A move by the National Student Financial Aid Scheme (NSFAS) board to terminate the services of its CEO, Andile Nongogo, has been widely welcomed by students and a civil action organisation responsible for exposing corruption.
The NSFAS board wrote to Nongogo on Tuesday to grant him an opportunity to indicate why his contract should not be terminated. He has been given until Monday to respond.
This follows the release of a damning report by law firm Werksmans Attorneys and advocate Tembeka Ngcukaitobi SC on Wednesday, who were tasked with conducting an investigation into allegations of irregularities involving a tender awarded to four companies to pay allowances to students.
Board chair Ernest Khosa said they will advise the four companies, eZaga Holdings, Coinvest Africa, Norraco Holdings and Tenet Technology, that their contracts will be terminated.
“The board will ensure that this termination does not affect the students negatively.”
He said they will also review the supply chain management policy in line with National Treasury regulations and policies.
Khosa met higher education minister Blade Nzimande on Tuesday to brief him on the outcomes of the investigation.
Vezinhlanhla Simelane, president of the South African Students Congress, said while they were in favour of the direct payment system, they had a problem with its implementation.
“There were challenges around payment. Students opened their cellphones to find there was money, but when they wake up in the morning they find the money is no longer there.”
He said the service providers were “collapsing” the system and needed to go.
The Organisation Undoing Tax Abuse (Outa) said it welcomed the findings and recommendations of the investigation team.
It was the first to blow the whistle on alleged irregularities involving the contracts awarded to the four service providers.
“We believe the termination of Mr Nongogo’s contract is the right decision. Mr Nongogo is a seasoned public servant who should know the prescripts of the PFMA [Public Finance Management Act] and procurement rules. He chose to ignore that,” Outa said in a statement.
“South Africa cannot afford to have executives in the public service who blatantly disregard the law.”
Louis Jacobs, spokesperson for North West University, said NSFAS plays an integral part to ensure students’ access and success.
“Therefore, we will continue to work with NSFAS to ensure timely payment of students allowances and prepare for the 2024 academic year.”
Meanwhile, Khosa said no feasibility study had been conducted before the implementation of the direct payment system, “particularly the justification of the appointment of the four service providers”.
“There was no reason furnished to the investigators why the feasibility study was not conducted, which is a critical part of the preparation for the implementation of the project.”
He said such an assessment would have enabled NSFAS to make an informed decision on the proposed solution and to evaluate the feasibility and chances of success of the proposed direct payment solution.
According to the investigation report, there was an amendment to the bid specification to include fintech companies, which resulted in drastic changes in the mandatory requirements of the original bid.
Khosa said that according to the report, “there is a possible relationship between Mr Nongogo and Coinvest and eZaga Holdings”.
“Another concern raised in the report is the inability to conduct a thorough due diligence of the service providers.”
He said the report established that Nongogo actively participated in the presentation to the bid evaluation committee of the proposals by the service providers.
“This is a material violation of public procurement processes of NSFAS, which he was employed to safeguard and uphold.”
In August the Sunday Times revealed, through audio recordings of the presentations by the different bidders, how Nongogo attended and participated in them.
At the time NSFAS insisted to the publication that the process was independent, with Nongogo playing no part in deciding who was evaluated and having “no hand” in awarding the contract.
The investigators’ report, according to Khosa, also revealed that “there seems to have been a conflict of interest in the appointment of these four fintech service providers”.
eZaga said in a statement it “is deeply disappointed by NSFAS’s decision to terminate its tender”.
“The allegations made against eZaga have raised significant concerns, including questions about the fairness and legality of the proceedings.
“eZaga strongly denies any association with or connection to Mr Nongogo before the tender was awarded. eZaga was awarded the tender having met all the necessary tender specifications and has consistently delivered on these requirements.”
The company said it is engaging legal counsel to address and respond to these accusations appropriately.
We believe the termination of Mr Nongogo’s contract is the right decision. Mr Nongogo is a seasoned public servant who should know the prescripts of the Public Finance Management Act and procurement rules. He chose to ignore that.
— Organisation Undoing Tax Abuse (Outa)
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