.

OUTA lays corruption complaint against NSFAS CEO

The Organisation Undoing Tax Abuse (OUTA) has laid criminal complaints against Andile Nongogo, former CEO of the Services Sector Education and Training Authority (SSETA) and current NSFAS CEO, as well as one of his former colleagues and two other individuals.

OUTA asked for a police investigation into the conduct of Nongogo, Duduzile Mwelase, a senior manager at SSETA, and Anania Baloyi and Ngwenya Baloyi, both from Five Stars Communications and Projects CC (Five Star), a SSETA service provider.

OUTA wants all four individuals to be investigated for alleged fraud and corruption, with Nongogo and Mwelase, who is the senior manager for brand management at SSETA, being investigated for contravening the Public Finance Management Act (PFMA) as well.

The criminal complaints relate to the over-inflation of a specific tender, awarded to Five Star on 22 August 2016. At the time, Baloyi was the sole member of Five Star, while her son, Ngwenya Baloyi, was the company’s managing director.

It is alleged that Five Star over-inflated their bid for the branding of a tender box by a whopping 8 000%, or at least R292 000.

Rudie Heyneke, portfolio manager at OUTA, says the organisation uncovered this irregular Five Star tender while investigating other dubious SSETA tenders. “Our investigations revealed irregularities with the Five Star tender, awarded for a period of 19 months until 31 March 2018, for the design, development and supply of branded promotional items as and when required by SSETA,” says Heyneke.

Five Star supplied several branded items and related services to SSETA and was paid R36.962 million for their services. In terms of the Service Level Agreement between SSETA and Five Star, the responsible SSETA official for this tender was the then CEO, Andile Nongogo.

On 27 January 2018 Five Star submitted a quote to SSETA for the branding of a tender box. The quote was only for the branding of an existing tender box (wooden cabinet) with the SSETA logo. The size of the cabinet is approximately 1800mm x 1500mm x 600mm.

The quote amounted to R302 010 and was made up as follows:  

• Disk preparation R1 650

• Disc presentation R660

• Design and layout R72 600

• Disc duplication R23 100

• Printing sign one R102 000

• Lamination R102 000

Five Star prepared an invoice for the work and submitted this to SSETA on 27 January 2018. Nongogo’s signature appears on the invoice, which in our view indicates that he should have been aware of the quoted price. On 12 February 2018, Duduzile Mwelase, the senior manager responsible for SSETA’s brand management, took delivery of the branded box. Nongogo then authorised payment of the invoice and on 1 March 2023 Five Star was paid R302 010 as stated on the invoice.

“During our investigation, we sought clarity from SSETA on several issues,” says Heyneke. “We also requested proof from SSETA that the tender box was recorded in the SSETA asset register, and at which value.” According to Heyneke, SSETA confirmed that the tender box was recorded in the asset register at the value of R9 690.

On 8 June 2023, OUTA investigators visited the SSETA offices to do a physical inspection and take pictures of the tender box/wooden cabinet in the building’s reception area. It was covered with white vinyl on which the SSETA logos were printed (see picture attached).

OUTA requested a quote from a reputable print- and branding company in Gauteng for the branding of a cabinet similar to SSETA’s tender box and was quoted R3 731.75.

Heyneke says it is evident that Five Star was overcharging SSETA, inflating the price by at least R298 000 or 8 000% in this specific instance. “The SSETA CEO and employees who approved these quotes and payments were complicit in the looting of public funds,” he says.

SSETA paid for 29 invoices submitted to them by Five Star. More criminal complaints on other transactions will follow, and OUTA is also planning to hand their findings to the Special Investigating Unit (SIU) for further investigation.

“We are still busy with investigations into this and other tenders at SSETA which were awarded to entities closely associated with Ngwenya Baloyi. The inflated prices charged by service providers are unacceptable. Companies who charged these exorbitant prices and public officials who approved payment of inflated tenders, should all be held to account for the abuse of taxpayers’ money. OUTA furthermore wants all such suppliers to be listed on National Treasury’s restricted suppliers’ data base so that they will not be able to conduct business with any state entities.” 

More information

A soundclip with comment by OUTA portfolio manager Rudie Heyneke is here.

OUTA has previously exposed irregularities at Services SETA as well as NSFAS. Read more here.

Below: This is the Services SETA tender box with the logo that cost R302 010. Image: OUTA