merSETA and TETA 2022/23 Annual Reports

Higher Education, Science and Innovation

01 November 2023
Chairperson: Ms J Mananiso (ANC) (Acting) and Ms
Share this page:

Meeting Summary

Manufacturing, Engineering and Related Services Sector Education and Training Authority (MERSETA)

Transport Education and Training Authority

Two SETAs – the Manufacturing, Engineering and Related Services Sector Education and Training Authority (merSETA) and the Transport Education Training Authority (TETA) – were called in to present their 2022/23 Annual Reports as they had received qualified audits from Auditor General South Africa (AGSA) as well as concerns about governance and management.

The TETA CEO was taken by surprise that a Section 14A letter had been issued by the Minister as the Transport SETA had not yet received it. She assured the Director General that the TETA board and executive would meet on that and provide a comprehensive written report.

The Director General was satisfied that the merSETA presentation had noted its CEO suspension. In the absence of the suspended CEO, a proper process has to be followed for the appointment of an acting incumbent. The merSETA board had gone ahead with recommendations of internal candidates that the Department is not satisfied with. They have met and accepted that the Department identify one of the “highly performing CEOs" to be the acting incumbent and assist in the transition.

Meeting report

Ms J Mananiso (ANC) was nominated to be the Acting Chairperson. She introduced the purpose of the meeting, saying that the Committee is taking stock of what the Manufacturing and Engineering SETA and Transport SETA have committed to implement in their skills development programmes and their work as institutions. She raised a concern as the Portfolio Committee finds their audit findings disappointing. TETA and merSETA must take note that the Committee feels there is a lack of commitment and professionalism in the space. She hoped that they tell the Committee and everyone on the platform what it is that they do right and will do better.

However, they note that that both SETAs could have tried to achieve more without any cost implications. This needs everybody to put their hands on deck. They cannot “shy away” from issues of irregularity as they are serious, and we want people to account and there should be consequence management.

Director General opening remarks
Dr Nkosinathi Sishi, DHET Director General, noted the comments from Ms Mananiso. Her comments are suggesting that notwithstanding the reporting framework for annual reports, there is a need for the Department when reporting on the performance of its SETAs to consider issues that impact on performance beyond what is reported. He appreciated this clarity as it assists them to bring other items on board as well. This is essential in turning around the performance of the institutions. There are two specific issues which he wishes to speak on for both the institutions.

Dr Sishi said that the Minister has issued written instructions to TETA, after they received various allegations from the TETA board chairperson that he made against the Accounting Authority. The Minister as the executive authority has looked into those matters. According to the requirements of Section 14A of the Skills Development Act, the Minister has instructed the Accounting Authority to submit a comprehensive report addressing the veracity of these allegations and submit an action plan and turnaround strategy with time frames that indicate how the issues raised will be addressed. This is over and above the mitigation strategies for the Auditor General findings that has led to a qualified audit opinion.

It is important to understand that if the allegations are proven to be true, that TETA could be in contravention of the Public Finance Management Act (PFMA) , the Skills Development Act and the SETA standard constitution, the SETA grant regulations and the King 4 report. As he Department accounting officer, Dr Sishi said that he takes these allegations very seriously. Thus, they are awaiting TETA's response about these matters that the Minister has raised.

They are watching very carefully the TETA presentation today on the approval and veracity of the mitigation strategies. But as she indicated earlier on to him what the measures are that DHET has taken, he wishes to share that DHET had already initiated that and written an instruction to TETA to provide in writing that comprehensive report. Once that report has been given to the Minister and the DHET accounting officer, the Department will then sanction an action plan that will be monitored with clear timeframes to ensure that these matters are addressed.

On merSETA, Dr Sishi said that he is happy that the last slide of the merSETA presentation covers the CEO suspension in which the Minister has already intervened. The internal appointment of acting incumbents must follow process and the DG and the Minister met with the merSETA board to discuss the process that needs to be followed in ensuring that in the absence of the suspended CEO, a proper process is followed for the appointment of an acting incumbent. merSETA has made recommendations on some internal candidates that the DG said they are not satisfied with. Thus, they have taken the decision to identify one of the “highly performing CEOs" to assist in the transition. Once the process is through, they will announce the acting incumbent. In the process, the management is being monitored and assisted by Mr Mabuza Ngubane, Chief Director: DHET Office for SETA Coordination, who is responsible for the coordination of SETAs.

As the DHET accounting officer, Dr Sishi has ensured that the issues that have emanated from the Auditor General's report are embedded in the service level agreement with all SETA CEOs, including these two SETAs. He expects that these signed service level agreements are monitored by the SETA board, but also in the quarterly monitoring and oversight by the Department. He expects quarterly reports that clearly indicate the progress of the SETA. The focus will definitely be the SETAs that the Auditor General has reported as concerning.

TETA 2022/23 Annual Report
Dr Eugenia Kula, TETA Board Chairperson, acknowledged her board in attendance. She said it was her first year as board chairperson and regretted the qualified audit outcome. She handed over to the TETA Executive that is responsible for the work of the SETA.

TETA CEO, Ms Maphefo Anno-Frempong, said she would
cover the 2022/23 performance, progress made in achieving targets and the reasons for those that were not achieved or not completed. The CFO will cover if TETA was able to fight off irregular, fruitless and wasteful expenditure in 2022/23, and if there has been investigation and implementation of consequence management against those who transgressed supply chain management (SCM) policy. He would also present the audit action plan which has time frames to address the audit findings. She would detail the TETA internal control environment based on the AG's recommendations.

Ms Anno-Frempong noted the “ambush” by the DG as TETA has not received a Section 14A letter from the Minister detailing allegations against the CEO or against the board. Had it reached them, TETA would have taken the time to respond in detail. She will talk about the internal control environment, which covers how policies are approved, policy development review and approval and the board committees as detailed by the governance charter. Slide 10 shows in detail the policies that are approved. The control environment covers governance and the oversight structures, governance charter and board evaluation.

Slide 11 shows the internal control environment covering the risk assessment process, policies, governance and people. Clean governance cannot occur outside that framework. The policy review process that occurs in the institution, in line with the approved policy on policy, is such that there are process owners that will draft policies in line with legislative changes to ensure that those policies comply and therefore take it to the relevant board committee to discuss, deliberate, and recommend. Should the board committee be satisfied that the policies are solid and comply, it will submit them to the board.

Slide 12 shows that policies have been delegated to the CEO, but the actual policy review is at an appropriate level done by the relevant board committee. Therefore, any allegation that TETA works outside the approved policy is not correct. The presentation shows some of the policies that were approved by the Finance and HR board committees in 2022/23.

Slide 14 shows further Committees that were approved by the same Finance Committee and the dates that the Committees looked at the policies, including the date that the accounting authority approved those policies. Slide 15 shows the policies approved in detail by the board committees, the date of the meetings and the date that the TETA board approved them. The remuneration policy and the performance management policy are pending the board meeting of 23 November for them to be approved.

Slide 16 and 17 demonstrates the other board committees that reviewed and approved policies and their dates.

Slide 19 to slide 69 shows TETA performance per programme, as requested by the Committee (see document). Programme 1 achieved all 10 targets; Programme 2 achieved 14 targets. They have achieved because there were research studies completed that flowed from the previous year. Slide 26 demonstrates how they have performed in terms of their payout ratio for mandatory grants and developing elementary skills. It is important to reflect under target 2.58 that they spent about17% making sure they do not focus only on elementary skills, but on developing high level skills in the transport sector. Another portion of this is allocated to developing intermediate and high-level skills. Slide 28 deals with lending programmes and projects.

The bulk of the work that TETA does is covered under Programme 3 Training. There has been a little bit of a dip on the number of people doing apprenticeships. TETA did not meet the target there. On its partnership with stakeholders, they find partnerships and then get a target to pay these partnerships, which have performed. On the place-based training, they have achieved all targets set. On implementation of interventions for capacitating their stakeholders, they have achieved all targets as well. They do a lot of career guidance and every year they find themselves exceeding the target. Slide 38 shows their media and publicity events achieved performance targets. Slide 39 met the targets for small and medium enterprises, cooperatives and NGOs. Slide 40 shows support of trade unions and that is where they do their road safety programmes and pandemic awareness programmes. They achieved those as planned.

Slide 41 deals with quality assurance and they achieved their targets, especially in developing new curriculum to ensure alignment to Quality Council for Trades and Occupations (QCTO), coming up with a lot of learning materials for QCTO approved occupational qualifications and being exam-ready for the new occupational qualifications. The targets have been met for the mentorship and coaching programme to mentor candidates as they come in into the workplace. TETA has also met the targets on supporting teachers, colleges of education and training and assisting lecturers to ensure that they are exposed to occupationally directed programmes.

TETA signed a service level agreement (SLA) with the Department on the Annual Performance Plan (APP). The SLA requires them to indicate completions: the people that have entered the programme and to what extent the course has been completed. However, there were people that registered but could not finish their programmes. Thus they had targeted those to be 35 but the target achieved at year end was only 24. This is a general problem that not all learners that register for programmes are able to conclude or pass them, and this brings down the TETA performance.

Of the five leadership programmes that they have, the board leadership development programme could not be reported on due to it is still being undertaken currently.

Slide 49 is about learners that were unemployed and engaged in adult education and training and it targeted hundreds. However, when the programme was finished, not all learners had passed so they were unable to meet that target.

TETA was unable to meet the target for cadetship and candidacy because it was a programme that was not within the control of TETA in terms of quality assurance. There were delays in its moderation by other parties that were implementing the project for TETA.

Slide 51 and 52 demonstrate that the entity met all those targets. TETA traces how the beneficiaries of their programmes end up such as: Do they get a job; does it increase their knowledge; do they get any benefits after the training? The presentation shows that the entity does not just invest without checking if there is a benefit on the investment.

TETA is expected to comply with the District Development Model, and the presentation shows that in the year under review, the entity went to different district development nodes and was able to expose unemployed young people to different opportunities. In 2022/23 they had gone to Limpopo, Free State, North West. In the current year, they had gone to Orange Farm in Gauteng, Northern Cape, and will be going to Mpumalanga soon. They had already gone to the Eastern Cape. This is just to demonstrate how the entity responds to national imperatives in the provinces.

One other programme that is part of the Economic Recovery, Reconstruction and Recovery Plan, is training young, unemployed people to get a learner licence and get a bike licence to be linked to e-commerce businesses and what is called a Last-Mile Delivery Programme. In 2022/23, 1125 learners benefited from this programme and have been given contracts. In the current year, TETA has gone into partnerships and 1200 learners are being trained and exposed to last-mile delivery. They are in the process of finalizing a partnership with the NYDA to work collaboratively to ensure that unemployed young people are exposed to opportunities and get into the world of work.

TETA had eight targets which they did not meet and the variance is reflected in the presentation as well as the reasons those targets were not met. What is the progress towards achieving those targets? and what the entity is doing to close the gap.

The TETA CFO, Mr Nchaupe Maepa, spoke to irregular, fruitless and wasteful expenditure and the audit outcome and audit action plan moving forward. Financial performance was compared. Revenue growth from 2018 to 2023 shows that the income has been growing and TETA has been recovering from the effects of COVID.

For the past five years, TETA spent close to R3 billion on key interventions particularly the discretionary grants. They had a five-year project and a lot of money was spent on learnerships where young people really benefit from the learnership programmes. It also spends a lot of money on apprenticeships and on other items given to young people coming from high school to universities. There are also TETA learners that are place in the employer companies. That is the essence of their interventions.

In terms of financial performance, their skills development levy is the primary source of their income sitting at 1% of total revenue. R50 million comes from investment interest. On expenditure trends, their grants and project expenses are R806 million, which represent 85% of total expenses. Employee costs are R76 million which is a difference of R23 million from 2021/22. Cash and cash equivalents in the balance sheet sit at about R1 billion.

TETA did not have any irregular expenditure in the supply chain space for a couple of years. The only irregular expenditure recorded was R92 million in 2021/22. That represented budget expenditure as they were disbursing money to projects based on their output surplus, but they had to record the expenditure in 2021/22. However, the expenditure was above the 2021/22 budget as they were spending the approved surplus of the previous financial year. Based on the AGSA report for 2020/21, there are areas like performance, contract management, planning, document management and asset management that are clean. Performance indicates that TETA moved from 56% over the past few years to 93% in terms of achieving targets.

TETA has received an unqualified audit for the past 14 years and only in 2022/23 received a qualified audit. The main issue is the financial statements. AGSA indicated that they could not grant some of the information provided by TETA. This was to do with deliverables of work done by training providers but not yet invoiced, meaning the AG could not determine if the commitments figure of R818.5 million is correct. TETA does not have a restatement of the financials currently. A matter of emphasis was also raised on the approval of the retention of surplus funds.

The audit action plan is in place for the qualified audit so that the entity does not find itself in the same situation in 2023/24. It is important to ensure that to the extent that training providers have completed the work, even if not invoiced, the entity should have a simulation of the process to determine the amount that should be in the annual financial statements. They have agreed TETA will have a central place for submission of deliverables and invoices, so that when registers are done, they are able to access all the information provided. It will also annualise the project implementation with training providers. The intention is to ensure that they have a proper timeline aligned to the TETA financial year. This will enable TETA to have an official cut-off and a proper report when they get information from the service providers and predict expenditure. This will help in TETA not having a situation where on 29 March, the service providers would still be delivering a particular service so will only invoice at a later stage. They want to ensure great alignment between the annual work done by the service providers and the entity.

The CFO spoke to the audit findings around performance information and the timelines on the review of the operating manual to strengthen segregation of duties, so strong controls are kept to ensure no repeat of findings.

TETA had started to ensure alignment with stakeholder training providers, so they know what to do when the audit comes. Most of their training providers are SMMEs, and TETA is partnering with them to provide them support especially in governance and capacity building.

merSETA presentation
The merSETA team that presented the Annual Performance Plan (APP) achievements and challenges and Finance Report comprised the Accounting Authority / Board Chairperson, Ms Kate Moloto; Acting CEO, Ms Disa Mpande; Acting COO, Mr Naphtaly Mokgotsane; Acting CFO,
Mr Andrew Venter; and Corporate Services Executive, Mr Rajesh Jock. The presentation included APP Achievements 22/23, Challenges and Mitigation Plans; Finance & Budget Report: Audit Outcomes and Action Plan; Achievement against five-year strategic targets and progress on seven investigations against previous senior management and consequence management.

Mr M Shikwambana (EFF) asked about the absence of the Minister but he was put on mute on a point of order as Mr Shikwambana had only joined the meeting late.

Mr T Letsie (ANC) asked the DG for clarity about the allegations about the TETA CEO that the DG claimed to have received – who sent them and what were these? The TETA CEO claims not to have heard from the Department or the Ministry.

Mr Letsie asked why they were not satisfied with the acting incumbents appointed by the merSETA board. What did the TETA board chairperson mean when she claimed the Minister appointed their own acting CEO. He asked if this is not interference.

Mr Letsie asked the TETA board chairperson about the TETA board motion which recommended that she be removed as chairperson in a meeting held on 24 March 2023. This came after the allegations of interference with management functions such as travelling arrangements for the students’ trip in October 2022; making contact with an executive officer of a certain chamber about the SETA's discretionary grant; and approaching the strategic projects manager to promote the interests of a company called KT Global. He asked her what she has to say on the matter.

Mr Letsie directed some concerns to the DG. The TETA board wrote to the Minister about the TETA board chairperson on 25 March. However, the Minister responded only on 11 August, almost five months later, to say that the matter is being attended to and that he is given an opportunity to the chair to respond to all allegations and a decision will then be taken after this response. Has the Ministry written to her since then? Has there been any response from her about the allegations? How far is the process?

Mr Letsie asked how merSETA spent 72% of the budget but achieved only 29 of its 60 targets (48%). How do they spend more while they have achieved far less? If they wanted to achieve the remaining targets, would they then not have money for it? He asked the merSETA board what they had done about the poor performance. Have they established who is responsible for the poor performance? Is there consequence management for the managers who were overseeing the achievement of these targets? Were the performance bonuses to the staff paid? If so, did the board authorise this? Is it true that there was a forensic investigation on the allegations against the suspended merSETA CEO?

Is it true that the forensic report was sent to the Department and the Minister and since May there has not been any movement on the matter? Are the allegations true that the suspended CEO bought shares worth R6 million through cash payments? Has the source of these funds been investigated? He asked for clarity on the allegations against the COO as well. Is it true that the disciplinary process, by the merSETA, is represented by senior counsel and is paid for by the company embroiled with the COO in the receipt of funds worth about R148 million? He would like concise answers to these questions and asked the Chairperson for an opportunity to ask follow-up questions should this not be the case.

Ms Khakhau (DA) requested an opportunity for the entities in question to return for another meeting after responses have been given because of the magnitude of the allegations. This should be handled the same way and on the same scale as NSFAS issue was handled. She would like to be brief; however, “a lot is wrong”.

She would focus on TETA. How much was spent per province on the expenditure of the projects done? She requested a breakdown of this expenditure and the corresponding project. She wants to establish if there is value for money in the projects and if there is fairness in the allocation and distribution of funds per province and no bias. She was concerned seeing that this is the first qualified audit opinion that TETA has received.

The discrepancies between the AG audit findings and what TETA reported is cause for alarm. This could mean that there has been deliberate miscommunication on the targets and/or laziness. Having the AG not able to report on actual statements but on an estimation because what is reported by the entity differs from their indicators is signalling a problem. This shows a problem with the reporting channel as well.

Ms Khakhau said that the material misstatements, in the same spirit as the material findings, there is concern that either there is general laziness or a deliberate attempt to cover something up, and this must be cleared up by TETA.

Ms Khakhau said that TETA need to deal with the internal control deficiencies that exist. They believe that they have adequate control measures and have communicated as such. However, according to the AG, the TETA management is unable to enforce these and there has been a deficiency that has contributed to the subsequent errors is the financial statements. The AG believes that management did not establish efficient oversight control for the performance and financial reporting processes. Thus, how is it then that the entity can find confidence in what they are reporting on? She expressed interest in the reasons for the previous CFO’s resignation, since this person was responsible for finances in the previous financial year. The Committee should be able to ask him to come and account for his tenure as CFO.

Ms Khakhau asked that they be told about the asset investigation. How far is the investigation? What do we know so far about the investigation? TETA has spent R943.7 million, against total revenue of R920.4 million for the 2022/23. Thus, they incurred a three percent deficit of R23.3 million. However, “the same TETA was able to spend close to R10 million on bonuses”. She is trying to understand the logic behind this. Why did this happen? Does it make sense? What was the motivation, given the state of our economy and the financial climate of the books?

Ms Khakhau asked for the reasons for the underperformance of unemployed learner apprenticeships. What was the exact nature of challenges faced by stakeholders? She asked that these be listed clearly so the Committee can track where to fix. She asked for a breakdown of the specific TVETs and tripartite partnerships that were formed. She asked for a breakdown of the remuneration within TETA as a follow up to her question about bonuses as the CEO “earned more than the President” with an increment of 20% of his salary. What is the logic of benchmarking for how CEOs of entities are remunerated?

Mr M Shikwambana (EFF) said he supported Ms Khakhau’s request for TETA to be brought back, given the number of issues that have arisen in the entity. Referencing the Annual Report, Mr Shikwambana asked who the executives are as reported in this document. How much are the costs for the formal qualifications of the board members? Can that be compared to the actual spend on employees who do the day-to-day work? How frequently do board members individually embark on international travel – number of trips in 2022/23, the costs and spend benefits?

Mr Shikwambana reminded the Committee that he was “harshly attacked” when he asked about the absence of the Minister. He wanted to enquire about the Minister’s knowledge about the happenings in the Department. He wants to know if the Minister appointed the board members to become full-time students at TETA at the expense of actual beneficiaries like the employees and unemployed people. However, in the absence of the Minister, he hopes that the DG will be able to give clarification. He reiterated that TETA should be brought back as there seems to be a lot of problems there and people seem to be unfairly targeted when they are doing good and punished for doing the right thing. The questions they have for TETA will not be exhausted in this meeting due to time constraints.

Ms C King (DA) asked the DG for an indication, in writing, of the document that was handed to the Minister by the TETA board chairperson. What are the issues that she is concerned about? Has the feedback been given to TETA?

On the ICT challenges and the different interfaces of the various entities within DHET, which resulted in double dipping, she asked what discussions DHET, NSFAS, Funza Lushaka and Home Affairs have had to ensure a system that can easily interface and ensure an end to double dipping. There was previously a suggestion, in accordance with the White Paper, that TETA funding should be taken up by NSFAS. However, due to how NSFAS is currently run, this would not be a viable option. The Department must speak to the measures to ensure that the recurring problems stop, and some funds are opened for the ‘missing middle’ to also benefit since they cannot benefit from NSFAS funding.

She directed the questions to merSETA, saying that there is a lack of oversight measures in place and that the organization does not necessarily adhere to legal and regulatory requirements. It is clear that there is a lack of internal control measures to ensure proper project management, monitoring and evaluation. The Auditor General has been raising these concerns that the projects are not being handled properly. Are these units present to ensure proper project management systems? They do not want a qualified audit in 2023/24.

Ms King noted that the reported achieved targets were not in line with what the AG reported. TETA Learning Programme 3 shows actual achievement of 7, which the AG disagreed with.
On the number of partnerships implemented with TVET colleges, the target was two and merSETA reported to have achieved 3. However, it was found that the actual achievement was zero, after seven years. The Auditor General could not find how reporting in line with the actual achievements. Why does it look as if merSETA was deliberately trying to mislead the Auditor General with its outcome achievements? This also raised a concern about the reported 92% achievement. Was this not inflated?

She asked for an explanation on the increment in travel and subsistence expenditure to R2.7 million while R1.4 million was spent in 2021/22. How many international trips did they embark on? How many people do they take on these international trips? Money spend on travelling must make sense.

Ms King asked how far the Department and National Treasury are on the discussion about the TETA retention of R977m surplus funds. She referenced page 114 of the Annual Report that contained the AGSA audit report. She asked supply chain management questions about R4.1 million given to a sole source and how permission was obtained for one single source. She asked the reason for the increase in licences from 250 to 400 employees for R496 482.60 and the number of staff currently in the employ of TETA.

merSETA highlighted the forensic investigations into the senior manager, the CEO, the client relationship manager in Mpumalanga and the Accounting Authority member. What are the conclusion dates for these forensic investigations? This is because they have realised that merSETA is planning to have another SIU investigation after the CEO's investigation is completed. She reiterated her wish to get a time frame of this forensic investigation, together with the date and scope of the SIU investigation.

It is concerning that merSETA is one of the “top contenders when it comes to irregular, fruitless and wasteful expenditure”. The Auditor General indicated concern because there are no disciplinary or criminal procedural steps taken to retrieve these funds. What has been done to recoup these funds, and what formal investigations have been initiated as a verbal warning to five employees does not seem effective?

Lastly, there was an issue with the board members being appointed at various SETAs. She asked DHET to present the measures put in place to resolve this and rectify these appointments. This is a serious concern because the Auditor General stated that some of them that do not meet the threshold to be a board member.

Ms D Sibiya (ANC) said that in merSETA, with regards to unemployed learners on occupational directed programmes, targets had not been met. How is it dealing with these challenges? Why did the learners not complete the studies? The AG reported R1.7 billion of irregular expenditure and merSETA has been found to be one of the top contributors to these irregularities. How does it respond to these findings?

Mr B Yabo (ANC) said that “the common thread with the majority of SETAs is that they struggle with governance, internal controls and compliance”. They struggle with basics such as keeping financial and performance records and producing such records at the request of the Auditor General South Africa. The lack of meeting such basics is commonplace. There are no board committees that deal with audit, risk and compliance. He expressed concern that the boards are made of incompetent people who do not know their purpose. It is a very worrisome development. From observation, the SETAs look like warzones as well. There seem to be “turf wars” where the CEO is fighting with the chairperson or together, they are fighting the board.

These SETAs have received the business deal to develop skills and ensure thatwe have a cohort of a workforce that is skilled and able to competently prosecute themselves within the world of work. A workforce thatis prepared for the future world of work. Yet, what is seen instead is the “grandstanding against one another”, fighting for tariffs and failing at basics. He made an example of the transport SETA, noting that they have overspent by three percent on their budget. They delved into the discretionary grant reserve. What their annual report doesn't see, though, is how much that reserve is, and if they have gone through necessary legal procedures to go into that reserve. The additional three percent that they have spent is usually used as a shortfall cover.

While there is an increase beyond budget in its expenditure, why did the programme that benefits end users get a reduction in spending? Where did the money go? Out of the four programmes, which programme benefited from this?

He also expressed concern at the increase in travel and subsistence figures. He asked that they get an itinerary of this travel and its purpose. This is not limited to TETA but also to merSETA as well because the Committee would like to see the benefit of the travel that is costing the state so much money as these are public funds. The abuse of public funding must be condemned in all its forms.

Mr Yabo said that there tends to be over reliance on consultants and service providers. Spending on general expenses was R60.9 million. Of that R60.9 million, R20.1 million was for consultants and service provider fees. What is the reason for the increase in spending on consultants and service providers? What could have caused the increase of R4 million? What services were being provided by these consultants and providers? Is there even a contractual obligation for these consultants or service providers to transfer skills to TETA staff? If there is no contractual obligation, why not? Why is the SETA not building in-house capacity? This led to him to the unfilled vacancies. Why are the vacancies unfilled when we are experiencing some of the highest levels of unemployment in our country? Well-funded posts are not filled. What is the issue? Is it a matter of process, compliance, lack of capacity or space? He urged them to fill these vacancies.

He wished to applaud that they did not incur irregular and fruitless and wasteful expenditure. However, AGSA gave a qualified audit as TETA was unable to substantiate their performance with commensurate evidence. When AGSA gave them a management letter, asking their response to these findings, they were still unable to produce such evidence. Most of the targets theypride themselves on achieving at 100% or 90%, they failed to substantiate. This begs the question if these targets were even achieved or a figment of their own imagination. It is valid to suspect that the targets have not been achieved if the evidence is not produced. Entities must be able to produce evidence of the targets they claim to have achieved.

In Programme 3, the target to have 25 TVET or CET lecturers exposed to industry was not met. There was unavailability of places to host the lecturers. What mitigating strategies are in place to ensure that this does not reoccur? Does TETA not have a memorandum of understanding to ensure that these lecturers are able to be placed in the industry?

On merSETA, he said that it is worrisome that an entity can have a budget of R1.8 billion and have a surplus of over R500 million at the end of the year under review? How does merSETA underspend its own expenditure forecast by so much? Are there no programmes, projects, or beneficiaries who required the intervention of such funds? Is there a problem with Programme 2? It is “preposterous” that amount of money can be returned as “surplus”. This must not be in the norm.

He agreed that the entity is a “Hollywood” with all its acting positions, saying that it seems more like the “Gaza strip”. The AG identified material misstatements in the annual performance report.These material misstatements were in the reported performance information of Programme 3. Management did not correct all the misstatements. Programme 3 is a problem as AGSA reported material findings. Why did management fail to correct the misstatements raised by AGSA? There is a lot he would like to ask merSETA, but many questions have been raised. However, he reiterated that it is worrisome that it can have a surplus of over half a billion rands with the kind of need we have in this country. It is unforgivable.

Mr K Pillay (DA) noted that he has been covered by many of the questions by other Committee members. It looks like a very bleak picture and it is challenging to know that where important services should be provided, they are not. There is poor governance and cases where money is not spent or money is overspent on things that are not important. What is the consequence management that both SETAs are going to take on the targets they are not achieving or money not spent? What is their plan to expand in other provinces?

On the merSETA, he said that other Committee members have covered him on the irregular expenditure. However, he would like to raise his concerns on non-compliance and other matters raised by the AG. How far is the process for correcting that? What is in place to ensure that in the next quarter, they will be able to achieve?

Acting Chairperson, Ms Mananiso, said that she was covered by Ms Khakhau, Ms King and Mr Letsie. However, she would like to know if there is a plan to build in-house capacity in TETA instead of having management consultancies because “we can't forever be paying people for doing things that we have to do as institutions”, especially because there are capable people. These entities need to be called back and a day dedicated to them to delve deep into all the investigations and allegations, and the Committee make recommendations. She agrees that they identify all the issues, as they are similar, and deal with them in a professional manner.

She wanted clarity on the discussions with National Treasury on surplus funding from both entities. She disagreed with the merSETA audit action plan timeframe. Drawing from her experience in project management, assigning only one month signals lack of commitment. Thus, she asked for a proper programme, in writing, for the action plan with specific time frames, for smooth accounting and oversight in the next meeting.

She requested a debrief on the TETA investigation on asset theft that occurred in the premises. How far is the consequence management process for those responsible for proper management of assets? On the legal and regulatory requirements, she urged both SETAs to “get their houses in order”, especially internal audit. Before the AGSA audit, the internal auditor should pick up all the challenges. However, the reasons for deviation show the need to ensure that the internal audit office is working on this.

The findings of PMFA non-compliance is a challenge. In future engagements, there must not be a repeat of the current conversation as if we do not understand how government works. There should come a time where there does not have to be a conversation on poor governance, poor management, and lack of leadership. If they keep dealing with the same issues in the Annual Reports, she is concerned if the Committee is achieving oversight at all.

Moving forward, those who do not meet performance targets should not get bonuses because it does not make sense to get a bonus just to “sit behind the desk”. She urged cadres to do what they are deployed to do because this failure reflects badly on them as politicians.

She asked for confirmation from both entities that there are no certification backlogs. This commitment is important if they are serious about the responsibility to train and educate.

The Acting Chairperson asked the AGSA representatives if there was anything AGSA would like to say. However, they did not have comments.

Mr Yabo pointed to the repetition of beneficiaries across multiple SETAs. There is a serious need across government to consider a single database that is run by government central to consolidate all information on every citizen in one space. This is to avoid government overspending on specific individuals due to fragmented data. There are probably over 1000 databases in government alone. The repetition of beneficiaries who benefit across multiple SETAs was picked up by AGSA.

Ms N Mkhatshwa (ANC), Committee Chairperson, took over from the Acting Chairperson. She appreciated the presentations and the comments, recommendations and questions by Members. The Committee response about NSFAS had been sent the day before and she would like the DG to acknowledge what had been sent.

Ms Mkhatshwa noted that there is an overall concern by Members on the state of both entities. The qualified audit outcomes reveal great concerns around governance and management. Listening to the DG and the TETA leadership, she is not confident that as a Member of Parliament sitting in this Committee that the accountability ecosystem is fully functional. She is not convinced of the synergy between department and the board and the management of these entities.

There seems to be a juncture in the accountability ecosystem as these entities do not account to Parliament on a quarter-to-quarter basis. It is important for the Committee to get clarity from the DG on the communication between the department, the TETA board and board chairperson or board secretary as well as the CEO. Listening to the articulations by DG and CEO, she tried to make a link; however, it does not connect.

There are many concerns raised on income, expenditure and performance. Looking at TETA, she is quite concerned about target setting and planning. She asked for further information in writing due to time constraints about the overachievement in slide 32 on unemployed learners and skills programme. The use of the word “however” in the slide is as if they are saying while they overachieved, they also underachieved. She wants to know what informs how particular targets are set. For example, in Slide 5 the set target was 15 for learners absorbed into employment, then there was an overachievement. She hoped for an explanation for the massive overachievement. The targets set on media information sessions had a massive overachievement as the initial target was six. What informed the target of six? Understanding how initial targets are set will enable the Committee to assist instead of question the overachievement. For example, achieving 490 instead of the 100 set is a lot. She saw the reasoning aligning to government priorities but this is an indication of poor planning.

A lot of concern has been raised by Members on vacancies and the amount of funds spent on consultants and if this can be performed in-house as opposed to being done by consultants. Concern was also raised about travel and subsistence allowances with the AG having the greatest concern as a potential for misuse of funds and not having as great an impact as it could have with its resources due to lack of coordination. The Department annual performance plan this year was quite bold about the importance of coordination, and this is a crisis seen across its entities.

It is seen with NSFAS and its relationship with institutions of higher learning. The back and forth between universities and TVET colleges with NSFAS about if allowances have been sent, if a student is funded, if a student is not accepted or accounted for. This was manifested negatively in the meeting a couple of days ago between NSFAS and the service providers. It is the struggle about data with service providers saying they cannot fund students because NSFAS has not sent that information to them. This leads to double dipping and sometimes it almost makes the beneficiary seem unethical.

DHET is also at fault because they do not have systems in place to ensure that government's intention to direct such a great amount of money towards education will not have an impact because of poor systems. DHET has made a commitment in the APP to strengthen the coordination of data and targets within the department with the guidance of the District Development Model. It has become very evident that this lack puts the efforts to ensure that no young people are not in employment, education or training, on the back foot.

Double dipping is something they need to investigate, but more importantly, they need to work towards strengthening the coordination of the resources they have and the efforts of the sector at large. It is a great concern not being able to account for some beneficiaries and if they really exist; not being able to provide the evidence or have proper record keeping in place. The AG raised suspicion that there are beneficiaries above the age limit and bogus ID numbers in the system. This delegitimizes all the work that they claim to be doing. It looks like fraud. Thus it is important to improve on governance and management and Members have spoken extensively about.

In closing, she acknowledged merSETA for caring for students coordinating efforts with DHET and NSFAS towards ensuring that students are funded and clearing student debt. These are some of the matters that are concerning the sector which are hopefully covered within that newest form of the comprehensive student funding model report. The President had advised that it ought to go back for greater consultation. She hopes it will get to a point soon when they can now engage with that funding model report.

She requested that they be sent the updated detailed audit action plan in the next two weeks as they will not be able to interact with these entities this year as there are several critical matters that the Committee needs to look into for the rest of the 2023 programme. However, the Committee must be assured that the two SETAs do not find themselves with a similar audit outcome and performance.

The Chairperson suggested that they agree that there will be a need for the Committee to interact with both entities in the first term of 2024, hoping that they would have made effort, together with the Department, to stabilize the leadership at merSETA and deal with governance and management issues at TETA. She hopes for an update in the next term on the efforts made in implementing the AG recommendations and the audit action plan. All written responses should be sent within 14 days.

Director General response
Dr Sishi acknowledged and appreciated the Chairperson's comments that the DG had made strong commitments in the APP around coordination and the development of an integrated system to deal with the problems of uncoordinated data and some of the broader issues raised by the Auditor General. He appreciated all the comments by Committee members providing guidance on how to deal with issues in the team.

The appointment of a SETA CEO is provided for in the Skills Development Act. Section 9 of the Act provides the framework and uniform policy on the recruitment and selection of CEOs to enable SETAs and their accounting authorities to make recommendations to the Minister. Section 14 empowers the Minister to prescribe limits to the administration costs for the salary bands within which CEOs must be remunerated and the regulations for the conditions, service and the appointment of CEOs of SETAs were published in Gazette 347/20 in November 2011. The Minister is responsible for the appointment of the SETA CEO but the trend that has been noted is the appointment of acting CEOs were being done by the SETA without the consultation of the Minister.

However, the CEO appointment at merSETA is under circumstances when the CEO is indisposed for a short period, where acting incumbents must be appointed. Under these circumstances, the Act does not provide for an acting incumbent. The appointment of an acting CEO in a SETA is based on directives that the Minister published on 18 March 2017.

Dr Sishi said that the matter has been discussed between the Minister and SETA chairpersons and CEOs and he cited the meeting held on 9 June 2017. This did not solve the problem as it continues that when the CEO was not available for a shorter period, the directives indicate that in cases where the CEO position is not vacant but the incumbent is not on duty for a shorter period of time, the power to appoint the acting CEO is delegated to the Accounting Authorities for approval. However, should this not just be for a short time, the directive still suggests that the Accounting Authority make recommendations to the Minister to appoint the CEO in accordance with the law.

This is very clear. As the merSETA accounting authority had already gone ahead to identify acting incumbents, the Department met recently with the accounting authority and these matters were discussed. They were able to resolve that with the insistence that merSETA follows the ministerial directives. This is the guidance that was provided, and it can be provided to the Members.

Dr Sishi said that he heard the CEO using strong words, and he expects, regardless of how they might have differing views, they still recognize the decorum of this platform. It is too strong to speak of anyone being "ambushed".

Committee members requested dates. On 11 August 2023, Minister Nzimande wrote to Dr Eugenia Kula, TETA chairperson, as follows:

“In this particular correspondence, the Minister has acknowledged receipt of a letter which was dated the 25th of March 2023. A letter which was from the accounting authority making allegations against the chairperson. And in this regard, the letter was accompanied by the investigation report, with findings and recommendations and evidence that substantiated those allegations.”

Dr Sishi said that this is what he had said earlier, albeit not having provided the dates. However, when he referred to that letter, he was responding to the request by the then Acting Committee Chairperson who asked him to indicate in clear terms what the measures are being taken to deal with the governance matters, some of which are in the Auditor General's report.

Dr Sishi said that as the Department accounting officer, notwithstanding the correspondence by the Minister, he was concerned about the manner in which the Auditor General report was dealt with. Ordinarily, there are mechanisms that the Auditor General makes available to accounting officers that if they are unsatisfied with the reports, they are elevated to higher levels at the Office of the Auditor General. This is well documented and well known and he assumes that this is understood by TETA officials. However, when you elevate these and challenge the Auditor General, some courtesy to one's board is expected. Elevating protests and challenging the AG can be done, but if this is done without going through the board, this sends a message to him as an accounting officer that there could be serious communication problems. The Auditor General’s opinion affects the entire organization. Given how he has had to deal with NSFAS non-cooperation with the Auditor General, he has no tolerance for lack of cooperation with the Auditor General. He insists that accounting officers follow due process and elevate those issues within the given platforms.

Dr Sishi said that he had shared today in confidence about the internal process of the Department in dealing with matters that have been raised. He further indicated that he has also prepared an approve where the Minister expresses concern about further issues that he is currently not at liberty to get into, except questions that have been asked and he must make a reference to those only that the Auditor General have raised. These have been communicated by Auditor General South Africa to the TETA chief executive authority dated 27 October 2023.

In that correspondence, the AG referred to a letter dated 19 October 2023 on the escalation of the dispute on the audit outcome. The Auditor General cited the discussion of 31 May 2023, “TETA submitted annual financial statements to the Auditor General and was given an opportunity by the audit team for an adjustment to be processed to correct the misstatements in the financial statements. This needed to be done after the modification of the root cause and all errors. TETA then proposed an adjustment of R99 million, which was subject to an audit process, resulting in further misstatements being identified by the AG. Therefore the Auditor General concurred with the audit team that the R99 million adjustment could not be accepted as it was still misstated.”

He is only speaking of that because they are in the Auditor General’s report. However, the other matters not in the audit report that emanate from the submission of a dossier to the Minister has not been cited because there is a process in the Department for that. This process has gone through him and he has approved for the Minister to take it forward to the SETA. All of this, however, must be understood in reference to his response to what the Acting Chairperson had asked him about what the Department is doing about the cited poor governance and those issues outside of the audit reporting framework that the Portfolio Committee is concerned with.

In closing, Dr Sishi said that he trusts that his response is clear. He is also prepared to provide copies of the letters sent, with the understanding that some of the matters are sensitive and have to wait for their internal processes to be finalized for them to be given to the incumbents that must then respond. If the accounting officer had raised the issue, it is an ambush. Unfortunately as accounting officer, one must account fully to the Portfolio Committee to one's best knowledge and ability and there is no intention to put anyone in a bad light. He assured the Committee that he will ensure that TETA accounts fully and there is “no fear or favour” to anybody.

Chairperson's comments to Director General
The Chairperson suggested that the DG meets urgently with the TETA Chairperson and CEO, guided by the Act and the Minister. Without undermining what had already been said, the best way to resolve the “back and forth” is through such a meeting and that there be an outcome that can be shared with the Committee. She commented that there are many letters that have gone back and forth and that there is not clarity. Hence, she recommends that they decide what they are going to do moving forward.

She emphasised that this is a Committee recommendation and not an instruction because they were told not to instruct. They recommend that the meeting be held within the next four weeks. At the end of November, there needs to be consensus, given the concerns raised by the Minister and the various allegations, about the state of governance and management at TETA. The clarification and outcome on TETA governance and management must then communicated to the Committee by the end of November.

TETA Board Chairperson response
Dr Eugenia Kula, TETA Board Chairperson, said that the request for a response to be provided to the Committee within two weeks is a fair one. She asked for a recording of the Committee meeting to help with this. Protocol demands that the Department receives the document first which TETA has done.

Dr Kula explained that in sorting out the audit findings, before there had been a “stop gap measure” in place. However, they now have a fully appointed internal audit service provider that will assist with the audit action plan so there is comfort in that.

They accept that they should have a meeting with the DG because already there are those members who are talking about taking each other to court. It is a waste of resources to have government bodies taking each other to court when they can sit and talk, hence they appealed to the minister to intervene. That is how it works.

It is unfortunate that the Committee calls in the entities only when there is an adverse audit opinion. The audit works on figures, numbers, finances and performance. If they make it a culture that people come and account, everyone will see where the funds are going instead of calling them only when there is a problem. This is her appeal as an ordinary citizen generally. At the end of the day, they all want what is best for South Africa. They want the best for the unemployed, skilled or unskilled, their families and other citizens as servants of the nation.

She will not deal with the issue of an ambush as it is not necessary for the platform. This will be done privately with the DG because already today she had received something from the AG, addressed to the CEO, and she was not aware that was written to them.

TETA CEO response
Ms Anno-Frempong confirmed that TETA does not have a certification backlog. On target setting, where it appears that TETA sets their targets too low while having performed in some instances far above the target, there are a few reasons for this. She gave an example of the target that would be set for the number of companies who would submit their Workplace Skills Plan (WSP) and Annual Training Report (ATR). However, the companies would need more than what has been planned. This would make it look like under-targeting.

Similarly, SMMEs in the sector are quite vast and they will target a certain number and then they will find that there are a lot more that have applied than what they have targeted for. This is sometimes due to stakeholder engagement or capacity building by their different operating units. They engage with stakeholders to familiarise them on how to comply with the skills development provisions. It is not always that exceeded targets are due to poor targeting or targets being set far too low.

The reason for the spike in ICT expenditure is TETA has appointed service providers to develop and implement an ICT system for a Management Information System (MIS) as well as for ERP. However, in changing over to a new service provider, they requested approval through Treasury to allow the outgoing service provider to continue for about 15 months to allow for a seamless transition. This caused the spike in expenditure.

On building in-house capacity, they got approval from the board to have an ICT unit within TETA for the systems that have been developed by the service provider to start implementing those systems internally.

On expansion to other provinces, she confirmed that because of budget constraints and the 10.5% cap on levy income to be used for administration expenditure, TETA has had to work with provinces through the Department of Transport, and in some instances, TVET colleges. Currently, they have five provincial offices but their rollout demonstrated that they are still able to cover all the provinces. The budgetary constraints have made them come up with ways to deal with provinces without TETA offices by working with their partners.

In Programme 3, where they were not able to meet the target of exposing TVETs lecturers to the marketplace, this was because regardless of agreements for this to be rolled out, they were not able to secure workplaces to host lecturers. However, she is happy to report that in the current year, they are closing that gap to ensure that those CET and TVET lecturers are exposed to the industry.

On stolen assets, laptops to be precise, she confirmed that a few laptops were stolen. It was reported to SAPS. They do have a security guard that works on the premises, who had to be guarding when that happened. Consequence management has been applied to see where the gaps are in the service provision by the service provider, but also with the assets. Their building has access boom gates and cameras that help with monitoring the activity around the building. However, due to funds, they could not implement additional measures.

The Department put TETA under very strict measure to ensure that we implement cost cutting measures. One of these is to identify where they can utilize internal capacity and allow staff members in some instances to act in two positions while not affecting their performance and service delivery so that they stick within the 10.5% where possible.

Travel expenditure has gone up because they are not performing on a hybrid model but are 100% in the office Monday through Friday. Their staff are monitoring and evaluating projects implemented by approximately 851 service providers.The spike from the previous year of about R1.4 million is not due to Subsistence and Travelling Allowance (S&T) and international travel.

They will provide all the documents that need to be provided to bring the Committee to confidence about the governance of the organisation.

In closing, the TETA CEO would like to put it on record that when she spoke about an ambush, it was not in any way intended meant to attack anyone and she apologised that it looked that way. She was completely unaware of a 27 October letter about some sort of issues that TETA has. Her concern was about coming to Parliament and responding to a letter that they do not know about. However, that Section 14A letter will ultimately reach their offices and they will respond.

She would like to put it on record that as much as the DG feels that she should meet with him and the board chairperson, she believes that the matter that the board and the chairperson have is a matter that she cannot meet without meeting with the board. Thus, she would like to ask that the TETA board and board chairperson and the TETA CEO and other executives be given an opportunity to engage with the correspondence from the Department, and even have the follow up meeting should that meeting be necessary, so that there are no misunderstandings.

There is one letter that the DG read, which is a letter from the Auditor General about her taking the option to escalate on audit matters that were of concern. That letter just came into her inbox during the meeting while she was presenting, and that escalation is within her responsibility to have done.

TETA management has written down the questions and will respond and provide the necessary documentation both to the Department and the Portfolio Committee.

The Department requested TETA share its presentation with it before coming with it to the Committee so that if there were any items left out, she hoped that in the spirit of cooperative governance, TETA senior management would have been given the opportunity to engage with the Department. Therefore, it came as a complete surprise that it looked as if they had left something out; hence her response. It is never the intention to come to Parliament and withhold information and present things that are not accurate. TETA holds our public accountability quite seriously. She asked the DG to accept her apology as it came from a place of complete surprise as she did not know there was such a communication.

Chairperson's comments on TETA
The Chairperson said that there is cause for concern at TETA. She admitted to thinking that the accountability ecosystem there is not on par, which is why she had previously said that it would be preferable that TETA not engage on the matter of the communication between the Minister and DG and themselves. They are here to listen but she had paved the way for this and colleagues need to meet. Communication on the allegations posed to the TETA chairperson and CEO and the resolutions on that need to be communicated to the Committee within a month. By the end of November, the Committee would like to have clear communication from the Ministry on the state of TETA governance and management.

merSETA Board Chairperson response
Ms Kate Moloto, merSETA Board Chairperson, responded to the “Hollywood scenario” that merSETA is alleged to have saying that this is something completely outside of their control as it is occasioned by the suspensions and the disciplinary process that is ongoing. We are unable to fill post when someone is suspended and the disciplinary process is still ongoing. They have, however, redoubled efforts, especially in the past three months, where the Accounting Authority (AA) now gets fortnightly reports on the disciplinary hearing process because there are matters where they believe staff members were unduly delaying the process. However, they must just wait it out and fast track it as best they can.

She agreed that the low performance is due to this, considering that they had to suspend a senior manager in a crucial portfolio. The COO and the CEO, in the space of about eight months, and a senior manager resigned. The COO and CEO are still undergoing their disciplinary enquiries. This indeed meant that merSETA performance gets that much lower. She confirmed that all the projects that were suspended have been referred to court to declare them invalid and it immediately suspended all payments to them.The intention is to recover all the monies as soon as a court declaration is received.

There is an allegation that the CEO purchased shares for cash and questions have been raised on how this can be afforded. It has come up with the AA and it has asked to fast track the intention they already had of conducting lifestyle audits of staff members. When the AA decided on the lifestyle audit, there was no concern on the horizon. All these matters came to the fore in about April 2022, and then it was “one after the other”, and it is not only the senior executives that have been implicated but also juniors that were given unlawful instructions.

Ms Moloto said she is happy to report that they have concluded all the forensic audits flowing from matters raised in 2022. The final forensic report dealing with the CEO was concluded end of May. The charges have been given to the CEO and there has already been a first sitting of the CEO disciplinary inquiry on the 26th. They have given the Minister a copy of the charges although the terms and conditions of employment of the CEO do not contain anything that the Minister is expected to do. The board must see through the inquiry and then consult the minister when there is censure, especially if it is a dismissal. They have kept the Minister informed on the progress and are hoping to get through the process quickly because they had previously identified that the instructions to the external initiators and chairpersons of the disciplinary hearings were not tight enough. They are trying hard to close all loopholes.

On what the board has done about the low performance, she said she appreciated that the care of the Committee did note the effort that they went into to combat student debt by targeting the missing middle and to give a lump sum to NSFAS when it became clear that they are not going to use up all the money. She said thatthey have been able to hold onto all the money that they have because ofsufficient commitment and the National Treasury has allowed them to, so they are not returning money. There are many allegations, but she assured the Committee that they have followed up on all of them.

There is one letter that is still outstanding and that is about conflict of interest of employees. She said this is because that report was given to them by the AG beginning of August. The service providers are already secured to do the probity checks on those that have been reviewed by the AG. This review is called a probity check andis conducted on the AA members as well. She clarified that there is only one AA member that was alleged to not havehandled their conflict of interest. In respect to thismember, there has been no money that was that was advanced to the involved company. They will know when the probity checks are concluded and that they are prevailing on the service providers to conclude that part of the probity by mid-November.

There are two former board members that were also affected by the forensic investigation of the CEO, and those probity checks are also due by middle of November. Mostly, these relate to money paid to these employer entities which are entitled to funding from merSETA. The probity will thus confirm if everything was done in accordance with the proper project management. One of the major lessons learned from the AG findings is the need to strengthen project management, especially liaison collaboration between finance and operations. The rest of the outstanding probity checks have a deadline around 15 December. They are ensuring that by financial year end, all these matters must be adhered to and they can hopefully undergo the audit without this hanging over them.

On irregular and wasteful expenditure, the majority of this is related to the investigations. However, there is also a very large sum of R1.2 billion due to the incorrect signing of a Memorandum of Agreement that was signed by the COO instead of the CEO. They conducted checks and have concluded that the MOA had value so there was no money lost. However, the correct procedure was not followed by the two individuals and this is one of the charges against the CEO. She is not aware of exorbitant travel and will ask the CFO to confirm that.

On failure to correct the material misstatements, this is not directly their choice if the AG finds a misstatement too late into the audit, and they cannot keep the audit open, then the entity is basically not allowed to correct that misstatement. They would have liked to correct it; however, due to the regulated process, once a certain point is reached, further corrections cannot be made. She agreed that the surplus is indeed too high, but they did their best to ensure that they put the money that was for the cancelled projects to good use.

merSETA CEO response
On the point of non-performance, the CEO wanted to reassure the Committee that the management team present, is the management team that has been acting since all these irregularities were confirmed. For all the initiatives put in place, they had only three months to implement as they all started acting around November 2022. With the efforts put in, they moved the performance of the SETA in 2022/23 as they had performed only 26% of the targets with the full time CEO present. In her opinion, the acting management team is the one that has rewritten how SETAs should operate and how they can respond to the challenges facing South Africa, including unemployment. The board chairperson has already spoken about how merSETA intervened on the NSFAS student debt and other initiatives such as building solar technician skills. They have responded to the energy crisis in manufacturing. It is a pity that the numbers do not show, but they are hoping that in 2023/24, they will have time to collect the data to record the achievements.

She thanked her team, saying that regardless of the board not being happy with the appointments, the team put in the effort to change the office and the output of the SETA space to ensure that SETAs are respected in South Africa. She echoed the merSETA board chairperson in that none of those contracts were irregular, but the issue was around the wrong signatures.

There are action plans in place on the unemployed learners programme and there was a request by the Committee to forward a proper action plan. As part of that, merSETA will report to the Committee on how they plan to intervene on the unemployed targets.

The travel expenditure is affected by the new project management office which is for the first time due to the contracts entered into in the last quarter of the year. The project management office is to ensure that these projects are properly managed. One of the reasons for it seeming as though they were underachieving on targets was because of lack of management in their projects. Hence, the board insisted that they implement the project management office. Hopefully, they will come back in the next financial year to report on progress and better performance.

Concluding note from Chairperson
The Chairperson said it will be important that the entities submit to the Committee in writing, on the funds used on travel. There will be a need for a follow-up meeting with both SETAs given the concerns raised by Members where they hope to be brought into confidence on the work being done to ensure that 2023/24 does not receive similar audit outcome and that they are able to achieve their mandate.

It will be important that the SETAs sharpen their audit action plans. They must reflect on their planning by constantly checking with the Department to see how they can better coordinate. She urged them to reflect on the AG observations and let that really shape their audit action plans. She asked them to be very clear in answering the questions raised and show how in they are going to address the concerns in their audit action plan. The Committee has made recommendations to TETA on trying to find some sort of stability for the concerns raised by the Ministry and the Department on the leadership, governance and management of TETA, and they have until the end of November to return with a report on that.

The Chairperson noted the reasoning given on merSETA and the acting position. It will be important to bring the Committee into confidence on the investigations and the probe taking place to stabilise its leadership from a managerial perspective. She asked them to indicate their time frame and reply in writing within the next two weeks.

The Chairperson said that they had just returned from an international study tour and across parties, they felt they are on the right track on policy and what they should be able to achieve using training authorities and the importance of apprenticeships in dealing with unemployment, bridging the inequality gaps and ensuring the alleviation of poverty in our country. They are on the right track about technical skills and the importance of the private sector coming on board. These partnerships are important for the entities and the job SETAs. However, how are the training authorities going to lure the private sector to come on board and assist in ensuring that those young people that are upskilling and reskilling are fit for the economy if they are not able to bring the Committee into confidence that SETAs able to govern and manage themselves?

The Chairperson reiterated that they are in the right path but need to do what is right and not act as though they do not know what they are supposed to be doing. These entities they are responsible for are critical to developing our country and taking it to where it needs to be.

She urged the executive management and leadership, amidst all the challenges, to take a moment to reflect on why they do the work they do. They need to get a clean audit next year, and the Committee needs to be brought into confidence that the clean audit had an impact on the communities they interact with. Parliament is well within its rights to call any institution to come account if it gives funds to administer on behalf of the people of South Africa. When Parliament believes they are not getting the information needed from a particular area of the accountability ecosystem, they will go directly to that entity that should have the information.

She asked again that the information requested be sent within two weeks and not be late as it does not inspire confidence if the Committee must follow up to get the information. They would have had to account on the spot, but they do not want to put them in a position where they are not being honest with the Committee because they do not have enough information. Ideally, she said, all those who lead these institutions should always be able to account on what is happening in the institutions. She expressed appreciation and said it is exciting to see women at the forefront of leadership, and that it is very important that “we excel in the work that we do”.

The meeting was adjourned.

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: