DEPARTMENT OF ARTS AND CULTURE 7/21/2018 NATIONAL ARTS COUNCIL

PRESENTATION OUTLINE

MANDATE

Strategic outcome oriented goal DAC strategic objective Entities strategic objectives and how it links to DAC objective Output for 2017/18 An integrated and inclusive society To lead, coordinate and implement social cohesion programme Promote equity in the arts through a specific grant making focus on disadvantaged and marginalised individuals and groups with focus on redress, transformation and nation building 5% of funding to support indigenous art forms 25% of funding to support projects in targeted rural areas 10% of funding to support women and women led organisations 15% of funding to support projects benefitting youth A transformed and productive ACH sector To develop, protect and promote cultural and creative sector To promote equity in the arts through a specific grant making focus on the disadvantage and marginalised individuals and groups

Strategic outcome oriented goal DAC strategic objective Entities strategic objectives and how it links to DAC objective Output for 2017/18 A transformed and productive ACH sector To provide access to information To increase access to markets and enable creative engagement for South African art and artists. Partnerships established with 1 government structure and 2 other relevant structures An effective and efficient ACH Sector To implement sound financial management and control systems Maintenance of efficient and effective systems of financial, legislative and administrative controls Reporting quarterly, bi-annually and annually 4 internal audits conducted A professional and capacitated ACH Sector To build human resource capacity and promote excellence Development of a highly capable organisational personnel Implementation of mentorship programme 5 staff trained Initiatives to promote employee wellness implemented 80% implementation of the approved training plan critical skills Implementation of PMS annually Implement the approved structure

PERFORMANCE REVIEW NAC reported 32 planned targets for the quarter ended 31 March 2017. 75% of the targets are achieved and 25% not achieved.

THREE YEAR PERFORMANCE OVERVIEW 2014/15 2015/16 2016/2017 Achieved 87% 100% 75% Not achieved 13% - 25% NONACHIEVED TARGET S 2016/17 (DROP OF PERFORMANCE) Only 22% of projects assessed prior to final approval out of 90% targeted Only 25% of projects assessed post approval out of 90% targeted Out of target 70% disbursements, 67,46 % was achieved Out of 7 Community arts centres trained , only 5 was achieved

THREE YEAR INCOME AND EXPENDITURE TRENDS NAC 2014/15 2015/16 2016/17 R’000 Income 96,084 98,983 104,627 Government Grant 91,865 96,089 102,054 Other Income 4,219 2,894 2,573 Expenditure (99,411) (102,567) 107,859 Deficit (3,327) (3,584) **(3,232) **The deficit is attributable to the accounting treatment of the NAC income and expenditure. The new and existing grants are charged on the current year allocation and the remaining amount is defrayed from the accumulated surpluses.

THREE YEAR STATEMENT OF FINANCIAL POSITION NAC 2014/15 2015/16 2016/17 R’000 Current Assets 56,286 45,901 40,121 Non-current Assets 17,677 5,664 8,429 Total Assets 73,963 51, 565 48,550 Current liabilities 12,342 4,054 3,068 Total liabilities Net Asset Value (NAV) 61,621 47,610 45,482

ANALYSIS OF CASH AND CASH EQUIVALENTS NAC 2014/15 2015/16 2016/17 R’000 Cash and Cash equivalents 47,645 45,567 39,774 Add: Trade and other receivables 8,641 335 347 Less: Current liabilities (12,342) (4,045) (3,068) Net Working Capital/Surplus Funds 43,944 41,857 37,053

MOTIVATION FOR CASH AND CASH EQUIVALENTS The surplus funds for 2016/17 financial year is attributable to funds earmarked for: Projects contracted but not yet fully paid. Projects approved for funding but not yet contracted.

THREE YEAR AUDIT OUTCOMES NAC 2014/15 2015/16 2016/17 Audit Outcome Clean

STATUS OF GOVERNANCE AT NAC

MANAGEMENT The operations of the NAC are managed by the Chief Executive Officer (CEO). The NAC has also appointed a Chief Financial Officer to administer its financial affairs . The National Arts Council comprises of 34 employees.

COUNCIL The National Arts Council is operating under the guidance of a Council comprising of 12 members appointed by the Minister of Arts and Culture and 5 provincial representatives nominated by MECs. The Minister of Arts and Culture appointed the Council of the National Arts Council for the period 1 January 2017 to 31 December 2020. The Council comprises of 17 members. The induction sessions of the new Council was conducted on 23 and 24 February 2017. NAC further conducted its own entity Induction on the 31 August 2017. Subsequent to the announcement of the induction dates, the Chairperson of the Council resigned citing health reasons. The Minister appointed a new Chairperson on 17 March 2017, Mr Hartely Ngoato.

AUDIT COMMITTEE The Audit Committee is in place. The Committee comprises of four members. The above include two external members plus two Council members.

SELECTED GOVERNANCE STRUCTURES AND MEETINGS HELD NAC 2014/15 2015/16 *2016/17 Number of Council members 17 18 Number of Council meetings 6 4 Number of Council committee meetings 8 9 Attendance rate of Council meetings 90% 80% 95% Number of Audit Committee meetings 5 Number of Management meetings 7 Number of Staff meetings *Note: 2016/17 stats are inclusive of the meetings held by the previously dissolved Council.

APPEALS CHALLENGES INTERVENTIONS BY DAC The Department received an appeal from Eskhaleni Arts and Culture Initiative that is situated in Manguza, KwaZulu-Natal pertaining to funding decision of the National Arts Council. On 22 December 2016, the Minister appointed two independent assessors to assist him in handling the appeal The independent assessors concluded their work in March 2017. Minister approved the recommendations and instructed the NAC Council to review Council decision and engage the beneficiaries. 19

INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC The Department of Arts and Culture received a correspondence from Mr Freddie Nyathela alleging that a grant application submitted by South African Roadies Association (SARA) was not handled properly as a result of failure on the part of the NAC management to adhere to the relevant grant funding policies. The Department conducted a forensic investigation to ascertain the veracity of the allegations contained in Mr Nyathela’s submission. The findings of the forensic investigation supported the decision of the management of not awarding a grant to SARA. The Business Innovation Group (BIG) forensic investigation further revealed that Mr Nyathela’s proposal did not comply with the requirements outlined in the grant funding policies and procedures of the NAC. Subsequent to the above-mentioned report, Mr Nyathela took the matter to the Public Protector for further investigation. Responding to Mr Nyathelas query, the Minister advised that a new investigation be conducted. 19

INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC The Department of Arts and Culture received a correspondence from Mr Freddie Nyathela alleging that a grant application submitted by South African Roadies Association (SARA) was not handled properly as a result of failure on the part of the NAC management to adhere to the relevant grant funding policies. The Department shared the report and the following were recommended to Council: NAC should conduct training awareness and workshops with staff and other stakeholders during which the policies and procedures of NAC are explained. The policy on expired projects and surpluses should be reviewed to make it more transparent. The NAC should conduct an audit to establish whether all grants awarded contributed to the achievement of the objectives of the NAC. 19

INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC AND COUNCIL The salary increases of both the CEO and the CFO for the 2016/17 financial year; The Department directed Council to investigate the allegations and the following were findings and recommendations from Council: The CEO’s salary is structured and only includes car allowance and that no performance bonuses and increases were paid to both the CEO and the CFO in 2014/15. The increase of the CEO salary by 18% from R1 296 226 to R1 664 326 was found not to be correct. 19

INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC AND COUNCIL The salary increases of both the CEO and the CFO for the 2016/17 financial year; The CEO received a performance bonus of R137,902. This amount was in excess of the stipulated 5% as per the Remuneration and Reward Policy of the NAC. 19

INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC AND COUNCIL Lalela Flagship Project Council concluded that the project did not comply with the following: The project did not submit the previous close out report Non-disclosure from the CEO from the time she became aware that Lalela is owned by someone linked to her family Council concluded that the project was not supposed to have been approved by the previous Council or put differently, Council to take disciplinary action against the CEO for non disclosure The Department has shared the report from Council to the Portfolio Committee. 19

INVESTIGATIONS CHALLENGES INTERVENTIONS BY COUNCIL Anonymous allegations contained in Molemo’s Letter of Appeal and information leakage to the media The NAC commissioned the services of Grant Thornton for the purposes of conducting the forensic investigation. The investigation was concluded on 8 February 2017. Council has started implementing the recommendations from the Grant Thornton Disciplinary action has been taken against the implicated officials for leaking confidential information and for contravening the NAC’s Code of Ethics. Information Technology Policy as recorded in the “Molemo letter of appeal”. The officials involved are currently on suspension pending the outcome of their disciplinary proceedings. 19

COUNCIL INTERNAL INVESTIGATIONS CHALLENGES INTERVENTIONS BY COUNCIL In addition to the findings of the Grant Thornton’s report, the Council conducted its own internal investigation pertaining to the Company Secretary: The investigation found that the Company Secretary has: Breached the NAC policy in particular the Council Charter; Breached conditions of her employment as contained in the job description; and Worked against the best interest of the Council; Performed her duties negligently (Gross negligent). Council resolved to institute disciplinary action against the Company Secretary. The Council has since suspended the Company Secretary. 19

DEPARTMENT OF ARTS AND CULTURE 7/21/2018 THANK YOU