Central University of Technology Council response to the Independent Assessor's report findings and related matters: briefing

Meeting report

Central University of Technology Council briefing
Mr Thandwa Mthembu, Vice-Chancellor and Principal, Central University of Technology (CUT), led the presentation. He informed the Committee that in a letter dated 29 August 2012, CUT was requested by the Chairperson of the Higher Education and Training Portfolio Committee (HETPC) to provide information the Committee needed to understand the CUT vs the Minister of Higher Education and Training (MHET) High Court case from CUT’s perspective. This meeting was on the request by CUT to ensure that its voluminous documents were well contextualised, explained and understood.

Major documents submitted to the Committee were the following:
CUT’s response to the independent assessor’s report, entitled 'Issues from the Independent Assessor’s Report' dated 31 May 2012
Judge Johann Daffue’s Judgement/2012 and 2786/2012
Two Adv Johan Lubbe Reports dated 20 October 2011 and 21 January 2012
Two KPMG Reports dated 16 and 29 September 2012

Mr Mthembu pointed out that the judgement did not conclude on a number of matters. As a result, Council resolved in its meeting of 7 September 2012 that a Commission of Enquiry be established to deal with all of those as yet undetermined matters, including all new ones that may have emerged that were similar to them.

Mr Mthembu noted that one of the major reasons why Judge Johann Daffue ruled in favour of CUT was that no evidence could be advanced to contradict what CUT had provided in its rebuttal and affidavits. Neither was there evidence contradicting CUT’s submissions in Prof Julian Smith’s report, in the affidavits, heads of argument and in oral argument by the Minister’s senior counsel.

Mr Mthembu quoted from Judge Daffue’s judgement (see briefing document). 

CUT’s presentation set out the findings of 'the Smith Report', CUT’s rebuttal to those findings, Judge Johann Daffue’s judgement regarding them, and outstanding matters before the Commission of Enquiry which were resolved by Council on 7 September 2012 and were now in process for a 30 November conclusion.

The first finding of the report was that the Minister was misled by Council with regard to the existence of the KPMG report when he enquired about it in November 2011. CUT rebutted that the Council had never received the KPMG report from any quarter until 22 May 2012. Judge Daffue had said that blaming Council for misleading the Minister was 'taking it too far'. The documentary proof was not placed before Judge Daffue and was not specifically contained in Prof Smith’s report to the Minister. The Commission of Enquiry had said that a term of reference was to investigate how the KPMG reports were submitted, received and managed by various parties.

The second finding was that the re-appointment of the Vice-Chancellor did not reflect a thorough and inclusive process warranted at that level. CUT rebutted that the report overlooked the specific provision in the Institutional Statute for CUT that such procedures were in the manner determined by the Council and based on institutional criteria as determined by Council. Judge Daffue had said that a proper approach in line with the CUT Statute was followed and that Prof Smith had merely mentioned that he would have expected Council to refer the issue to the Senate before a decision was taken.

The second part of the second finding was the conclusion that general financial oversight could also be regarded as insufficient and that the reserves of the University had been eroding. CUT provided evidence to prove that different categories of University reserves and funds had increased substantially since 2006. Judge Daffue had said that the CUT reserves had recently trebled and that its reserves had not decreased as alleged. It had received clean audits several years in a row.

The third part of the second finding was that there was a significant increase in expenditure on external consultants, legal fees and management services. CUT rebutted that external consultants were needed in the restructuring process that helped to reduce the salary bill from 74% to 61% and achieved savings of close to R20 million in recurrent expenditure. R11 million was budgeted for and approved by Council as part of restructuring costs. Legal fees had increased from 2009 due to the restructuring exercise and for which Council had allocated R5 million in anticipation of the increased costs as staff challenged the process. Legal costs had been reduced from R6 million in 2010 to about R1 million in 2011. Judge Daffue had said that human resources issues including disciplinary hearings and high staff turnover had been satisfactorily explained by Council, as was the case in respect of all other perceptions raised.

The fourth part of the second finding was that there were several other management and staff related allegations like: unplanned increase in the number of employees; establishment of the CUT Enterprise and Services Trust; the establishment of the Free State Information Technology (IT) Hub; management of allocations from the National Lottery Distribution trust Fund; the Ceramics project; the World Cup 2010 Facilities improvement Project; and resignation of or disciplinary processes against some CUT Council members. CUT provided specific information and documentary evidence in respect of each of the allegations and perceptions relating to those projects. Judge Daffue had found that no clear evidence of financial and other maladministration of a serious nature and/or serious undermining of the effective functioning of the CUT was placed before the Minister.

The third finding included several human resource matters such as: prolonged staff restructuring; high staff turnover; severance packages; flouting of the labour relations Act; instability at executive level; and lack of focus on staff wellness. CUT provided specific information and documentary evidence in respect of each of those allegations. Judge Daffue had said that Human Resources issues specifically pertaining to disciplinary hearings and high staff turnover had been satisfactorily explained by Council, as was the case in respect of all other perceptions raised.

The fourth finding was that of vulnerability and aloofness. This included aloofness to the strategic management of finances. CUT provided extracts of minutes of Mancom and of the Finance and Audit Committees where financial management matters were discussed and resolved. Judge Daffue had said that a lack of evidence was put before him and the Minister and that there was a lack of jurisdictional factors which had to be met.

The fifth finding was that the Vice-Chancellor had not followed through on strategic matters and tasks, and that severances at Deputy Vice-Chancellor (DVC) level had been high. CUT provided its Governance and Management Framework of 2007 and beyond. Details of achievements and challenges were provided. Judge Daffue had said that the Minister’s complaint in respect of the re-appointment of the Vice-Chancellor had nothing to do with him as a suitable person, but the process followed. The Minister’s reliance on Prof Smith’s finding was therefore misplaced.

The report accepted that transformation was required as a priority by CUT and that some progress had been made regarding certain aspects thereof. However, the sixth finding was that the institutional culture seemed to be influenced by a 'culture of fear'. CUT could not respond to this allegation as no details had been provided. Judge Daffue had said that this should be addressed by Council and that judgement should not be seen as encouragement that a solution did not have to be found to reduce or eliminate such fear, but there was no justification for intervention in that regard. One of the Commission’s terms of reference was to investigate allegations that there was a culture of victimisation and fear at CUT and that the Vice-Chancellor had an autocratic management style.

The seventh finding was that, while there were encouraging developments with regard to the improvement of physical infrastructure at the Welkom Campus, the general impression gained was that it did not get consistent and ongoing attention in order for the effects of the merger to be mitigated and opportunities to be optimised. There was a further allegation about tenders at the Welkom Campus. CUT provided information and documentation on two elements of Welkom Campus’ development beyond physical infrastructure. One of the Commission’s terms of reference was to investigate allegations referred to in a report by Prof Smith dated May 2012.

Prof Smith’s conclusion that the proximity of the University of the Free State (UFS) did not seem to be formally exploited to the advantage of CUT acknowledged CUT’s several international and local partnerships. CUT could not respond to this criticism as it had not been clear how it had failed the UFS in the context of the two universities being autonomous universities.

Prof Smith had repeated and amplified his finding about Council’s deficiency in exercising its governance function relating to the KPMG reports. CUT’s response provided further information and evidence about the handling of the KPMG reports. The Commission of Enquiry said that a term of reference was to investigate how the KPMG reports were submitted, received and managed by various parties.

A matter that was constantly raised in the findings was the payment of bonuses to the management team only, and not to other excellently performing staff at other levels. Further, that a member of Council who was not supportive of the way in which those bonuses were handled had disciplinary measures instituted against her. CUT provided information and documentary evidence to show that that was false as all staff had received performance awards when those had been available to distribute. Further, the real circumstances of the resignation of Council members that had resigned were provided. Judge Duffue had said that the Human Resources issues specifically pertaining to disciplinary hearings and high staff turnover had been satisfactorily explained by Council, as was the case in respect of all other perceptions raised.

In the findings, Prof Smith had alleged that there were weaknesses in the executive management structure. He had also expressed his concern about letters of warnings that were issued to some members of the executive team. Further he had intimated that the reconstitution of the Mancom which lead to the former executive deans becoming 'regular' deans without membership of that management structure had been found to be a sensitive matter. CUT rebutted that there were patently false statements about composition of Mancom. Deans had been members of Mancom all along and continued to be. The letters of warnings had been issued as the last resort when those executives involved had repeatedly refused to adhere to a Mancom resolution and the Vice-Chancellor’s instruction. Judge Daffue had said that there was nothing specific in the judgement about those. No evidence to contradict CUT’s evidence was placed before him.

In further findings, Prof Smith had expressed concern about the Vice-Chancellor’s trip to the United States of America, in which he was accompanied by a partner and a CUT staff member whose ticket had been upgraded; concerns about the approval processes for overseas trips; and concerns about an overseas trip undertaken by some members of Council. CUT provided information and documentary evidence regarding their policy about travel with spouse/partner on one international trip per year; about a lack of clarity in the policy regarding upgrading, which had then been left at the discretion of the Vice-Chancellor. Further, evidence was provided that it was not Prof Schultz or anybody else who approved trips, but the Chairperson of the Council. Information was also provided about the trips undertaken and their relevance to CUT’s vision 2020 project. Two of the Commission’s terms of references were to investigate allegations about the trip that some members of council took to the United States of America in November 2009. Secondly, to investigate allegations about the Vice-Chancellor’s trip to the United States of America in mid June 2011, including the matter of who accompanied the Vice-Chancellor and on what basis, how the accompanying persons travelled, and whether the CUT policies allowed for that.

In the findings, Prof Smith alleged abuse of power by the Vice-Chancellor regarding written warnings, investigations in departments, disciplinary processes, and in appointments and promotions. CUT provided details and pieces of evidence that provided the context and actions taken on each of those specific cases.
One of the Commission’s terms of reference was to investigate allegations that there was a culture of victimisation and fear at CUT and that the Vice-Chancellor had an autocratic management style.

In the final findings it was stated that victimisation had been experienced and remained an ever-present possibility. Instances quoted during the assessment were the Events Unit, the Legal Affairs section and the Campus Protection Services. CUT provided details and pieces of evidence that provided the context and actions taken on each of those specific cases. One of the Commission’s terms of reference was to investigate allegations that there was a culture of victimisation and fear at CUT and that the Vice-Chancellor had an autocratic management style.

Discussion
The Chairperson reminded the audience that legislation protected those who gave information in Parliament; therefore he requested that everyone spoke openly and honestly. He did not think that it would be advisable for the Committee to reflect on the Vice-Chancellor's being re-appointed or the correctness of the judgement of the Minister to appoint an administrator. He wanted all the facts to be interrogated. He pointed out that there were three inconclusive reports before the Committee namely, Advocate Lubbe’s, KPMG’s and the Independent Assessor’s report. The independent assessor did not give Council the opportunity to respond to the contents of his report.

The Chairperson said that the Assessor’s use of concepts like 'seemingly' created doubts in the minds of its readers. It was clear that council instructed KPMG to assess whether there was some substance in the allegations but Council was worried when KPMG wanted to make a clinical investigation. He requested that all facts be disclosed in CUT’s responses.

Mr S Makhubele (ANC) said that for the sake of record, the Council should be reminded that the Committee had visited CUT previously, so the current meeting was not their first interaction. He pointed out that at their previous visit of CUT, the issues of the KPMG report were still prevalent. He wanted to know why the KPMG investigation in Bloemfontein was terminated. He remarked that there was not a conclusive indication regarding victimisation and the fear element. He wanted all those issues to be put to rest so that no more reports would have to be written on them.

Dr A Lotriet (DA) stressed that the KPMG and Lubbe reports were the crux of the matter and should be interrogated, but not much was made of them during the presentation. She expressed her deep concern that nothing prevented the Commission from going the same direction as the KPMG and the Lubbe reports as there was now a history of it. She wanted to know who drew up the terms of reference for the new Commission of Enquiry, if there had been any subsequent suspensions after the court ruling at CUT and what the reasons for those were.

Dr Sylvan Seane, Chairperson, CUT Council, replied that the Registrar had been suspended the previous week.

Mr B Bhanga (COPE) stated that if the Committee wanted things done openly, Members had to have confidence in themselves that the Commission would be effective and they had to think deeply on the nature of the Commission. He felt that the poor language skills of academics in South Africa reflected the poor quality of education in South Africa and were uninspiring to the youth.

Mr Bhanga said that the CUT was running an institution of services which were supposed to be provided in a satisfactory manner. He voiced his concern regarding the smooth running of the institution. He wanted to know if students were receiving quality education, what the student success rate was and what was meant by the institution being financially stable. He pointed out that people where suspicious of CUT due to tender problems which were related to corruption. He wanted to know if the KPMG report was received by or leaked to the Minister. If it was leaked, he wanted to know the legality of that and who CUT thought could have leaked it. He also wanted to know if the travel benefits the institution gave were policy and if trips overseas were the norm.

Ms Viwe Qegu, Deputy Chairperson, CUT Council, replied that the Committee’s concerns were the same concerns the Council had had when they first received the anonymous letter from the Minister. Regarding the rendering of services, Council had an oversight which ensured that the Institution delivered what was supposed to be delivered to the public. She said that the calibre and integration of the CUT students was exemplary. CUT students were in demand nationally and world wide. The CUT was also launching a project called 20 20 vision. She added that the institution had policies for travel, and those policies were very clear that the institution allowed certain privileges to the Vice Chancellor and who could accompany him.

Mr K Dikobo (AZAPO) made a disclaimer that he did not have the documents mentioned by his colleagues. He wanted to know who commissioned the KPMG report, when it was commissioned, when it was supposed to conclude, and where was it delivered. He wanted to know if the University was saying that they were unaware of people going on trips and if the Council was satisfied that no regulations were broken. He remarked that it was very sad that the matter had to go to court and that the Minister and Vice-Chancellor found themselves on opposite sides. He enquired if the Council was satisfied that all avenues to resolve the matter amicably had been exhausted before going to court, as they still had to work together in the interest of education in the country. He also wanted to know whether the management and the Council of CUT were intact, what the relations between them were and if they were cordial.

Dr Seane responded that when the letter came from the Minister of the Department indicating that he had received an anonymous letter, CUT commissioned KPMG to do the preliminary investigation into the merits and demerits of that letter. CUT had informed them that they needed it in June, but that did not happen. CUT commissioned Adv Lubbe to do the report. The report was inconclusive and Adv Lubbe did not give substantial evidence in terms of assisting the Council, therefore they decided to terminate his mandate. In the full Council meeting which was overturned, the Council afforded that process to take effect. Although the process took time, the Council always acted with urgency in order to show that the matter was receiving attention.

Mr A Mpontshane (IFP) expressed his deep concern at the issue between the Minister and the CUT as it portrayed instability. He referred to Prof Smith pointing out that an individual had received the KPMG Report at the Registrar’s office. He noted that the Registrar was a representative of the University and was therefore jointly and severally liable. That being the case, he wanted to know what the University’s action against the Registrar would be if it was found that the Registrar or his secretary had received the report but failed to forward it to the relevant authorities.

Mr G Radebe (ANC) stated that the suppression of the reports implied that there was a challenge of leadership in the Institution. He requested clarification in terms of the functioning and structures within the institution and the relations thereof.

Ms Qegu replied that grievances brought anonymously were dealt with separately by the KPMG. Ms Qegu wanted to ensure that Members of Parliament had clarity in terms of labour procedures within the institution. Human Resource procedures, policies, the statute and time-lines regarding labour procedures were clear. However, because the letter was anonymous and remained vague until now, it was why it took longer for the report to go through. Tender processes were very clear. The institution had clear policies and issues which were open to scrutiny by anybody.

Mr L Bosman (DA) agreed with Mr Radebe. He thought that what the Committee had seen and heard, answered to allegations put forth by the reports. He felt that individuals and part of management tried to deflect the problem instead of getting to the bottom of it. It worried him that, internally, the Committee did not have a relationship with people who trusted each other or were working towards the same goal. He remarked that issues such as allegations of finding financial oversight to be insufficient were explained to the Committee, but Members did not receive concrete answers. He noted that the reserves had increased, but there could be deficiencies in other areas. The current situation was that all the information from the KPMG Report and the court case were mixed together, and problems were not resolved as they came along. When the Assessor was called upon, he had tried to address the situation without pinning it down to the problem.

Mr Bosman felt that the Committee had to be informed of what the real issue was and wanted to know why a real solution to the problem was not achieved. Finally, he wanted to know why one had to go to court in the final stages in order to get a court order.

Ms Qegu responded that the Council felt it was not necessary to go to court as it had several engagements with the Department where it tried to tell the Department about the issues, what it was doing about them and which matters it wanted to probe further. The Commission had not been instituted after the case. The Council wanted to institute the Commission when the anonymous letter was first received, but that did not happen due to the processes and procedures within the institution.

Ms N Gina (ANC) expressed her concern that the Committee would not get the responses from CUT that it was looking for because the Committee was not getting the whole picture of what Council and the management were saying. She did not doubt the responses, she just felt it would be more conducive to have the whole Council present in order for the Committee’s questions to be answered concisely. She concluded that if all allegations made by Prof Smith had been rebutted and no fault was found with the institution, why was there a need for the Commission?

Dr Seane replied that the CUT had made efforts to indicate to the Department that there was no crisis in the University, that it was in a stable position and produced good students who were in demand around the world. He said that CUT had two meetings with the Department in it was shown documents which proved that Prof Smith’s report was not actually factual and did not have any evidence. The evidence produced by CUT was not well received by the Department, which was why it went to court. In its last meeting in September, the Council revisited the resolution taken in the beginning of the year that there was need for a commission of inquiry. The Council preferred a retired judge to head the Commission but due to the current situation of the court case, that matter could not be followed through immediately. The Council wanted someone with integrity in the educational sphere to assist as the Chairperson of the Commission enquiry.

Mr Dikobo wanted to know if the Council was convinced that no laws were broken.

Ms Qegu responded that the Council put many hours into making sure that all the relevant documents were in order. Before the Council approved anything, it was interrogated and policies and rules were followed. Council was confident that everything was within the law, and rules, policies and processes which it had developed.

Mr Gwebs Qonde, Director-General, Department of Higher Education and Training, said that the Department supported the institution. The funding patterns from the Department proved that commitment. The anonymous allegations received by the Minister in 2011 were levelled against the Vice-Chancellor. The allegations were that he acted autocratically, he adjusted the truth to suit his own agenda, he picked certain staff for certain positions and he engaged in vendettas against staff who questioned him. The Department was asked to attend to these matters and did so in March 2011. The Council then commissioned the KPMG investigation which was terminated in September 2011. Adv Lubbe was then brought in. Mr Qonde pointed out that this meant that there were 21 months of inconclusive investigations on serious matters regarding the running of the Institution.

Mr Qonde said that In the Judge’s findings, on page 73, he clearly stated that no sufficient justification existed to set aside a process report or grant an interdict. He said it was also important to note that the Independent Assessor’s report was not set aside by the Judge. There had been numerous resignations by council members at CUT, and, at their exit, they wrote about their frustrations in the running of the affairs of the institution by the council, which was accused of embracing only the needs of the Vice-Chancellor. Mr Qonde felt that the most important thing was to establish whether the institution was actually capable of investigating those allegations or not. The three aborted reports at the instruction of the Council proved that the institution was incapable or unwilling to do so. He wanted to know what the terms of reference for the Commission were and why the appeal on the case was pending. He felt that the CUT matter could be clarified better by an independent person and not by CUT itself

Dr Lotriet pointed out that the Committee had a KPMG report which indicated only merits and demerits. She requested that if there was a full KPMG report with evidence in existence, that it be made available to the Committee.

Mr Dikobo said that he would like Prof Julian Smith to personally address the Committee regarding all the issues discussed. He felt that the Department had lost its objectivity, as some of the issues were just personal and not things which should be raised by a Department.

Mr Mpontshane remarked that there would always be different views among the same group of people and that the Committee wanted to hear from the other members of Council. He wondered if there was any connection between the Registrar's receiving the report, the suppression of it and the Registrar’s ultimate suspension.

Mr Bhanga requested that the Committee have a session with KPMG because the report was not conclusive. It was clear that the Department had taken a position similar to that of the institution, therefore the Committee could not make a conclusive decision and judge it. He added that the CUT was in motion. There was no ruling saying that CUT could not run or that everything had to be stopped. Therefore, the Committee had to submit its interests as parties and as individuals.

The Chairperson suggested that the Auditor-General look into all of the allegations on behalf of the Committee. He could speak to KPMG, acquire all the necessary information from them and go through all the documents that were required in terms of the Public Audit Act (No. 25 of  2004).

Mr Dikobo said that the Committee did not want people to commit misconduct simply because the Auditor-General was coming or because people were going to court. CUT had to run the way it was running. If the Council had personal issues its members should sort them out separately amongst themselves and not let it interfere with the smooth running of the University.

Mr Bhanga supported the proposal of calling on the Auditor-General. Until then, the Vice-Chancellor should run the University.

Dr Lotriet was in favour of taking the Auditor-General direction but had a deep concern regarding the issues of victimisation and suspension. She wanted to know what would happen in the meantime as the Committee did not know when the Commission would complete its work, and there was no guarantee that it would receive a full report.

Mr M Hlengwa (IFP) supported the route of the Auditor-General. He also stated that people in the institution in positions of leadership had to either 'shape up or ship out' and not disrupt the work that needed to be done. He added that this was an unfortunate incident of a 'turf war' which would in the long run not affect those who were fighting it, but those who were going to inherit the results of the fight.

The Chairperson requested that CUT provide the Committee with the institutional statute of its travel policy and allowance; processes, human resource management; and procedure policies by the following day. Those would be studied and a letter to the Auditor General would be formulated in respect of the terms of reference emanating from the investigations of Adv Lubbe and the KPMG.

The Chairperson would like to believe that the Vice-Chancellor was still running the University properly. He pointed out that the Committee had left the issues of dissolution of Council and the appointment of the administrator to the judges in the Supreme Court of Appeal. The Committee would study their judgement the following year.

The Chairperson felt strongly about the legislation passed the previous year which stated that members of councils should not do business with universities. He concluded by saying that the Auditor-General would have six months in which to present the Committee with findings, but a request for an extension of time would be permissible.

Mr Qonde emphasised that all the Department wanted was for a proper, credible and independent investigation to be undertaken. No individuals had been found guilty by it; it just did not want a situation existing where matters of public interest were raised and not investigated properly or were not concluded to the  satisfaction of Parliament.

The Chairperson adjourned the meeting.