SA: Forensic report finds financial irregularities in CCIFSA funding

The investigation, conducted by Gobodo Forensic and Investigative Accounting (GFIA), examined funds allocated to CCIFSA between the 2014/15 and 2023/24 financial years. According to the department, the report identified governance failures, breaches of the Public Finance Management Act (PFMA), and non-compliance with departmental policies.

Among the findings was an irregular contract addendum signed in March 2016 that increased CCIFSA’s funding agreement by R772 884 without what the report described as proper submission, justification or approval processes.

The investigation 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. Instead, the funds were allegedly used to support CCIFSA operations during periods when no valid contract existed between the organisation and the department.

According to the report, a close-out report submitted by CCIFSA misrepresented funds intended for the Downtown Music Hub programme as operational funding for the federation.

The report further examined the Downtown Music Hub initiative, stating that CCIFSA’s appointment as fiduciary agent followed a flawed procurement process. It found that R13 million allocated to the programme was mixed with CCIFSA operational funds in a single bank account, which investigators described as maladministration and not in the best interests of the programme.

In relation to the Ushering In a New Era awards, also known as USIBA, investigators found that the first tranche of R10 million transferred to CCIFSA could not be fully accounted for because supporting invoices and proof of payment were not provided. The report also stated that most of the funds were subcontracted to a third party in breach of the funding agreement.

The investigation additionally found that a budget submitted by CCIFSA for a recent funding application included administration costs amounting to 32% of the total allocation, exceeding the 10% limit stipulated in the agreement. The administration costs reportedly consisted mainly of salaries and payments to CCIFSA executives.

Minister of Sport, Arts and Culture Gayton McKenzie said he had instructed the department’s Director-General to begin 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 decisions are made, in line with labour regulations and fair process requirements.

DSAC also confirmed that the irregular expenditure identified in the report would be formally declared in accordance with the PFMA. The report will be referred to the Auditor-General of South Africa, the Special Investigating Unit and the Hawks for further consideration and possible investigation.

In addition, the department said it would review its current and future funding relationship with CCIFSA, including the legal basis for any future transfer of public funds to the organisation.

Addressing public claims made by individuals linked to CCIFSA, McKenzie said the findings contradicted allegations of political persecution.

“This report puts that narrative to rest,” he said. “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.”

He added: “The South African public, and the artists and creatives this federation was meant to serve, deserve honesty about what happened to these funds.”

The department said the forensic report remains a confidential internal document. However, it has been shared with the Portfolio Committee on Sport, Arts and Culture and the Auditor-General as part of the department’s accountability obligations.