The Western Cape High Court has dismissed a request by eZaga Holdings to block the implementation of the Werksmans report by the The National Student Financial Aid Scheme (NSFAS). This comes as the government bursary scheme seeks to terminate their contract following evidence of irregularities in awarding contracts for service providers.
eZaga Holdings, one of four service providers contracted to pay NSFAS student allowances, approached the court for an interim order to interdict NSFAS in seeking to take steps in implementing the recommendations of the Werksman’s Report.
The court ruled that eZaga's application lacked urgency and is awaiting a separate contract review. This decision paves the way for NSFAS to implement the report's recommendations, which may include corrective actions for past wrongdoings.
The court order ruled there was no urgency to the application brought by Ezaga, while the review application to review and set aside eZaga’s contract is being finalised. The order comes after the Special Investigating Unit (SIU) successfully applied to be joined in the matter as a respondent.
The SIU and NSFAS successfully argued that the matter was not urgent and fell to be struck off the roll for lack of urgency. The SIU welcomed the court’s decision stating that it will pave the way for the full implementation of the Werksmans report.
The SIU and NSFAS welcome the decision of the High Court, as it clears the way for implementing investigation outcomes and consequence management to correct wrongdoings and further tighten the controls within the public procurement process.
The unit, along with NSFAS, have jointly applied to the Special Tribunal to review the contracts to have them declared invalid and unlawful. Additionally, want to strip the service providers of any profits gained from these contested tenders.
The SIU and NSFAS also seek the service providers to be divested of all the profits they accrued due to the impugned tender awarded to them.
How We Got Here
NSFAS funds more than one million students currently enrolled at public universities and Technical and Vocational Education and Training (TVET) Colleges around South Africa.
In 2023, NSFAS-funded students (except disabled students) began receiving their allowances via a direct allowance payment system. The system was facilitated by four service providers, namely, eZaga, Coinvest, Norocco and Tenetech.
An investigation, carried out by Werksmans Attorneys, focused on irregularities related to Bid NO. SCMN022/2021, which involved the appointment of service providers for the NSFAS direct payment system. This tender ultimately led to the former NSFAS board’s decision to terminate former NSFAS CEO Andile Nongogo from his position, a decision that was recently ratified in court.
The investigation found that there may have been possible relationships between key individuals including Nongogo and the Fintech companies appointed to pay allowances directly to students.
It was also revealed that there was active involvement of the CEO in the presentation to the Bid Evaluation Committee and potential conflicts of interest in the appointment of service providers.
The Werksmans report recommended that NSFAS terminate the contracts of service providers. This recommendation was adopted by the NSFAS board, however, their failure to do this led to the dissolution of the board by former Higher Education Minister Blade Nzimande
Nzimande appointed Freeman Nomvalo as the scheme administrator to ensure students receive their monthly allowances on time, developing the capacity to address NSFAS shortfalls and evaluating possible changes to the NSFAS Act to improve the scheme's efficacy and efficiency.
