UPDATE ON NATIONAL ARTS COUNCIL DEPARTMENT OF ARTS AND CULTURE 4/3/2019 UPDATE ON NATIONAL ARTS COUNCIL DIRECTOR GENERAL: ARTS AND CULTURE 4 SEPTEMBER 2018

INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC The Department of Arts and Culture received 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 requested Gobodo Forensic and Investigative Accounting (PTY) Ltd to conduct the investigations into the allegations. These were the findings : Gobodo concluded that the BIG report was issued without any malicious intent. Gobodo concluded that BIG investigator disclosed the fact he worked at the Development Bank of South Africa during the time that Ms Rosemary Mangope was a DBSA Executive. Gobodo concluded that Mr Andries Dippenaar did not have a close personal or working relationship with Ms Rosemary Mangope. 2

INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC The Department of Arts and Culture received correspondence from Mr Freddie Nyathela alleging that a grant application submitted by the 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. Gobodo concluded that there was no conflict of interest regarding Mr Andries Dippenaar’s involvement in the NAC investigation. NB: The working relationship had no bearing on the findings and recommendations. 3

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. 4

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 in the amount of R137,902.00. This amount was in excess of the stipulated 5% as per the Remuneration and Reward Policy of the NAC; thus the said Policy was transgressed. The Minister met with the NAC Council on 16 July 2018 to discuss the progress report on the investigation that was conducted by Council. 5

INVESTIGATIONS CHALLENGES RECOMMENDATIONS Lalela Flagship Project Gobodo Forensic and Investigative Accounting (PTY) Ltd recommended that disciplinary action be instituted against Ms Rosemary Mangope, the NAC Chief Executive Officer for the following: Submitting a funding application directly to EXCO and the Council without the application being subject to the normal funding process is in breach of paragraphs 6.1 and 12.1.5 of the Grant Awarding Manual; Irregular meeting with the Lalela representatives to discuss the “Social Cohesion Heart Maps Project’’ before the fund application and or proposal had been submitted to the NAC. 6

INVESTIGATIONS CHALLENGES RECOMMENDATIONS Lalela Flagship Project The said meeting resulted in Lalela being given favourable treatment and a competitive advantage over other potential applicants. This is a contravention of section 38(iii) of the PFMA. For acting in a negligent manner and recommending the approval of grant funding of R1 899 000,00 for a beneficiary classified as an “expired project” For irregularly authorising the payment of R1 133 571.00 to Lalela as proper approval process was not followed in the award of the grant; 7

INVESTIGATIONS CHALLENGES RECOMMENDATIONS Lalela Flagship Project For irregularly authorising the payment of R566 785.50 to Lalela as proper approval process was not followed in the grant; and For misrepresenting that a funding application had been submitted for the Social Cohesion Heart Maps project of Lalela projects. 8

REMEDIAL ACTION/S CEO CFO & ARTS DEV MANAGER Gobodo presented its final investigation report to NAC Council on 09 June 2018. Subsequently NAC Council Chairperson met with the Minister in order to determine the Status/ Progress in respect of the forensic report recommendations. The Initiator and the Chairperson have been appointed. Appointment letters were signed by the Chairperson of Council, the letters were issued and received on Monday,13 August 2018. The Chairperson of Council has met with the Initiator and has provided the following documents necessary and relevant to draft charges: Gobodo Report, (Lalela) NAC report on salaries, bonus and Lalela Grant awarding manual Surplus policy Grant Thornton report Disciplinary policy and procedure for NAC Charges were served to the CEO on 29 August 2018 The DAC assisted with the appointment of the initiator and Chairperson. This was done through the Office of the State Attorney. A briefing of the initiator by the forensic investigators was done on 29 August 2018. Charges will then be drafted Other processes will follow thereafter 9

REMEDIAL ACTIONS ISSUE DECISION STATUS Anonymous allegations contained in Molemo’s Letter of Appeal and information leakage to the media At the meeting with the Minister held on 16 July 2018, the NAC Council presented a report on the outcome of the disciplinary hearing against the Company Secretary. The Company Secretary is dismissed. The Company Secretary is appealing the dismissal Further payments to Lalela The Chairperson has instructed NAC not to make any further payment to Lalela until matter is finalised as they were due to receive last tranch of the funding. No payment will be made to Lalela. The outstanding amount due to Lalela Project is R188,928.50.

DEPARTMENT OF ARTS AND CULTURE 4/3/2019 THANK YOU