Minister of Sport, Arts and Culture Gayton McKenzie has said the forensic investigation into the Cultural and Creative Industries Federation of South Africa (CCIFSA) has exposed serious financial mismanagement involving more than R51 million in public funds transferred to the organisation over nearly a decade as reported by IOL.
“This report puts that narrative to rest,” McKenzie said. This comes after he received the final forensic report compiled by Gobodo Forensic and Investigative Accounting (GFIA) on behalf of the Department of Sport, Arts and Culture (DSAC).
“What this investigation has documented is not victimisation. It is mismanagement of public money, failure to account, failure to return unspent funds, and the misrepresentation of financial records.”
The investigation examined R51.8 million transferred to CCIFSA between the 2014/15 and 2023/24 financial years and found extensive financial irregularities, governance failures and breaches of the Public Finance Management Act as well as departmental policies.
Among the findings was an irregular contract addendum signed in March 2016 that increased the original funding agreement by R772,884 without a submission, justification or proper approval.
Investigators also found that R5.4 million in unspent funds at the end of the 2016/17 contract period was not returned to the department as required but was instead used by CCIFSA to fund operations during years in which it allegedly had no valid contract with DSAC.
The report further found that a close-out report submitted to the department misrepresented funds intended for the Downtown Music Hub as CCIFSA operational funding.
In relation to the Downtown Music Hub programme, investigators found that CCIFSA’s appointment as fiduciary agent followed what was described as a flawed procurement process.
The report stated that R13 million allocated to the programme was mixed with CCIFSA’s own funds in a single bank account, which investigators described as a serious governance failure and maladministration.
The probe also uncovered irregularities linked to the Ushering In a New Era awards, commonly known as the USIBA Ministerial Conference and Awards.
According to the report, the R10 million first tranche paid to CCIFSA could not be properly accounted for because no supporting invoices or proof of payment were provided.
Investigators further alleged that most of the funds were irregularly subcontracted to a third party in breach of the agreement.
The report also flagged a budget submitted by CCIFSA in support of a recent funding application, which reflected an administration fee of 32% of the total allocation, exceeding the 10% maximum stipulated in the applicable agreement.
According to investigators, the administration costs mainly consisted of salaries and payments to CCIFSA executives.
“The South African public, and the artists and creatives this federation was meant to serve, deserve honesty about what happened to these funds.
“They will not be served by a public theatre of grievance designed to obscure the findings of an independent forensic investigation,” McKenzie said.
The minister said he had instructed the department’s director-general to initiate processes against officials identified in the report.
The department said affected officials would be given an opportunity to respond to the findings before any disciplinary action is taken.
DSAC also confirmed it would declare the irregular expenditure identified in the report in line with the PFMA and refer the findings to the Auditor-General of South Africa, the Special Investigating Unit and the Hawks for further investigation.
“The cultural and creative industries are too important, and the public funds entrusted to this Department too scarce, for us to allow R51 million in transfers to escape proper scrutiny,” McKenzie said.
“Where officials in my department are found to have failed in their duties after due process, they will face consequences. Where funds were used irregularly, that will be declared and addressed. And where the law has been broken, that will be a matter for the appropriate authorities.”
The department said it would also review its current and future funding relationship with CCIFSA, including the legal basis for any future transfer of public funds to the federation.