Andile Nongogo should not be allowed near the public purse

R37 million wasted through highly overinflated prices, a questionable tender award process and a total disregard for the PFMA – this is what the Organisation Undoing Tax Abuse's (OUTA’s) latest investigation into the Services SETA revealed

Help us oppose corruption

OUTA is standing up against government corruption and mismanagement. Our work is made possible though donations by our paying supporters.

04/08/2023 09:17:01

Picture: OUTA

Andile Nongogo should not be allowed near the public purse

OUTA has been investigating corruption and maladministration in the Services Sector Education and Training Authority (SSETA) since 2018. Our latest investigation into this entity has uncovered an extremely overpriced rebranding campaign that cost taxpayers R37 million. The invoices were signed off by Andile Nongogo, who was the Services SETA CEO at the time and who currently serves as the NSFAS CEO.

OUTA has laid criminal complaints against Nongogo and others and lodged a formal complaint against Nongogo with the South African Institute for Chartered Accountants (SAICA).

A branded T-shirt at R4 600, R44 000 for a branded umbrella, R980 for a coaster, R668 200 to print 100 copies of the SSETA Annual Performance Plan – these are just some of the inflated prices revealed by OUTA’s investigation into one specific tender.

The tender, worth R40 million, was awarded to Five Stars Communication and Projects for the development and production of SSETA’s branding and marketing materials. Ngwenya Baloyi is named as Five Star’s director in the agreement, and Andile Nongogo, SSETA CEO at the time, was the official responsible for managing the tender in terms of the Service Level Agreement.

OUTA’s investigation not only uncovered highly inflated prices for products and services procured, but also exposed irregularities with the awarding of the tender. In the Request for Bids (RFB) process, the validity period was stated as 90 days from the closing date for the bid. During the validity period the public entity has to evaluate, adjudicate and finalise the award of a contract. Once the validity period has expired, the tender is no longer valid.

The tender in question was advertised in March 2016, but a service provider was only appointed on 22 August 2016 (158 days) after the closing of the bid, which makes this an invalid award.

The contract was awarded for 18 months, but nothing was ordered from the service provider until two months before the contract expired. During the last two months, SSETA received branded items and services to the amount of R36.9 million.

After studying the evidence, it is clear that – in order to enable the spending of the whole budget two months before the contract ended and before the end of the financial year – the service provider had to inflate the prices excessively and the accounting officer had to authorise payment.

OUTA’s investigation revealed that none of the invoiced prices were questioned by Nongogo, who authorised payments for items or services such as the following:

•    R93 579.60 for 20 branded T-shirts (i.e. an average of R4 679 per T-shirt)

•    R264 340 for six branded umbrellas (i.e. an average of R44 057 per umbrella)

•    R187 600 for video services for a one-day event

•    R58 800 for 60 coasters (i.e. R980 per coaster)

•    R36 300 to design a letterhead 

•    R36 300 to redesign a payment advice form where only three minor changes were made to the existing form 

•    R668 200 to print 100 copies of the SSETA Annual Performance Plan

•    R58 400 for photography services at a one-day event

•    R302 010 for the vinyl branding of a tender box

On 18 June 2023, OUTA laid a criminal complaint relating to the tender box branding with the SAPS. In addition, we handed a comprehensive investigation report to the investigation officer on the criminal case, covering the above payments and more, authorised by Nongogo. “It is OUTA’s view that the report should result in at least 28 more charges against Nongogo, Baloyi and Ms Duduzile Mwelase, the senior manager in charge of branding for SSETA, whose signatures appear on the documents in question,” says Rudie Heyneke from OUTA’s investigation department.

According to Advocate Stefanie Fick, director of accountability at OUTA, the case against SSETA and Five Star is not based on mere suspicions of criminality. “The evidence can be found in the official documents that were handed to OUTA by SSETA, following a successful PAIA request. The chain of evidence is available for criminal investigations.”

OUTA also questions how Nongogo, a registered chartered accountant and a seasoned public official with more than a decade’s experience, can be allowed to get away with such conduct. “Nongogo should be well acquainted with the PFMA. We find his approval of these purchases totally unacceptable, a waste of public money and gross negligence of his fiduciary duties. It is worrying that Nongogo is now in charge of NSFAS, an institution currently making headlines because of the chaos caused by adopting a questionable direct payment system. Thousands of students have not received their payments,” says Heyneke.

Further to laying criminal complaints, OUTA also reported Nongogo to the South African Institute for Chartered Accountants (SAICA) calling for an investigation into his professional conduct. “Nongogo should not be allowed to be involved with the financial management of any institution using taxpayers’ money,” says Heyneke. “It is not unreasonable for South Africans to expect government officials to spend their taxes wisely and not waste these on highly inflated prices for products and services.” 

Fick agrees. “Wasting money from the fiscus shows a disrespect for the taxpayer and casts serious doubt on the integrity of such an official.”

OUTA says Baloyi, who not only overcharged SSETA but sometimes even charged twice for the same product, should face the full might of the law and should not be allowed to do any business whatsoever with the state in future.

As far as Mwelase is concerned, OUTA says she neglected her duties as the gatekeeper. “Not only did she allow the quotes with the inflated prices to go through, but she also failed to question them. Had she followed procurement rules and if she was diligent in her duties, this would not have happened,” Heyneke says.

OUTA will not stop unmasking people who spend public money without getting fair value for the expenditure and who deliberately ignore procurement and other processes.

More information

The full investigation report can be found here.

A soundclip with comment by OUTA’s Rudie Heyneke is here.

OUTA's previous statement regarding the SSETA Five Stars tender can be found here.

Help us oppose corruption

OUTA is standing up against government corruption and mismanagement. 

Our work is made possible though donations by our paying supporters.

Join us in working towards a better South Africa by becoming a paying OUTA supporter. 

In 2022, we’re in court challenging the AARTO law, the Karpowership generation licences and SANRAL’s secrecy over toll profits.
We’re also challenging electricity prices and defending South Africa’s water resources.

We want to see South Africa’s tax revenue used for the benefit of all, not a greedy few. 

Any amount welcome.