Minister Nzimande and NSFAS chairperson should resign
4 January 2024
The Organisation Undoing Tax Abuse (OUTA) calls for the resignation of Dr Blade Nzimande, Minister of Higher Education and Training, and Ernest Khosa, chairperson of the National Student Financial Aid Scheme (NSFAS) board. “If they don’t resign, we call on President Cyril Ramaphosa to fire them immediately,” says Rudie Heyneke, OUTA’s Investigations Manager.
In support of this call, OUTA releases voice recordings of two meetings between Khosa and a representative of a service provider which reveal how service providers allegedly paid millions of rand in kickbacks to Nzimande and Khosa, as well as at least R1 million to the South African Communist Party (SACP). This was done in return for tenders and protection for service providers.
The recordings and OUTA’s accompanying report are the latest bombshell exposing corruption and mismanagement at NSFAS. The scheme admitted earlier this week that at least 20 000 students countrywide are still waiting for 2023 allowances to be paid. The payment system to students all but collapsed after four new service providers were awarded the tender for facilitating direct payments to students since July 2023. They are: Coinvest Africa (Pty) Ltd, Tenet Technology (Pty) Ltd, Ezaga Holdings (Pty) Ltd and Norraco Corporation (Pty) Ltd.
OUTA had warned as early as October 2022 that awarding the tender to these service providers would lead to problems with student payments while costing taxpayers millions of rand in additional funds. Since then, OUTA has published several more reports detailing mismanagement of funds meant for students, while also exposing the role of NSFAS CEO Andile Nongogo, tracing his nefarious activities back to his tenure as CEO at the Services SETA (SSETA). (See here.)
OUTA’s latest detailed investigative report and the voice recordings will be shared with authorities, including the Special Investigating Unit (SIU), Public Protector, SARS and the Auditor-General’s office. According to Heyneke, the voice recordings have already been shared with the SIU, which has been investigating corruption at NSFAS since 2022. “There needs to be a thorough investigation into the vast web of corruption in the higher education sector, which OUTA’s various reports and these recordings reveal,” says Heyneke.
The recordings – leaked by a whistleblower – document two separate meetings that took place after the NSFAS board resolved (on 16 August 2023) that the CEO, Andile Nongogo, was to be placed on special leave while a board-ordered investigation into his conduct was being undertaken. At the time of the meeting, the board’s decision hasn’t been made public yet. The investigation followed on another OUTA report detailing Nongogo’s relationship with the directors of Coinvest, one of the NSFAS direct payment service providers, that could be traced back to Nongogo’s tenure as CEO of the Services SETA (SSETA). (Read more here.)
The announcement of Nongogo’s leave of absence came a day after Khosa met with Thula Ntumba, husband of Tshegofatso Ntumba (who is one of two Coinvest directors).
During this meeting Khosa told Ntumba and an unidentified third person that he was familiar with the contents of the OUTA report and the allegations against Nongogo. Khosa said the only way the NSFAS board could react was to put Nongogo on special leave and then report to Parliament on the steps the board would take to handle the situation. Khosa also said the OUTA report was not the biggest problem, but rather a conspiracy from inside the ANC – he specifically mentioned Deputy Minister of Higher Education and Training, Buti Manamela – that wanted to get rid of Khosa and Nzimande.
During this meeting Khosa further stated that the board granted him the sole authority to draft the terms of reference for an investigation, which gave him the opportunity to exclude everything that would possibly create a problem for Nongogo. Khosa said since he was aware of Nongogo’s wrongdoing in the past, he would make sure that they would not be caught out.
Khosa then mentioned another big problem: the need to appoint a legal firm that he would be able to control. He asked Ntumba for suggestions. Ntumba responded by suggesting Werksmans Attorneys for the investigation, and promised to give Khosa the name of a partner that NSFAS would be able to control.
The third, unidentified person asked Khosa about certain letters that Nongogo had to sign. Khosa not only confirmed that he had seen the letters but even admitted to changing the contents. He warned that the minister was worried that their relationship with the service providers would become known, adding that he suspected that investigators were tracking their cell phones to establish if there were meetings between the minister, the chairperson, and the service providers.
Heyneke says it is unethical, highly irregular and against all the principles of good governance for the chairperson of the board to meet with service providers and request input on board decisions. “Why was it even necessary for Khosa to meet these people and to update them on internal matters and request their input for the way forward?”
The answer to this question can be found in the recordings of a second meeting between Khosa, Ntumba and an unidentified third person about two weeks after the first meeting.
The recording of this meeting revealed that millions of rand were paid to the SACP, Minister Nzimande and Khosa. During the first part of the meeting, which lasted for one and a half hours, Ntumba and the unidentified person discussed Khosa and his conduct at length. They also conspired how to place him under pressure to extend the investigation period into Nongogo’s conduct for at least three months.
They alleged that it was Khosa’s intention to threaten them with the termination of the Coinvest/NSFAS contracts so that they would pay him to prevent the termination of the contracts. Ntumba furthermore alleged that Khosa met with the chairperson of Fundi, another company doing business in the higher education sector, and suggested that Fundi may have paid Khosa and was now putting pressure on him. (Fundi tendered for several NSFAS contracts but was never awarded any.)
They also discussed the criminal charges against Khosa while he was the CEO of the Mpumalanga Economic Empowerment Commission (now known as the Mpumalanga Economic Growth Agency), previous meetings they had with him and the minister and how Khosa allegedly openly talked about a bribe of R6 million in the presence of another NSFAS board member and former president of SASCO, Bamanye Matiwane. Ntumba also mentioned a meeting he had with Nzimande where his special advisor, Nqaba Nqandela, was present.
When Khosa joined the two men, he assured them of his good relationship with Minister Nzimande and briefed them on the ongoing investigation by Werksmans Attorneys, which he confirmed he appointed on Ntumba’s advice. Khosa referred to OUTA’s investigation into Nongogo’s term as SSETA’s CEO, repeating that he did not believe Nongogo had done anything wrong at NSFAS.
Khosa discussed the progress of the Werksmans’ investigation, after which Ntumba requested that – should the Werksmans report suggest cancelling the service provider contracts – that it should be done in such a way that Coinvest would not look “guilty”. Ntumba also referred to Coinvest’s sponsorship by Nedbank, saying that it was too important to lose if they were found to be involved with any irregularities.
Both men informed Khosa that, although everything did not go according to plan, the “top players” were still willing to give “incentives” even if these had to come from “other sources”. Ntumba reminded Khosa that he paid R1 million towards the SACP conference, together with Star Sign and Print which printed T-shirts and bags for the conference. Ntumba’s wife is a director of Star Sign and Print, the company OUTA previously exposed for charging the SSETA heavily inflated prices for printing and branding services while Nongogo was the CEO.
Ntumba left the meeting early because of another appointment. When he walked out, the recording stopped, strongly suggesting that he was the person who had the recording device. It is not clear why he recorded the conversation, but it is OUTA’s view that he needed something to have some leverage on the chairperson.
OUTA believes that the recordings confirm a lot of what OUTA has stated in the past, particularly about patronage networks within the Department of Higher Education as well as higher education institutions. Public officials and service providers apparently use these networks to enrich certain individuals in turn for being awarded tenders and contracts.
Companies linked to Ntumba were awarded tenders worth millions in the past by different SETAs and also more recently at NSFAS. The recordings confirm that Ntumba and his associates financially looked after people like Nzimande, Khosa and Nongogo. They in turn rewarded Ntumba and companies linked to him with contracts. This has already been exposed by several of OUTA’s investigation reports.
Heyneke said that the findings of the Werksmans’ report vindicated OUTA’s findings on Nongogo’s involvement with the awarding of tenders to Coinvest, Ezaga, Norraco and Tenet Technology (also known as Tenetech). “OUTA is satisfied with the outcome of the Werksmans’ investigation. While Khosa – on the advice of Ntumba – appointed Werksmans in the mistaken believe that they would be able to control the firm and influence the outcome of the investigation, this plan definitely backfired,” says Heyneke.
“While NSFAS acted on Werksmans’ recommendation that Nongogo should be removed as CEO, it remains unclear why the four service providers haven’t been removed yet, especially since thousands of students countrywide are still waiting for allowances and tuition fees for last year to be paid – it is clear for everyone to see that the service providers are not capable of doing the job. It seems that Khosa did indeed heed the call not to terminate the contracts of the service providers as was discussed in the recordings, although it was one of the Werksmans’ recommendations.” The recordings indicate that Ntumba was concerned that the contracts should not be cancelled immediately even if Werksmans recommended this, and this was discussed at length. To date, OUTA understands that the service providers have not received any notification of any cancellation.
OUTA is very concerned that the accommodation tenders awarded by NSFAS have the potential to again leave thousands of students without accommodation at the start of this academic year. By 4 October 2023 NSFAS reported to the Higher Education Portfolio Committee in Parliament that a mere 25 803 (or 6.5%) of the required beds had been accredited. “It is highly unlikely that there will be enough beds accredited in time for the new academic year that starts in a couple of weeks,” says Heyneke.
He says NSFAS students do not deserve this kind of treatment. “It is clear that the students are the last thing on the minds of the minister, the chairperson, NSFAS management and the service providers who were appointed to serve the students. With elections around the corner, we remind students that they should not allow self-serving leaders with questionable integrity to remain in powerful positions, or for similarly tainted leaders to be elected to those positions. As future leaders, students have important decisions to make about their own futures as well as that of the country.”
Apart from sharing the recordings and investigation report with authorities and writing to President Ramaphosa requesting Nzimande’s removal as cabinet minister and Khosa’s removal as NSFAS chairperson, OUTA will also open a criminal complaint against Nzimande, Khosa and Ntumba. “We expect the SAPS to thoroughly investigate the corruption charges that OUTA will submit,” says Heyneke.
OUTA will also inform Nedbank of the conduct of their client Coinvest. “Nedbank needs to thoroughly investigate their client and reconsider their sponsorship.”
Issued by OUTA, 4 January 2024
