Cape Town - The National Student Financial Aid Scheme (NSFAS) board has given CEO Andile Nongogo until Monday to state why his contract should not be terminated over the irregular awarding of contracts.
The contracts of four service providers tasked with the disbursement of student funds will be terminated.
This was revealed during a media briefing by the board on the outcomes of an investigation by Werksmans Attorneys, on Wednesday.
The board appointed Werksmans Attorneys to investigate allegations against Nongogo’s work with the Services Sector Education and Training Authority and the awarding of bids at NSFAS.
Upon announcing the investigation, the board said it would focus on the Direct Payment Project, piloted last year for TVET colleges and implemented this year for university students.
In June, NSFAS-funded university students received their allowances through an NSFAS bank account, with four service providers appointed to facilitate the disbursement of funds. They were Coinvest Africa, eZaga Holdings, Noracco Corporation, and Tenet Technology.
Nongogo was placed on a leave of absence and the chief financial officer filled the role of acting CEO until further notice.
An investigation by Organisation Undoing Tax Abuse into the mismanagement of student funds and tender corruption at NSFAS found that NSFAS hired businesses without banking licences or VAT registrations to handle the direct payment of student allowances.
Those appointed were awarded a tender without being financial service providers. It also found that they charged students much higher fees than major banks would.
Board chairperson Ernest Khosa said the board wrote to Nongogo and presented a copy of the report.
On Wednesday morning, the board met representatives of the four direct payment service providers over the contents of the report and its implications.
Khosa said: “The board also notes the fact that the report indicates 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.
“The report established that Mr Nongogo actively participated in the presentation to the bid evaluation committee of proposals by service providers. This is a material violation of public procurement processes of NSFAS which he was employed to safeguard and uphold.
“Furthermore, the report reveals that there seems to have been a conflict of interest in the appointment of these four fintech service providers.”
The report found a possible relationship between Nongogo and Coinvest and eZaga Holdings.
All staff members associated with wrongdoing, as mentioned in the report, will be subjected to a disciplinary inquiry. All four direct payment service providers have been told that their contracts will be terminated.
Khosa said the board would ensure this termination did not affect students negatively.
A review of the supply chain management policy, in line with the National Treasury regulations and policies, including the Public Finance Management Act, would be done, starting yesterday.