The National Audit Office (NAO) has raised significant concerns regarding the lack of oversight and transparency within a theatre funding initiative managed by Arts Council Malta. In its report published at the end of last year, the NAO outlined a series of issues that have emerged in the evaluation of this funding scheme for the year 2024.
Among the most pressing concerns is the existence of an incomplete theatre project, which remains unfinished despite having a stipulated completion timeframe of just 24 months.
This audit specifically targeted the Theatre Spaces Funding Scheme, one of several programs administered by the Arts Council Malta (ACM). The focus was primarily on the second component of this scheme, designed to support large-scale infrastructural projects undertaken by various theatres.
This segment of funding was generous, covering up to 80% of eligible expenses, with each individual project capped at a maximum of €500,000. Three theatres collectively received a total of €1 million: one theatre was granted €498,000, another received €300,000, and the third was allocated €202,000.
A glaring issue identified by the NAO was the opacity in how funds were allocated and dispensed. The report pointed out conflicting provisions in the guidelines regarding financial distribution. Specifically, while clause 3 of the guidelines indicated that the Evaluation Board had sole discretion over funding amounts, clause 6 implied that ACM and/or Teatru Malta could also determine these figures.
Moreover, although the guidelines stated that the fund could cover up to 80% of eligible costs within the two-year window, there was no documentation available to clarify the rationale behind the funding decisions. This meant that while one theatre received nearly the full amount it requested, the allocations for the other two theatres appeared arbitrary and lacked justification.
In terms of record-keeping, the documentation concerning the pitching sessions was found to be inadequate, providing little insight into how funding amounts were decided for the chosen projects. Although both ACM and Teatru Malta were mentioned in the guidelines regarding oversight, the responsibilities for specific tasks were not clearly defined.
Additionally, the guidelines allowed ACM and/or Teatru Malta the authority to reclaim funds if they were misused or not aligned with the submitted budget; however, no effective processes were in place for timely identification of such issues.
One particularly concerning finding was that, despite the established two-year deadline for project completion, one theatre had been left incomplete six years after the program's initiation. Consequently, ACM had not received any receipts for the €398,400 already disbursed to the owner of this theatre, and the last communication regarding the project occurred in September 2022. The NAO reported that work had stagnated for more than two years.
Furthermore, approximately €16,000 from the allocated funds lacked supporting receipts, prompting the NAO to instruct ACM to conduct a thorough review to ascertain eligible expenses supported by proper proof of payment, along with the recovery of any unspent funds. In response, ACM announced plans to hire an external auditor to perform this comprehensive assessment of project expenditures.
While the other two projects had been completed, with relevant reports and invoices submitted, the NAO found no evidence to suggest that ACM or Teatru Malta had conducted any detailed analysis in accordance with the guidelines.
Another serious concern highlighted by the NAO was that ACM did not have a system to evaluate the success of the fund against its strategic goals. Alarmingly, it was discovered that one of the three theatres was entirely unusable due to ongoing construction work, while another was predominantly utilized for band rehearsals and similar activities.
The NAO report also pointed to the absence of conflict of interest declaration forms among the evaluators. The Management Procedures signed by these evaluators emphasized the importance of such declarations, making it clear that failure to comply would result in cessation of their remuneration for services rendered. Despite their significance, ACM admitted to not being able to locate these records, making it impossible to confirm their existence.
Additionally, the Artistic Director of Teatru Malta had at one point been working from an office space rented from one of the theatres that benefited from the funding, all while serving on the Evaluation Board of this funding scheme. The NAO suggested that it would have been more appropriate to appoint another individual to this board in his place, given the potential for conflicts of interest.
