14/10/2026
OBSERVED INDUSTRY FINDINGS: WHY THE FILM DIVISION OF KZN TOURISM & FILM AUTHORITY (KZNTAFA) HAS MALFUNCTIONED POST-MERGER
Establishment: KZN Studios (Pty) Ltd was established February 2019 following Framework Agreement signed 11-12 Feb 2019 between KZN Film Commission (KZNFC) and private partner awarded a bid on 09 Nov 2018 to establish a Black-owned film studio.
Shareholding: 90% private partner / 10% KZNFC. KZNFC is a Schedule 3C PFMA public entity.
Public Funds: R15 million in public seed capital transferred 27 February 2019 into KZN Studios FNB account.
Court Finding: High Court in Ngcobo and Others v KZN Studios (Pty) Ltd and Others ZAKZPHC 129 (5 December 2025) confirmed administrators with signing authority remained on bank account even after resignation as director, and signing authority does not automatically lapse on resignation.
Impairment: Annual Financial Statements show investment impaired to ~R12.5 million based on advice from National Treasury and latest bank statements.
SIU Probe: By Presidential Proclamation R4539 of 22 March 2024, SIU is investigating procurement of partners for KZN Studios, the investment, and any unauthorised, irregular, fruitless and wasteful expenditure 1 July 2017 — 22 March 2024.
WHY MERGER MALFUNCTIONED
A. Unclean Balance Sheet Merged:
KZNTAFA was created by Act No.02 of 2024 merging tourism and film. The film side brought with it an unresolved R15m associate entity under SIU probe. Treasury rules require impairment and forensic audit before merger — this was not done. New Authority therefore inherited a liability it cannot legally close.
B. Form Over Substance Governance:
a) Public funds held in co-signatory account with private majority shareholder — contrary to PFMA Section 38 requirement for accounting officer control;
b) Resignation as director does not extinguish control over public funds if bank mandate remains — creates loophole where fiduciary liability under Companies Act is avoided but financial power retained;
c) Same officials involved in that structure then participate in adjudication of other public film funds (PESP/NFVF) without adequate disclosure and recusal protocols;
d) Pattern of resignations when governance issues arise rather than accounting undermines King IV Principle 1 and PFMA transparency.
C. KPI Collision:
Tourism measures bed-nights and events. Film measures 3-5 year slate, IP ownership, and studio infrastructure. Post-merger, tourism short-term targets cannibalised long-term film budget. Result: R154m+ historic film funding track record frozen, no new studio built, funding portal demands 50% KZN spend with no studio to spend it in.
D. Loss of Institutional Trust:
After NFVF Council dissolution in Sep 2025 for governance breach and ongoing SIU probe in KZN, industry apprehension is high. Production houses migrate to Gauteng/WC. Applications drop, litigation rises.
OBSERVED MALFUNCTIONS
1. No approved film strategy for KZNTAFA 2025/26
2. Film fund calls delayed / criteria copy-pasted from tourism
3. No clarity who is accounting officer for KZN Studios FNB account post-merger — PFMA breach
4. No publication of SIU interim recommendations or forensic audit
5. Film staff redeployed to tourism events, loss of specialist capacity
RECOMMENDATIONS
1. DSAC and EDTEA to publish gazetted appointment letters and disclosure registers for all adjudication panels PESP4, PESP5, PESP6 and KZN Studios 2019-2025;
2. KZNTAFA to publish audited bank movements of KZN Studios FNB account and implement SIU interim recommendations before any new film call;
3. NFVF to exclude persons with active interests in entities under SIU investigation from future PESP panels to avoid reasonable apprehension of bias;
4. Ring-fence film division with separate accounting officer and separate audit.
Public film funding is a lifeline for jobs and transformation. When R15m seed capital and R154m+ provincial funding plus R84m PESP6 nationally are at stake, we need clean governance, not form-over-substance compliance.
