After allegations of tender corruption arose at the National Student Financial Aid Scheme (NSFAS) involving their CEO, Andile Nongogo, the CEO was placed on special leave while an investigation took place.
The NSFAS board has now received a report from Werksmans Attorneys with the Department of Higher Education (DHET) and NSFAS holding a briefing unpacking the report findings on the direct payment system irregularities.
NSFAS Board Chairperson, Ernest Khosa, said:
The Board has noted that there was problems related to the current implementation of the direct payment system.
Findings of NSFAS Report
- No feasibility study was done before the payment system was implemented, particularly for the justification for the appointment of the four service providers
- Investigator said there was no reason given as to why a feasibility study was not conducted and that it is integral in the implementation of the project
- A feasibility study would have resulted in NSFAS making a much more informed decision and to evaluate the practicality and chances of success of the system
- There was an amendment to the bid specifications to include fintech companies which resulted in drastic changes in mandatory requirements of the original bid
- The changes made to the bid specifications would have required a deeper analysis to be made on the need of the fintech companies
- There was a conflict of interest with the NSFAS CEO, Andile Nongogo, who actively participated in the presentation to the bid evaluation committee
- Nongogo was involved in the appointment of two of the four service providers, namely Coinvest and eZaga as he has a possible relationship with those service providers
- Technical advisor, appointed by Nongogo, was "inherently incorrect"
- Inability to conduct due diligence to service providers
- Appointment of service providers were irregular
So what's next?
Following this, Khosa has said that there are "lots of possible steps to be taken, lots of possible action to be taken". NSFAS held a meeting with the Department of Higher Education on 15 October to discuss the report.
NSFAS has also made the service providers aware of the recommendations and implications of the report and has asked Nongogo to give them reasons as to why his contract shouldn't be terminated.
Our approach is that we go have further engagements with them [service providers]. We will part ways at some stage but the manner in which we are going to do this shall be such that it not to the disadvantage of the students.
Steps will also be taken against staff who are involved in any wrongdoing.
The scheme will also review the Supply Chain Policy in line with National Treasury regulations and policies.
Khosa then said that the scheme is now looking at the recommendations and the next steps they need to take.
How did this all start?
Four service providers were awarded tenders to administer NSFAS allowances through the scheme's new direct payment system. The four service providers appointed were eZaga, Norraco, Coinvest and Tenet Technology.
The investigation sought to determine whether these service providers are registered financial entities and whether there is a historical business and tender relationship between the CEO and the director of these companies.
The corruption allegations against Nongogo relate to their previous work with Services SETA (SSETA) which lead to concerns being raised about potential improper practices in the awarding of bids for the direct payment of allowances from NSFAS.
Challenges were shown to be present when it comes to the direct payment system but the NSFAS board has said that the system will remain as it is necessary.
Nongogo has not responded publicly regarding the findings made in the report. This article will be updated to reflect his response.