Statement on the public release of the National Arts Council Forensic Report

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Statement on the public release of the National Arts Council Forensic Report
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MEDIA STATEMENT
ATTENTION: ALL JOURNALISTS AND NEWS EDITORS

Johannesburg, 13 November 2021: Today, the National Arts Council (NAC) released the final and adopted Mazars Forensic Report instituted by the NAC. This was done following a media briefing held by the Minister of Sport, Arts and Culture (DSAC), Hon. Nathi Mthethwa, and the NAC Chairperson, Princess Celenhle Dlamini, on 27 September 2021 where they announced the preliminary findings of the report.

The forensic report was instituted after numerous allegations and complaints from the creative industry, certain individuals and some NAC independent Panel Members about alleged mismanagement and maladministration of the PESP process by the NAC.

The NAC Council has taken the findings in the report seriously and are committed to ensuring that all resources required are allocated to restoring strong internal processes and controls, capacitating Council Members to effectively discharge their fiduciary duties and ensuring the promotion of good governance within the organisation. This is so the entity is never faced with this type of maladministration again.

Since the media briefing, the National Arts Council and the Department of Sport, Art and Culture (DSAC), have been inundated with requests from various industry formations, including those mentioned in the report, for it to be released to the public and to those implicated in the findings.

Prior to the release of the Report, the National Arts Council has had to critically consider what was in the public interest, whilst ensuring that such release would in no way violate parties affected by the investigation.

After seeking legal advice, the NAC Council resolved to release the report to the public. Due consideration has been taken to ensure that those mentioned in the Report are informed of the process that the NAC is undertaking prior to its release.

The release of the Report to the public is preceding the official commencement of the implementation of the recommendations as contained in the Report. The Chief Executive Officer and Chief Financial Officer have been charged.

Some of the findings revealed in the report are:
● There were several irregularities pertaining to the management of the PESP. These include;
○ financial mismanagement,
○ process irregularities and
○ lack of adequate oversight

● All funds have been accounted for at the NAC;
● Newly appointed Council Members (from the 1st of January 2021) were all cleared of any wrong-doing;
● The Report confirmed the findings of the State Law Attorneys stating that newly appointed Council members whose organisations had applied for the PESP could not have been conflicted as they had not commenced their appointment at the NAC at the time of applying and completion of adjudication.
● The Report however did identify conflict of interest in respect of some Former Council Members, who contravened Section 8(5) of the NAC Act by participating in the PESP processes and failing to declare their directorship in companies that applied to the PESP.
● Former Council Members disregarded their own resolution of 19 September 2020 by allowing five Council Members to actively participate in the evaluation of applications, thereby contravening the provisions of the NAC Act.
● The five former Council members were cumulatively paid R511,452 for performing work of independent Panel Members. These payments are regarded as irregular expenditure as these Council members contravened the provisions of the NAC Act.
● Failure to meet deliverables within the timeline of the PESP Programme.
● Failure to take effective and appropriate steps to prevent irregularities in the adjudication process, including irregular spending.
● Failure to provide financial oversight regarding the implementation of the PESP within the allocated budget of R285 million, resulting in an over-commitment amount of R428,073,778 (More than double the allocated budget).
● There are no funds missing on the PESP Programme.

The NAC would like to acknowledge and thank Mr. Theo Lawrence for leading the small group of Panel Members whom raised the alarm to some of these maladministration practices identified in the report. It was his letter to the National Arts Council and Hon. Minister Mthethwa that gave rise to the newly appointed Council to closely look at what was occurring within the PESP programme. His brave actions led to Council having to review some of the decisions that had been taken with regards to the PESP.

The National Arts Council will provide updates on the implementation of the recommendations of the forensic report, where necessary. Until such time that the NAC has completed its action on the recommendations, we appeal to those who may have an interest in the outcome and the execution of the recommendations to please allow the NAC to implement and complete the process without excessive interference. We would like to thank the industry for its patience and provide reassurance that Council is already looking ahead and strengthening the NAC through effective and good governance.

Ends.

Media enquiries:
Thola Phetla, Marketing and Communications Manager
Email: media@nac.org.za

Issued by the National Arts Council of South Africa.

Download the above Press Release here.
Download the Forensic Audit Report here.
Download the Addendum to the Forensic Audit here.

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