue or haggle over the amount.

Ms D Van der Walt (DA) thanked the Minister and the delegation from the Department for briefing the Committee. She had a number of brief questions. Firstly, she enquired about the status of entities falling under the Department that had qualified Audit Reports. Had steps been taken to redress these problems? Secondly, she was confused over the number of entities that actually fell under the Department as a member of the Department’s Audit Committee had stated that there were twenty six entities while a report by the Standing Committee on Public Accounts (SCOPA) on 7 June stated that there were thirty two and she had added up 27 entities. What was the correct total?

She also wished to know if the Department had any influence to ensure that National Arts Council (NAC) funding reached smaller entities as it seemed that the same large groupings received this funding year after year which was unfair. Lastly, while studying the budget her financial researchers informed her that only 1, 87 % of the Department’s capital budget had been spent during the previous financial year. Was this true and if so why had this occurred?

The Minister noted with some concern that some of the entities that fell under the Department had qualified audit reports. This gave rise to an extremely difficult situation as it meant that the Auditor General was not satisfied with the entities’ book keeping, its spending of funds and finances and usual business could not commence the following year. It meant that the Department either had to cut back on its Budget or the entities had to undertake to rectify the issues raised in the Auditor report.

The latter situation entailed the Department sending a letter to the entity that asked for an explanation and corrective measures relating to the issues raised by the Auditor General. If the Department did not receive these undertakings measures would then have to be taken to encourage future compliance and this normally entailed cutting the entity’s budget.

The Department would like to in the normal course of events increase the budget of the NAC. He agreed that a large amount of the money received by the NAC went to individuals, groups and companies in urban areas rather than those in rural areas and peri-urban areas. This was a concern and measures had been taken to address this issue as the NAC was extremely conscious of the problem. For example, in the past it was impossible to obtain NAC funding application forms in any language other than English and Afrikaans. This had changed and these forms were now available in all of the official languages. However, in many instances people who applied for funding could not meet some of the application requirements. For example, one of the requirements was the existence of a bank account but this was impossible to open if the entity did not have any funds.

In addition these were public funds so the Department and the NAC needed assurance that these funds would be spent for what it was allocated for. In order to ensure this occurred the funds were often given in stages but this often meant that the smaller entities could not operate as they lacked the start up funds.

The Minister argued that in the defence of the NAC all the entities that received funding were non-profit organisations that did not have a surplus at the end of the financial year. This meant that these entities had to apply for funding year after year which made allocations by the NAC very difficult.

Prof Mosala answered that there were twenty-eight entities that fell under the Department. Twenty-five of these entities were listed as schedule 3A entities under the PFMA and were publicly listed. Two of them were non-public entities and the final entity was the Pan-South African Language Board (PANSALB) which was a constitutional institution.

He was unsure of the figure of 1.8% of the Department’s capital budget. However, he highlighted that a problem with the Capital Works budget was that it was usually earmarked for specific projects and could not be spent for any other purpose. If it was not used for these specific projects it had to go back to Treasury. However, the 1.8% figure sounded very low and needed to be reviewed. In general the Department never spent its entire capital works budget.

Mr P Van Zyl (Director of Financial Management) added that in the 2004/05 financial year R600 000 was not spent of the capital works budget which made up 0.05% of the total budget of the Department. The 2005/06 financial years figures had not been released yet but the Department would save around R10, 4 million of its capital works budget. This was because of the continuation of works and contractors who had not completed projects when expected. This made up 0.8% of the Department’s total budget and would be reallocated to the following year.

Ms Van der Walt wished to know if the Freedom Park’s capital was included in these figures.

Mr Van Zyl replied that it was not included in this figure.

Ms M Mdlalose (ANC) wished to know what the planned woman’s day celebrations would entail and how involved would women be in these celebrations?

The Minister replied that the woman’s day celebrations began on the 8 March this year which was international woman’s day. The Morning Live television show kicked off these celebrations and there was also a debate in Parliament and a celebration in the Langa township. The highpoint of these celebrations would occur on 9 August and would not entail a mere re-enactment of the Pretoria march. In addition to the commemorative march to Pretoria there would also be marches on a smaller scale in the other provinces and the Department envisioned tele-linking them to the Pretoria march at its own expense.

There would also be a Council event and a commemorative rally at the Union Buildings which would be addressed by the President and the Deputy President. The Minister hoped that there would be similar rallies in the other provinces. There would also be a huge celebratory concert dominated by women performers and would include traditional music and modern music. This concert would hopefully be televised so that people who were unable to attend the concert could also view it.

The celebrations would also include poetry readings and other related projects. Firstly, there would be pottery, embroidery and tapestry projects involving women artists in these fields. Lastly there would be the unveiling of a commemorative sculpture by the leading woman sculptor Maria Mobasa. This would be unveiled on the night of 9 August or around that date.

These celebrations would end around 10 December which was Human Rights day and the tenth anniversary of the country’s Constitution. The Department hoped to round off the celebrations with a significant event and the production of a book by South African woman writers on their experiences during this celebratory year.

The participation in the Pretoria march and the other provincial marches would lie in the hands of civil society and would not be organised by the government. However, the Department hoped to see veterans who had taken part in the original march attending the celebratory march. The celebratory march would cover the original six to seven kilometre route. The Minister envisaged that the veterans would only take part in the last kilometre of the route while the younger woman would walk the entire route.

Ms Mdlalose had a follow up comment regarding the women’s day celebrations and the march. She was aware that the Multi-Party Caucus for Women had explicitly expressed its wish to be involved in these celebrations and she wanted to highlight this wish to the Department.

The Minister responded that the participation in these commemorative events lay in the hands of civil society. The Department could not invite this caucus to the march and the other celebrations as it was merely responsible for mounting the actual rally, the concert and refurbishment of the women’s monument at the Union building. However, the Minister could write to the caucus and inform them of the events.

Mr C Gololo (ANC) sought clarity over the two Freedom Park figures in the Department’s budget. What was the difference between the current budget which equalled R45 million and the capital budget which equalled R111, 587 million?

Prof Mosala replied that the Capital budget referred to the money used for building and construction while the Current Budget was used in the expenditure related to the actual operation of the organisation.

Mr Khumalo (ANC) argued that many of the performing arts institutions that were funded by the Department were mainly white male dominated institutions. Many of these institutions also only served small communities such as the Windybrow Theatre. On the other hand the NAC mostly catered for and provided funding to the smaller community based organisations. Large amounts of money were also given to the larger theatres such as the State Theatre and Artscape Theatre that did not put on many African plays but rather put on mainly Western based plays.

There was a large discrepancy between the R62 million given to the NAC which funded a large number of small groups and communities and the R115 million given to just five entities. He had raised this concern a number of times and it this situation continued not much could be done in the arts and culture society in the African communities. He also felt uncomfortable to pass a Budget when there had been no change made to this current situation.  He could not blame the Department solely for this problem as often many of the decisions relating to this problem were passed by various boards. However, he suggested that a future meeting be held in order for this issue to be discussed in greater detail.

The Minister acknowledged the points made by Mr Khumalo. However, he argued that it was a difficult situation as the larger entities also had brick and mortar structures to maintain. He had raised in the last imbizos that had taken place the issue of lopsided funding, as most of the funding supplied to these larger entities went to the maintenance and sustenance of its buildings, while the remaining funds went to the actual performances. The NAC on the other hand had no buildings to maintain and had smaller administration responsibilities.

He proposed that in future the maintenance of buildings be separated and outsourced so that another company maintained the buildings while the funds received from the Department were then only used for putting on performances. This would be a better situation but would have to be thought through in greater detail.

The Department had very little control on what performances were put on by these entities. It hoped that these entities were conscious of the issues raised by Mr Khumalo and were making visible efforts to include these types of plays and this was seen at the State Theatre. He had personally visited the Playhouse in Durban and not one of the plays that were put on were Western in nature.

In terms of the Department’s other funding it allocated R41, 783 million to the promotion of Arts and Culture under its Arts and Culture in Society programme. This funding mainly went to disadvantaged communities and he encouraged Committee Members to visit the entities that were funded with this money as they made big differences in the areas in which they were situated.

The Acting Chairperson thanked the Minister for the briefing as it had given clarity on a number of issues. He stated that the meeting between the NFVF and the Department would now take place. The Minister was excused from the meeting if he did not want to stay. However, he might be required to return to the Committee at a later stage if the issues required this.

The Committee had decided to call the Department and the NFVF together in order for the issues that had arisen to be addressed and resolved at the same time. He hoped that common ground would be found where the parties could work together. All previous correspondence on the issues had been circulated to the Members who were therefore informed on the problem.

Meeting with Department and National Film and Video Foundation
Mr E Mbalo (Chief Executive Officer of the NFVF) reminded the Committee that he had visited them in November 2005 as part of a scheduled meeting. This meeting had dealt with the scheduled business as well as with a letter from the Chairperson of the NFVF which highlighted a number of concerns particularly over the interaction with the Department and the NFVF.

This letter had been necessitated by a resolution that was taken by the Council of the NFVF on 28 July whereby the Council had declared a state of crisis in respect of the delivery of service in the NFVF. This crisis related to the budgetary processes and a lapse in funding that had been available for three years. This lapse had meant the NFVF was moving backwards in terms of the development of the film industry.

The NFVF was happy to hear from the Minister that its budget had been increased as a result of his promise in his budget speech of 2005 that action would be taken. It was also pleased to hear that there was some intervention from the Minister himself to ensure that the NFVF’s budget was increased.

However, the NFVF’s position had never been over whether or not the Department gave it money. It was aware that the Department itself had to motivate for funds to the Cabinet and Treasury. The foundation’s main complaint was the lack of engagement and interaction between the Department and itself. It has never questioned the fact that it is accountable to Parliament through the Department. An example of this problem is that the Council of the NFVF since its appointment three years ago had never met with the Department as a board even though it had requested this engagement in order to be inducted. The NFVF believed that it was extremely important that constructive engagement occurred between the Department and the entities that fell under it especially with those people who had the responsibility of guiding these institutions.

The state of delivery crisis in the NFVF was caused by the fact that the foundation had an Act and guidelines and had developed a strategy and programmes but there had never been any engagement on these with the Department. He questioned how the Department was able to approach the Treasury to motivate for resources when it was possible that it was not familiar with the NFVF’s strategies. The foundation was frustrated by the fact that when entering other forums such as Committee clusters and with Treasury itself it was not adequately represented and it feared this was because there was a lack of understanding over what the NFVF’s work entailed.

Mr Mbalo felt that it was clear that the main area of concern was to what extent it engaged with the Department. This engagement would result in the NFVF’s increasing its understanding of the Department’s position and how to interact with its programmes. The reality was that when the NFVF requested resources it did not expect to receive all the money allocated to the film industry. It was continually mobilising resources for the film industry and this meant that if there was for instance money that was meant for the film industry lying at the Department of Trade and Industry or the provinces the NFVF would interact with these bodies to ensure the money was used. As the NFVF mobilised for resources it hoped to develop synergies with other parties to ensure there was no duplication of programmes and that everyone did not work past each other.

There was a great deal of money sitting in the National Lottery. The NFVF wished to know if the allocation of money was informed by the national strategy for the development of the arts. Mr Mbalo had raised this issue a number of times as it was clear that resources were available to support the work of the NFVF. The reality was that the number of entities that were funded by the National Lottery were decreasing and some were closing down. The NFVF had seen no engagement between the National Lottery and entities that were involved in the arts. Yet, this engagement could lead to gaps that existed in the funding of Treasury being closed.

The NFVF was surprised that after it last meeting with the Committee an advert had appeared in the Mail and Guardian on 18 November 2005 which was titled “there comes a time when the young have to stand on their own feet”. This advert was specifically directed towards the NFVF and had appeared during the Sithengi Film Festival where visitors were received from all over the world. The NFVF believed that this advert had been placed in reaction to its presentation to the Committee and it felt that this type of communication damaged not only the film industry but also the Government.

The reality was that the people serving on the board and the Chairperson of the NFVF had volunteered their time and services to serve the Government and develop the film industry. If these people were now told to find their own funding to survive then the institution should rather be closed so that these people could continue to run their own businesses.

Mr Mbalo emphasised that the NFVF wanted to engage with the Department especially on the strategies it had developed.  During the Indaba 2005 a value charter had been adopted for the development of the film industry. This value charter had been presented to the Committee. However, even though the Department had been invited not one official had been present. The Indaba was a platform where the NFVF was able to interact with civil society and the communities and it had invited the Department to present its strategy for the development of the film industry. The Department and the NFVF seemed to have different strategies for the development of the film industry and the foundation wished to see the value charter be adopted by the Cabinet as the programme for the development of the arts as a whole.

The Department of Trade and Industry had developed a customised service programme which was informed by the value charter. The NFVF had interacted with this Department during the development of this programme.

The NFVF was happy with the recent developments that this meeting with the Department was taking place. The NFVF did not wish to fight with the Department as even though tensions existed these two bodies had sound relations at a personal level. However, the NFVF sought protection from the Department so that it could carry on with its programmes in the future.

Discussion
The Acting Chairperson thanked Mr Mbalo for the general overview of the situation he had given as it was the exact scenario the Committee wanted to see. However, he pointed out that the crux of the matter which lead to this meeting taking place was that the Department had cut the allocation of funding of the NFVF. He requested that this arrangement be further clarified as the Department had acted in this way due to the Audit Report of the NFVF. If the situation was actually in order the Committee could then be satisfied that relations and cooperation between the two parties had been restored. He wished to know what the opinions of the other Members were regarding this situation.

Mr J Maake (ANC) was of the understanding that the problem that actually existed was that there had been a breakdown in communication between the NFVF and the Department. If this was the case how had this situation occurred? He was not familiar with the Acts that governed the NFVF but was sure that these Acts required meetings to occur between the Board of the NFVF and the Department. It was difficult for him to understand how the current situation had come about as this engagement was a necessity if the Department funded the NFVF.

There should also be rules under the PFMA and he therefore questioned why problems with regards to the Audit Report had arisen. If the Department did not engage with the NFVF it would not be familiar with its programmes and it would be impossible to provide funding if it did not know what work the foundation was doing. This lack of knowledge would also mean that the Department would not understand the Audit Report of the NFVF. He therefore wished to know what was happening as the Department should not provide funding if it was unfamiliar with the NFVF and if there was no engagement this situation had to be resolved immediately.

Mr Sonto intervened and stated that while giving an outline of the fall out between the NFVF and the Department there were two corresponding statements from either party. The NFVF had stated that it was concerned over the lack of cooperation on the part of the Department and the cut in the allocated funds. The Department had stated that it had cut this allocation on the basis of the NFVF’s Audit Report being qualified. However, the NFVF disputed these qualifications. He believed that this was when the Committee had been requested to intervene in order to restore relations between the two parties.

However, if the situation had been presented to the Committee as mildly as it had been by Mr Mbalo at this meeting there was a strong chance that the Committee would not have intervened. The way in which Committee Members had been informed of the fallout between the two parties, it seemed essential that the Committee had to become involved in the situation.

Ms Mdlalose requested that the Department have a chance to present their side of the story as the NFVF had been given the opportunity to do so.

Mr Khumalo agreed with Ms Malelose but he also wished to comment on the presentation of the NFVF. Firstly, he recognised that the Department of Arts and Culture had only been formed in 2004 and had formerly been the Department of Arts, Culture, Science and Technology. A new Director General had also been appointed. It was clear that in the past there had been a culture where some of the entities had not been fully monitored as between fifty to eighty entities had fallen under this old Department. This situation would have led to some of the problems that still existed today.

Secondly, he recognised that the Department had mentioned the issue of accountability of the NFVF in terms of sections 36 and 63 of the PFMA and that it had expected the NFVF to meet these requirements. However, if there had been regular meetings between the two parties many of the problems that existed would not have arisen. Thirdly, when the NFVF had presented the current situation it had tried to lobby the Committee in order to receive more funding. However, the Committee wished to know why it required this funding.

The media spat that then ensued between the Department and the NFVF was regrettable and the NFVF had then also indicated that the Committee had not acted to solve the problem. What was unfortunate from the Committee side was that at the time the spat ensued, Mr Tsenoli the Chairperson of the Committee was transferred to another Portfolio. The new Chairperson, Ms Jacobus also left and the matter was therefore not attended to. It was quite clear that this period would have lead to animosity arising between the Department and the NFVF as nothing had been done to solve the situation. However, the dust had now seemed to settle down.

It was important to note that a situation where the Committee had to intervene was not favourable as entities were still first and foremost accountable to the Department. South Africa was increasingly playing a more global role in certain spheres including the film industry and it was therefore important that more resources were allocated to this sphere and requests for an increase in funding should therefore be considered. This was especially important when strides were being made in these spheres. Lastly, he felt that it would be appropriate after this meeting to encourage the Department and the NFVF to meet in the future. If these meetings occurred many of the problems that existed would be solved.

Mr Sonto requested the Department’s comments on the situation.

Prof Mosala thought it would be useful to follow the line the Acting Chairperson had followed which was to get to the core of the issue. The whole story of a crisis and a breakdown of communication between itself and the NFVF had come as a great surprise to the Department. He had told Mr Mbalo that he was surprised as up to now he had believed that the two parties enjoyed the best of relationships.

Mr Mosala informed the Committee that the weekend after the Department had received the first letter from the Chairperson of the NFVF Board he had met up with the Chairperson by chance. He discussed the contents of this letter at this informal meeting and indicated to the Chairperson as cordially as he could that he was shocked over the tone of this letter from the NFVF. The Chairperson had then cordially responded that it had been necessary for the NFVF to raise these matters.

He pointed out that the letter the Department had sent initially to the NFVF had actually been sent to a number of entities as many of them had been informed by the Auditor General that there were problems with their audit reports. The internal audit committee of the Department had then approached Mr Mosala as he was the accounting officer in order to find out what measures he had taken to address the issues the Auditor General had raised.  He agreed to write to the entities in order to highlight the issues that had been raised by the Auditor General. These letters were sent to all the entities concerned that were requested to inform the Department what their plans were in order to address these issues. During this time the Department as prescribed by the PFMA rules withheld the funding that was allocated to these entities. This funding was only withheld until the Department had heard what measures these entities were planning to take and not until the issues were actually corrected as this correction would be a long process.

All the other entities wrote back informing the Department of the measures they were planning to take to correct the issues that had been raised by the Auditor General. As soon as the Department had received these replies it released the funding that was allocated to these entities.

The NFVF was the only organisation that took a different route and requested a meeting with the Minister. Mr Mosala also met with Mr Mbalo and Mr Vundla and indicated to them that he had sent a simple compliance letter to the NFVF and as soon as the foundation indicated how it planned to correct the issues raised by the Auditor General the money allocated to it would be released. He was unaware on what basis the Department eventually released the money to the NFVF but he was certain that this money had been released.

The second matter he wished to cover was the allocation of funding to the NFVF that had been cut by the Department. The allocation that had been made by the Cabinet was always meant to be a once off special three-year allocation. Once these three years had passed the Treasury had not made any further allocations to the NFVF. He therefore argued that the allocation of funds had not been cut but had merely ended as initially planned.

He proposed to the Committee that he arrange a meeting between the Chairperson of the Board, the Minister and himself where all the issues that had been raised could then be dealt with including future communication between the two parties. It was unfortunate that this situation had been brought in front of the Committee as he believed that there were good enough relationships between the heads of the two parties to solve the issues that had arisen without the Committee having to intervene.

Lastly, he would also encourage the Deputy Director General for Cultural Development and International Co-operation, under which the NFVF fell, to engage with Mr Mbalo on the issues he had raised. He would also meet with the Chairperson, Mr Vundla in the future. Unfortunately, he had no proposals for the problems surrounding the audit report as he had merely been doing his job as the accounting officer of the Department.

Mr Sonto was pleased to hear that the funds that had been withheld had been released by the Department. He recognised that the Chairperson of the NFVF wished to make a follow up on Mr Mosala’s comments.

Mr M Vundla (Chairperson of NFVF) highlighted that he had entered his third term as Chairperson of the NFVF and his term would expire in September. He had been appointed by the Minister and served with a number of prominent people on the council. However, he wished to put on record that since his appointment he had never had an official meeting with the Department even though he had requested such meetings.

He also found it unacceptable that the council of the NFVF had never been inducted. He believed that the personal relationships that existed between officials of the Department and the NFVF were irrelevant as the NFVF as a statutory body appointed by Parliament had never met with the Department.

Mr G O’Leary (Executive Councillor of NFVF) wished to clarify the situation regarding the Auditor General’s report. He would explain to the Committee exactly what the Auditor General said and why the NFVF took great exception to the actions of the Department.

Mr Maluleka felt that the NFVF should not go into this issue at the meeting. It was obvious that there was room for improvement in the relations between the Department and the NFVF. Without this information being presented the Committee would still not leave with the view that the NFVF was wrong in this situation.

Any suggestions that had been made by Mr Vundla could be raised at the meeting between the Department and the NFVF even after he had stepped down as Chairperson. He therefore suggested that the meeting end on the note that the two parties would meet and would work on the misunderstandings and problems that had arisen.

Ms Mdlalose concurred with Mr Maluleka. However, she suggested that the Department and the NFVF report back to the Committee on the outcomes of the meeting that had taken place between them.

The Acting Chairperson stated that this was the line he also wished to take. Even if a gap existed between the parties there was an intent to come together to sort out these problems. He felt it was important to ensure that before the Chairperson left his office the meeting took place. He agreed that both parties could then give a synopsis of the improved relations that existed as a result of the meetings.

Mr O’Leary felt that these suggestions were appropriate but he felt that the issues surrounding the Auditor Generals report still needed to be clarified at the meeting. Since the foundation had been established in 1999 there had never been any qualifications or emphasis of matter regarding its Audit Reports. It was only in the 2004/05 financial year that certain matters of emphasis had been raised; however the foundation’s audit report had never been qualified.

The Acting Chairperson interrupted and stated that the Committee was trying to avoid a situation where the Department would want to respond to the comments made by the NFVF. The two parties should rather meet and solve these issues by themselves.

Mr Khumalo argued that as the Committee had given the Department the opportunity to give its version of the Audit Report problem the NFVF should be given the opportunity to do the same.

Mr Gololo proposed that a time frame be set to ensure the meeting between the two parties actually took place and to ensure that the parties reported back to the Committee.

The Acting Chairperson stated that the Committee was aware of the crisis or misunderstanding that existed. However, both parties were prepared to meet to solve this crisis. The Committee was also aware of the letters that had been sent by both parties and were therefore familiar with the arguments made by the NFVF and the Department in these letters. He agreed with the proposal of a time frame being set to ensure the meeting was expedited and the issues resolved. A specific date did not have to be given but rather a period of time.

Mr Mbalo pleaded with the Committee to give the NFVF the opportunity to explain its side of the story as it was very important to the foundation. After these Audit Report issues had been presented to the Committee and were supposedly resolved an article had appeared on 9 March in the Government Communications Bua magazine which stated that the Department’s decision to withhold R12 million funding from the NFVF came after the Auditor General had found irregularities in the foundation’s books. The foundation did not want the Committee to leave with the impression that there were irregularities in the books of the NFVF. It did not believe a response was required from the Department. It was merely to clarify the fact that there were no irregularities in the books of the NFVF. Mr O’Leary had tried to explain that the NFVF had communicated with the Auditor General who was the only actual authority who was able to discuss this issue and not officials from the Department.

The Acting Chairperson replied that the NFVF could discuss this issue further only if the Department would not respond.

Prof Mosala responded that this would only happen if the Chairperson ruled it to happen this way. However, it was unfair to allow one side to put its argument on record and then not allow the other side to do the same. He highlighted once again that he was merely the accounting officer and the NFVF should rather communicate directly with the Auditor General on the situation. He also felt that Mr Mbalo’s comments were out of line as he had a Masters’ degree in finance.

The Acting Chairperson intervened and stated that the parties were willing to meet; therefore the issues should not be opened further at this present meeting. The Committee had on record that the NFVF disputed that its Audit Report was qualified. He therefore instructed that the parties meet to discuss all the issues and then come back to the Committee.

Mr Khumalo proposed that the meetings between the Department and the NFVF be open to other members of the board. It would deal with issues of operation and the Chief Executive Officer of the NFVF should therefore also be present at the meeting.

The Acting Chairperson agreed that all issues of concern needed to be discussed and that any person who could add value to the meeting should attend. He once again stated that a timeframe should also be set.

The meeting was adjourned.



 

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