OUTA goes to court to get details of dodgy Services SETA contract

The Organisation Undoing Tax Abuse (OUTA) has filed an application in the Johannesburg High Court asking the court to overturn the Services SETA’s refusal to provide documents about a suspicious contract.

The application aims to overturn the Services SETA’s refusal to provide the information which OUTA requested in January in terms of the Promotion of Access to Information Act (PAIA).

PAIA gives effect to section 32 of the Constitution, promoting transparency, accountability and effective governance.

OUTA’s court application is against the Services SETA and Grayson Reed (Pty) Ltd, the business which was awarded the contract worth R162-million in November 2017.

During 2018 OUTA received information from whistleblowers that there were irregularities in this contract. In order to verify this, OUTA submitted a PAIA application to the Services SETA, asking for specific documents relating to the tender and contract.

These included copies of: 

• The Services SETA’s needs analysis which resulted in the tender;

• The tender compliance checklist;

• The Grayson Reed tender response;

• The recommendations by the Bid Specification Committee, the Bid Evaluation Committee and the Bid Adjudication Committee to appoint Grayson Reed;

• The master service level agreement between the Services SETA and Grayson Reed;

• Billing documentation from 1 November 2017 to 31 January 2019, including proof of payments and deliveries;

• The register of learners and entities which received stipends;

• The schedule of payments by the Services SETA to Grayson Reed;

• The attendance records generated by the biometric units supplied by Grayson Reed; and

• The names and registration numbers of Grayson Reed subcontractors on this contract.

The court application is supported by an affidavit by Advocate Stefanie Fick, OUTA’s Chief Legal Officer.

OUTA’s PAIA application was submitted to the Services SETA on 23 January 2019. Documents requested in terms of PAIA should be provided within 30 days. The Services SETA extended the period by another 30 days, in terms of section 26 of PAIA, saying it had to notify Grayson Reed of the request in terms of S47 of PAIA. OUTA did not object to this.

On 22 March the Services SETA provided four documents and refused the rest.

Those provided were: 

• The Services SETA’s latest supply chain management policy;

• The needs analysis which resulted in the tender;

• The tender advert;

• The tender compliance checklist.

The Services SETA refused access to all other records, some due to objections by Grayson Reed, which claimed the documents contained trade secrets or confidential financial, commercial and technical information.

OUTA appealed against this refusal, in terms of S74 and S75 of PAIA, on the grounds that Grayson Reed’s objection was illogical as all the documents requested were part of the public tender process.

“The records that were requested cannot be construed in any way as confidential or as commercially sensitive. This is because they pertain to a public tender issued by SETA, which it awarded to Grayson. The records do not in any way reveal the trade secrets or any other commercial interest of Grayson,” says Fick in the affidavit.

“Furthermore, section 46 of PAIA provides that access to information must be granted if the disclosure of the record would reveal evidence of a substantial contravention of, or a failure to comply with, the law, and the public interest in the disclosure of the record outweighs the harm contemplated in the ground for refusal.”

The Services SETA failed to provide a response on the outcome of the appeal, so it is presumed this was refused.

This week’s court application arises from that refusal.

The background on the contract

"In November 2018, OUTA exposed the Services SETA arrangement with Grayson Reed, which appears to have been structured to loot Services SETA funds which should have been used for learner stipend payments and the procurement of biometric systems. The 29-month contract started in November 2017, runs to March 2020 and is worth at least R162-million," says Dominique Msibi, OUTA's Portfolio Manager on Education.

"Learners have been complaining to OUTA that they were not receiving their stipends from Grayson Reed.

"At the time, OUTA called for the immediate suspension of the Grayson Reed contract, for an independent investigation into this matter and for learners to be reimbursed missing stipends.

“In September 2019, the Services SETA ended the contract early, but there is no indication that any action has been taken against Grayson Reed.” OUTA’s statement on this is here.

The PAIA process and transparency

“OUTA believes that public institutions should make a greater effort to comply with PAIA requests, as this is essential to transparency and oversight,” says Msibi.

The South African Human Rights Commission (SAHRC) monitors the number of PAIA requests received by public bodies and how those requests were dealt with. Public institutions are obliged to report to the SAHRC on their PAIA performance.

The SAHRC’s annual report on PAIA for 2018/19 was tabled in Parliament on 2 October and paints a sorry picture of non-compliance, both in terms of institutions failing to report to the SAHRC and in failing to provide information to the public arising from PAIA requests. The report refers to “pervasive non-compliance with the letter and spirit of the PAIA” and the need for the public to litigate to obtain information.

"OUTA believes that this systemic failure to comply both with PAIA requests and with the SAHRC’s reporting channels underlines the contempt which public bodies show for the PAIA process," says Msibi.

Only one SETA (the Culture, Art, Tourism, Hospitality and Sport Sector SETA) is listed as providing information to the SAHRC. The Services SETA is not listed so presumably did not comply.

The SAHRC report illustrates the difficulty of getting the official reports on PAIA from public bodies: 

• Only 26 of 45 national government departments provided information to the SAHRC.

• Six of the nine Chapter 9 and 10 institutions did not provide information, including the Public Protector.

• Only 31 of the 257 municipalities complied, including only four of the eight metros.

• Not a single Northern Cape provincial government department complied.

OUTA's Notice of Motion and founding affidavit in the case against the Services SETA and Grayson Reed is here. 

 Voice Note available here