Nexus probe blows lid off R5bn fleecing of NSF upskill programme
Last year minister Nzimande ordered a full-scale probe
The lid has finally been lifted on companies accused of fleecing the National Skills Fund (NSF) of millions of rand in what can be described as the capture of a key funding institution meant to upskill South Africans.
Last year, higher education minister Blade Nzimande ordered a full-scale forensic investigation into allegations of maladministration and corruption at the NSF.
The probe was conducted by Nexus Forensic Services.
The investigation was ordered after an auditor-general’s (AG) report found that over two years nearly R5-billion could not be accounted for.
This week, Nzimande’s ministerial team finally reported to the standing committee on public accounts (Scopa) after weeks of standoffs between the department and the watchdog.
The report of the investigation, presented by the department, zoomed in on 10 projects that form part of the R2.5-billion that has been unaccounted for as reported in the NSF’S 2019/20 financial statement.
One of the entities Nexus Forensic Services investigated was ADA Holdings, and the company was found to have submitted an unsolicited proposal to the NSF.
The proposal highlights the development of Eastern Cape-based Ingwe TVET at four sites, and at the heart of the proposal was the improvement of the institution’s capacity, provide guidance and develop NQF programmes and skills at a cost of over R150-million.
The project was awarded to ADA Holdings to train 1025 learners over a period of nine months at a total value of R187-million, and investigators found that the project’s fund advances of R131-million could not be verified with “compliant bank records, supplier invoices and reports”.
“We therefore conclude that the failure by ADA Holdings to provide supporting documentation relating to their expenditure, create a reasonable suspicion of fraud and/
or corruption and such suspicion triggers the reporting to the Directorate for Priority Crime Investigation (Hawks),” the investigators said.
Another entity investigated is the PE TVET College, where it was found it opened an account in the name of the NSF into which R7.2-million was deposited. However, the account showed an additional R10-million was transferred by Treasury in contravention of the memorandum of agreement (MOA) between the NSF and the PE college.
The college is also accused of not keeping records. The investigators recommended that the department blacklist the college “for any future funding pending the final conclusion of the investigation”.
Another entity flagged in the report was Rubicon Communications. The company is said to have received a contract irregularly from the NSF. It was paid a first tranche of R2.6-million. The investigation found the payment must be recorded as fruitless and wasteful expenditure as it was made “in vain and could have been avoided had reasonable care been exercised”.
Investigators asked the department to open a criminal case with the Hawks. “Due to Rubicon being unable to justify expenditure amounting to R2 110 009 and potential irregular expenditure amounting to R552450 regarding FNB account xxxxxxx, it creates a reasonable suspicion of corruption, or theft or fraud.”
The investigators also recommended a company called Passionate About People (PAP) be reported to the Hawks on allegations of corruption and fraud. Nexus found that the entity received payments totalling R13.4-million from the NSF. The organisation then made payments of R9.8-million to two service providers. However, Nexus said PAP failed to provide it with supporting documents.
Ekurhuleni West TVET College was also probed for contracts worth over R30-million. Nexus revealed a company called Emanzini Staffing Solutions must be blacklisted pending the conclusion of investigations. This comes after the entity could not justify expenditure amounting to R1-million.
The other organisations listed in the report are Centre for Education and Policy Development, Ikhonolakho Woman and Youth Primary Co-operative and Dithepe Trading Enterprise, but no further details were given.
“NSF must monitor cashflow from the respective ringfenced bank accounts to ensure that money is utilised for the intended project purposes. This can be done by providing specific NSF officials with electronic access to bank accounts (listed on the MOA for the project) with only ‘viewing access’. All transactions must only be executed from this account and no money may be transferred to ‘other’ accounts,” Nexus recommended.
Scopa chairperson Mkhuleko Hlengwa on Friday welcomed the information that the NSF was working with the auditor-general to ensure the fund meets its audit requirements.“scopa has also noted three areas that are emanating from the NSF process as it deals with the outcomes of the forensic report. The first area is the disciplinary hearings that are taking place within the NSF. The second area is the Hawks-led criminal investigations which are underway. The third aspect, which must now take place, is the Siu-led process on the civil litigations.
“Scopa is looking forward to a meeting between the department and the SIU within the next 14 days to ensure the third leg of this process unfolds. Scopa will then monitor the process by requesting quarterly reports.
“The committee will only submit its report to the National Assembly once it has received feedback from the meeting that must take place between the department and the SIU within the next 14 days,” Hlengwa said.
Report zoomed in on 10 projects, which form part of a R2.5bn probe
Ingwe TVET was probed for a R150m improvement programme