The National Student Financial Aid Scheme (NSFAS) has announced that its CEO, Andile Nongogo, has been placed on special leave as a result of mounting concerns regarding the awarding of contracts to service providers responsible for the bursary scheme's direct payment system.
In the interest of the image of NSFAS, the Board has resolved to investigate the allegations with a particular focus on the Direct Payment project. During the course of the investigation, the Chief Executive Officer will be on leave of absence.
The decision comes amidst public outrage and a report by the Organisation Undoing Tax abuse (OUTA) highlighting questionable practices surrounding these contracts.
Questionable Direct Payment Contract
The recent controversy revolves around the awarding of contracts to four service providers tasked with managing the direct payment system for student allowances within the NSFAS framework. According to the OUTA report, these service providers were hired without proper banking licences and were charging excessive rates for their services.
OUTA CEO, Wayne Duvenage, expressed that the intervention was critical, as the service providers initially planned to impose significantly higher transaction fees compared to the existing rates.
"Initially they were going to charge R102 on student bank accounts for a monthly fee. That was quickly reduced to R29 and eventually to R12 which is still double what other service providers can offer," said Duvenage.
Financial Implications
The implications of the alleged improprieties are substantial. The appointed service providers, including Tenet Technology, eZaga, Norraco Corporation, and Coinvest Africa, were estimated to collectively generate a staggering R4.3 million per month from the newly introduced bank charges and other associated fees.
CEO Placed on Special Leave
In response to the mounting allegations and the public outcry, the NSFAS Board decided to initiate an investigation into the matter, with a particular focus on the Direct Payment project.
As a result, CEO Andile Nongogo has been placed on a leave of absence for the duration of the investigation. This move was primarily made to safeguard the image of NSFAS and to allow for an impartial examination of the allegations.
Masile Ramorwesi, the Chief Financial Officer of NSFAS, will assume the role of acting Chief Executive Officer in Nongogo's absence.
Wider Implications and Criminal Complaint
OUTA's investigations have revealed further concerns regarding Nongogo's actions. OUTA has lodged a criminal complaint against Nongogo for his previous role as the CEO of the Services Sector Education and Training Authority (SSETA).
Their investigations into SSETA indicated alleged waste of R37 million due to inflated prices, questionable tender awards, and disregard for financial regulations.
OUTA's report indicates that invoices for these transactions were signed off by Nongogo during his tenure at SSETA. The organisation has also taken formal action against Nongogo by lodging a complaint with the South African Institute for Chartered Accountants (Saica).
The investigation into the alleged improprieties surrounding the direct payment contracts and the subsequent actions taken against CEO Andile Nongogo will undoubtedly shape the future of NSFAS and its commitment to financial transparency and student support.
