The Department of Sports, Arts and Culture, working with the National Arts Council (NAC), is undertaking a forensic investigation to discern where additional funds can be sourced to cover the shortfall created by the mismanagement of funds of the Presidential Employment Stimulus Programme (PESP) budget allocation, Minister Nkosinathi Mthethwa announced on March 29.

He said the fiscus does not permit the disbursement of additional funds at this point.

Mthethwa explained that the PESP was designed to act as an injection of income into the creative economy and to assist practitioners and their projects, as well as companies that incurred losses during the Covid-19 lockdown period.

The department entrusted the administration of the PESP to the NAC.

Mthethwa said the department received an allocation of R665-million from the National Treasury through a letter dated September 23, 2020, and started with processing in October 2020 after the announcement of the PESP by the President on October 15, 2020.

He explained that the budget allocation was such that R300-million went to the NAC, R140-million to National Film and Video Foundation and R60-million to the Sports Trust, whose objective was to create and retain jobs.

A balance of R165-million went towards the Sport Compliance Project, Heritage PESP projects and Arts and Culture PESP projects implemented mostly with provinces.

Mthethwa emphasised that, contrary to reports, there is not R300-million missing, but rather, that funds were overcommitted by the NAC.  

As the NAC had not adequately answered questions to a new council regarding developments with the disbursement process, the disbursement process was paused until further legal advice could be received.

Mthethwa said that because the council was not receiving assistance from the NAC management, it decided to suspend the CEO and the CFO as from March 1.

Subsequently, they discovered that the allocated budget had been mismanaged by the NAC, mainly by way of an over-commitment of the available funds that were allocated to creative sector organisations, by more than double the allocated amount in their possession, he explained.

“For instance, the NAC over-committed the funds that were allocated to artists by over double the allocated amount in their possession. This is the crux of the issue that we are faced with today. We will ensure that those who are responsible for this gross negligence are brought to book,” Mthethwa emphasised.

“In the past few weeks, we have been trying to see where we can get additional funds to cover the shortfall created by the mismanagement of funds. Unfortunately, so far, the fiscus does not permit the disbursement of additional funds at this point,” he added.

Therefore, the investigation is aimed at unpacking how the funds were allocated, as well as where to source additional funds.

It was noted that the NAC initially approved about 1 374 applicants, but that duplications were found and the number has now been confirmed at about 1 208.

Out of this, 505 beneficiaries have been paid. A further 380 beneficiaries will be paid in the next three days.

“As the Minister ultimately responsible for the successful rectification of this unacceptable dilemma, I firstly want to issue an unconditional apology for having been let down by an institution which I sincerely believed was up to the task. I entrusted the NAC to bring much-needed relief in such a desperate state of economic vulnerability, through the introduction of inevitable Covid-19 lockdown.

“Having done so, I hereby issue to you an absolute and uncompromising promise to ensure that those who are responsible for this gross negligence are brought to book,” Mthethwa emphasised.