How Essence Festival's R95m budget was spent
Durban - A marketing company was paid to provide security services at the 2016
Essence Festival while the city forked out close to R200 000 on “refreshments” at a popular club-cum-restaurant as part of events linked to the festival.
These are some of the explosive revelations contained in a damning report produced by the city’s internal audit unit which has been reviewing the R95 million expenditure incurred by the city for hosting the five-day event.
However Philip Sithole, the head of Business Support, Tourism and Markets, rejected the report, saying it had been finalised without comments from the project managers and heads of relevant units.
“The report was then withdrawn pending comments from management. Once all comments have been received, the report will be forwarded to council for approval”.
Sithole said the city is committed to clean governance and will issue a statement in due course.
The city is due to host another Essence Festival this year as part of a three-year deal with Time Inc who owns the rights to the Festival. The city bought licensing rights from the company, and the licensing fees amounted to R18million.
The auditors further found that there “may have been irregularities and collusive procurement practices” related to the event.
The confidential document, leaked to The Mercury last week, lists various suspicious transactions where the core function of the service providers “is not corresponding to the services provided”.
One of these is the marketing company, whose identity is known to The Mercury, which was paid to provide security despite this not being one of its competencies.
The auditors said that upon examination they had found that the said service provider specialises in brand activations, promotions, branding, graphic design, printing and events management but “nothing relating to security”.
A total of R178 000 was paid to the company, of that R23 000 was for “ad hoc security” while R155 000 was for “buildings”.
“We noted that in some instances the explanation of the payments made and the services provided by the suppliers are not identical. We have examined the impacted companies and learnt that,” the auditors state.
The documents further reveal how R171 000 was spent on “refreshments” at a popular club-cum-restaurant in South Beach.
The same business was also paid an additional R93 792 for venue hire as part of the festival activation.
The bulk of the budget went to paying artists, as this item cost the city just over R30m, venue hire was also another costly item costing the ratepayer R13.5m.
The report raises concerns that the city had to be the sole funder of the event, saying that internationally, the festivals are funded and driven by the private sector in partnership with government.
“It further appears that the recommendation of the executive committee which is to ensure that the city’s contribution is reduced was purely overlooked, as finally the city funded almost 100% with consequent overspending on budget vote not meant for the purpose,” the report states.
The report shows that there was no funding from sponsorships and from other spheres of government as it had been proposed. Fifty-three percent of the funding came from the city’s social cohesion programmes while the remaining 47% was drawn from the city’s business units budget.
Approached for comment yesterday, mayoral spokesperson Mthunzi Gumede said it would be premature to give any comment.
“We have never seen the report. Once it gets tabled we will study it, look at the contents and then we will be able to engage”.
DA leader Zwakele Mncwango said he had recently written to the city manager asking for a forensic probe of the 2016 festival.
He asked why the report of the internal audit was never tabled before the executive committee.
“This report was done but it has been hidden from councillors. By hiding this report from Exco you are denying
us an opportunity to ensure that the mistakes of 2016 are not repeated because we have to analyse 2016 before we commit on the 2017 festival,” he said.
Mncwango also called for criminal proceedings, saying this would unpack what transpired in the lead-up to the festival.