FRUITLESS AND WASTEFUL EXPENDITURE: PUBLIC ENTITIES 2016/17 DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE: PUBLIC ENTITIES 2016/17 DIRECTOR-GENERAL: ARTS AND CULTURE DATE: 14 NOVEMBER 2017

PRESENTATION OUTLINE BACKGROUND DIE AFRIKAANSE TAALMUSEUM EN –MONUMENT  SOUTH AFRICAN STATE THEATRE MARKET THEATRE NELSON MANDELA MUSEUM IZIKO MUSEUMS OF SOUTH AFRICA FREEDOM PARK SOUTH AFRICAN HERITAGE RESOURCES AGENCY(SAHRA) NATIONAL LIBRARY OF SOUTH AFRICA NATIONAL ARTS COUNCIL NATIONAL ENGLISH LITERARY MUSEUM(NELM) DITSONG MUSEUMS OF SOUTH AFRICA PERFOMING ARTS CENTRE OF THE FREE STATE (PACOFS) DAC SUPPORT AND OVERSIGHT OVER THE ENTITIES TO ENSURE GOOD GOVERNANCE AND ACCOUNTABILITY FOR APPROPRIATED FUNDS

BACKGROUND In the 2016/176 financial year, twelve out of twenty five entities incurred fruitless and wasteful expenditure; this accounts for 48% of the entities Total amount of fruitless and wasteful expenditure incurred: R 1 652 390.46 The Portfolio Committee instructed the Department to present a detailed report on fruitless and wasteful expenditure by entities including: Officials responsible for incurring fruitless and wasteful expenditure Consequence management implemented in this regard Measures to prevent recurrence of fruitless and wasteful expenditure

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 DIE AFRIKAANSE TAALMUSEUM EN –MONUMENT Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R11 724,76 for flights booked for a CEO meeting which was cancelled without new dates.   Entity notified DAC of the fruitless expenditure No sanctions imposed as the meetings were cancelled by DAC due to emergent priorities R5 849,00 for flights booked for a CEO Forum meeting which was cancelled without new dates. 4

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17  SOUTH AFRICAN STATE THEATRE Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY   Action taken to recover the money Sanction imposed on officials implicated R 589.00 Interest charged on late payment of the annual subscription fee of the CFO to SAICA. The outcomes of the investigation will inform the action(s) to be taken including the possibility of recovering R589.00 from the official involved. No sanction imposed as the official concerned is on suspension 5

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 NELSON MANDELA MUSEUM  Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R 5,204.10 Money charged by the Municipality for arrears, interest and penalties on late payment of vehicle licence Deducted from the salary of the official - R 763.50  - R 11 597.07 Late submission of pension funds returns resulting in penalties and interest charges Letter issued to the official informing him of the transgression and eminent disciplinary hearing. No sanction imposed pending the outcome of the hearing. The Disciplinary hearing is on going. 6

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 MARKET THEATRE  Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R 14 500.00 Deposit paid to suppliers for work that was not done (Construction of steel cage in basement) Second payment was not made. The CFO requested Treasury to blacklist the supplier. The blacklisting process is still in progress. Market Theatre adopted Policy that stipulates not to pay deposits in future. The Market Theatre is constantly engaging National Treasury to blacklist the company however, this has not been done. R 28 227.54 This amount is 50% of the total amount charged to Market Theatre. Market Theatre paid deposit to suppliers but work not done(furniture purchased) Second payment was not made. The amount is irrecoverable because the supplier is in liquidation. Market Theatre is claiming the 50% from the furniture designer. The 50% down payment was a requirement from the supplier before delivering the furniture. 7

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17   IZIKO MUSEUMS OF SOUTH AFRICA Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R 14 454.00 Traffic fines and penalties Iziko has not taken action as they have not conducted an in-depth investigation as to who owes how much. The fines were only submitted to Iziko by the fleet management company after the audit outcome. The matter is included in the Audit improvement plan for intervention. Sanctions have not been imposed yet as the matter is still under investigation. 8

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 FREEDOM PARK Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated  R 22,155.00 Overtime was charged by a supplier due to late request by the Freedom Park official   Disciplinary action Deductions from the official have been effected from September 2017  R 49,081.00  Forensic investigator appointed without following SCM process The previous Council of Freedom Park appointed a forensic investigator without following SCM processes. In approving the condonation for irregular expenditure, the National Treasury instructed the Freedom Park to classify R 49 081 of the irregular expenditure as fruitless & wasteful expenditure and consider the cost-benefit of instituting recovery procedures. The current Council resolved that because most of the members of the previous Council were no longer active, the cost to recover will surpass the fruitless expenditure. The amount was written off. 9

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 SOUTH AFRICAN HERITAGE RESOURCES AGENCY Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R 15 100.00 Penalties in late submission of the PAYE No action taken against any official yet. The matter is still under investigation.  The matter is still under internal investigation. The investigation involves officials from different units who are responsible for the payment of Council members PAYE. As a result no sanction has been made yet. R 2 901.39 Interest on overdue accounts (municipal accounts) due to late submission of invoice from the Municipalities via Post Office. This caused delays in Finance receiving them. Finance is currently negotiating with all Municipalities to rather email invoices in order to ensure that invoices are received and paid in time. Money was not recovered for the following reasons:   The expenditure did not originate as a result of negligence; Goods and/or services have been received and delivered satisfactorily and requisite value was received in relation to said expenditure. The Chief Executive Officer conducted an investigation to determine recoverability or condone the expenditure   No sanction imposed as there was no official implicated. 10

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 NATIONAL LIBRARY OF SOUTH AFRICA Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R 40 028.52 Private use of mobile account allocated for work-purpose. Usage was not regularly reviewed on the business MTN data accounts to prevent personal use by staff.   Staff Debtor raised against the official. Debt acknowledgement forms have been issued to the official Human Resources Management to take disciplinary action against the official. Warning letters have been issued to the official. No date has been issued yet due to the unavailability of the CEO who was on sick leave. R 45 739.63 Was unauthorised/ improper use of the accommodation booking account of the NLSA with the travel agent Staff Debtor raised against the official Debt acknowledgement forms have been issued to the official . Human Resources Management to take disciplinary action against the official. Warning letters have been issued to the official. No date has been issued yet due to the unavailability of the CEO who was on sick leave. R 88 129.47 Penalties & interest paid for the late/ incorrect submissions of UIF & PAYE returns during the period Feb 2009-Feb 2016 Still under investigation Still under investigation. The matter has not been concluded. The entity has an approved Policy on how to deal with fruitless and wasteful expenditure and are applying the policy as a guide for consequence management . 11

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 NATIONAL ARTS COUNCIL Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R 409.00 Interest charged due to late payment to the supplier. Letter was issued to the official to recover the money, the matter will be finalised by end of November 2017. Disciplinary action will be taken against the official 12

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 NATIONAL ENGLISH LITERARY MUSEUM Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R 3 029.13 This was the total amount incurred by the entity due to a Council member who did not notify the entity on time that he was not going to attend the Council meeting. In arranging travelling for the Council members, the official responsible for bookings committed an error which had financial implications that amounted to R650. This was recovered by deduction from the official’s salary. The balance which is R 2 379.13 was to be paid by the Council member involved. R650.00 has been paid by the official. The Councillor involved has been requested to pay the money before the end the Council’s term which is end of November. Written warning Awaiting payment 13

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 DITSONG MUSEUMS OF SOUTH AFRICA (DMSA) Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated Interest and penalties on late payment of PAYE for the September 2016 return amounting to R57 229.19   The official involved will be raised as a debtor and money recovered through a debt collector: The entity is in the process of appointing a debt collector by end of November 2017. The official is no longer in the employ of DMSA Interest and penalties on late payment of UIF for the September 2016 return amounting to R 6 971.51 14

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 DITSONG MUSEUMS OF SOUTH AFRICA (DMSA) Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated Payments to Nzwalethu Maintenance and Projects – Palisade fencing at Willem Prinsloo Agricultural Museum amounting to R593 750.00. These were duplicate payments outside payment schedule The official involved will be raised as a debtor and money recovered through a debt collector: The entity is in the process of appointing a debt collector by end of November 2017 The official was suspended owing to various misconduct allegations against her. The DMSA scheduled disciplinary hearings which were constantly postponed. The Council resolved to separate with the CFO at a cost of five and half months of her contract effective 31 August 2017. The settlement does not close the on going criminal cases opened against the CFO. Payments to Bella Casa Housing Developers – Palisade fencing at Tswaing Crater Museum amounting to R561 748.36. These were duplicate payments outside payment schedule   15

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 FRUITLESS AND WASTEFUL EXPENDITURE 0F 2016/17 PERFORMING ARTS CENTRE OF THE FREE STATE Amount of Fruitless and Wasteful Expenditure Incurred for 2016/17 FY Action taken to recover the money Sanction imposed on officials implicated R67 131.21 (Appointed Kelly Group without following SCM processes, recruitment process and without approval of Council Funds were not recovered The official was dismissed R3 582.24 (Flight not taken and another route taken) R116.71 (Not paying AG invoice in time) 16

DAC SUPPORT/INTERVENTIONS The Department of Arts and Culture (DAC) has established various oversight mechanisms /interventions to assist the public entities to achieve their targets as adopted and tabled in Parliament. These interventions are important in ensuring that the public entities are better managed and accountable through sound corporate governance and a performance management system.  In line with the National Treasury guidelines, the public entities, submit their first and second drafts of the APPs (Annual Performance Plans) to the DAC before the end of August and November respectively. Upon receiving the APPs, the DAC analyses the draft APPs, convene meetings to discuss their draft APPs and feedback is given to entities for final amendments. The feedback assisted the entities to fine tune their plans and ensure that they are aligned to government imperatives relevant to the arts, culture and heritage sector. Subsequent to tabling the final approved APPs, the Minister signs shareholder’s compacts with the Chairpersons of all the DAC public entities, the shareholder compact symbolises a performance contract between the Minister and the Council.

DAC SUPPORT/INTERVENTIONS CONT.. The approved and tabled APPs are part of the shareholder’s compact documents The Department has also developed a set of templates to ensure standardised reporting and to facilitate a consistent assessment of performance through the submission and analysis of the quarterly reports Quarterly the DAC receives 25 quarterly reports which have to adhere and comply with the agreed performance analysis framework as guided by the National Treasury The quarterly reports address both the financial and non-financial performance of the entities, ensure alignment of reporting against those targets presented in the Annual Performance Plan (APP) and the Shareholder’s Compact, importantly outline the entities Audit improvement plans Upon analysing the reports, a Ministerial submission is generated with feedback letters where there are matters to be communicated with the relevant Chairpersons.

DAC SUPPORT/INTERVENTIONS CONT.. The quarterly reports form part of the Monitoring and Evaluation process which will be supported by quarterly site visits to the entities to validate and verify the performance submitted The quarterly visits focus on : The performance of the entities(financial and non- financial) The state of governance of the entities ( constitution of Councils and all the Committees) The relationship between the employees ( stake holder engagement between the staff at all the levels) The monitoring and tracking of the Audit Improvement Plan The DAC has developed a Governance Framework for stakeholder relationship management with key stakeholders. The DAC has established the following Governance Frameworks:

DAC SUPPORT/INTERVENTIONS CONT.. CHAIRPERSON’S FORUM This Forum is a consultative body comprising Chairpersons of Councils/Boards of the public entities reporting to the Minister of DAC. The forum presents the Chairpersons with the opportunity to engage with the Minister in issues relating to the national priorities, government directives, challenges confronting public entities and information sharing. It comprises of Chairpersons of the Councils /Boards The Forum meets twice a year. CHIEF EXECUTIVE OFFICER’S FORUM The Forum is chaired by the Director-General of Arts and Culture The Forum comprises of all the CEO/heads of Institutions of the DAC The Forum meets twice a year CHIEF FINANCIAL OFFICER’S FORUM This is a forum of CFO’s of public entities and is chaired by the DAC CFO The Forum deals with issues relating to financial governance as stipulated in the Public Finance Management Act (PFMA) and National Treasury regulations (including budgeting, auditing and other compliance related) The Forum meets twice in a year

DAC SUPPORT/INTERVENTIONS CONT.. SECTOR FORUMS The following are the sector-specific forums Performing arts institutions (PAIs) chaired by CEO of State Theatre; Heritage Institutions/museums chaired by DDG Heritage Promotion and Preservation Development Agencies (DAGs) chaired by DDG Arts Culture Promotion and Development. The entities discuss sector-specific issues and share best practices The Forums meet twice in a year BI-LATERAL ENGAGEMENTS These are adhoc meetings between the Minister and a particular public entity (preferably with the Chairperson of the Council) to discuss issues pertaining to a particular institution The Director-General of Arts and Culture can also convene these bi-lateral meetings with any particular public entity if there are pressing matters to discuss

DEPARTMENT OF ARTS AND CULTURE 11/24/2018 THANK YOU