The Committee met virtually to receive a briefing from the Construction Education and Training Authority (CETA) on matters related to governance, management and skills development interventions in the construction sector. However, the Committee was not pleased that the Ministry was not present as some of the questions required its response. CETA had been placed under administration twice and the Committee had not been privy to the administration reports; allegations of unqualified board members; Pension Fund investigative report; the recent forensic investigation report by the Administrator; why three CETA board members were reappointed when they were part of the previous board that failed to meet its fiduciary duties and why the new board was not fully constituted.
In its briefing, CETA focused on its governance and executive management; skills development budget for 2022/23; skills development interventions per province, race, gender and people with disabilities; support programmes for black and emerging contractors; bursaries and internships; update on NEHAWU allegations on CETA governance and management and programmes in support of the District Development Model (DMM).
Members asked questions about board reappointments and remaining board vacancies; lack of qualifications by the executive, particularly an unqualified supply chain manager; the certification backlog; management of bursary scheme; not meeting skills development targets; whether CETA was funding the appropriate qualifications for the construction industry and the infrastructure development trajectory South Africa needed. It also asked about staff salary disparities; stipend payment challenges; and tender procurement awards since April 2021.
That CETA had been placed under administration twice – in 2020 and 2011 – troubled Committee Members and they sought reassurance that CETA had action plans in place to prevent this. Members were not completely satisfied with the responses from the new CETA board and CEO and written responses will be provided within seven days. The Committee also requested the Administrator close-out report and the pension fund forensic investigation report.
Before the meeting commenced, Mr T Letsie (ANC) expressed his dissatisfaction with the absence of the political leadership as some of the questions of the Members would be directed to the executive leadership.
The Chairperson shared Mr Letsie’s sentiments. If Members are not able to get sufficient responses today, it throws off the programme of the Committee.
Construction and Education Training Authority (CETA) briefing
Mr Thabo Masombuka, CETA Board Chairperson, said this was an inaugural interface of the newly appointed accounting authority by the Minister. It is important to announce its presence and inform the Committee that the new accounting authority is not fully constituted yet, but the reasons will be highlighted in the presentation. Secondly, it is important to interact to give the Committee comfort on the matters of concern that were raised in the Committee invitation letter.
Mr Malusi Shezi, CETA Chief Executive Officer, made the presentation giving an overview of the CETA governance and executive management; skills development budget for 2022/23; skills development interventions per province, race, gender and people with disabilities; support programmes for black and emerging contractors; bursaries and internships; update on NEHAWU allegations on CETA governance and management and programmes in support of the District Development Model (see document).
Mr Masombuka concluded on the matter referred to by the CEO on normalising relations between NEHAWU and the executive management. The board has mandated him to ensure that this matter is resolved speedily. There is a process in place which will zoom into the allegations outlined on page 11 of the document. All issues will be isolated and dealt with separately to get to a resolution. He assured the Committee that he would report back on the matter within a reasonable timeframe.
Mr Letsie said CETA was placed under administration on 29 January 2020 and the reasons provided then was that the CETA board failed to execute the fiduciary duties assigned to it. What were those issues? There was an issue with the pension fund when CETA presented to the Portfolio Committee on 26 November 2019. The former CEO made allegations that she had a letter from the board instructing her to give the staff 100% pension benefits. Mr Mfebe, the board member present, disputed the former CEO’s assertions. During the ensuing parliamentary recess, the Minister dissolved the CETA board and placed it under administration. The Committee interacted with the CETA Administrator for the first time in May 2020. He told the Committee that he would start a forensic investigation into CETA, taking into consideration the allegations that emanated from a board meeting with two letters instructing the CEO and the other the board-laid claim. He said the forensic investigation report would be available at the beginning of 2021. This report has not yet been submitted to the Committee. It would have assisted the Committee if the Minister had been present to clarify this matter.
How far is the implementation of that forensic investigation report and when will the report be shared with the Committee? He suggested providing it within seven working days so that Members can study it as soon as possible.
The new board has been appointed and it is not a full complement with five vacancies. He assumed that those appointed met all the requisite requirements per the gazette published. Why were the three members reappointed when they were part of the previous disbanded board which could not execute their fiduciary duties? There were allegations that some of the board members did not meet the requisite requirements and he sought clarity on the allegations. The board vacancies have been advertised more than twice. This costs CETA money. How much has it spent on these advertisements and why does it keep readvertising?
Mr Letsie asked if there are learner certificates outstanding and from which period. What contributed to the certification backlog and what mitigation strategies are in place to address this backlog? When will day zero be met on the backlog?
CETA has targeted 3 500 skills programme participants for the Economic Recovery and Reconstruction Plan (ERRP), funded at R52.5 million. What skill programmes are targeted for the ERRP? The Post School Education and Training (PSET) White Paper proposed that where a SETA is funding the provision for undergraduate or postgraduate qualifications in line with sector priorities, it should make a ring-fenced contribution to NSFAS instead of attempting to manage disbursing funds to students. Last week the Committee visited NSFAS and it raised the issue of sector education and training authorities (SETAs) managing their own bursaries. How much does CETA spend on managing its bursary scheme and is it considering allocating bursary funds to be administered by NSFAS? If not, why not?
Are board member appointments gender-equitable because in this meeting, there are three males and zero females as board members?
When the Administrator was appointed, one of his tasks was to review the terms and conditions of employment for the CEO, Chief Financial Officer and other employees. Was this process concluded? If so, was it implemented fully? If not, why not?
CETA has been under administration twice, in 2011 and 2020, so CETA is a repeat offender. This is extremely worrisome for the Committee. Is CETA confident that being placed under administration will never happen again? Has the current board assessed why CETA was placed under administration in both those periods to ensure it implements systems and mechanisms to avoid this?
How did CETA perform based on interactions with the Auditor-General of South Africa (AGSA)? Is management confident that CETA has performed well in the current financial year? If there were issues with the audit in the previous financial year, has management ensured that the audit action plan is being implemented? Has an investigation been initiated by the National Skills Authority (NSA) into CETA’s affairs? If yes, what is the status of the implementation and consequence management? Have any of those matters been resolved to date? Are there any outstanding unresolved matters and if so, why are they not resolved?
Some of these questions are directed to the Ministry but it is not here. Perhaps, the board chairperson may liaise with the Office of the Minister, especially on the forensic investigation report. Public funds are used for investigations and these reports must be used and implemented. He suggested that these discussions should be held directly with the Ministry. It makes it extremely difficult for Members to do their job if the Committee does not have sight of the report and now the political leadership is not here.
Ms J Mananiso (ANC) said that most of the governance and policy issues were covered; however, she was disappointed by the internship beneficiaries; it is unbecoming for a SETA to have fewer numbers of people benefiting than what is targetted.
The Committee also stresses the importance of accountability. If people are not fit for the task, they must not be employed. We cannot be talking about this all the time. She asked for a staff skills audit report to be submitted because Members need to understand if there are issues stopping people from executing their duties.
As for the investigation, the supply chain management head, Ms Tumisho Mphuthi, was allegedly appointed without the requisite qualifications and experience – but who should be liable for this appointment and are there any such appointments at CETA? What were the reasons for the extension of the Administrator and has the administration process been completed? If so, is the Administrator report available? It must be submitted to the Committee.
On the ERRP skills programme, she asked for the issues referred to by the CEO and a detailed report of its beneficiary cohort. She also asked for a report on local beneficiaries who are getting opportunities from contractors as sub-contractors.
The Chairperson reiterated the previous Members’ sentiment, particularly that some of these questions should be responded to by the Ministry. The Administrator report was needed to understand its findings and recommendations so the Committee could exercise oversight on implementing those recommendations. In turn, it would assist the Committee in monitoring the new board to ensure recommendations are implemented to avoid another administration for CETA.
The allegation against Ms Tumisho Mputhi about the lack of requisite qualifications and skills to occupy that position was worrisome, but has CETA resolved this allegation and investigated these allegations? Was that allegation warranted?
She was concerned that there had been allegations against Mr Shezi’s leadership. The appointment was made in September 2021 but there are already complaints about his leadership. We need CETA to thrive, especially when government is driving massive investments into infrastructure development in the country. Leadership skills issues should not impede the progress and cloud CETA from taking the opportunity of these infrastructure development programmes to advance its mandate. This SETA ought to play a very important role in the construction sector. It must ensure female representation is prioritized. By when will the board be fully constituted?
The Committee requests that the CETA pension fund investigation report and the Administrator report be submitted by CETA within seven days.
Mr B Yabo (ANC) said that in the annexure accompanying the presentation, there is an interesting phenomenon in that the scales of the pay grades have some form of non-sequential flow, in how salaries are graded in the organisation. Some of the most notable are the B3 grade and E3. What informs the SETA medians for the benchmark norms of other SETAs? The B3 grade, compared to other SETAs, is almost four times as high as the median. The E3 grade is almost 75% higher than the median. Interestingly, the E3 median is also higher than the E4 median. If you look at it sequentially and logically, one expects that E4 would be higher than E3. Why is this the case? Is there remedial action taken to ensure that these scales are sensible? Some of these things become an issue between employer and unions. What caused these disparities in median pay grades and what seems to be the sector norm? Has the union raised questions about this? If yes, how has it been addressed? If not, what are management and executive views on rectifying this anomaly?
Lastly, what are the CETA requirements or prerequisites for ERRP programme implementation for municipalities and provincial governments? How are municipal programmes approved?
Ms C King (DA) asked, through the Zoom chat, if there were any challenges relating to stipends. She also asked for a report on procurement by CETA between April and November 2021.
Mr Thabo Masombuka, CETA Board Chairperson, that Mr Ngubane would deal with the historic issues that preceded this board. Members would appreciate that the final discretion for the appointment of board members lies with the Minister, but he cannot do that without the recommendations or nominations made by the constituency bodies. However, the Skills Development Act in Section 11 is prescriptive on how the Minister can exercise that discretion. It explains who should constitute the accounting authority. Regarding the current outstanding board vacancies, the advert has specifically mentioned that the expected nominations should be made for three board members representing (1) the organized employer, preferably women and black South Africans (2) one represents organized labour, preferably a woman, and (3) one either represents professional bodies or the bargaining councils or community constituencies and it is preferred that it is a woman. Currently, the board constitutes of at least three women, with one representing organized labour, the second one also representing organized labour (NUM) and the last one representing the Department of Public Works and Infrastructure.
On CETA's contribution to infrastructure development, it is correct how CETA contributes to the infrastructure development framework in the country is unfortunate because CETA is not an implementing agent. However, it is a strategic partner in ensuring that it facilitates the provision of skills capacity in the industry so that the industry can have a pool of skilled young black people who are represented in the industry. CETA also extended the operational plan to build the capacity of these young people to be absorbed in the economy as employers as well, not only as employees or interns.
In terms of the work plan and envisaged work outcome, the board hopes that by 25 October, the full complement of the board will be constituted. This will allow the board to engage in high-level strategic sessions for the next financial year and the term of the board. That session will also receive all the investigation forensic reports with summaries, findings, recommendations, and proposed action plans. The board is not currently able to make its plans available within seven days. However, as a matter of process, the board is already considering some of the reports mentioned earlier by Members.
In the first two days of the induction workshop, the new board reaffirmed its commitment to ensuring that 1) it reinstates confidence in the administration and management of CETA and ensures that relations between NEHAWU and management are swiftly normalized and regularized; 2) CETA ensures that there is a quality output of its programmes. One of the most difficult things that SETAs face is the expectation to do more with less, which speaks to the targets. The National Skills Authority must ensure that commitments made by SETAs are critical to the service legal agreements of SETAs with the Department and other stakeholders. SETAs must plan within their means and with what is availed in funding through the National Skills Fund.
The pension fund matter is a legacy issue and is a bone of contention in the 11-page demand by NEHAWU. It must be handled carefully; it is a legal and labour relations issue. We are trying to resolve this at an organizational level. It cannot continue dragging to the extent that it virtually collapsed administration in CETA.
Mr Mabuza Ngubane, CETA board member, apologized on behalf of the Minister and the Department DDG for Skills Development. CETA was placed under administration in 2020 due to its failure to execute its fiduciary duties. This manifested through financial mismanagement, in particular the pension fund contributions which were irregularly paid. There were claims made by the former CEO at a meeting of this Committee that she was executing a board instruction. There were also a lot of issues between the CEO and the board. When CETA went into administration, the Administrator commissioned a forensic investigation to ascertain the veracity of the allegations made. The forensic investigation report was available and it was shared with the new accounting authority. The same report will be availed to the Committee as requested.
The administration period ended on 2 February 2022 and the accounting authority has just been appointed and underwent induction training on 5 September 2022. For all issues raised in the forensic report, the expectation is that the new board will examine the report and come up with an action plan to address these. Moreover, the Administrator was appointed and assigned to execute specific functions and at the end of that period, the Administrator prepared an administration close-out report, which was submitted to the Department. That report will be used to guide the new board on the burning issues identified during the administration period that were hindering CETA governance. Based on this report, the board will develop an action plan. Now that the new board has been inducted, it is ready to execute its fiduciary duties. The forensic investigation and administration close-out reports are a starting point for the new board.
The appointment of board members is regulated in Section 11 of the Skills Development Act and CETA standard constitution. The Act stipulates eligibility criteria such as criminal record, South African citizenship and no conflict of interest must be checked before appointment. Their qualifications are verified by SAQA and their seniority in the nominating organisations recommending them. The current ten members of the board have undergone these checks and passed them.
The appointment process was guided by the Act and the members were nominated by their constituencies within the construction sector. From the Department’s side, considering such nominations was based on board continuity, retaining institutional memory and experience on the CETA board.
The reasons for placing CETA under administration in 2011 differed from those for CETA to be placed under administration in 2020. He could not confidently say that CETA would not be placed under administration again. CETA was placed under administration in 2020 and the Administrator conducted a forensic investigation – that investigation will inform the board of what needs attention.
The audit action plan is one of the documents that the board will implement. During the administration period, CETA received an unqualified audit opinion, but this did not mean the organisation was properly governed; hence, it was placed under administration. The Department has requested all SETAs to submit audit action plans to address AGSA findings. Further, the Minister has recommended that a task team comprising Department officials, CETA management team and NEHAWU be formed to look at all the challenges facing CETA to develop an action plan on how relations within the organisation will be harmonized. The first meeting took place last week on 23 September and the Task Team has been given orders to assess all the issues raised by NEHAWU. The Task Team will reconvene on 30 September.
The board is confident that the CETA executive team is playing its part. It has begun stakeholder engagement roadshows to build stakeholder confidence about CETA. The CEO mentioned earlier that the executive has managed to note 10 burning issues from stakeholders and it has come up with the 7-Item Action Plan to address those.
Mr Ngubane replied about the extension of the administration. When the Administrator was appointed, the initial appointment was for 12 months. Towards the end of the period, there were key milestones that had not been achieved by the Administrator, which were important to the running of CETA. This included the appointment of the CEO and the engagement of all stakeholders to discuss and adopt the constitution. These milestones were seen to be critical for the management and leadership of CETA. The administration was concluded on 2 February 2022.
On the allegations about the leadership of the new CEO, Mr Ngubane replied that when an organisation is transitioning from administration, there will always be uncertainty and some resistance from employees. A roadmap with a list of the action plans and how all allegations will be addressed will be compiled and managed closely by the board. The Department expects that from time to time, the Task Team will also report to the board.
Ms Mabo Thobela, CETA Executive Manager: Strategic Support, responded to the pay scale question. The pay scale report was commissioned during the administration before the organizational development (OD) process was implemented. She agreed that there were anomalies in the pay scales, which are believed to have been caused by not following proper processes or a structured approach when offering salaries to new employees. Previously, people were offered salaries and pay scales that were not reviewed to ensure they were within the relevant pay scales of their job level. This is what caused the anomalies.
Recommendations have been made to normalise the situation, including freezing salaries, benchmarking jobs with other SETAs and validating the job grades in CETA. Management felt that before these recommendations were implemented, the report was formally tabled to the board so that it may provide guidance and leadership on how to normalize the situation. CETA is indeed paying significantly higher than other SETAs.
The union has raised the matter of salary disparities. Management wants to first allow the board to assess these issues and provide leadership and guidance on how it wants to implement the recommendations to normalize the salary scales.
Mr Phumzile Yeko, CETA Executive Manager: Client Services and Projects, replied that CETA was not certificating at the speed that it should. CETA had data management challenges and what has happened in the past. There were also issues around external moderation, it was picked up that there was noncompliance among the learners in the system. The backlog was indicative of work that still needed to be done from both ends – by CETA and the service providers. There were also challenges with the capacity and the number of staff members. Measures have been put in place for the moderation process so that the data of the learners is readily available for certification.
The training was also provided at NQF Level 4 because it is a specialized space. HR was asked to conduct bulk training for staff members. After the struggles with the data, the staff is settling.
CETA has a service provider that administers the discretionary grant process and the bursaries. There are improvements and discussions on efficiency and how CETA can utilize the existing platforms or avenues like the institutions and NSFAS.
On the stipend payments, there are problems with paying on time. One of the biggest problems is that CETA relies on the service providers to submit proof of attendance of the learners. The manual process contributes to the time it takes to make payments.
The ERRP model is part of the special projects which ERRP forms part of. Provinces have been approached and the Offices of the Premiers to assess the spread across the provinces for opportunities. This assists in getting a sense of what programmes are happening on the ground and how long they are going to take. If we want to skill, what are the opportunities? This is where the District Development Model assists CETA.
The Chairperson said that if CETA is allocating funds to organisations, companies and entities to train on government's behalf, CETA must ensure that the training programmes learners receive to respond to the infrastructure demands or trajectory that the country needs. For example, the recent floods in KwaZulu-Natal and Eastern Cape sparked conversations on spatial and town planning. Even with government infrastructure, we must ensure that the skills these young people acquire respond to the needed infrastructure development in the country.
The Committee must be brought into confidence about the allegations that Ms Tumisho Mputhi did not have the requisite skills. If these allegations were true, what was done to rectify this? How did we get to the point of appointing someone who did not possess the requisite skills?
Mr Letsie said certification cannot be stressed enough. When you train people for a particular skill and you do not issue them a certificate, why was so much money spent on training that person? Without the certificate, that person cannot get employment since they do not have the papers to show that they have been trained for that skill. He suggested that the executive team must devise a plan to certify people timeously. The plan must consider those who have graduated and are not certified. The plan must be implementable to ensure that those graduating soon receive their certificates.
On the stipend matter, we are at the point of the fourth industrial revolution and payments were still being made based on manual attendance registers. Skills in the sector must be shared to the advantage of the SETAs through collaborative efforts.
Members know how board appointments are guided by the Act. Members' questions were clear. The board was put under administration because the previous board did not exercise its fiduciary duty. Members do not want to know how they were appointed; they want to know how they failed to exercise a fiduciary duty. These are the same board members who were part of the previous board that failed to execute its fiduciary duty.
Members asked why the five outstanding board members could not be appointed or were not appointed. There must be reasons why those people were not appointed. And why were these specific board members allowed to come back, yet others were not?
Last year, the Committee met with the Services SETA and suggested that due to the challenges in the SETA sector, of having a central bargaining council led by the Department. This will help avoid all HR-related issues and salary disparities. It would have a standardised model of basic requirements for executive appointments. The centrality of the bargaining council will standardize wage increments and ensure negotiations are streamlined across all the SETAs.
Mr Yabo said the response to his questions did not speak to what led to the disparities in pay grades or pay scales. If this is a legacy issue, the successors – the current management and the board – must indicate that these matters were historical and they cannot provide answers at this point. If this is a legacy matter, perhaps AGSA may have picked up on this and raised it as part of its findings in its notes to management. The response given did not speak to the why.
The Chairperson said that in the fourth term, the Committee may request AGSA to provide some clarity on these matters. She asked for the implementation of the Artisan Recognition of Prior Learning (ARPL) by CETA, particularly the status of implementation. Some of the questions by Members would be best responded to in writing. CETA could include details on the certification backlog and its work towards a day-zero for the backlog. CETA must establish that date and revert to the Committee. This will afford the Committee the ability to monitor the work done in getting to that day-zero.
There will be a need for a follow-up session with CETA.
Mr Malusi Shezi, CETA CEO, replied that he understood that before the previous board was dissolved, there were constituencies represented on that board that had raised complaints and had resigned or recalled their nominated members from the board. These were from organized labour. When the previous board dissolved, those board members had already left the board. So these members were not implicated in the failure to execute the fiduciary duty as board members. It is indeed true that certain board members from the previous board that were cited in the forensic report before the Minister now have violated certain regulations and laws. It would have been risky for the Minister to appoint those people because they are compromised, compromising the organisation.
Mr Shezi replied that CETA receives sufficient board nominations; however, they are not compliant with what is stipulated in the Act. The vacancies still exist for the five board members because there were so many applications received from professional bodies for one vacancy. This was the case for employer organisations. Some of them did not have certificates from the Department of Labour and Employment and there must be a certificate confirming such.
The costs associated with the advertisements will be submitted in writing to the Committee.
On the ARPL rates, the new circular became effective from this year and all the new awards will be based on the new circular. So it will be implemented by CETA.
AGSA never raised the salary disparities because CETA would get clean audits in all those years and this matter was not flagged. The Administrator attempted to engage with AGSA about all the matters that may have led to CETA being placed under administration.
On the qualifications of Ms Mputhi, this matter was indeed true. The employee was not new and was within CETA before the administration. It was only the academic qualifications that Ms Mputhi did not meet. Otherwise, she possessed the requisite experience required for the job.
Mr Shezi said he started his role on 1 September 2021 during the administration period. On occupying the CEO role, he noted red flags in certain processes at CETA. He wrote to the Administrator highlighting non-compliance that was red-flagged during his review at the time. Some of these included its procurement process. Most of the procurement was already awarded and he instituted a probity audit to assess the procurement process. This applied to all tenders awarded from 1 April to 30 September 2022. The report was finalised in March 2022 and confirmed various irregularities. In response, by January 2022, he cancelled certain tenders including the security tender which was fraudulently awarded. This led to the board audit committee resolving to assess tenders from 1 October 2021 to 30 April 2022. This was completed and is now in the process of being tabled to management.
Regarding the alleged unqualified appointments at the executive level, there was no substance to those allegations. Candidates are properly and suitably qualified with good experience. Where internal advertisements were made, approvals were obtained from the Administrator.
On the consultants appointed, the skills audit indicated various weaknesses in the capacity and skills in CETA. After the placement through the OD of all the staff in the new organogram, there were still critical vacancies, which necessitated further consultant engagements. No employee has been replaced by consultants in the organisation.
The salary disparity issue was handed over to the board HR remuneration committee to deal with.
Mr Philip Vilakazi, CETA Board Member, said that the board appreciates the Committee in articulating the issues. It is up to this board to sit and ensure that systems are put in place and become a consultative structure to play a clear oversight role to the extent that CETA is not taken to administration again.
Mr Thabo Masombuka, CETA Board Chairperson, in his concluding remarks, said that the board would work towards ensuring that CETA turns the tide and ensure that it does not find itself in a third administration.
The Chairperson thanked CETA for its response. Some of the matters will have to be taken up with the Department and a further discussion with CETA is warranted. The Committee would engage with AGSA in three weeks' time on some of these matters. It is evident that Members were not satisfied with some of the responses, but these responses should also be furnished in writing within seven days. The Minister is to be requested to submit the Administrator’s report. It would also be important for the Committee to be updated once the board is fully composed. The forensic investigation report must also be submitted within seven days.
The Committee will continue its engagements with the CETA board. The Committee will support the board. It is important to note that the Committee is not conducting a red-pen exercise but will support the board to ensure that CETA meets its core mandate.
The meeting was adjourned.
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