Allegations of maladministration at NSFAS: NEHAWU briefing & NSFAS response

Meeting report

Opening remarks
The Chairperson said the Committee had received a submission from provincial secretary of the National Education, Health and Allied Workers Union (NEHAWU) making various allegations against the National Student Financial Aid Scheme (NSFAS), in particular the Administrator and some of the people working there. The Committee had looked at the submission and thought that they were of a serious nature. Subsequently, it had requested the Administrator to respond to those allegations, hence today’s meeting.

The Committee had received the responses from NSFAS and all documentation that would be relevant for today was available.

The Committee had asked for more information from the Administrator on two aspects that Members thought were important -- the cost of hotel accommodation, car hire and V&A accommodation, as well as remuneration of advisors. Secondly, it had requested the profile of the appointed advisors. This information was received, but he was not certain whether all profiles were sent.

There was a request from the Administrator regarding information about employees, that it should be handled in a very sensitive manner in order to protect their personal information. This information had not yet been distributed to the Members.

NEHAWU on NSFAS concerns
  
Mr Eric Kweleta, Western Cape Provincial Secretary General, NEHAWU, said that it had been now three years since the appointment of the Administrator, and NEHAWU had been party to that process after it fought against corruption and maladministration in NSFAS. It had thought the arrival of the Administrator would ease things, but the opposite had happened. NSFAS was better off under the previous Board then than it was now. Some of NEHAWU’s personnel had been taken to court against civil claims amounting to about R1 million personally for raising these issues.

What they had seen in the South African Revenue Service (SARS) with the rogue unit had been replicated at NSFAS, seeing that the Administrator came from SARS. This institution did not have policies, and as the union raised these matters, people got suspended and there was currently a flood of cases of suspensions that were before the Commission for Conciliation, Mediation and Arbitration (CCMA).

Mr Baxolise Mali, Regional Secretary, NEHAWU, said that the first issue was the illegal extension of the Administrator’s term. The Administrator was placed after the Board was dissolved, and there was a subsequent renewal by Minister Nzimande. When they expected him to vacate the building, they were surprised by a letter of extension. There were terms of reference for the extension and it was gazetted. The Administrator’s extension was not legal and he continued to occupy the office with his advisors illegally, knowing that there was no money for this. By implication, the extension took up what was meant for the compensation of workers.

The extension for the Administrator and the advisors was not necessary. NEHAWU might be told that all the submissions of advisors were done in concurrence with the Minister, but it believed that was misleading. The NSFAS had started operating as a rogue unit where employees’ emails had been monitored and hacked.

The Administrator had submitted the advisors that he preferred, but the union had advisors for the Occupational Health Act, and when these advisors came on board, they took on other positions such as human resources (HR) advisors. There was a person called Tasneem Salasa who had now been made a Chief Operating Officer, with a Bachelor’s degree in psychology. How was this even possible?

Another issue was that the salaries that these advisors were receiving were exorbitant, and they had now assumed acting positions at NSFAS. These advisors had flights and travel in and out the province. They were not placed in accommodation that was reasonably priced, but were staying at expensive hotels in the V&A. This was in contravention of the Constitution regarding the effective use of the country’s resources. Treasury had given an instruction that in the public entities, anyone above management should receive only a 2.5% increase, yet there was no salary increment for employees.

On the laptop tender, NEHAWU workers had raised an issue about the interference of a special advisor of the Minister on the process dealing with adjudication. NEHAWU knew that Treasury had released a Code and Conduct in 2006 for public service regulations and supply chain management (5 December 2003), which was explicit that in the process of adjudication for bidding, there were observers that could be allowed during the bidding. People who were observing had to be officials. NSFAS had to book the official a flight to come down and check bidding documents.

Currently there was a reconstitution of the bidding committee that had now been replaced with former staff members of the Minister. It was clear that these people had to be vetted to ensure that they qualified and were cleared at the confidential level. These staff members had replaced qualified chartered accountants who had not done anything wrong.

NSFAS had qualified people, and suddenly there were people with certificates who were handling important documents and occupying important positions. For example, there was a Mr Willem Basson who had tried to access confidential information.

When children of the working class applied for NSFAS support, they were often told that they had qualified for funding but when registration came, they no longer had the funding that was initially granted. As proof of collapsed of governance, when the Administrator came in, he had been requested to return NSFAS to its initial position.

A former staff member, Ms Sibongile Mncwabe, had attended a meeting in Johannesburg to discuss creating a position that she would occupy. In the process of creating that position, the person who occupied that position was the same person who attended that meeting with the Minister about the creation of that position and its profile.

There were internal auditors who arrived to deal with issues of internal audit and identified the weaknesses in the internal controls. They had gone further to make recommendations about creating critical positions for the internal audit function. There had been a complete disregard of the employees at the NSFAS.

Mr Kagisho Mamabolo, General Manager: Corporate Services, NSFAS, said was important for Members to appreciate that NEHAWU’s approach had come right at the end of the term of administration, because the submissions made today were not ‘hear-says’ – there was evidence to support them. Some of NEHAWU’s workers had been with the NSFAS long before the current administration, and thus the union was very aware of the issues.

NSFAS lacked an effective platform that could verify income, and most of the applicants that applied were often rejected on the basis that the income submitted by applicants was not correct and the parents earned more. So what had the Administration done to ensure that the verification of income processes or systems was correct? Prior to administration, the officials who were responsible for the operations team had put in an emergency process to verify income, which was consulting third parties such as credit bureaus. That was meant to be an emergency intervention, not a permanent process. It had now become a permanent process.

They had been told by the Administration that there was integration with the SARS system, but there was no such a thing. At NSFAS, there was the infamous “Hand of God,” and everyone that was in the operation knew about this.  This “Hand of God” basically meant that applications could be rejected without any reasonable verification. It meant that the outcome of applications for funding could change at any time without anyone knowing why or what happened. In some instances, applications would be withdrawn even after the funding had been granted, or funding would be disbursed towards applications that had been rejected. No one really knew what happened; people just saw the outcomes changing. The most concerning part of it all was that some applications would be withdrawn without students being informed.  When students enquired at the call centre; they would be told that they had withdrawn their application themselves, which was not true. One would also witness instances where directors would be granted NSFAS funding.

At the moment, the disbursement unit was completely destroyed and when the Administrator arrived at NSFAS, the disbursement teams had been working effectively. They may not have been perfect, but they were working. Some of the members of those teams had witnessed and noticed transactions that were processed and made during the night. When the posting of these payments was reported, a week later those employees were suspended -- outside of business hours. There were many members of NEHAWU that had been made to feel incompetent when it was not the case. Some of them had worked in governance for many years and took their jobs seriously.

Members had been told about the NSFAS Wallet. None of this had come to fruition, and this was the kind of information that Parliament had to deal with. This Administration was leaving and was going to leave the NSFAS in a far worse place than before. They had proof that there were interviews that had taken place at the Administrator’s house.  They knew that it was wrong, but when they disagreed with the processes, they were victimised.

Advisors had come in and created positions for themselves, and currently there was a much bigger problem in the HR function, where advisors have created positions for themselves and occupied them.

Ms Nqwenelwa Ncede, Senior Manager: Strategic Planning and Performance, NSFAS (and a member of NEHAWU) reminded Members why NSFAS had been placed under administration. It had been placed under administration due to the fee-free higher education pronouncement that was made by the former President Jacob Zuma on 16 December 2017. That announcement had surprised the whole country, and had compromised the capacity and operations of the NSFAS. Although, the NSFAS mandate was clear, it was not ready to take up such a gargantuan task. Perhaps, if it was done in phases, the conversation would be different.

She had started in February 2018, when the previous Board was still in operation, and during the refinements of the annual performance plan (APP), the indicators of the NSFAS were revised to talk to the new bursary and loan system. The strategic planning was then aligned to the APP, which was submitted to Treasury and to the Committee at the time. This was audited by the Auditor General (AG) in 2018, but due to the influx into the system, NSFAS’s performance declined to 9%, and last year it was 12%. However, the audit outcomes were unqualified and only two indicators out of 17 were qualified, which was due to Ms Thaaniya Isaacs, who had refused to submit information.

During the Fifth Administration, the revised strategic and performance plans would be submitted on the 16 November each year. For the 2019/20 APP, NSFAS complied with the submission date on 16 November, which was revised. However, later on in November, she was called to the office by Ms Isaacs, who was an Ernst & Young consultant at the time, and requested to remove the indicators and to replace them with the terms of reference of the Administrator. She informed Ms Isaacs that the indicators were aligned to the SMART principles and the strategic plan, and it would be improper to replace them with the Administrator’s terms of reference. The terms of reference were operational, and the strategic plan was forward looking. The indicators were subsequently removed while she was away. There was a directive that came from Treasury through the Department to freeze the salaries of senior managers and executives.

The revised APP was then submitted to the Department without her approval, and she never received a copy of that APP. However, when she was preparing the quarterly reports she became privy to the revised APP. She took this matter up to the Administrator and emphasised that the terms of reference of the Administrator were not measurable, not auditable and some targets had been removed. The APP was wrong as it would be impossible to measure, and this might give the NSFAS an adverse finding. Ms Isaacs then called me to the University of Cape Town (UCT) and handed me a letter of intention to suspend me, arguing that was I was misleading government. Fortunately, Ms Isaacs and her team were called to the Department and were told the very same thing she had been telling the Committee.

Ms Ncede’s communication was disrupted and she discontinued her submission.

Ms Marlene Bossett, Manager: Transformation Projects, Central University of Technology (CUT), said that HR had had three advisors during the Administrator’s term, and nothing had happened. There had been no improvements. Someone who attended the Executive Committee meeting informed her that there were various things that were said about the Minister and the Administrator’s intent to undermine the Ministerial Task Team. That individual had reported the matter to the Department, and officials in the Department had gone back to tell the Administrator, and the whistle-blower was subsequently dismissed.

One of the Administrator’s tasks had been to put policies in place. There were a number of policies in his responses, but he failed to mention that the policies were outdated and were not aligned to the Department of Public Service and Administration (DPSA) and legislation. This had been escalated to all managers and the advisors to change these policies, but she had been charged with flouting the policies – a matter of “keep your mouth shut, and do what you are told.”

Irregular appointments happened often, and were at the core of creating a culture of fear and discrimination in the organisation.

The previous chief executive officer, Mr Steven Zwane, had been accused of bringing people in irregularly. Working in HR, she said that the Administrator had done the same thing under the guise of “bringing in experts or advisors.” This was done without the consultation and approval of the Minister as required. For example, there was a Mr Shai who was brought in through a text that was sent to her, where the Administrator said Mr Shai was a good friend that he knew and that he must be brought on board to work at the NSFAS. She had looked at his CV and spoken to him at the instruction of the Administrator. His job was to work with her as an advisor. Shortly after she come back from a holiday he had been appointed as a strategy and annual performance plan consultant. Subsequent, to that he had become a service provider in strategy, and then became an employee in the organisation in one or other department.

There was also a Ms Verna Stuurman, whom she had been instructed to interview. This person had worked with the Administrator in a previous organisation -- a teacher that the Administrator knew – but she was not an expert in anything.

There was also another instance where she was instructed to travel to Bloemfontein to interview another person who was very close to the Administrator, but she had refused. That individual was a friend of the Administrator’s wife.

There were a number of these instances where people were appointed to key positions due to their close relations with the Administrator.

There were people who were interviewed by Ms Thaaniya Isaacs in restaurants without the HR executive present.

Ms Thaaniya Isaacs, a consultant for Ernst & Young, had produced a report about how bad NSFAS was, and non-complying. She had then applied for a position of Chief Risk Officer at NSFAS, which was on the approved structure. After she got the position, it was subsequently expanded to become Chief Government Risk and Compliance Officer, which she never applied for but received as an award after she had applied for the narrow position. While she was still at EY, she had been tasked with drafting a letter to the Minister outlining reasons why NSFAS should in-source internal audit. Evidence on this matter was available.

When Ms Isaacs came to work for NSFAS, she did not adhere to the international audit standard pertaining to a cooling-off period. The audit standards were very clear on this. As a member of the HR staff, she was responsible for verifying the qualifications of employees, and Ms Isaacs was not a chartered accountant as was claimed by the Administrator.

Administrator’s responses to NEHAWU allegations

Dr Randall Carolissen, NSFAS Administrator, said he would clear the on-going allegations levelled against him, the advisors and employees. They did not agree with these allegations, but respected NEHAWU’s right to articulate its observations or allegations.

He said Mr Shai was not in NSFAS’s employment, and the person who was said to have worked for his wife had not worked for her. He was taking these allegations very seriously, and the legal counsel had been invited as well as the chairperson of the Independent Audit Committee, who was present at this meeting.

Dr Carolissen read a statement responding to the allegations. [See statement attached]

National Student Financial Aid Scheme Briefing on its Responses to NEHAWU Allegations

Dr Carolissen commenced with a presentation on the appointment of the advisors. He said the process of appointing these candidates was done in concurrence with the Minister, based on their qualifications, experience and availability. Following the appointment of Administrator, the entire top management structure had departed, either through dismissal, a negotiated exit or resignation, which had further necessitated the appointment of some specialist advisors to act in the vacated top management structure. The secondment of the Acting Chief Operating Officer from UCT had already been in place, prior to the commencement of administration.

As for the initial risk assessment, they were able to release funds to students and had identified a further 150 000 students, which in turn had led to further disbursement amounting to R14 billion. People were also disbursing funds from their kitchens at home, and they had put an end to that. There was an absence of information communication technology (ICT) governance control, and people could just change things.

The cyber-security was sub-zero, and this was done by the previous board, but that had not been shared with him. The previous Board had not mentioned the cyber-security report that had not been implemented. All illegal portals were subsequently shut down, and that report was implemented.

The corporate council was toxic, and the HR function was dysfunctional. In the HR forensic report, some of the people that had been charged were implicated. There was a severe lack of technical skills at NSFAS.

He had formulated a strategy which spanned the three stages of administration, which included business rescue and stabilisation, and when he arrived NSFAS was in a far more worse state than what he had been told, so a lot of consultants had been brought on board to assist in rescuing and stabilising the Scheme. Technical skills were subsequently brought in to assist in the stabilisation of the organisation.

As for the NEHAWU’s complaints, they were cooperating to get into the depth of the allegations. Since it had been mentioned, Ms Tania Isaacs had been a chartered accountant (CA) since 2002, and she was registered in the SA Institute of Chartered Accountants’ (SAICA’s) database. There were also other allegations that were extremely harmful, and they wanted to create an environment where people would want to come and work at NSFAS.

The Chairperson said that the Members had not had the opportunity to hear about the specifics of the responses on the allegations that had been brought up. There was uncertainty on how that part would be handled, and the Committee would rather prefer specific responses to specific allegations that had been raised. He was not comforted by the generic responses.

The Committee had received a request deal with the names of the advisors or the employees confidentially, and had agreed to this. He felt that there was nothing confidential about employees, and there was nothing preventing the information from being presented openly. These persons or employees had not been given an opportunity to respond, which was a valid point, so the Committee may allow them to respond to the allegations that had been raised against them. That would be a fair practice in complying with the principle of fairness when it came to matters of this nature.

The Committee was concerned about the allegations made regarding misleading Parliament, and Members would appreciate more details on that item.

Mr Mamabolo said that on a number of occasions, they would appear in Parliament as NSFAS, and in those instances there would be certain information that would be required. One of the issues had been the matter involving VBS mutual bank in August last year, where they appeared before the Portfolio Committee on Higher Education and Training, together with some of the advisors present and the then Chief Operating Officer. The plan was to have the presentation done by the Administrator, supported by his advisors. However, the Administrator had asked him to present suddenly – on the spot. It was uncomfortable, and Mr Nodada, a Committee Member, had asked a question relating to VBS. The response from the Administrator had been that he had reversed the decision on VBS which had been taken by the previous NSFAS Board. The information was presented in a way that indicated the entire VBS process was corrupt, irregular and that the previous management had made a bad decision. This process had happened long before the Administration, and he had explained this to the Administrator during the meeting with the Committee.

The Sbux system was said to have been dismantled and replaced by the NSFAS Wallet system, as the Committee was told. This was not true. The NSFAS Wallet was the same as Sbux -- it was just a name change.

There were issues that were factually incorrect that had been presented the Committee. For example, the matter regarding the late submission of the annual report had been blamed on the Auditor General of South Africa (AGSA) when in fact it was the administration’s fault.

Discussion

Mr T Letsie (ANC) said that people must remember that at the end of these allegations and complaints, NSFAS was very important to South African students. On the allegations regarding the ICT verification system, was it true that the system was still the same? Secondly, how much had been spent on the ICT system since the arrival of the Administrator?

The Committee would appreciate confirmation of the allegations about the “Hand of god.” Members had been briefed thoroughly on NSFAS applications, particularly withdrawals at the Venda University of Technology.

The whistle-blower who had been suspended and brought back to NSFAS -- was this true? If so, Members would like to interrogate or to ask that individual questions pertaining to the allegations.

On the salary increments, there was a Treasury report that had been adopted last year. This report spoke very specifically about salary increases for senior management in public entities. Was true that the advisors had received salary increases above the Cabinet’s approved levels?

How many cases had been withdrawn from the CCMA, and how many suspensions were lifted by NSFAS?

How many of the employees were suspended on full salary, and what was the period of the suspensions? How much had NSFAS spent on legal costs in relation to the suspensions, and what was the process employed in the appointment of the legal firms?

He asked NEHAWU to forward whatever evidence it had at its disposable regarding the allegations it had made.

This year, the Committee had considered the APP of the NSFAS and had made it clear that it consisted of many loopholes and gaps. It had therefore been requested to come back with a revised APP and targets. NSFAS had not indicated when it would be ready to make that presentation.

How much was NSFAS paying for the NSFAS Wallet service providers? Was it more than the Sbux system?

Could the Committee be furnished with detailed information on the laptop tender, because many allegations of corruption had surfaced since the Minister’s announcement to provide laptops for students? Students were nearing their exams, but the tools of trade had not been delivered.

The Bid Adjudication Committee (BAC) had been changed. Was this in line with supply chain management (SCM) policies and National Treasury’s regulations? One would think that SCM processes were a little more complicated than the alleged processes reported to the Members.

Could the Committee get more clarification and details on the laptop tender allegations regarding Ministerial adviser Nqaba Nqandela, particularly from the Department and the Minister?

Lastly, the Committee should perhaps look into constituting an inquiry or a forensic investigation into these allegations. Ultimately, the Committee wanted the students to receive the funding that they needed to complete their studies.

Dr B Holomisa (UDM) said there had been a query on the extension of the Administrator’s contract, and suggested it would it be advisable for the Committee to invite the parliamentary legal services to comment on whether the extension was indeed illegal. If so, it would be a fruitless exercise to continue engaging with an Administrator whose extension was illegal.

The Minister and the Accounting Officers should be invited by the Committee to clarify some of the issues. There were a number of matters that overlapped in these discussions. It would appear that there was a process where the Director General and the Chief Directors had been bypassed.

Dr S Thembekwayo (EFF) said there was no smoke without fire, and it was important to listen to the whistle-blower. He needed to learn to do the right thing and listen. Was it appropriate for the Administrator to utilise money meant for students for someone who was coming in to fiddle with governance processes.

There was a significant problem with the verification process or systems at NSFAS. People with the right expertise needed to be brought on board.

On the irregular appointments, there was truth in some of the allegations that had been levelled at the Committee. This was wrong, and the Members were there to represent the black students that needed the financial support that NSFAS was mandated to provide.

The irregular appointment of senior managers had been red-flagged as one of the points that was mentioned in the risk assessment as a significant contributing factor towards the collapse of governance in the Scheme.

Ms N Mkhatshwa (ANC) said they needed to always remind themselves of the importance of NSFAS and what it was intended to achieve. The continuous challenges at NSFAS were very concerning. The allegations made sounded just like the allegations that had been made before the arrival of the Administrator. Over and above the much-needed funding, there was a need for people who had the appetite to effect change in this organisation. Perhaps they needed to change the name of NSFAS because despite who ran it, challenges continued to be prevalent. A fresh breed of people was needed who were willing to drive the organisation.

Mr B Nodada (DA) said the Portfolio Committee was missing some key stakeholders, such as the Ministers, to respond to specific questions raised on the interference with the tender and the appointment of personnel at NSFAS.  It also needed the Department to be present, because NSFAS reported to the Department.

The Committee needed to make relevant resolutions regarding the matters that had been raised. These allegations had continued to be raised.

He asked the Administrator about the allegations on irregular appointments and nepotism, particularly with regard to the case of Ms Sibongile Mncwabe.

He would like the Chairperson to share the report with the Members regarding the laptop tender from the Department. The Committee should make a resolution to have this matter ventilated at the Standing Committee on Public Accounts (SCOPA) as well. In the process of conducting an inquiry, all relevant stakeholders must be invited.

The Minister must also be invited to respond to the matter around Mr Nqandela.

On the matter regarding misleading Parliament and outsourcing the Annual Performance Plans and Annual Reports, there was R500 000 that had been paid to a service provider to prepare the APP and annual report, and this matter had come up again, despite the fact that he had previously enquired about the R500 000, to which a written response had been provided.

In the NEHAWU presentation, there had been a slide that spoke to the costs associated with the loss of cases at the CCMA. What were the causes of that, and could the Committee receive a full report on it?

He also asked the Administrator whether the new revised APPs had been submitted, and for a full financial breakdown on the remuneration of the advisors that he had appointed. He probed on the progress regarding the appointment of a new CEO, chief operating officer (COO), and a new Board.

Regarding the terms of reference, what had the Administrator implemented so far, and what had his administration achieved?

He recommended that the Committee needed to resolve that SCOPA -- as well as the Committee -- must investigate the laptop tender. Secondly, the relevant stakeholders like NEHAWU and others must form part of the inquiry. The aim was to get NSFAS functioning.

The Chairperson said the report from the Director-General had been made available to the Committee, and that could be provided. The laptop tender matter was still on-going, and information could not be provided to the Committee to avoid compromising the on-going process.

Ms Mkhatshwa said the reconstitution of NSFAS must be done according to the laws of this country. She could not comprehend how people could be interviewed in restaurants and if there was evidence to this effect, it must be provided to the Committee, because Members would like to know what processes had been followed when the interviews were being conducted.

A lot of allegations had been made and specific responses on those allegations must be furnished. For example, the travel and accommodation costs were not clearly outlined. When bookings of accommodation were made, was due process followed in terms of supply chain management processes?

The Committee needed specific details on the progress that had been made at NSFAS.

On the Venda University of Technology (VUT) matter, during the previous engagement with NSFAS there had been no clear answer on the way forward, and whether the concerns that were raised by students had been addressed. They had since received more correspondence and complaints from students.

Ms J Mananiso (ANC) said she was extremely disappointed by the allegations that have been made. She emphasised that she failed to understand why issues of supply chain management kept coming up over and over again. They had been repeating themselves as Members dealing with the self-interest of individuals, instead of the beneficiaries. Now was the time to bite and hold people to account. Whistle-blowers should come forward and provide information.

She wanted to know whether during all the processes of engagement, the Administrator or NSFAS had misled Parliament or not.

Ms D Sibiya (ANC) said that NEHAWU was tabling allegations and the Administrator was denying them, yet students had also ventilated the same issues. What was the status of the complaint that had been lodged with the Public Protector against NSFAS?

She sought more details on the misalignment of the strategic plan and the annual performance plans.

The Chairperson said that individuals who were implicated in the allegations should be given the opportunity to respond. There had been a suggestion that all the allegations were without merit and frivolous, but he quoted instances where there had been an admission by NSFAS on allegations that had been made against it.

With regard to irregular appointments, there were instances in the NSFAS report where the administration had admitted to three appointments that were alleged to be irregular. It would be unnecessary to rehash these, because the administration was aware of what was contained in its report. There were quite a number of allegations to which the responses from NSFAS did not deny or acknowledge them. One could agree that some of the allegations were indeed valid and had merit.

The Committee needed to allow a process where those individuals were given an opportunity to comment and speak for themselves. With those three responses from NSFAS regarding the irregular appointments, there was nothing confidential about it, and as such those matters must be thoroughly ventilated.

On the remuneration of the advisors, he quoted an amendment to the NSFAS Act of 1999 by the Higher Education Act of 2011, which amended section 17 of the former Act. Section 17(c) stated that “the Minister, with the approval of the Minister of Finance, may determine the remuneration and allowances paid to the Administrator and any other person(s) appointed in terms of section 17(b).”

Section 17(b) then stated: “The Administrator appointed in terms of section 17(a), may with the approval of the Minister, appoint any other person(s) with suitable knowledge or experience to assist him or her in the performance of his or her functions.” So section 17(b) granted powers to the Administrator to appoint advisors, in consultation with the Minister. However, the advisors’ remuneration and other benefits must be determined by the Minister, with the approval of the Minister of Finance. The report of NSFAS claimed there was a proper process followed and the advisors had been appointed with the approval of the Minister, but it did not indicate whether the Minister of Finance had approved the remuneration and other benefits of the advisors. This was an important point, because it dealt with the allegation of exorbitant remuneration structures for the advisors.

The Chairperson sought an indication of whether Section 17(c) of the NSFAS Act had been complied with.

After reading the report of the NSFAS, the Administrator had said that the Board had approved the organisational structure because it was too heavy on top. Members had noted the statement, but was the Committee able to compare the organisational structure approved by the Board, and the one that was approved by the Administrator? The Committee needed to be provided with the two organisational structures in order to juxtapose them in relation to the allegations made by NEHAWU. Too many people had been appointed during the administration, and the salary expenditure of NSFAS had shot up. The Committee needed this information to be provided in the most detailed fashion.

Could the Committee receive copies of declarations of interests by the individuals who were appointed?

The Administrator had indicated that the National Treasury guidelines on salaries and packages had been met, so the Committee should be furnished with those guidelines, although the Act supersedes the guidelines that the Minister of Finance must approve.

On allegations regarding the appointment of the Acting Chief Operating Officer; the response from the administration was that she was appointed by the previous Board, and an arrangement had been made with the University of Cape Town to secure the services of Ms Tasneem Salasa. NSFAS was to pay UCT for an honorarium, and UCT would negotiate with Ms Salasa. Section 9(2) of NSFAS Act permitted the Board to second people from higher education. That section spoke about appointment or transfer, but nothing about a secondment. What was the honorarium that was paid, and had she received payment from UCT and NSFAS?

He emphasised that the Administrator could not give general responses to specific allegations. Detailed responses were warranted. There were instances where NSFAS had indicated that there was insufficient information to respond to the allegation.

It would be necessary to have a follow up engagement to be furnished with detailed responses on the allegations that were made.

Mr Kweleta felt that it was not necessary for the Administrator to bring legal counsel to this platform. NEHAWU embraced the administration process, and did not expect the Administrator to be the “Pastor Mboro” of NSFAS. However, it came as a package, because a Ministerial Committee and a Board ought to be appointed. There was a report claiming that the Administrator had openly undermined the appointment of the Board, and had said that he would place the Board in an isolated building and write it up as wasteful expenditure. These were the matters that the whistle-blower had been vilified for. Now that whistle-blower had been dismissed, and this was not fair.

It was misleading to say that there were investigations taking place at NSFAS, and what the Administrator had failed to tell this platform was that the investigation involved workers who were merely involved in a R1 500 scandal. This matter had been dealt with at the CCMA, and those employees had been reinstated. There was no other corruption investigation happening at NSFAS. He had spent millions on forensic investigations, and if R8 million had been spent to expose a corruption scandal involving R1 500, something must be terribly wrong.

On the “Hand of God” matter, the student who had received R14 million accidentally from NSFAS was facing legal charges, but no one from NSFAS was facing any legal charges. Someone at NSFAS had authorised this.

Lastly, on the laptops, NEHAWU was not aware of how NSFAS had issued a tender worth R3.2 billion while universities had been providing computers to their students. UCT had completed that process, as had the Cape Peninsula University of Technology (CPUT) and the University of the Western Cape (UWC), yet NSFAS was still telling them that it was still busy with the laptop tender.

NEHAWU welcomed the joint process of enquiry, and the Administrator hated the union because he did not want to be kept on his toes. One could not sit here and listen to responses that were not truthful while NEHAWU possessed evidence to support the allegations that it had ventilated.

The Chairperson asked Dr Carolissen to clarify the presence of a legal counsel present at the meeting.

Administrator’s response

Dr Carolissen said that there had been a debate as to whether legal counsel should be present, and there was also another feeling that similar allegations had been levelled to the Public Protector. For him, he did not necessarily require legal counsel. Legal counsel was present due to the fact that these were similar matters to those also levelled to the Public Protector, which he was involved in.

He categorically stated that he had not misled Parliament. On the VBS issue, he had thought very hard to recollect the incident that Mr Mamabolo had referred to. He was very clear that the previous Board had dealt with the VBS tender and when he arrived he had addressed the Standard Bank matter. The VBS tender was not cancelled by him, but by the previous board. What he got involved in was the Standard Bank tender, where he had engaged the Chief Executive Officer to cancel it due to the allegations that involved the award of the entire tender. Both he and the Standard Bank CEO had come to an agreement on this matter and had cancelled the tender. 

The Sbux system was premised on the basis that only certain goods or items could be redeemed by students when they used it. The people who had been not found guilty by the CCMA had criminal cases on-going as they spoke. He was happy that the Committee was chasing this level of detail, and everything would be made available to the Committee to peruse.

The Chairperson clarified that the Sbux and NSFAS Wallet comment from NEHAWU was that the system was still the same, but an impression had been created that it was different, when it was in fact a different method of payment. The only difference was that the previous one had involved a voucher, and the current one was an electronic payment.

Dr Carolissen said that there was a significant difference between the two systems because of the additional checks that were built into the new system. The administration would submit a detailed report on it for the Committee to see for itself.

On the late submission of the annual report last year, the administration would provide a detailed report on why the submission was late. On the face of it, he had insisted on the delay of the submission because he was not happy with the quantification of the irregular expenditure. If the annual report had been submitted then, it would not have provided a completed picture.

The Chairperson said that the reasons that were given to Parliament last year were actually not true – this was the point that NEHAWU was saying. The reasons provided to Parliament for the delay of the tabling of the report had been attributed to the Auditor General.

Referring the Tasneem Salasa matter, Dr Carolissen said when he arrived at NSFAS she had already been appointed. He would go back and find out the reasons for her appointment, and under which section she had been appointed.

On the laptop matter, there was a comprehensive project under way with the Department, where all NSFAS students had been identified. The Department’s administration had encouraged universities last year to begin using part of their budgets for learning materials on computers, and some universities had already done so last year. When Covid-19 started, some of the Vice Chancellors had contacted the administration to find out how the Administrator could assist, because they had already paid out the learning material allowances. The administration had written a full proposal to the Minister to address the issue. Each person was identified by name, and if they had already received a laptop from the university, they would not receive a device again, because it was offset against their allowance.

The R3.2 billion was the outer envelope, which covered the cost if NSFAS was to start paying for all NSFAS students, but that amount had gone down because some universities had already started issuing laptops. In the cases where they had started with the procurement process and they needed to recover the money from NSFAS, there was a policy in place for that.

Since the names had been mentioned, he retracted his confidentiality proposal on those matters. On the examples quoted on the irregular appointments by the manager and the subsequent corrective action that had been taken, that was not viewed as irregular. The management or board would have been satisfied that corrective action had been taken and the manager reprimanded. This was normal practice in many organisations.

The Chairperson said that in its report, it stated that “NSFAS acknowledges that the appointments were irregular.” This was documented in the NSFAS document. In the report, NSFAS acknowledged that the appointments were irregular.

Dr Carolissen said that he would provide a report that addressed this matter.

Approval had been given by the Department on the travel allowances and travel expenditures. The quotations had been submitted to the Department, and it was meant to lessen the discomfort of taking people away from their families. This was why the accommodation was rented for apartments, and not hotel rooms.

The Chairperson asked whether the approval was given by the Minister of Finance.

Dr Carolissen said that he could not speak for the Department, because the administration submitted everything through the Department, and one would presume that it then submitted to National Treasury.

The Chairperson said that if the approval was not given by the Minister of Finance, the remuneration and other related benefits for the people who were appointed would be outside what the law required. He asked Dr Carolissen to confirm whether he was not aware whether the approval was sought from the Minister of Finance by the Department.

Dr Carolissen said that he was aware that from the Department’s side, everything was in order. That was the protocol. The Department would engage with its counterparts and come back to NSFAS. He had no reason to think that the approval had not been granted.

The Chairperson said that this was a very important point, because of the allegations that had emerged regarding the advisors, including the Administrator, earning salaries that were way beyond what should be paid in the public service. The reason why that section had been included in the appointment of the Administrator and his prerogative to appoint advisors was to deal specifically with such criticism. That section had been created to curtail such things. If it transpired that there was no approval by the Minister of Finance, what would then happen, because looking at the expenditure itself, it was too much. It was way above the public expectation for an organisation like NSFAS. It was important that they check on what basis the approval was given. As public representatives, their actions were permitted only as far as the law allowed.

Dr Carolissen said that the current ICT system had been installed in 2011 at a cost of R100 million, and when he arrived at NSFAS, the system was already in place. However, he could obtain specific financial information regarding money that had been spent on fixing and maintaining the system.

On the VUT matter, it was important for Members to note that they were dealing with an institution that did not know who it was disbursing money to, or when.

Ms Nthuseng Mphahlele, Chief Operating Officer, NSFAS, told Members that during the application processes there were often walk-in students, some of whom were from 2018 and 2019. For these students, VUT used their own systems to determine whether these students qualified or not. The VUT then went on further to disburse funding to those students without due processes to check whether they indeed qualified for funding. In the last two weeks, NSFAS had received the ID numbers of those students, and had identified that only 279 students qualified for NSFAS funding. On Monday, for that 279, the institution had submitted their registration data after the closing date. After the meeting on Tuesday, NSFAS had deployed a team to work with the institution and upload information for the 279 students so that they could be included in the payment.

On the “Hand of God,” the Administrator said that NSFAS had been working with legacy systems that were procured back in 2014. In the administration period, the plan was to redesign the systems and the processes. The issue of withdrawal of student information had been picked up through the quality controls that were implemented in the system.  In the 2021, the quality control system had already picked up on the students that had withdrawn. If there were any students whose data had been unfairly withdrawn, that information needed to be forwarded to the Committee or NSFAS, in order to be looked into.

Historically, the challenges that NSFAS faced were not fast-tracked in the disbursement unit, and that function was not at full capacity. Things were done manually, but these matters had been resolved. Every month, every student and every institution that had submitted data on time had been paid the funding.

The Sbux part was a manual system, but it had been automated now and the only aspect of it that remained manual was the feedback file when it came back to check the issues. However, concerted efforts were always put in to ensure that those issues were resolved. In 2017/18, the payments had been bad, but looking at the current state now, one could say that there had been a significant improvement in the system.

Dr Carolissen referred to the IT system for verification of income, and said he was shocked at the way in which this was being done at the time of his arrival. In essence, what happened was that the person’s details would be sent to a credit bureau, and based on that data, a determination would be made on the eligibility of a student. Credit bureau data was notoriously unreliable, and in any case it was self-declaratory. It became evident that NSFAS could not rely on that data source. He had then contacted SARS, and after long negotiations with SARS an agreement had been reached to exchange data to improve the verification system. There had been a lot of legal work involved due to matters of confidentiality with the clients. Currently, NSFAS was working together with SARS on an automated system. The exchange of data had been effective, and data manipulation could easily be picked up.

In the recent past, when 5 000 students were unfunded, NSFAS had been very careful to not take marginal cases. There were very rich people in that 5 000, but they were engaging with legal counsel as to the best way to recover the funds. Once this had been thought through, a proposal would be drafted.

On the whistle-blower matter, the administration had re-established the hotline platform and discovered there were 20 000 queries that had been left unanswered. This showed how seriously whistle-blowing was taken in the organisation. On the specific matter that had been brought up regarding a whistle-blower, the person was the secretary of the executive committee (EXCO), with certain confidentiality attached to it. It was unconscionable for that person to pass on the recording of the meeting in a subterfuge manner. No organisation would tolerate a board secretary that leaked information outside the organisation.

The Chairperson interjected and said that the Committee would need to have a follow up engagement on the whistle-blower matter. NEHAWU had argued that the individual was in the meeting and listening in, and had approached the Department on an assertion made that the Ministerial team would be frustrated and undermined. The person was concerned about that, and had provided that information to the Department out of a concern. Was the Administrator saying that this individual did not fall under the definition of a whistle-blower?

Dr Carolissen emphasised that there was no organisation that would tolerate its recording secretary leaking information of EXCO meetings without the approval of the superiors.

The Chairperson said the issue was that the Administrator had been speaking ill of the officials of the Department. The other concern by NEHAWU was that the Administrator openly planned to sabotage the work that was going to be done by another team appointed by the Minister. The whistle-blower could not allow that to happen, so they had reported it to the Department.

He had read the transcript, and he felt that one would understand why that whistle-blower would report the assertions that were made to the Department.

Dr Carolissen said that the laptop process would be audited by the Auditor-General, and he was looking forward to this. The impression created that the Administrator had cancelled the tender was misleading. The tender had been cancelled based on the recommendation had he received from the BAC, after applying his mind and seeing the consequences. He realised that it would delay the distribution of the laptops. Subsequent to that, he had made a recommendation to the Minister that he would cancel the tender, based on the recommendations of the BAC. This could be shared with the Committee.

On the allegations of appointing people with no skills, NSFAS had an extensive recruitment process which normally started with the specifications of the job, salary, etc. The process was followed through the best practices, and people were vetted thoroughly. In many cases, they were sent for aptitude testing, and then based on that information, the panel would make a recommendation to the line manager. Very rarely information came to him, and the only time he was involved was when it related to people that reported directly to him.

Ms Mncwabe went through the entire process, and a full transcript of the entire process was available and would be provided to the Committee.

A report on the costs incurred in relation to the CCMA cases would be provided. In many cases, the administration had decided to settle because the settlement amount would be far less than the legal costs that would be incurred if the process continued.

The settlements did not preclude any further criminal actions that may be uncovered once the individual had left the organisation. The administration had settled with the former Chief Executive Officer in the first month of his arrival. It had been a prudent decision because he was paid a lot of money and would have cost NSFAS a lot more.

He had submitted the scorecard of his terms of reference for the first and second term, and a full report on the achievements had been provided to the Department and the Minister. He could provide this to the Committee.  The terms of reference for the third term in essence had to do with the handover to the new board and the in-coming executives, as well as the Ministerial team.

On the filling of executive positions, there were three critical positions that have not been appointed yet -- the CEO, CFO and Chief Information Officer. Reference checks and the short-listing for the CFO position were being conducted. This was the second round, because they could not find the correct incumbents in the first round. The administration would be interviewing some candidates that had head-hunted on 13 October. The business of running NSFAS was complex, and one needed to find an individual with a multiplicity of skills.

The Chairperson welcomed the responses provided by the administration, but suggested that a further engagement was necessitated by the lack of specific responses. In addition, all individuals that had been mentioned and implicated would be given an opportunity to respond for themselves on matters that had been raised.

The meeting was adjourned.