Parliamentary committee misled during NSFAS meeting

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09/10/2023 05:54:54

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Parliamentary committee misled during NSFAS meeting

On 4 October 2023, Parliament’s Portfolio Committee on Higher Education, Science and Innovation heard presentations from Minister Blade Nzimande, the Director-General of Higher Education, the NSFAS chairperson and acting CEO, and four NSFAS service providers responsible for direct payments to students. The records of this meeting are here.

The minister and NSFAS failed to show up at the committee’s previous meeting of 27 September 2023 as scheduled, and  committee chairperson Nompendulo Mkhatshwa had warned the minister and NSFAS that she would issue summons against them if they fail to appear on 4 October.

OUTA analysed the presentations to the committee  and identified red flags, inaccuracies, half-truths and blatant dishonesty. This is a huge concern. OUTA also notes that several questions asked by the committee members on previous occasions were ignored, which shows the disrespect of some of the presenters for the committee.

OUTA’s concerns

  • NSFAS and service providers failed to provide the names of the service providers’ sub-contractors, as requested by MP Chantel King. The tender required service providers to sub-contract 30% of the contracts, in accordance with regulation 9 of the Preferential Procurement Regulations.

  • OUTA’s investigations revealed that the sub-contractor appointed by Tenet Technology* was Coralite Training Academy. This was revealed during Tenet Technology’s presentation to the NSFAS Bid Evaluation Committee.  Further investigations revealed that the sole director of Tenet Technology, Koobandhra Naidoo, was appointed as a director of Coralite on 11 October 2022, thus making it clear that Tenet Technology appointed a company of its own director as its sub-contractor.  This defies the purpose of the Preferential Procurement Regulations of spreading the wealth and expertise to deserving small- and micro-enterprises.  This illustrates why it is crucial that the identities of the sub-contractors of all four service providers be revealed to establish if they comply with the tender requirements.

  • The Tenet Technology presentation was made by Ryan Passmore, who introduced himself to the committee as the Project Executive. Later when the committee chairperson asked for service provider leadership to submit written apologies for failing to attend the meeting, Passmore told the committee he was the Tenet CEO. This indicates that Tenet is reluctant to let its director and owner Naidoo be identified or appear before the committee.

  • During the NSFAS bid evaluation process, Tenet Technology told NSFAS that the founding director of Tenet Technology was Lindiwe Mthethwa, a black woman, and said that Tenet Technology valued transformation and the role of women in their business.  Shortly after the tender was awarded to Tenet Technology, Mthethwa resigned as a director. Another woman, Serisha Beosumbar, was appointed for a few months before Naidoo took over as sole director. During the presentation to the portfolio committee, Passmore was accompanied by Tenet Technology employee Bonginkosi Mthethwa, the spouse of Ms Lindiwe Mthethwa, leading to the impression that Lindiwe Mthethwa was just used as an interim director for tendering purposes to create the impression that the company was led by a black woman. OUTA rejects with contempt the abuse of women, especially black women, to score points during a tender process.

  • Tenet Technology’s presentation stated that the company has been in business from 2013.  Although the company was registered in 2013, Lindiwe Mthethwa was only appointed on 11 November 2021 as a director.  OUTA could find no evidence that the first two directors of Tenet were involved with the business of Tenet as described in the slides presented to Parliament.

  • Tenet Technology’s presentation claimed that it is a licenced Financial Service Provider (FSP), and provided company registration number K2016527054 to confirm  the FSP registration.  However, this company registration number belongs to another company, trading as Icap Wealth with a business address in Umhlanga Rocks and with Zubin Sasha Pillay as the sole director.  The FSP registration number is 47943.  Pillay and Tenet Technology’s sole director Naidoo are co-directors of a company called Trurofin, also based in Umhlanga.  Tenet Technology is not registered as an FSP and Naidoo used a business associate’s FSP registration number to mislead the portfolio committee.

  • The committee questioned NSFAS and the service providers at length about the fees structure of the payment scheme.  NSFAS presented the fees structure to the committee which was negotiated and agreed upon by all relevant stakeholders.  Some of the service providers also presented similar fee structures.  What is concerning is that none of the presentations showed what the transaction fee will be for an EFT transfer of funds from the NSFAS banking card to another bank account.  This fee is surely the most important fee to disclose to students because most students transfer their allowances to their personal bank accounts.  OUTA has shown in its investigation report of February 2023 that R30 was deducted from students’ accounts when they transfer money by EFT from their NSFAS bank card. The lack of transparency regarding this fee should raise a red flag to the NSFAS beneficiaries and the portfolio committee.

  • All the presenters confirmed that a monthly fee of R89 (excl VAT) was negotiated and agreed upon after the tender was awarded. Everybody also confirmed that the current monthly fee on all student accounts has now been reduced to R12.  How were the service providers all able to afford to decrease the monthly fee by approximately 86%?  Will these service providers still be around for the remainder of the contract period? Are they substituting their loss on that fee with other income, such as increased transaction fees on EFT?  It is clear from the NSFAS presentation that the transaction fees of the service providers are much higher than those of commercial banks, hence OUTA’s concern regarding the increased transaction fees on the NSFAS bank card.

  • MPs were not impressed by the numbers presented by the service providers regarding the onboarding of students onto the scheme and wanted statistics on the real number of students who were paid and, crucially, how many  were not paid.  MP Bafuze Yabo made a very valid comment that NSFAS and the service providers are focused on number crushing and presenting their “successes” of how many students were paid, but do not acknowledge how many students are not paid. He stated that NSFAS and the service providers do not realise that they are dealing with human beings who in some instances don’t have parents who can support them or other resources. Other MPs also alluded to the fact that many students went hungry and without accommodation.

  • NSFAS chairperson Ernest Khosa informed the committee that the internal investigation that was launched by the institution into the allegations against its CEO Andile Nongogo was in its final stages and that NSFAS will be able to present the findings within 10 days after the meeting.  This investigation, by attorneys firm Werksmans and  Advocate Tembeka Ngcukaitobi SC,  was initiated after media reports and OUTA’s report on Nongogo’s conduct (see here). OUTA calls on NSFAS to make the report publicly available and share it with the portfolio committee.  This will contribute to transparency and trust in the NSFAS board.

  • The committee was told that only 25 803 beds have been accredited for student accommodation so far for 2024, against more than 400 000 needed. This is shocking. This issue is also being investigated by OUTA and a report will be released soon, showing how senior government officials, university employees and student accommodation providers were appointed by NSFAS to accredit student accommodation. 

  • Before the meeting adjourned Minister Nzimande made a scathing attack on chairperson Mkhatshwa, after she requested the service providers and NSFAS to return with further information. The minister was of the opinion that it was not within the powers of the committee to instruct any of the presenters to submit more information or to instruct any member of the Executive.  OUTA disagrees with the minister.  It is common cause that Parliament and its committees have powers to summon any person or institution to give evidence or produce documents (see here and here).

OUTA welcomes the portfolio committee’s efforts to hold the minister and NSFAS to account. The incompetence and irregular actions of executives and employees in this sector cannot be tolerated, as this affects the future of the students and shows disrespect for both students and taxpayers who fund NSFAS.

·       More information

A soundclip with comment by Rudie Heyneke, OUTA Investigations Manager, is here.

The Parliamentary Monitoring Group records of the meeting of the Portfolio Committee on Higher Education, Science and Innovation, with links to the presentations, are here

* Note that NSFAS contractor Tenet Technology is not the same company as Tenet (Tertiary Education and Research Network of South Africa). See the court order obtained in August 2023 in the Western Cape High Court by Tenet against Tenet Technology over use of the name here.

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