Parliamentary inquiry into allegations of corruption, maladministration at Tshwane University of Technology (postponed); Progress report on restoring governance, financial and administrative challenges at University of Fort Hare

Higher Education, Science and Technology

19 November 2019
Chairperson: Mr M Mapulane (ANC)
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Meeting Summary

The Portfolio Committee met to conduct preliminary investigations into allegations of corruption and maladministration at the Tshwane University of Technology (TUT) and the University of Fort Hare (UFH). The Committee frowned on the failure of the TUT to attend the meeting. The university had pleaded for additional time in order to investigate the matters meticulously before it came before the Committee. The Committee condemned this response, stating that the university had had adequate time to prepare. The Chairperson said there appeared to be a culture of impunity that was deeply embedded in the university’s system, and this demonstrated itself in the manner the Council handled the Committee. The Council would be summoned to appear the following Wednesday to account to Parliament.

The Administrator of Fort Hare said he had been appointed by the former Minister of Higher Education and Training on 29 April 2019 with the aim of restoring governance and administration to the university. Measures taken to achieve the goal included a revision of the institutional statute, the appointment of independent assessors, the establishment of advisory committees to assist in fufilling the statutory obligations and mandate, crafting and overseeing the implementation of a turnaround and performance improvement plan, and a review of the Registrar's office. These measures had been achieved. On-going measures included overseeing the drafting of institutional rules and the reconstitution of Council, in terms of the new statute.

The Auditor-General had recorded adverse findings on different areas of the university’s financial performance, including disclosures relating to the student residence reburbishment and maintenance contract given to Equicent Infrastructural Development, property plant and equipment; impairment of accounts receivable and revenues for tuition and residence.

The Committee expressed concern about the declining standard of historically black universities. The universities were South Africa’s heritage and should be properly governed. The Administrator had to ensure that he constituted the Council and unraveled the mystery behind the Equicent contract before his term terminated on 29 April next year.

Meeting report

Tshwane University of Technology: Failure to attend

The Chairperson said the Committee had invited the University of Fort Hare (UFH), the Tshwane University of Technology (TUT) and the Vaal University of Technology (VUT) to appear in response to serious allegations that came from the universities.

It had received a series of allegations from the TUT for the last three weeks. The Committee had decided to make preliminary enquiries according to the rules of Parliament, and would decide on how to handle the matter. It aimed to unravel what actually happened and would possibly refer the matter to the appropriate authority to handle. VUT's Administrator could not attend the meeting because he was on a fellowship commitment to the United Kingdom. The Deputy Minister could not attend because of another official commitment. Ms D Sibiya (ANC) and Ms J Mananiso (ANC) had sent apologies because they had gone to an ANC caucus meeting.

The VUT and TUT had been placed under Administration. The Council and Management of TUT were absent from the meeting. The Chairperson of the TUT Council, Dr Bandile Masuku, had notified the Committee late on Monday 18 November that the Council of the University needed more time to conduct the preliminary investigations meticulously, despite the Committee having given them three to four weeks to prepare for the meeting. This attitude was totally unacceptable to the Committee. The allegations were well known to the university, and it had not indicated a specific time they would like the meeting to be hold. They had simply said they could not come.

There appeared to be a culture of impunity that was deeply embedded in the university’s system, and this demonstrated itself in the manner the Council handled the Committee. The Committee was comprised of Members of Parliament (MPs), who were representatives of the public and would ensure that the universities, just like other entities, were accountable.

The Committee had invited various stakeholders, including the students’ representative council (SRC), the University's Council, workers' representatives and a former member of the Council of TUT, Ms Veronica Matloutsi, who had allegedly been removed without due process.

The Chairperson said that there would be meeting to consider sector education and training authorities (SETAs) on 26 November, and an oversight function on 27 November. The Committee would probably postpone the oversight visit to 3 December in order to create time to have a comprehensive discussion with TUT's Council.  The Council had no choice but to attend the  meeting because they had to account for whatever went on in the institution.

An Member commented that the TUT could not afford to take the Committee and Parliament for granted. Anyone who held a public office must be ready to account to Parliament whenever they were summoned.

Mr W Boshoff (FF+) concurred with the Chairperson's proposal.

Mr P Keetse (EFF) said the Chairperson of the Council at TUT was a Member of the Executive Council. It was unfortunate that a prominent politician should behave towards Parliament in such a manner. He should know the rules that govern Parliament. The Committee must take appropriate steps to forestall similar occurrences in the future.

Mr B Nodada (DA) concurred with the Chairperson's proposal. It was troubling that a member of the government could behave in such manner. The Parliament should engage the mechanisms that existed in Parliament to summon the Council, whether they liked to appear before Parliament or not. The action of TUT's Council should be appropriately documented, and strict consequence management must be implemented to deter others from behaving in a similar way. The Committee should adopt proactive measures to get invited people to Parliament in future, especially when there was a suspicion that the invited people might attempt to evade the invitation. Parliament allocated funds to the institutions so they could function properly. The institutions/entities must be ready to account for such funds. The Committee only wanted to conduct preliminary investigations. It did not aim to castigate anyone at this stage.

Mr W Letsie (ANC) said Parliament and the Committee must make an example of the Council and management of the TUT to serve as a caution to anyone who might want to behave like them in the future. They must know that they were not above the Constitution of the land.

The Chairperson said the Committee would contact the Speaker of the National Assembly (NA) to issue an appropriate notice to the University Council. President Cyril Ramaphosa came to Parliament whenever he was summoned. Managements of universities could not do as they pleased in their institutions. Everything must be done in accordance with the rule of law. The Committee took the invitation seriously, because enormous cost was incurred by the invited institutions. He urged all stakeholders to avail themselves for the meeting on 27 November, especially if the management of TUT honoured the invitation.

Mr Pupuru Motebejane, Shop Steward: National Education, Health and Allied Workers' Union (NEHAWU), proposed that the Committee should continue with the meeting only when all affected parties were present in order to get a comprehensive approach to the matter. There were serious wrongdoings at the TUT, but the Committee must ensure it conducts its investigations meticulously to get to the bottom of the matter.

The Committee agreed with the proposal.

Ms N Mkhatshwa (ANC) apologised for the inconvenience the invited people experienced for the meeting, which would now be held on 27 November.

All stakeholders agreed to come to the meeting the following week.

The Chairperson promised to do all within the powers of the Committee to get TUT's management to Parliament.

University of Fort Hare: Briefing by Administrator

Professor Loyiso Nongxa said the former Minister of Higher Education and Training had dissolved the University of Fort Hare’s (UFH's) Council on 29 April 2019, and appointed him as its Administrator. He headed the Council, and the Vice-Chancellor (VC) remained the administrative head of the University. The terms of reference of the appointment were laid out in Government Gazette, Volume 646, Number 42425.

The government had decided to place UFH under administration because of serious administrative and governance challenges which the Council could not resolve. This had led to conflict among the members of the Council. The terms of reference specified that the Administrator had to take over the roles, functions and duties of the Council for 12 months, initiate processes that restore effective governance to the University, implement the process of reviewing and revising the current status of the university in terms of Section 32 of the Act and its approval in terms of Section 33, ensure independent investigation into what had led to the current state of affairs and the collapse of governance in the university, review the office of the Registrar and identify any deficiencies and initiate processes that lead to optimal functioning to support governance and management delivery in the university, and reconstitute the Council in terms of the Statute.

The action plan to restore administration and governance to the university included revision of the institutional Statute, the appointment of independent assessors, the appointment of advisory committees to assist with fulfilling statutory obligations and the mandate, crafting and overseeing the implementation of a turnaround and performance improvement plan, and reviewing the office of the Registrar.  All of these had been achieved.

The Administrator also oversees the drafting of the institutional rules and reconstitution of the Council in terms of the Statute, which was ongoing.

The terms of reference of the independent assessors were similar to those of the Administrator. They had to do with governance with respect to financial management, supply chain management, human resources and information technology.

Based on extensive stakeholder engagements and a review of pre-existing reports on governance and management at UFH, the Administrator had drafted a diagnostic report identifying current UFH' difficulties in six areas -- finance, human resources, safety and security, infrastructure, academic and management information systems (MIS). Many of these matters were recurring and had been identified as far back as 2009.

The Administrator had crafted a turnaround and performance improvement plan (TPIP) in the interim to deal with the significant overlap in the independent assessors' investigation and the diagnostic report. The Administrator and other role-players discuss all identified matters once a week. The Administration currently focuses on monitoring and implementation of the TPIP, which includes seven separate projects -- governance enhancement, review of academic enterprise, talent management, financial sustainability, infrastructure development and maintenance, management information systems and institutional culture.

Prof Nongxa said that the mistrust and anger within the university had to be resolved. He expressed disappointment with service delivery at UFH. It was necessary to have institutional rules that would clearly state the roles of every official, including the VC. The recommendations of the review of the Registrar's office would be finalised 30 days after the term of the Administrator. Reconstitution of the Council would commence early in 2020, and all the constituencies would have nominated their candidates by 1 March 2020.


Presentation by UFH Vice Chancellor

Prof Sakhela Buhlungu, Vice Chancellor, University of Fort Hare, said that the UFH appropriation budget had increased by 14.8%, and included gap funding from the Department of Higher Education and Training (DHET) to assist the “missing middle” students. Its tuition and residence fees had increased by 9.1%, which was influenced by course selection and the number of students registered. It had improved from a deficit to reflect a surplus for the year, compared to 2017.

Property, plant and equipment were the university’s most significant asset, and they were valued at R1.6 billion. The Equicent Infrastructural Development contract was taking longer than anticipated, and this constituted a problem for the university.

The university had developed proactive action plans to deal with some of the audit findings.

The first audit qualification item was relates to the Equicent contract, which deals with the refurbishment and maintenance of student residences. The termination of the contract had been brought forward from 2025 to 2022, and the buildings had been valued. These measures would eliminate any findings on the Equicent contract.

The Auditor General (AG) had had a finding on property, plant and equipment, because the supporting documents for an adjustment made to the buildings in 2012 could not be extracted during the 2017 audit. The action plan to eliminate findings included the valuation of immovable assets and development of an asset management policy, which was in the process of approval.

The AG also had a finding related to an impairment of accounts receivable. This was a serious matter, as some of the students would not be able to access National Student Financial Aid Scheme (NSFAS) bursaries because they did not qualify.

The university had installed specialists within the accounting department to identify a method and approach acceptable to the auditors.

The AG also had finding on revenue for tuition and residence, because supporting documents were not available to verify adjustments made to student accounts.

Some students left the residences at mid-term, and there were no records for this group of students.

The university would develop standard operating procedures (SOPs) to ensure that documents were complete, accurate and properly authorised and available for audit. The use of an electronic document management system would be explored to enhance efficiencies. The university would extract exception reports from the system, and supporting documents would be inspected in order to eliminate audit queries.

Most of the students were on the NSFAS system and would be negatively affected if anything went wrong with it. The university expected about R131 million of NSFAS funding. The students had already signed the agreements, and disbursement would be made in due time. R94 million was yet to be approved by NSFAS because the students had not signed the agreements. The university would receive the payment when the students signed the agreements.

UFH had recommended 99 of the 518 appeals received from the students during the initial submission. NSFAS had eventually approved 74 appeals. During the subsequent submission, 419 students had submitted appeals and UFH had approved 72. It awaited the approval of NSFAS.

Students' applications were rejected either because they did not meet the academic requirements stipulated by NSFAS, or did not meet the “n+2” rule applied by NSFAS. In addition, some students did not submit the mandatory documents

The UFH expected phase 2 of the Alice Student Village to be completed by October 2020. The student village was a 1 437-bed facility, and was being implemented as planned. A client service delivery manager had been appointed on 15 October 2019 to bolster infrastructure delivery capacity. The UFH was finalising plans to roll out the approved infrastructure development and maintenance projects. Water and sanitation challenges on the Alice campus had been scoped in detail and costed. The university operated within a struggling municipality. The water treatment plant was severely stressed. The university had applied to the DHET to get funding for a water and sanitation upgrade in Alice.

There had been allegations of supply chain irregularities in the awarding of tenders, and appropriate consequence management had been meted out to the employees involved in the irregularities, most of which had resulted from the manipulation of systems and solicitation of bribes.

There were allegations of fraud in residence leases. A case had been opened with the Hawks, but it had not been heard in court. The fraud had resulted from the collusion of internal syndicates in the university. There was also an alleged cleaning contract fraud to the value of R19.5 million. No arrests had been made, but there was incontrovertible evidence of wrongdoing.

The university was taking appropriate steps to fill critical vacant positions. It attracts a broad pool of high quality applicants and all the remaining critical positions should be filled by early 2020. The university had had a significant improvement in research and PhD outputs. It was trying its level best to restore effective management and governance. Those that were working to move the university forward faced enormous strain. The university was attempting to clean up as it moved forward, and this did not go well with those that were affected.

The VC expressed appreciation to the DHET for the confidence and trust it had in the management of the university. He also appreciated the Committee for its continuous constructive engagements.

Discussion

The Chairperson noted that the UFH had received a disclaimer from the Auditor General. How was the UFH responding to the matters raised by the AG? How fast was the response? The UFH should close its books by March 2020. It should be preparing for another audit by now. The municipality and the province should not rely on UFH's water treatment plant. The municipality could seek assistance from the Department and other entities. When was the term of office of the Administrator ending?

A Member of the Committee said the spike in the drop-out rate was not unique to UFH. Apart from the “Fees must Fall” demonstrations, what other factors had contributed to the increase in the drop-out rate?

Mr Nodada commented that the VC had spoken only about the good things the management was doing to improve the situation in the university. This was not sufficient. The Committee needed to know about the challenges in order to intervene appropriately.

He expressed concern about the unclear nature of the scope of the internal auditors. Some of the employees had not cooperated with the internal auditors during the investigations. What investigations had led to the disclaimer audit outcome in the prior financial year? What was the nature of the consequence management? Most institutions got disclaimer audit outcomes because of poor consequence management. Had any staff of the university been found guilty of irregular expenditure, fraud and corruption? What was the timeline for the investigations by the independent assessors? Had they recommended any mitigation measures? Maintenance of infrastructure at UFH appeared to be dismal. Did the university have any time frame to digitise its processes? Did NSFAS owe allowances to UFH's students?

Mr S Ngcobo (IFP) asked if this was the first time the new university had been placed under administration. What had led to the establishment of the administration? How far had the independent assessors investigated the allegations of mismanagement and misconduct by the VC? The chief financial officer (CFO) was in a better position to present the financial report. The CFO had been in the system for some time. The finding on the financial statement resulted from inadequate financial information. Had this finding occurred in the past? If yes, how did the university deal with it? The VC had not attached seriousness to the drop out rate. First- year students were prone to drop out due to their inability to cope with some of the challenges at the university. Most of the students in first year were leaving their parents for the first time. Did the UFH have any programmes that facilitated the integration of students into the university? How did the university ensure that students did not abuse the freedom they had?

Ms N Mkhatshwa (ANC) said that the university needed a vibrant institutional culture. The student leadership, especially the SRC, could play a major role in curbing student unrest and protests at the institution. Did the UFH have a culture of following up with its students? Top universities like Harvard did this because they continuously aimed to promote their names.

The UFH had produced great leaders that had fought for the liberation of South Africa. It was unfortunate that the current generation did not want to identify with the university. What was the institutional culture like at UFH? One could not talk about institutional culture in an environment where students did not have basic needs. Unfortunately, similar scenarios were playing out in the technical and vocational education and training (TVET) colleges. The university management should have active engagements with the student leadership.

It was important that the university takes infrastructure development and maintenance seriously. What were the various projects and the timeframes? What was the extent of implementation at the moment? The PC should pay attention to those that the VC had accused of trying to bring down the university. Exceptional skills alone were not enough to successfully run an institution. People tasked with the execution of projects must have the right mindset and ethics. A lot could be achieved with available resources if the workers were honest.

The Chairperson noted that the Equicent project had attracted an audit finding. When did the contract terminate? What was the worth of the contract?

UFH’s response

Mr Nielesh Ravgee, CFO of UFH, said that the disclaimer audit outcome had resulted from four issues picked up by the external auditors. The university had already developed an audit action plan and each matter that the AG had raised would be resolved within specified timeframes. The UFH would submit a copy of the detailed action plan to the Committee. There had been other findings in the report of the external auditors, but they had not contributed to the disclaimer audit opinion.

The institution would receive R131 million from the NSFAS. The university might also receive R94 million after the students signed the necessary agreements. This would bring the total funding from NSFAS to R225 million.

In 2016 there had been two disclaimer audit outcomes, and the institution was taking steps to deal with the matter. There had been three disclaimer audit outcomes in 2017, one of which resulted from the Equicent contract. The university had employed valuers to value the assets, and the value would be reflected in the financial statement for the current financial year. This should prevent a recurrence of the audit finding. The university would also ensure appropriate record keeping so that all supporting documents were kept intact. It would submit adequate data to the auditors going forward. Most of the audit findings should be resolved by June 2020 when the auditors come for the preliminary audit.

The Chairperson expressed concern about the nature of the Equicent contract, because it appeared to be open-ended. What was the timeframe for the contract?

The CFO said that the contract began in 2012 and would terminate in 2022. The initial date of termination was 2025, but it had been brought forward to 2022.

Mr Letsie said that UFH should know the worth of the contract since there were specific number of beds, and there was a specific cost per bed.

Professor Nokwethemba Ndlazi, Deputy Vice-Chancellor: Institutional Support, said that the water treatment plant of UFH serviced the whole of the host municipality. This put significant strain on the infrastructure, and the water treatment plant could not service the new student village project with its current capacity. UFH would consult with the Amatole municipality to discuss a way forward with the water treatment plant.

The university was in the process of digitising all its processes. It aimed to streamline business processes and this would be an integral part of the annual performance plan in 2020. The infrastructure team was working out an infrastructure management plan to determine the best way to resolve the UFH’s infrastructure challenges.

Prof Buhlungu said that the UFH works in collaboration with various stakeholders, including the authority of the Amatole District municipality, where UFH was located, the Amatole Water Board, which owns the water treatment plant, the DHET and the town of Alice, among others.

Professor Renuka Vithal, Deputy Vice-Chancellor for Academic Affairs, said that the institution had enrolled 2 331 students in 2013 and the cumulative percentage of students that had graduated in 2019 was about 61%. Most of the drop-outs were in the second year. Therefore, the university targeted its interventions mainly at second year students. The university takes several measures to reduce the drop-outs rate of students. These include mentorship, additional tutoring, a review of programmes and courses, and a review of prerequisites. The review of pre-requisites tends to ease students' paths through the university.

The CFO said that the Equicent contract was based on cost per bed. By 2022, UFH should have paid R938 million on the contract.

The Chairperson said something was fundamentally wrong with the contract. The university management must devise measures to resolve the matter in order to avoid another adverse audit finding at the end of the current financial year. The Administrator must ensure the problem was resolved before the end of his term. When would the term of the Administrator elapse?

The Administrator said he was appointed on 29 April 2019, and his term would elapse on 29 April 2020. However, the contract could be extended for a maximum of six months. One of his mandates was to constitute a functional Council before he leaves. The challenges at UFH had persisted for years. The Administration adopted the approach of the Council on Higher Education (CHE), that the university must report to the Department on an annual basis. The Administration also had an agreement with the Department to incorporate a turnaround time in the annual performance plan of the university. This would force the university's officials to implement measures timeously. The terms of reference of the independent assessors included the investigation of the alleged misconduct of the VC. Their report would contain findings of the investigation, and the Council would deal with the VC accordingly.

The Chairperson told the Administrator to prepare a detailed report on the Equicent contract and submit it to the Department. The Department would forward it to the Minister, who would eventually forward it to the Committee. The Council was at the centre of the destabilisation at the university. It was concerning that the university had had disclaimer audit outcomes for two consecutive years. The management should ensure the financial sustainability of the institution. What was the root cause of the disclaimer audit outcomes? The Administrator should leave a legacy of a complete turnaround by the end of his term in 2020. The country would like to celebrate historically black institutions. However, the current state of most of the historically black institutions was not commendable.

Ms Mkhatshwa said the Committee should incorporate student leadership in the discussion, especially the SRC.

The Chairperson apologised for excluding the SRC. Students' representatives were vital, and they should be able to confirm what was happening on the ground.

The historically black institutions were part of the country’s heritage, and should be properly administered. The universities should not be under Administration perpetually.

The meeting was adjourned.

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