The Organisation Undoing Tax Abuse (OUTA) says it stands by its report on the leaked National Student Financial Aid Scheme (NSFAS) recordings released in January, despite a report compiled by Adv William Mokhare SC alleging that no evidence could be found to substantiate OUTA’s view that the leaked voice recordings implicate the Minister of Higher Education, Dr Blade Nzimande, and the former NSFAS chairperson, Ernest Khosa, in corruption.

“We want to emphasise that the allegations of gratification received by the minister and Ernest Khosa was made by Khosa’s two acquaintances, Thula Ntumba and Joshua Maluleke, and can be heard very clearly in conversations which Ntumba himself recorded,” says Rudie Heyneke, OUTA’s Investigations Manager. “OUTA never made the allegations – we merely reported on the recordings, which we received from a whistleblower and not from Ntumba, as Adv Mokhare incorrectly assumes in his report.”

Heyneke says it is now common knowledge that the recordings are authentic. “Not only was it confirmed by Adv Mokhare, but Khosa himself confirmed that he took part in the discussions. It is therefore noteworthy that Adv Mokhare’s report authenticates the recordings but refutes OUTA’s report on the content of the conversations, that is, the allegations of bribery against the Minister and Khosa.”

OUTA says a media statement by NSFAS (issued on 3 May) on the outcome of Adv Mokhare’s report created the impression that Khosa was exonerated by the report. “We stand by our report that Khosa’s actions were unbecoming of the chairperson of a board of directors and that he should be held accountable for his actions. The bribery and kickback allegations made by Ntumba and Maluleke are under investigation by the Directorate for Priority Crime Investigation (DPCI or Hawks) and the SIU and we call on these law enforcement agencies to expedite their work.”

In January this year, OUTA released a damning report on the recordings. It documents two separate meetings that took place after the NSFAS board resolved (on 16 August 2023) that the CEO, Andile Nongogo, was to be placed on special leave while a board-ordered investigation into his conduct was being undertaken. At the time of the meeting, the board’s decision hadn’t been made public yet. The investigation followed on another OUTA report detailing Nongogo’s relationship with the directors of Coinvest, one of the NSFAS direct payment service providers, that could be traced back to Nongogo’s tenure as CEO of the Services SETA (SSETA). Read more here.

Nthumba’s wife, Tshegofatso, is a co-director of Coinvest, one of the four financial service providers linked to the failed NSFAS direct payment scheme. Maluleke is a close business associate of President Ramaphosa’s brother Douglas, and both of them as well as Freeman Nomvalo – who was brought in to clean up the rot at NSFAS – serve on the board of directors of the OR Tambo School of Leadership, chaired by former president Kgalema Motlanthe. According to the website “(t)his political school is an autonomous educational institution that builds the ideological, intellectual and organizational capacity of the African National Congress”. 

The Mokhare report (see here) was prepared for NSFAS by Advocate William Mokhare on instruction by Tshisevhe Attorneys Incorporated (TGR). The law firm was appointed on 26 February 2024 by the NSFAS board under chairmanship of Prof Lourens van Staden and instructed to conduct an investigation into the recorded conversations. They had to report back to the board in 30 days. Subsequent to their appointment, TGR briefed Adv Mokhare to lead the investigation.

According to Heyneke, OUTA does not agree with some of the findings made by Adv Mokhare SC in his report. “It is a poorly constructed report that has clearly been written to try and denounce OUTA’s report on the recordings, while skirting around some real issues that need to be thoroughly investigated and reported on with greater accuracy before coming to any conclusions.”  The most significant finding by Adv Mokhare on the conduct of Khosa was also disputed by TGR, the very same attorneys who briefed him to lead the investigation. In a letter dated 28 March 2024 and addressed to Prof van Staden, TGR informed NSFAS that a difference in opinion has arisen between them and Adv Mokhare (see here).

TGR informed NSFAS that although they agree with the contents of Adv Mokhare’s report in many respects, they have concluded that their legal analysis of the facts differs from counsel on one particular term of reference. TGR stated that Khosa’s conduct was in breach of his duties as a non-executive director and chairperson of the NSFAS board. The fact that Khosa discussed confidential board matters with Ntumba and Maluleke and did not disclose his discussions to the board was in contradiction with and in breach of several prescripts of the board charter. “TGR also called his behaviour unethical and something that caused NSFAS serious reputational harm,” Heyneke says. 

TGR recommended that the NSFAS board should consider sending Khosa to board leadership training by organisations such as The Institute of Directors South Africa or any relevant institution.

Heyneke says OUTA supports the findings of TGR and made similar findings in our report of 4 January 2024. “However,  the sanctions recommended by TGR fall short when the serious reputational harm it caused NSFAS is taken into consideration,” says Heyneke. “This  institution is mandated to cater for the needs of millions of poor South African students who are studying with government aid at several tertiary institutions in the country. With the huge responsibility placed on board members and especially the board chairperson of NSFAS, OUTA believes that Adv Mokhare and TGR failed to measure Khosa’s conduct against the prescripts of the Companies Act 71 of 2008.”

It is OUTA’s view that Khosa grossly abused his position as the board chairperson, took personal advantage of internal NSFAS information, and intentionally, alternatively by gross negligence, inflicted harm upon NSFAS. “He acted in a manner that amounted to gross negligence and seriously breached the trust in him by the NSFAS board, NSFAS executives and employees as well as the thousands of NSFAS beneficiaries and stakeholders,” says Heyneke.

OUTA will write to the NSFAS administrator, Freeman Nomvalo, requesting him to urgently consider approaching the high court with an application to have Khosa declared a delinquent director in terms of the Companies Act.

The TGR letter to NSFAS was dated 28 March 2024 and Adv Mokhare signed his report on 27 March 2024. OUTA says it is difficult to understand why the findings were only made public after Khosa’s resignation, the minister’s decision to place NSFAS under administration and the appointment of the administrator. It should be noted that the dissolution of the board was only announced and effected on 11 April as per NSFAS’s own media statement.

“Was the report handed to the board, and did they simply fail to act on it, or was it held back deliberately until the board was dissolved?” asks Heyneke.

Adv Mokhare’s report recommended that:

OUTA finds it difficult to understand on what grounds Adv Mokhare recommended that NSFAS should seek legal guidance to prevent exposure to potentially damaging claims. “What did he find in our report or in the recordings that led to this recommendation? The second recommendation is – to say the least – a light slap on Khosa’s wrist, with Adv Mokhare missing Khosa’s serious misconduct,” says Heyneke.

According to Heyneke,  OUTA agrees with Adv Mokhare’s third recommendation. “It’s  something OUTA and all NSFAS beneficiaries have called for since the payment chaos started in July 2023. So, this is nothing new – in fact, it should have been done months ago.” 

OUTA says it is also very important to note that – as pointed out by Adv Mokhare himself – the investigation team was reliant on Khosa, Ntumba and Maluleke for their cooperation. However, Ntumba and Maluleke “avoided being interviewed”, according to Mokhare. “The fact is that neither OUTA, nor the TRG investigation team could provide any evidence to proof or disprove what was said in these recordings. This is exactly why law enforcement authorities are investigating the matter.”

• Adv Mokhare failed to include the Companies Act  71 of 2008 and measure Khosa’s actions as a non-executive director against the prescripts of the act.

• Adv Mokhare incorrectly stated in the report that OUTA concluded that Joshua Maluleke was employed by Norraco. “This is incorrect, and is evident from the transcripts of my interview with the TGR investigation team,” says Heyneke.

• Adv Mokhare incorrectly assumed that OUTA received the recordings from Ntumba. “We can say for a fact that this is not true. We received the recordings from a whistleblower,” Heyneke explains.

• Adv Mokhare failed to question Khosa on certain significant parts of the recordings. “Ntumba said to Khosa that they will carry on paying ‘incentives’ although the ‘hole is deep’. Khosa never denied or tried to correct those statements by Ntumba and Maluleke during their conversation. Adv Mokhare just took Khosa’s word for it that he never received any payments from any of the service providers or their connected partners. Why did he not dig deeper into comments like these? These things were said, and cannot simply be ignored. Khosa’s explanation to Mokhare that he ‘played along’ is farfetched and cannot be taken seriously,” says Heyneke.

• Adv Mokhare apparently failed to understand the Coinvest structure and shareholding. “It is clear from his report that he merely accepted Tshegofatso Ntumba’s word without reading the addendums to OUTA’s report on the recordings. If he read it – something one can surely expect from the lead investigator on such an important investigation – he would have understood how Coinvest was structured, who the directors are and who were the founding directors. He would also have realised that ‘Marilyn’ is not a man, and who ‘Artwell’ is. In short, from this we can deduct that Adv Mokhare ignored the facts that OUTA pointed out in its investigation, but merely accepted what he was told by people implicated in the recordings,” says Heyneke.

OUTA furthermore rejects certain statements made by Khosa during the TGR investigation and contained in the report. These include:

• That Khosa did not know Ntumba was involved with Coinvest when the big parts of the conversation revolved around Coinvest. “Ntumba’s involvement with Coinvest is no secret, and this was also confirmed by Ryan Passmore of Tenetech – another financial service provider –  during his interview with Adv Mokhare, in which he explained that he met Ntumba at a meeting between the four service providers. On that occasion Ntumba acted as the Coinvest representative.” 

• That he did not discuss internal NSFAS board decisions with Ntumba and Maluleke but merely “played along” when they mentioned the appointment of a law firm to investigate the appointment of the four service providers. “This was one of the issues that TGR had a problem with and resulted in the letter to NSFAS. Also, what did he play along with?” Heyneke asks.

• That he was not friends with Minister Nzimande. “Khosa himself can be heard in the recordings, explaining how his friendship with Nzimande dates back to 2005,” says Heyneke. “Khosa also admitted that he has known Ntumba and Maluleke at least 15 years. Is this perhaps the reason why Khosa chose not to take legal action against them if it is indeed true that their allegations of bribery are lies? Or is it perhaps the fact that Maluleke seems to be politically very well connected via the OR Tambo School and his business links with the President’s brother?” asks Heyneke.

Heyneke says it is concerning to listen to the recordings and hear that students and their financial suffering was not discussed at any time during the almost three-hour meeting. “Khosa told Adv Mokhare that they met to discuss mining opportunities, but nowhere in the recordings of almost 3 hours are there any mention about mining, Not only is his explanation farfetched, but it is shocking that it was accepted. At the second meeting, the three men only discussed the Werksmans investigation. We reject Khosa’s explanation with the contempt it deserves. It is very clear to us that he only thought of his personal interest during these discussions.” 

OUTA also finds it odd that Minister Nzimande has not contacted it yet. “He not only threatened legal action, but also said on a public platform that he has an appointment with OUTA to discuss our allegations. However, we are still waiting. We also find it strange that Khosa and the minister have not taken any legal action against Ntumba and Maluleke over their allegations of bribery, but instead opted to threaten OUTA with law suits and court applications,” says Heyneke.

When media articles were published reporting that Khosa was “cleared” of the allegations in the OUTA report, he made a public statement and said that he wants OUTA to be probed for “destabilising” higher education in the country. OUTA reiterates that Khosa is definitely not cleared on the allegations that were made by Ntumba and Maluleke during the recorded conversations, and neither is he cleared of misconduct while he was the chairperson of NSFAS.

While Khosa did serve legal papers on OUTA demanding a retraction of the report on the recordings, calling it “defamatory”, he has not laid any criminal complaints. He wants the court to order OUTA to pay R50 000 in “constitutional damages”, but says he does not want the money for himself. The payment should be made directly to his church. Khosa also wants the court to order a punitive cost order against OUTA. OUTA is defending this case.