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Andile Nongogo should not have access to public money, the Organisation Undoing Tax Abuse (Outa) says after it found in an investigation into the Services SETA that R37 million was allegedly wasted due to highly overinflated prices, a questionable tender award process and a total disregard for the Public Finance Management Act (PFMA).
“Our latest investigation uncovered an extremely overpriced rebranding campaign that cost taxpayers R37 million,” Rudie Heyneke from Outa’s investigation department says.
The invoices were signed off by Andile Nongogo, who was the Services SETA CEO at the time and who currently serves as the NSFAS CEO.
Outa has laid criminal complaints against Nongogo and others and lodged a formal complaint against Nongogo with the South African Institute for Chartered Accountants (Saica).
According to Outa, some of the inflated prices into one specific tender included a branded T-shirt at R4 600, R44 000 for a branded umbrella, R980 for a coaster and R668 200 to print 100 copies of the SSETA Annual Performance Plan.
The tender, worth R40 million, was awarded to Five Stars Communication and Projects for the development and production of SSETA’s branding and marketing materials, Outa says.
Ngwenya Baloyi is named as Five Star’s director in the agreement and Andile Nongogo, SSETA CEO at the time, was the official responsible for managing the tender in terms of the Service Level Agreement.
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Outa’s investigation also exposed irregularities with the awarding of the tender. In the Request for Bids process, the validity period was stated as 90 days from the closing date for the bid and during this time the public entity has to evaluate, adjudicate and finalise the award of a contract.
Once the validity period expires, the tender is no longer valid.
According to Outa, the tender in question was advertised in March 2016, but a service provider was only appointed on 22 August 2016, 158 days later, after the closing of the bid, which makes this an invalid award.
The contract was awarded for 18 months, but nothing was ordered until 2 months before the contract expired, Outa says.
During the last two months, SSETA received branded items and services to the amount of R36,9 million.
“After studying the evidence, it is clear that in order to enable the spending of the whole budget two months before the contract ended and before the end of the financial year, the service provider had to inflate the prices excessively and the accounting officer had to authorise payment,” Outa says.
Outa’s investigation revealed that Nongogo did not question any of the invoiced prices although he authorised payments for items or services such as:
Outa laid a criminal complaint relating to the tender box branding with the SAPS on 18 June 2023 and Outa says it handed a comprehensive investigation report to the investigation officer on the criminal case, covering the inflated payments and more, authorised by Nongogo.
“It is Outa’s view that the report should result in at least 28 more charges against Nongogo, Baloyi and Duduzile Mwelase, the senior manager in charge of branding for SSETA, whose signatures appear on the documents in question,” Heyneke says.
Adv Stefanie Fick, director of accountability at Outa, says the case against SSETA and Five Star is not based on mere suspicions of criminality.
“The evidence can be found in the official documents that SSETA handed over to Outa after a successful PAIA request. The chain of evidence is available for criminal investigations.”
Outa also questions how Nongogo, a registered chartered accountant and a seasoned public official with more than a decade’s experience, can be allowed to get away with such conduct.
“Nongogo should be well acquainted with the PFMA. We find his approval of these purchases totally unacceptable, a waste of public money and gross negligence of his fiduciary duties.
“It is worrying that Nongogo is now in charge of NSFAS, an institution currently making headlines because of the chaos caused by adopting a questionable direct payment system. Thousands of students have not received their payments,” says Heyneke.
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Outa also reported Nongogo to the South African Institute for Chartered Accountants (SAICA) calling for an investigation into his professional conduct.
“Nongogo should not be allowed to be involved with the financial management of any institution using taxpayers’ money. It is not unreasonable for South Africans to expect government officials to spend their taxes wisely and not waste these on highly inflated prices for products and services.”
Fick agrees.
“Wasting money from the fiscus shows a disrespect for the taxpayer and casts serious doubt on the integrity of such an official.”
Outa says Baloyi, who not only overcharged SSETA but sometimes even charged them twice for the same product, should face the full might of the law and should not be allowed to do any business whatsoever with the state in future.
In addition, Outa says Mwelase neglected her duties as the gatekeeper.
“Not only did she allow the quotes with the inflated prices to go through, but she also failed to question them. Had she followed procurement rules and if she was diligent in her duties, this would not have happened,” Heyneke says.
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NSFAS earlier said in a statement that it notes the various articles from various media on the alleged laying of charges against its CEO.
“We also note that the alleged transgressions have nothing to do with Nongogo’s current responsibilities and mandate at NSFAS. We are, however, disappointed that an attempt was being made to link such incidents to NSFAS.”
According to the statement, charges were allegedly laid against employees at Nongogo’s erstwhile employer and his name never featured.
“We observed that since the adoption of policies related to the direct payment of student allowances and NSFAS’s involvement in student accommodation, there has been a consistent and coordinated set of attacks on the CEO and the institution.”
The attacks included intimidation of the CEO by faceless individuals through short messaging services which is being addressed through appropriate security structures, NSFAS says.
“NSFAS will proceed to vigorously implement policies which are sanctioned by the board and the shareholder and will not succumb to character assassination attempts disguising as concern for the rule of law.”
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