The Committee met virtually with Auditor General South Africa (AGSA) and the new National Student Financial Aid Scheme (NSFAS) board and CEO appointed at the end of November 2020 to receive briefings on the 2019/20 audit outcomes and its Annual Report.
AGSA highlighted irregular expenditure of R50 billion. Most was as a result of disbursements made to students contrary to NSFAS funding policies, eligibility criteria and funder requirements. This R50 billion should have been disclosed as irregular expenditure as it was for disbursements made when eligibility criteria had been set without consultations with the minister nor was it gazetted.
After AGSA had briefed the Committee on the NSFAS audit outcome, the Minister expressed his displeasure with the exorbitant cumulative irregular expenditure reported by the Auditor-General. He argued that some of the audit findings had less to do with NSFAS itself but more with the higher education institutions. Sometimes the data submitted by institutions to NSFAS was not timely or it was unreliable. The matter is worse at TVET colleges where administrative and ICT system capacity is very weak, but the Department was dealing with that. There were limited funds to attend to some of the NSFAS problems and the Department would be happy to meet with the Committee and address these matters.
The Minister said the Auditor-General notified him that the audit would make a finding of irregular expenditure against NSFAS because for the past three years NSFAS had not gazetted the new bursary scheme introduced in 2018. This he found problematic and noted this matter straddled three Higher Education Ministers. The Minister said that he did not understand why it took AGSA three years to discover this. According to the law, gazetting was not a ‘must’ but a ‘may’.
What the audit finding meant was that more than R100 billion spent by NSFAS over the past three years supporting the children of the working class and the poor was irregular. He encouraged the new NSFAS leadership to work closely with the Department and the Auditor-General on the clarification of the law. The money has been spent but there was no corruption involved.
Members were concerned about the audit outcome and NSFAS performance. They asked who was responsible for gazetting; why there was no Audit Committee established at NSFAS; why the audit outcome was only presented to Parliament now; why NSFAS did not consult with the Minister when developing criteria for granting loans and bursaries; if NSFAS had taken action to implement the audit recommendations; if the irregular expenditure had financial implications for NSFAS; and audit recommendations for its outdated ICT system.
NSFAS leadership then briefed the Committee on its 2019/20 Annual Report noting the qualified audit due to misstatement of cash flow, amounts due to institutions and bursary expenditure. NSFAS has had a slight budget increase of R371.1 million and its predictions were that it should have been an increase of R1.8 billion based on the prior MTEF. The number of applications indicate there could be a severe shortfall should most of the eligible new applicants be accepted at institutions of higher learning.
The Committee welcomed the new leadership and hoped they were committed to a turnaround. Members asked why the CFO position was not yet filled and other critical vacancies; the regression in achieved targets; NSFAS tracking system; forensic investigations; progress in ICT model tender to reduce glitches in the system; how many students received funding in the 2019 academic year; steps to address compliance and record keeping; how many students were still owed funding; if the consultants appointed by the Administrator are still at NSFAS; repayment of student loans and if NSFAS had a system to track students who owed repayments. The Chairperson was scathing about the NSFAS Administrator and the Deputy Minister reasoned with him that the former Administrator should be allowed an opportunity to respond.
Ms N Mkhatshwa (ANC) was elected as interim Chairperson of the meeting as the Chairperson was going to be late. She asked Members to observe a moment of silence for Members of Parliament and from this Committee they have lost to Covid-19 such as Ms Belinda Bozzolli. She noted the new NSFAS leadership and said the Committee hopes that it will turn the ship around.
NSFAS 2019/20 Audit: Auditor-General SA briefing
Mr Luthando Mehlomakhulu, AGSA Senior Manager, said over the past three years since 2017/18, NSFAS had received a qualified audit with findings. The audit outcome has stagnated. Qualified areas reported on in the prior year audit were not addressed and re-occurred such as contingent liabilities, amounts owing by institutions and bursary expenditure. Challenges to formulate KPIs according to the SMART principles and the maintenance of performance reporting supported by credible evidence persisted. Audit action plans were not implemented in a timely manner to address significant internal control deficiencies.
NSFAS is yet to reconcile records with tertiary institutions dating back to 2017. The delay in finalising these reconciliations results in institutions owing material balances of unutilised cash to the NSFAS, which has not been recorded and collected. Irregular expenditure was materially understated due NSFAS failing to consult with the Minister when setting conditions and criteria for eligible students for bursary awards, and failing to gazette those conditions and criteria.
On compliance with legislation, effective performance monitoring, evaluation and corrective actions through quarterly reports were not established; prevention of irregular expenditure was not done; financial statements were not prepared in accordance with PFMA and material misstatements were not adequately corrected.
As for irregular expenditure, most was caused due to disbursements made to students contrary to NSFAS funding policies, eligibility criteria and funder requirements. R50 billion additional irregular expenditure should have been disclosed due to disbursements against eligibility criteria and conditions set without consultations with the minister and not gazetted.
Dr Blade Nzimande, Minister of Higher Education, Science and Technology, thanked AGSA for the presentation and committed to the Department going through the Audit Report with NSFAS and AGSA to ascertain what each party needs to do.
Some of the findings against NSFAS have less to do with NSFAS itself but with the lack of cooperation with higher education institutions. For example, some of the data is not submitted timeously by institutions or it is unreliable. The matter is worse with TVET colleges whose capacity is very weak in administrative and ICT systems, but the Department is dealing with that. There is no money to attend to some of the NSFAS problems. The Department of Higher Education and Training (DHET) would be happy to come and address this matter with the Committee.
The second matter he raised was the Office of the Auditor-General bringing to his attention that it would make a finding of irregular expenditure against NSFAS as for the past three years NSFAS has not gazetted the new bursary scheme introduced in 2018 by DHET and to be implemented by NSFAS. As there was no gazetting this constituted irregular expenditure. This dates back to 2018, but yesterday it said that 2018 was no longer an issue because there was an engagement between NSFAS and AGSA. He was uncertain then if it constituted irregular expenditure. This straddles three Ministers, from Minister Mkhize to Minister Pandor and now himself. As a result, he wrote a letter to the DG as the Accounting Officer asking why he did not ensure that the gazetting was done. The DG wrote back and said that their legal advice told them that there was no need to gazette. In essence, this meant there is a dispute between DHET and Auditor-General. DHET was still telling him that it should not be gazetted. The AGSA presenter had told him that he would be happy to provide more detail after the meeting.
He respects the Office of the Auditor-General immensely but he asked why it took three years to discover this. He asked if according to AGSA this a serious matter – because he was concerned. He asked AGSA where in law the gazetting was required. Its interpretation was it says ‘may require gazetting’ but not a ‘must’. AGSA may provide more explanation on this matter. In essence this means, more than R100 billion spent over the past three years, supporting the children of the working class and the poor was irregular. This was problematic to him.
He hoped that the new NSFAS board, together with the DG and AGSA, address this matter without trembling. He wanted clarity as the Minister as far as the law is concerned. There is no corruption but this money has been spent. It would be irresponsible on his part if he did not raise this matter with the Committee after doing so with AGSA and the DG. He hoped that this matter would be clarified before he had to depart for his cabinet meeting.
Mr T Letsie (ANC) sought clarity from AGSA on which stakeholder was responsible for gazetting the bursary scheme. AGSA said that if Members needed additional explanation on the irregular expenditure it will be provided to Members, can this be given? What is the audit opinion on NSFAS performance indicators? She asked for clarity that no audit committee was established at NSFAS.
On internal controls, there was no improvement in effective leadership as well as proper record keeping, daily and monthly controls, review and monitoring compliance and risk management. Intervention was required.
Assurance providers also lacked improvement and there was an additional note that there was limited assurance by the executive authority. He asked if NSFAS was given a timeframe for implementation of the recommendations. Lastly, why was the Committee getting the NSFAS audit outcome only now?
Ms D Sibiya (ANC) asked why NSFAS did not consult the Minister in developing criteria for granting loans and bursaries.
Ms C King (DA) said that AGSA saw that for the past three years NSFAS had qualified audit opinions. Did NSFAS have a proper audit action plan to ensure that all AGSA recommendations were implemented? If not, what consequence management can be imposed on NSFAS?
She asked for AGSA’s understanding of the importance of missing gazettes and the irregular expenditure. What financial implications could this have on NSFAS? There were delays in presenting the NSFAS audit findings to the Committee. The Committee needs to ask for an audit action plan from NSFAS with timelines for implementing the audit recommendations. Members would need a report back on how far NSFAS has gone with those recommendations as well as monies owing by and to NSFAS by higher education institutions (HEIs). What recommendations did AGSA make about the ICT system?
Mr S Ngcobo (IFP) found it problematic that there was a dispute on the gazette matter. Why should this dispute be left to AGSA and DHET to sort out? He reminded Members that the last time the Committee engaged with the NSFAS Administrator, the Committee was warned by one of the NSFAS officials that Members would have to expect this sort of audit outcome and this is exactly what is happening. This meant that there were serious problems at NSFAS, but how many audit opinions like this before the Auditor-General can do something about it? It seems this would be a recurring matter.
Ms Sharonne Adams, AGSA Business Executive, replied that the academic year and the financial year do not start at the same time. On 3 April 2018, regulations were gazetted that NSFAS had to implement applicable from January 2018 when the academic year started stating there was a specific manner in which NSFAS was required to provide funding to students. In the 2017/18 financial year, this was not applicable. The gazette would apply to the 2018/19 financial year going forward.
The legislation states clearly that NSFAS "may determine" and "may from time to time revise, in consultation with the Minister, the criteria for eligibility" for different forms of financial aid. When these criteria have been changed, they must be published in a gazette and become operative upon publication. When looking at 2018, retrospectively, there should have been some consultation with the Minister and gazetting.
Based on the information AGSA receive, there was some revision of the funding guidelines and based on those guidelines, NSFAS did pay eligible students. From 2018/19, there was a revision of those guidelines. This is where the irregular expenditure stemmed from as the publishing in the gazette did not happen.
This gazette came into effect from 3 April 2018 and would impact the academic year for 2019. When the students started, advance payments were made, and the advance is allocated to the expenditure at a later stage. The expenditure only became irregular when there is an expenditure disclosed in the books of NSFAS. Based on the estimate done, there was only a disclosure of R500 million of irregular expenditure compared to the prior year of about R3 billion. A response from the NSFAS Administrator was sought at the time, but it was not convincing.
The additional irregular expenditure consisted of the R500 million disclosed in the notes to the financial statements. There were amounts paid to the bursar in excess of the amount supposed to be paid – this is largely were this additional irregular expenditure came from.
The Chairperson commented on the remarks made by the Minister and said there is an opportunity to correct as NSFAS had now a new board and new management. It would be easier to motivate to National Treasury to have that irregular expenditure condoned. We understand that there was an omission, either on the part of DHET or NSFAS, to get the bursary rules gazetted. He advised that NSFAS, DHET and AGSA should work together on the interpretation of the legislation to avoid it from happening again. At this moment, the qualification has been raised and is part of the annual report and audit outcome.
There are a number of repeat audit findings for NSFAS. However, this qualification, now everyone has provided context, it seems it was an oversight as legislation interpretation came into play. The irregular expenditure of R50 billion on the gazetting of the funding rules is a serious matter and it really needs to be looked into.
The Chairperson noted that during 2019/20 there was no Audit Committee – at the time the audit was conducted, it was not yet established. However, it has since been established.
He raised a concern about compliance with legislation on remuneration and benefits that were given to the NSFAS Administrator and the advisors. This was a problematic matter that Members raised several times with the Administrator and the Minister.
The Chairperson welcomed the new NSFAS Board and congratulated the Board Chairperson and Members. This NSFAS Annual Report fell outside their term of office. It covered the period when NSFAS was under administration – with Dr Carolissen as Administrator.
National Student Financial Aid Scheme 2019/20 Annual Report
Mr Ernest Khoza, NSFAS Board Chairperson, introduced the board members and management team. The new board was very aware of not pleading "newness" all the time but the board was conscious of the centrality of NSFAS, not only for access to education but for human and social development of this country. The board was encouraged by the comment made by Members on the significance of the institution for the future of this country. The board would like to work with the Committee to reset NSFAS to conventional governance after a long period of administration. The board will need the advice, input and encouragement from the Committee.
Having listened to the Auditor-General and interacted with the reports, the board was deeply concerned with the poor audit outcome and poor performance of the institution. It is concerned about the high irregular expenditure. The board will continue to work closely with DHET on matters of policy and general issues affecting the sector.
Some of the interventions that have been initiated by the new board to ensure that the audit outcomes have been attended to include strategic direction and oversight on ICT, HR, ethics and operations; addressing significant matters raised by the Auditor-General to ensure that medium term capacity is built; reviewing organisation structure to ensure it is fit for purpose; developing a SMART audit action plan monitored by the Audit Risk Committee and the Board; putting mechanisms in place to review quarterly performance reports to ensure accuracy and completeness; and management directed to work closely with the Auditor-General and National Treasury to address legislation interpretation. The board would need the support of the Committee.
Mr Andile Nongogo, NSFAS CEO, focused on the Annual Performance Plan and reasons for non-achievement of targets; the Audit Action Plan to address audit outcomes; and strategic steps to stabilise the institution and funding requirement.
The focus of NSFAS Administration included:
- Developed a risk-based strategy informed by detailed root cause analysis.
- Stabilise unreliable ICT systems and poorly designed data architecture
- Release funds trapped in the system to ease the plight of hundreds of thousands of students
- Introduce financial controls, improve governance, develop and enforce a policy and standard operating procedures framework and clamp down on fraud and corruption
- Engage the Council for Scientific and Industrial Research (CSIR) to assist with the resolution of the cyber security finding for the vulnerabilities identified
- Insource the internal audit function.
NSFAS received a qualified audit opinion for misstatement of the cash flow, amounts due to institutions (non-exchange), and bursary expenditure. Besides the irregular expenditure, no fruitless and wasteful expenditure was incurred.
NSFAS has had a slight budget increase of R371.1 million compared to the 2019/2020 budget. Its predictions indicated that there should have been an increase of R1.8 billion based on the prior MTEF. The number of applications indicate that there could be a severe shortfall should most of the eligible new applicants be accepted at higher education institutions.
The Chairperson thanked the CEO and said the Committee understood the summarised nature of the presentation. This Report is for 2019/20 and Members must agree that the past two years represent the worst NSFAS has been. Items meant to be achieved through the administration were not achieved and matters got worse. The findings that propelled NSFAS to be placed under administration were still in existence. AGSA has alluded that NSFAS has gotten into a worse position. Dr Randall Carolissen came in and left the institution in worse position, this is evident from the reports by AGSA and NSFAS, even though there are attempts to project a rosy picture. If one looks at the areas the Administration was meant to assist, it got really worse. In the past financial year, the performance was very low. All the areas where the Administration was meant to assist, the results were worse than before. There was an attempt to increase the performance to 60% but AGSA refused and evaluated the performance of NSFAS at 30%.
The Committee hopes that the new leadership will work really hard to turn this entity around. All the matters raised by AGSA have been brought to the Committee’s attention before and now AGSA confirms all those assertions. Members cannot put blame on the new leadership, but the Committee hopes that the new leadership will strengthen its working relationship with the Committee, the Auditor-General, DHET and the National Treasury. NSFAS was turned into a personal fiefdom and that cannot continue going forward.
Mr Letsie said that the problems at NSFAS were and still are gargantuan; hopefully the new leadership would turn a new page. He noted that there was still an acting CFO and wanted to know when the position would be filled.
There were no financials presented in the presentation. On page 120 of the Annual Report, he wanted to know about the reserves illustrated on page 151. The CEO indicated in the presentation that management would not be filling the critical list of vacancies as it is waiting for the Minister to approve the structure. Can the leadership tell the Committee if filling vacancies through that critical list was wrong? He urged the new leadership to involve every stakeholder that should be involved in the restructuring process. He asked if the new leadership was avoiding interaction with the media and if a spokesperson had been appointed yet.
There is no detail on the regression in targets achieved. What were the reasons NSFAS achieved only some targets but not all? Could it be attributed to the change in the targets? He expressed concern about the lack of "following the money" and the regression of targets when R31 billion was used. It seems there is no tracking of where the money went and on what it was spent.
Mr Letsie said that AGSA indicated NSFAS did not have a system to track how much is owed to it and how much it owed to institutions. He welcomed the Minister’s comments on the lack of data from institutions but this is no excuse for NSFAS not to establish a proper tracking system.
How far are the forensic investigations that were instituted? Have they yielded any result; if so, what kind of results? How much has been spent on those investigations so far? How many NSFAS employees have been implicated and found guilty of fraud and corruption?
NSFAS indicated that in the current financial year only the Audit and Risk Committee was established. The expenditure on consultants and professional services amounted to R45.2 million. What were the services rendered by the consultants and professionals? Who were they and how much was each paid? There was a consultant under the name of Shayi who was paid for an APP and there was also a consultant under the name of Basson that came on board to fix the sham of an APP that was created by the former.
He also asked for details on the forensic investigations that have been instituted.
Ms J Mananiso (ANC) agreed with the Chairperson that the past two years at NSFAS were indeed the worst. She appealed to the new board and management to come up with an implementable plan on how the audit findings will be addressed. This needs to be encompassed by timelines. For example, the ICT challenges at NSFAS have been recurring year-in and year-out.
She suggested that NSFAS leadership consider using page 13 and 14 of AGSA ’s presentation as a guideline to commence resolving the findings. Management must take advantage of what AGSA has already highlighted as recurring findings.
She emphasized that DHET did not exercise oversight over NSFAS. It needs to strengthen its efforts in conducting oversight over NSFAS.
She appealed to the new leadership to do the right thing at NSFAS because the students continue to suffer from reckless leaders who put their interests first.
Ms King asked how far NSFAS was in identifying which aspects of its ICT model need to be developed and when will the tender process commence to allocate the needed expertise to reduce the glitches in the ICT system. How many eligible students received funding in the 2019 academic year or are there still some outstanding challenges to finalise that funding?
Were some vacant posts eventually filled, especially the critical posts such as the CFO?
When she heard about the Administrator not performing well and then you read the utterances by the Minister about how well the Administrator did his job. What plans does the board have to address the issues that were left hanging by the Administrator?
The presentation does not address the lack of compliance and record keeping only the irregularities – will there be proper steps taken to address compliance and record keeping in the future? What led to the underspending and what are the implications of that underspending?
Ms Sibiya asked how much was still due to be paid to students in terms of allowances and how many students were still owed funding? Are the consultants appointed by the Administrator still at NSFAS. If so, what are they doing in NSFAS?
Ms N Marchesi (DA) wanted to know how NSFAS was able to retrieve payments made to students. As a former NSFAS beneficiary, she was one of the students who got deductions from her salary when she started working to repay her NSFAS loan. Is that system still intact to ensure that payments are received? Why is there a regression in this regard? What plans are going to be implemented to ensure that supported students do pay back the loans, especially those that are employed?
She asked if NSFAS facilitated employment for students that it financially supported. Does it play a role in assisting students to choose the right courses to secure employment upon completion of their qualifications?
Ms Mkhatshwa, said that this was an important moment – having a fully constituted board and new management. Hopefully, this will yield the desired results for NSFAS. As we increase the bracket that will allow more students to be eligible for NSFAS, we are mindful of those who fall outside that bracket but still need financial assistance. She pleaded with the new leadership to be mindful of the role of NSFAS in addressing the injustices of the past.
The Chairperson said that there was a long list of questions to the board and the management. He did not want to add to that list because the leadership was still new, despite the principle in law that when you inherit an organisation it comes with its successes and flaws. He would like to give the leadership a chance, and the Committee would only judge it based on its own annual report.
The Auditor-General identified key qualification areas – contingent liabilities on student funding, R500 million of irregular expenditure; prior year errors on prepayments, and lack of reconciliation of records between NSFAS and institutions. The Committee will only be able to hold the new leadership accountable based on the promise they give it. The person who was supposed to be responding to all these questions is the former Administrator.
Mr Nongogo apologised for the omission of the financial statements in the presentation. It has been about two months since he assumed office and a month since the Board came on board. He conducted an analysis of the state of affairs in NSFAS and many of the issues raised by AGSA are indeed issues the new management was still grappling with. When he assumed office he requested all executives to come back to the office in order to start resolving some of these critical issues raised by AGSA , and that are likely to affect students.
One has to summarise the critical issues. What hampers the ability to deliver on time and efficiently was due to aging and outdated systems. What has been happening over the years was ‘patch-work’ of systems. The challenge with this patch-work is that it happens live - this also affects staff performance. As an institution, we have forgotten that behind data, numbers or records, there are people behind those. Management was now trying to rejuvenate the team to take those records seriously because those records relate to people (the students).
The process to find a permanent CFO has been initiated before the new financial year starts.
On the critical list of vacancies, the Administration had been wary of reviewing the structure while awaiting the Ministerial Task Team work to conclude. There was an interim measure to fill those positions in the ICT and risk and governance space. The reason this was stopped was because if the filling of vacancies continued, it could end up possibly bloating the structure of the organisation.
At an informal level, management has informed the unions about aligning the organisation to ensure that it is agile and responds to all the challenges that it faces. The intention is not for anyone to lose their job but to ensure that the organisation is efficient.
As for not doing interviews, Mr Nongogo thought it critical for one first to get in tune with the challenges at NSFAS before going to the media. It is not that the team was avoiding the media, but rather it was focused on getting the ball rolling for now until the team feels comfortable to do so.
There is a spokesperson for the institution, and as far as strategic matters affect the institution, these are matters that will be dealt with by the Office of the CEO.
In terms of regression, that has been cumulative over the years. Performance management and reporting seems to be dealt with only at the time when reporting must be done. In the last two days, management was in a strategic session to review outcomes and indicators to ensure that they are SMART and there is ownership of these programmes.
It is true that NSFAS does not have a system to fully track amounts owing to NSFAS and to higher education institutions. At the moment, the team was developing what was called ‘agreed procedures’’ – that it would want the auditors of the HEIs to confirm to NSFAS the monies advanced; if they have been used for the intended purpose; and to provide NSFAS with a balance.
What was spent in 2020/21 on forensic investigations was approximately R6.9 million and about four reports were done. One was about irregularities in the HR function – it was found that in 2017 five positions were graded out of the process and there were 14 in 2018. Staff members funded for their studies inappropriately as well as leave and pension fund concerns. The forensic review showed that the process followed to appoint the scheme could not be traced.
The other report was the NOCLAR (Non Compliance with Laws and Regulations) report where R4.36 billion in disbursements was declared irregular. No employee was identified but some of these related to overpaying students.
As part of these forensic reports, 32 staff members were identified to have benefited irregularly or fraudulently. Eight of these employees were still going through the disciplinary process, corrective measures were taken on four and recommendations made for five. There were 11 dismissals and three were referred to legal or management to deal with and one has been referred to external law enforcement.
As for the consultants utilised, the team can submit the names later to the Committee but the summary of the matters referred to legal consultants amounted to about a R1 million. There was about R6.9 million on forensics, R16 million on ICT support and R1.6 million on travel.
Mr Shayi was not with the organisation anymore. Mr Basson was still on a contract amounting to R1.2 million and he has since been assigned within the planning unit to assist in policy formulation and performance monitoring and management.
The team decided to build a new ICT system and notices have been sent to the current providers to terminate. The team has six months to conclude this process.
As for student that have not received allowances, it is an approximate 8 000 students of which about 2 000 were from universities and the balance to all other institutions. This was due to data submitted late by institutions.
On the reconciliation of payments, once we implement the ICT system we are embarking on all these legacy issues would be dealt with.
As for proper records, the underlying data in the systems – there is no data integrity for it. NSFAS has no proper record keeping at the moment. Management has taken a decision to implement a record management system. Some of these matters had to be prioritised due to financial constraints.
On the R4.4 billion "underspending", this was a result of timing differences as it relates to monies that were not yet spent but committed by financial year end. To date the monies have been spent.
The consultants that NSFAS currently has are those working on the closeout report but the process to appoint them was still underway.
As for recovery of monies from students, the process has not yet changed. We have a soft approach at the moment through debt collectors; we do also get data from SARS on students that were NSFAS beneficiaries. We have decided to follow the approach of social consciousness where we will showcase people who have benefitted from NSFAS and show how their repayments puts other students through tertiary education. We hope that this will appeal to people’s social consciousness.
As for applications received, NSFAS received about 750 000 applications between manual and online applications. 62% of the applications are SASSA beneficiaries and about 55% of the applications have already been evaluated and processed. Appeals are now immediate and about 1 700 appeals were received.
28 000 appeals for continuing students were received, and about 87% of those were approved. The percentage that was not approved was due to a number of matters such as late submissions. We have disbursed about 20 000 of them. For new applicants, we have disbursed about 99% of approved funding. For N+2 appeals, NSFAS received about 9540 and 92% has been approved and 77% have already been paid.
On the laptop process, an initial order has been placed based on numbers received in 2020 of 180 000 devices. These devices are due to be distributed on 18 April. The delay was due to the time needed to manufacture the devices.
He appealed to the Chairperson that all unanswered questions be responded to in writing.
The Chairperson welcomed the suggestion and said that some of the questions asked by Members were curveballs.
Mr Khoza said that the board was very much aware of the issues that NSFAS experienced under the previous administration. The board has taken a resolution to attend to the issues at hand.
The Chairperson said he was pleased that the board had taken a resolution to attend to all the issues. Members have expectations but those expectations will be accompanied by the support of the Committee. Some of the issues noted by the Auditor-General appear in greater detail in the management letter. The board has no choice but to do all it can to stabilise NSFAS after such a terrible run with the previous administration.
He was uncertain how the concept of consequence management applied because here is an individual who was appointed to turnaround and stabilise NSFAS. This is one of the biggest entities in DHET with annual allocation over R30 billion. It is an important entity – this individual goes and appoint his family members, friends and acquaintances. Furthermore, he pays himself exorbitant salaries, chauffer-driven cars and stays in exquisite places in Cape Town and goes on a witch-hunt of employees who called out this behaviour. This individual then gets intolerant of any sort of accountability.
During the period the Administrator was at NSFAS, there was no Audit Committee – this requirement is enshrined in the King Code on corporate governance. The Auditor-General compiled an action plan but that plan was not actioned.
There was no such thing as a critical list because it existed in the imagination of somebody. There had to be a critical list for people to be appointed without following the proper recruitment process. The worst part of it is that this person attempted to cook the books to create the impression that his administration performed well. NSFAS only met 34% of its targets or indicators.
The Committee will avail itself to ensure that the new leadership and management receive the support that it requires to turn the situation around at NSFAS. From this engagement, he was quite comfortable with the leadership that has been appointed.
The Committee will have a follow up meeting to ascertain if an audit action plan is being implemented. This will assist the Committee to track if the recommendations and findings of the Auditor-General are being attended to.
Deputy Minister Buti Manamela agreed with the Chairperson on the follow up engagements with the new leadership. Secondly, the allegations levelled against the former Administrator should be ventilated but he should be afforded the opportunity to respond. Members need to be mindful that when the former Administrator was appointed by Minister Pandor, NSFAS was almost in complete chaos.
The Chairperson interjected and suggested that the Deputy Minister left things as they were because the Chair had made his concluding remarks.
The meeting was adjourned.
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