Parliament grills Services SETA over ignored Werksmans report

A tender that escalated by more than 1200% (from R6,6m to R89m) awarded to a bidder that should have been disqualified at the functionality stage, a mere five-day window from the placing of orders to the authorisation of payments, no investigations into the bidders' previous experience or capacity to deliver on the contracts, non-disclosure by a former CFO of a possible of conflict of interest where there was a previous relationship with a winning bidder... These are just some of the shocking irregularities and legal violations that took place at the Services SETA under Themba Mhambi (then board chairperson), Andile Nongogo (CFO at the time but later CEO) and Tsheola Matsebe (CFO from 2017). 

But in a refreshing turn of events, members of Parliament’s Portfolio Committee on Higher Education did not hold back when questioning the SSETA  Accounting Authority (AA) and executive on 9 October 2024 (watch here). SSETA was sharply criticised for failing to implement a single recommendation from the Werksmans report and for not holding anyone accountable.

OUTA submitted the Werksmans report to the Portfolio Committee on the 8th of October after a protracted battle to obtain the report from SSETA. The institution’s leadership was scheduled to appear before the Portfolio Committee on the 9th of October to discuss its Annual Report and the qualified audit opinion received from the Auditor-General. The Portfolio Committee also requested SSETA’s response to the Werksmans report.

Six years, three fired whistleblowers but still no other consequences

The Werksmans report is the direct result of OUTA’s investigation into tender irregularities at SSETA after three whistleblowers approached OUTA in 2018 with damning evidence of tender manipulation on several different tenders. 

OUTA’s request for more information on specific tenders was denied by SSETA, forcing us to approach the High Court. After a legal battle, the court ordered SSETA to release the requested information to OUTA.

According to Rudie Heyneke, OUTA’s Senior Project Manager, a subsequent investigation into three tenders uncovered several irregularities. Amongst this was SSETA’s failure to maintain adequate records of payments to service providers, while millions of Rands were paid for items with highly inflated prices – some marked up by as much as 8000%.

In October 2022, SSETA’s CEO, CFO and legal manager met with OUTA to discuss the findings of our investigations. The SSETA executives pledged to act on our findings and enforce consequence management. “Shortly after the meeting, SSETA informed us that Werksmans Attorneys had been appointed to investigate several tenders and review SSETA’s procurement processes in line with relevant laws, regulations, and policies,” Heyneke explains.

In July 2023, OUTA learned that Werksmans had submitted its report with findings and recommendations to SSETA. “But – like in 2019 – SSETA refused to share the report with us, forcing OUTA to file a PAIA request,” says Heyneke. After the PAIA request was denied, OUTA launched an internal appeal, which was also rejected. OUTA then approached the Information Regulator to compel SSETA to release the report. 

On the 4th of October 2024, two years after OUTA’s meeting with the SSETA executives, SSETA finally provided OUTA with a redacted version of the Werksmans report. 

The Werksmans report confirmed what three whistleblowers told OUTA in 2018. “In fact, the Werksmans report exonerated them. Sadly, they paid a very high price for exposing the corruption. They were persecuted by the Mhambi administration, their phones were hacked, and they were dismissed on trumped-up charges. Despite being skills development experts, the people they exposed went as far as warning potential employers in Higher Education against giving them any form of opportunity to earn a living.”

Shocking findings, no accountability

Heyneke describes the findings as “shocking”, but says it is even more shocking that – to date – no action has been taken against employees or service providers implicated in the tender irregularities. “We therefore applaud the Portfolio Committee for not holding back in questioning SSETA executives and the Accounting Authority on the lack of action.” 

OUTA formally requested clarification from SSETA on key issues raised in the Werksmans report and gave them a one-week deadline. OUTA only received a response from SSETA yesterday (16 October). 

Heyneke expressed disappointment at SSETA’s response to why no action was taken after the Werksmans report (see letter here). “It’s not good enough to say that the Werksmans report’s recommendations were implemented ‘through the review and approval of the amended supply chain management (SCM) policy’ and that ‘work has already commenced to implement’ other recommendations.”

OUTA says it is equally unacceptable that no disciplinary action has been taken against employees implicated in the Werksman’s report. “Why not? The money wasted and looted here should have been used for skills development and further education for young South Africans, as it was meant to be.”

The findings:  A pattern of non-compliance and negligence

Werksmans investigated nine SSETA tenders and found that none of them followed the standard process flow expected for government contracts as set out in National Treasury regulations. Two of the tenders – Grayson Reed Consulting and Star Sign and Print – have also been scrutinised by OUTA, who laid criminal charges (see here). OUTA’s investigation into yet another overpriced tender awarded while Nongogo was CEO, led to more criminal charges – see here.

Some of the most alarming findings included:

• Non-compliance with the SCM Policy in relation to the composition of the Bid Evaluation Committee (BEC), the Bid Specification Committee (BSC) and the Bid Adjudication Committee (BAC).

• Serious irregularities and contravention of the law regarding the signing of 

bid documents by certain successful bidders, who should have been disqualified from the process and not awarded the tenders.

• SSETA does not keep minutes of proceedings of its procurement committees.

• It seemed that the Accounting Authority at the time permanently delegated its supply chain management (SCM) functions/ duties to certain committees.

• One of the tenders revealed an apparent close relationship between SSETA officials and those of the service provider. 

• Orders were placed, products delivered, invoices submitted, payment requisitions processed, and payments authorised – all within a span of approximately five days on multiple occasions. This highly compressed timeline is unprecedented, especially given the significant amounts involved in the invoices and payments.

• For one of the tenders, there was no evidence that the service provider delivered the items ordered, despite the contract being worth millions of Rands.

• When the Bid Evaluation Committee (BEC) conducts due diligence on bidders, it limits itself to checking the Central Supplier Database (CSD) to verify if the recommended bidder is active and not listed in the National Treasury Restricted Supplier Database or the Register of Tender Defaulters. No investigations were conducted into the bidders' previous experience or capacity to deliver on the contracts. 

• Non-disclosure by the Nongogo, the CFO at the time, of a possible of conflict of interest where there was a previous relationship with a winning bidder.

• Tenders were not advertised in accordance with National Treasury regulations.

• General sloppiness and/or negligence in the evaluations of bid submissions.

• A lack of proper oversight and quality assurance by the chairperson of the BEC.

• The Star Sign and Print tender value was R6 619 592.72.  This bidder should have been disqualified at the functionality stage of the bid evaluation but was awarded the tender and the total amount escalated to R89 015 190.28

• The tender document of a winning bidder, Ntumba Joint Venture was not entirely completed as some pages were not initialled and other pages not filled. This was not picked up by the BEC and the bidder should have been disqualified.

Werksmans recommended that SSETA initiate disciplinary investigations against implicated employees where reasonable grounds exist. Additionally, it advised that the Accounting Authority thoroughly review the report and refer any cases with merit for criminal investigation to the appropriate law enforcement agencies.

OUTA’s criminal cases on irregular tenders are actively pursued, with regular interactions between our team and the investigators. “This is precisely what the SSETA board should have done, but despite having the Werksmans report for over a year, they have taken no action. Some of the implicated employees remain in senior positions at SSETA, while the whistleblowers who exposed these irregularities have been dismissed. If that is ‘justice’, it is completely unacceptable,” says Heyneke. 

Heyneke calls on the Portfolio Committee to call the whistleblowers to testify on how they were treated by SSETA. “We also urge the Department of Higher Education and SSETA to reconsider their dismissal. Allegations of corruption should be investigated – don’t just fire the messenger. As the saying goes: where there’s smoke, there’s usually fire. It happens too often that those who blow the whistle on corruption pay a heavy price, while the powerful corrupt they exposed are still living comfortable lives financed with public funds.” 

Same perpetrators, different report

All the tenders investigated by Werksmans were awarded during the tenure of the previous board, chaired by Mr. Themba Mhambi. At the time, Mr. Andile Nongogo served as the CFO, but he was later appointed as the CEO. Mr. Tsheola Matsebe took over from Nongogo as the CFO. (Mhambi is currently serving his second term as chairperson of SANRAL.) 

Nongogo, after being appointed CEO of NSFAS, was dismissed following another Werksmans investigation, initiated after OUTA released a report on the mismanagement of student allowances at NSFAS. Meanwhile, Matsebe remains employed as CFO at SSETA.

Heyneke says the new board, under the leadership of Mr. Stephen de Vries, has failed in its duty to hold those implicated accountable. “No action has been taken against the previous board, the implicated SSETA employees, or any of the service providers. This lack of accountability was further highlighted by Mr. de Vries' response to OUTA’s request to place certain service providers on National Treasury’s restricted suppliers database. He stated that the service providers identified by OUTA during its investigations are no longer doing business with SSETA, and therefore, SSETA would not comply with the request,” he explained. 

The Minister of Higher Education will appoint a new SSETA board in March 2025. Heyneke says OUTA will closely monitor its actions and urges the minister to appoint a board with integrity, ethics, and a focus on good governance. "We call on Minister Nkabane to ensure looters of SSETA are held accountable, and that leadership prioritises youth development and skills training at the highest standards," he added.

More information

A soundclip with comment by Rudie Heyneke, OUTA Senior Project Manager, in English is here and in Afrikaans is here.