Quality Council on Trades and Occupations implementation; Indlela fraud investigation

Meeting report

Update on the Quality Council on Trades and Occupations
Mr Gwebs Qonde, Acting Director-General: Department of Higher Education and Training (DHET), told the Committee that the South African Qualifications Authority of South Africa (SAQA) set standards or qualifications and registered them with the National Qualifications Framework (NQF). It did this by recognising Standard Generating Bodies (SGBs) to do the work. Sector Education Training Authorities (SETAs) often established SGBs under SAQA and developed their own sectoral qualifications. Quality assurance was done by SAQA-accredited Education and Training Quality Assurance (ETQA) bodies. SETAs were accredited as ETQAs. However, duplication occurred as a result of uneven sectoral quality. Therefore, proposals for the Quality Council on Trades and Occupations (QCTO) emerged.

Ms Percy Moleke, DHET Deputy Director-General for Skills Development, said that an inter-ministerial review of the NQF began in 2001, which resulted in a Joint Ministerial Statement (Department of Labour and former Department of Education) in 2007. The statement envisioned a third quality council, the QCTO, alongside Umalusi and the Council on Higher Education (CHE). All three quality councils were to set standards and qualifications as well as take on the responsibility of Quality Assurance. SAQA was given the role to enhance communication, co-ordination and collaboration.

The QCTO was responsible for establishing and maintaining occupational standards and qualifications, for the quality assurance of occupational standards and qualifications, designing and developing occupational standards and qualifications and submitting them to SAQA for registration with the NQF, and for ensuring the quality of occupational standards and qualifications for the workplace. The Minister had the responsibility of setting policy on occupational standards and qualifications. The Minister also had the responsibility to determine policy on an occupational qualifications sub-framework as an integral part of the NQF, the sub-framework for quality assurance for occupational qualifications, and any other matter concerning occupational standards or occupational qualifications.

An occupational qualification was defined as a qualification associated with a trade, occupation or profession resulting from work-based learning and consisting of knowledge unit standards, practical unit standards, and work experience unit standards. By implication, before the Occupational Sub-Framework for Trades and Occupations could be published, there had to be alignment with other sub-frameworks i.e. Umalusi and CHE. The alignments with the sub-frameworks were under debate. The DHET needed to clarify the overlaps and contradictions in the sub-frameworks. They also had to clarify the roles and responsibilities with other quality councils, and Umalusi in particular on the theoretical component of occupational qualifications, and clarify relations, roles and responsibilities with SETAs.

The Higher Education and Training Laws Amendment Act, passed 7 December 2010, provided for QCTO staff establishment. This was being prioritised urgently. The business plan for the QCTO had to be submitted to the National Treasury very shortly. The QCTO was listed as a Section 3A Public Entity on 31 December 2010, which required a number of obligations to be implemented urgently. The QCTO could only function properly as a public entity once the budget was transferred from the DHET. For this to occur, finance and human resources systems had to be in place. The QCTO would use the DHET's systems for an initial phase from 1 April 2011 until it was operationally ready. The DHET would continue to provide support and assistance to ensure that policy matters were clarified, and overlaps with quality councils were addressed. Financial allocations would continue through the DHET.

Discussion
Ms N Gina (ANC) noted that the QCTO had already been established but that some duties had been delegated to the SETAs. She asked which duties had been delegated back to the SETAs and if they could clarify when the QCTO would be fully functional.

Ms Moleke answered that the functionality of the QCTO was linked to when the business plan would be submitted to the National Treasury. The DHET was ahead of the deadline for submission. The QCTO had been listed as a public entity before some of the usual processes could be completed. Normally, the National Treasury would not list an organisation as a public entity until a business plan was submitted and approved. However, the QCTO’s business plan was approved early by the Department. The Minister of Finance then asked the Minister for Higher Education and Training why the QCTO had been listed as a public entity. The Minister of Finance ruled that the DHET had to submit a business plan and that certain systems such as human resources and finances had to be in place. Once the Minister of Finance and the Minister of Higher Education and Training were satisfied that these systems were in place, the Minister of Finance would “release” the QCTO.

Ms Moleke added that it was the DHET’s intention to get the QCTO up and running as soon as possible because it could not continue to be part of the DHET. Internally, the DHET was working on processes and timeframes for the QCTO. They would keep updating the Committee on the QCTO's progress.

Ms Adrienne Bird, Acting CEO: QCTO, addressed the question concerning the delegation of duties to the SETAs. She said that the questions had to be answered in respect of the past and the future. Historically, when SAQA was responsible for designing qualifications, there were a number of qualifications registered on the NQF. These qualifications were quality assured by the SETAs. So, the first duty the DHET wanted to delegate to the SETAs was the responsibilities to continue to quality assure those historic qualifications i.e. those that had been on the system for ten years or so. This meant that they would continue to accredit quality providers who delivered programmes, and over-seeing the assessments that took place. There was also a proposal to start some pilot projects where some of the work would be done differently. There were many problems in the past concerning uneven quality. To rectify this, the QCTO was bringing in a system of national standards. There were no longer sectoral standards. The pilot project would involve asking an individual SETA to act as the convenor across other SETAs in respect of particular occupations.

Mr Qonde added that he thought the question spoke to the management and leadership of this transitional period that would enable the DHET to migrate and align the systems in a manner that would be to the optimal benefit of the country. The DHET was providing management and leadership to the QCTO in a structured fashion. However, the QCTO's capacity constraints had to be taken into account.

Mr S Makhubele (ANC) asked if the ETQAs would be de-established now that the QCTO had been created.

Ms Moleke explained that the establishment of the QCTO did indeed mean that the ETQAs would be de-established. This was quite a process as the QCTO was not yet up and running and could not focus on quality assurance yet. Functions would have to move from the SETAs to the QCTO, but because the entity was still being capacitated, SETAs would still be used.

Mr Smiles (DA) said that it was encouraging to hear that the DHET had prioritised addressing policy matters that affected the QCTO. He noted that the QCTO's business plan still had to be submitted to the National Treasury and was concerned about this. How could the QCTO be established properly if the business plan had not been submitted yet? The QCTO needed funding. He reminded the DHET that the Minister of Finance would be giving his budget speech later that day and he wondered if the QCTO would be budgeted for. If not, the QCTO would experience some difficulty.

Ms Moleke replied that the QCTO had been budgeted for in the DHET's skills division. Like other departments, the DHET had asked for more funding from the Treasury but they only received half of what they had asked for. This would be utilised to get the QCTO up and running.

Ms W Nelson (ANC) said that the plans for the establishment of the QCTO sounded good, but the Committee was more interested in the timeframes for setting up the entity. The Committee wanted to see the DHET's timeframes for the QCTO showing what they wanted to do and when they would complete it by.

Mr Qonde replied that the DHET was working very hard on establishing timeframes for the QCTO. But, this was dependent on the budget. He hoped this would be completed soon.

Mr Wilson Nzimande, Chairperson: QCTO, added that he understood the importance of timeframes, especially for the Committee and the greater public. The establishment of the QCTO had to be finalised by the end of 2011. However, there were many issues such as the matter of the organogram, appointments of staff and capacity constraints that had to be resolved.

Mr G Radebe (ANC) wanted to see the QCTO being independent and not aligned to the DHET. The QCTO had to be independent so it could operate by itself with all the capacity it needed. He said the Committee needed more information about the pilot project that the DHET referred to in the previous answer.

Mr Qonde replied that the DHET's interest was to get the QCTO up and running as soon as possible so that it could be independent of the DHET. The DHET did not want to rush the independence of the QCTO when the main goal was to ensure that the entity was functioning properly. The DHET opted to focus on the QCTO's functionality instead and to look at the key partnerships for the QCTO. They were looking at the critical alignments for the QCTO and how they could extract maximum value from within all quality assurance bodies that were acting under the auspices of the DHET. However, the DHET was also mindful that they had to move with speed.

Ms N Magazi (ANC) said she was glad that the country was moving towards the coordination of qualifications. It was the Committee's responsibility to oversee the QCTO.

The Chairperson asked the DHET to clarify the financial position of the QCTO. What were the bottlenecks that the DHET had to deal with?

Mr Qonde replied that the DHET was liaising with the National Treasury on the matter. It was difficult to predict what the outcome was going to be.

The Chairperson thanked the DHET and asked them to move on to the next presentation.

Indlela (Institute for National Development of Learnerships Employment Skills and Labour Assessments) challenges: DHET Briefing
Mr Clive Mtshisa, Chief Director: Indlela / National Artisan Moderation Body (DHET), informed the Committee that Indlela had been managed as a standalone, almost autonomous entity by the Department of Labour (DoL).  As a result, it developed a lot of parallel systems to that of the DoL. Some of the problems that emerged had come about because of the level of autonomy that Indlela had been given.

 A Presidential Proclamation was given to transfer Indlela's operational functions from the DoL to the newly created DHET on 4 September 2009. However, the transfer of the budget vote could only take place on 1 April 2010. The transfer of the administrative and operational functions was effectively achieved by July 2010. The Minister received a full briefing on the transfer and the budget. The briefing also included the challenges Indlela was experiencing.

There were concerns and allegations regarding impropriety and mismanagement. This was brought to the attention of the Director-General and the Minister. The Minister instructed the DHET to convene a meeting with the two Union Branch representatives including Indlela site representatives of NEHAWU and PSA. Subsequently, the Minister instructed the DHET to conduct a full forensic investigation at Indlela. The audit firm, OMA, was appointed to conduct the forensic investigation. The investigation covered the financial years 2008-2010 and focused on assessments, fixed assets, housing, overtime and leave, transport, social club funds and supply chain management.

The DHET appointed a consultant to strengthen the administrative systems at Indlela. There was also an internal effort to effect better controls by centralising all the corporate functions conducted at Indlela. The consultant assisted with the implementation of a messenger service between Indlela and the DHET, secure and controlled vehicle petrol cards, updating housing registers to reflect the correct occupants, ensuring officials paid in the rental shortfall for housing for April 2010, aligning housing policies with the Department of Public Service and Administration prescripts, and scheduling regular meetings between management and unions active at Indlela. The consultant also assisted in resolving all outstanding disputes and disciplinary charges, investigating the five cases of alleged corruption reported by whistle-blowers, and ensuring all documents were sorted and archived.

Based on the challenges identified, the DHET appointed OMA to conduct a forensic audit and submit a report and recommendation to the DHET. A report on the forensic audit was submitted to the Chief Financial Officer and Acting Director-General in December 2010. The report was currently being processed to determine all the legal implications, and collaboration between the DHET and the police has been initiated for possible criminal proceedings. The DHET was also preparing disciplinary proceedings against alleged offenders. 

Discussion
Ms Magazi wondered why the DHET had waited so long to make this presentation to the Committee. She did not understand why certain institutions were not being managed properly.

Mr Qonde answered that he did not have an adequate answer for the Member’s question. Indlela was a function that the DHET inherited from the DoL. They would be able to answer this question better than the DHET could.

Mr Makhubele commented that it was as if Indlela was established without much clarity on what they were supposed to do. Regardless of whether they were in charge of creating the policies themselves, they either did not do so or they did not adhere to the policies. It seemed as if Indlela's financial statements had never been audited.

Mr Qonde replied that he did not know if the DoL’s internal audit committee had been up and running at that stage. He did not know if there was risk management within the institution at the time.

Mr Radebe stated that he had a slight concern about a consultant being employed to assist the operational activities of Indlela. He wondered if DHET did not have the capacity or the resources to do this job itself. His understanding was that the DHET had the resources. He asked how long the consultant would be there and when a full office management structure would be implemented in Indlela.

Mr Qonde explained that the first thing they did was to figure out which matters within Indlela warranted disciplinary action and criminal charges. The DHET approached the South African Police Service (SAPS) for assistance and they took over the matter. After this, the DHET looked at strengthening the systems of Indlela. The first thing the DHET did was to hire the services of a consultant to assist the DHET as they had been working with a skeleton staff. 

Ms Nelson was shocked to hear what was happening at Indlela. However, she was pleased that the DHET had picked up on the problems and were making an effort to resolve these. She asked who the accounting officer was for Indlela, or who the person was that was responsible for the institution. What was the accounting officer’s role if the consultant had to be called in to attend to Indlela’s issues? Was the accounting officer still within the institution? It was horrifying to think that the person who was supposed to be running the institution was still there if this person could not implement the strategies identified by the consultant. What kind of punitive action was being taken against employees at Indlela?

Mr Qonde replied that the accounting officer was a male and that he had lost a lot of money for Indlela. Approximately 53% of Indlela’s budget had been misappropriated. This meant that theft and fraud accounted for more than 50% of the institution’s deficit. He did not know how this was able to happen.

The consultant was hired to take away the operations and day to day management from employees in Indlela, specifically those that were implicated according to the forensic audit report.

Mr Smiles agreed that the appointment of the consultant was unnecessary because the forensic audit would have brought out the points raised by the consultant. Now that the forensic audit report said that disciplinary action would be taken, it was also important to look at remedial steps that would be taken. Other systems such as financial, operational and management systems had to be put in place.

Mr C Moni (ANC) commented that disciplinary measures had to be taken promptly as evidence could go missing, which would make it difficult to prosecute people.

The Chairperson understood that the Committee could not see the forensic audit report at the moment because it was sub judice, but the Members had to see it at some point. If these matters had been taken to the Special Investigating Unit or the police, then the Committee should not be talking about them. He asked if Indlela had a risk prevention strategy in place or a fraud prevention plan. Were the CEO and CFO still working at Indlela? Did they resign or were they in jail?

Mr Qonde answered that the DHET was in the process of pursuing arrests and criminal charges. The DHET was also focusing on disciplinary actions taken against executive employees.

Mr Mtshisa clarified that Indlela was managed as a directorate within the DoL. It was not a public entity. Because it was considered a centre, it was also treated like regional office which gave it a certain sense of autonomy. This was where the problem had emerged. Physically, it was not part of the DoL and therefore did not have a CEO, accounting officer and CFO.

The Chairperson concluded, saying that the Committee had a good picture of what was happening in Indlela. He could foresee 80% of the institution’s employees being retrenched. The Labour Relations Act would deal with this matter. The presentation showed Members what challenges Indlela was facing and what interventions the DHET had put in place. It was the Committee’s observation that there were problems in terms of Indlela’s supply chain management.

The meeting was adjourned.