Where has the R37bn gone?

2014-10-19 15:01

South Africa’s Sector Education and Training Authorities (Setas) received R37?billion over the past three years.

Half of them have been forensically investigated amid claims of financial mismanagement, fraud and corruption, and some are under administration or are facing administration.

But some private companies, which contribute 1% of their total payroll to the skills levy that is used to run Setas, seem not to have noticed.

This information was revealed after City Press filed a Promotion of Access to Information Act request, asking the department of higher education and training for all information regarding the performance of the Setas – the results of which paint a grim picture.

These records were requested before Stats?SA’s recently released shocking report into youth employment, unemployment, skills and economic growth, which revealed that just 17.9% of black youth are skilled employees.

Setas have been experiencing serious difficulties, especially in the areas of financial management and evaluation systems, and there is no adequate monitoring system with accurate records of the number of people who have benefited from the system.

The Setas’ main mandate is to ensure a skilled workforce through education and training.

At least six Setas received qualified audits in the 2012/13 financial year and, since 2011, at least five – including the Services Seta, which received more than R1?billion in the past financial year – were placed under administration.

Higher education spokesperson Khaye Nkwanyana told City Press that the minister, Blade Nzimande, has on several occasions admitted the challenges he faces with the Seta system.

“It is a sad reality that most black people are not in work, let alone in skilled jobs.

“That nearly 20% of black people are in skilled jobs is a tribute to the massive efforts that have been made in a number of sectors.

“Steps are being taken to ensure that Setas are more accountable, that they spend the majority of their funds on scarce or critical skills, that they play a greater role in supporting the broader education and training system,” said Nkwanyana.

But according to documents, close to half of the 21 Setas are singing a different tune.

In the past year alone, the Safety and Security Seta had at least three different forensic investigations into procurement and payment processes, mismanagement of discretionary grants and duplicate payments.

According to the documents received, it is obvious Nzimande is inundated with complaints from officials working in the Setas, and from students who have not received either their stipends or their certificates.

Officials from two different Setas and the higher education department, who spoke to City Press, said the problems were not only financially driven, but there was too much labour influence on the boards.

The Seta boards comprise a proportionate representation of people from the business sector and labour unions.

A chairperson of one of the Setas said there was no harmony in the Setas.

“The labour unions had too much influence within the boards and they try to bully through their policies, and this attitude is not helping.

“It is always a fight to get anything passed through. When the CEO is called to answer, the board members rally behind him. This is not sustainable,” said the chairperson, who did not want to be named.

Earlier this year, City Press reported Nzimande was demanding answers from the Culture, Arts, Tourism, Hospitality and Sport Seta after allegations that a former staff member’s children were flown to Italy on a school trip.

It was claimed that they were underprivileged, yet the employee is an accountant.

Two board members had their children’s university fees paid for by the Seta.

There were also allegations of financial mismanagement in an African Cup of Nations deal, which were investigated by audit firm Grant Thornton.

City Press has seen a letter addressed to the Seta instructing it to respond to the reports. If it failed to do so, it would be placed under administration.

But the department is still adamant there is no need to despair because over the past financial year, more than 100?000 pupils completed their learnership programmes through the Setas.

But sadly, less than half have found jobs.

About 40?000 bursaries were awarded, yet from those pupils, just more than 11?000 are employed.

The Setas’ golden goose, private companies, are also upbeat about the Setas they fall under.

Freight logistics company Transnet said it had no problems with the Transport Education and Training Authority.

Pick n Pay HR director Isaac Motaung said there had been no problems regarding either financials or training.

“There is a very good training programme at the Wholesale and Retail Sector Education and Training Authority, and Pick n Pay takes some of the students who have been trained under their programmes.

“Some of these have gone on to become full-time employees and trainee managers,” he said.

The worst performers

Local Government Seta



As of last year, the Seta was placed under administration due to its failure to, among other things, comply with National Treasury regulations.

The department states that the Seta failed to submit its annual report on time for tabling in Parliament. It also received a disclaimer for the 2011/12 financial year.

The Auditor-General wrote to the department about serious concerns regarding the awarding of grants and how the Seta failed to disclose irregular expenditure, as well as that there was “major mismanagement of the Seta’s finances”.

The department requested an explanation from the Seta on numerous occasions, to no avail.

Transport, Education Seta



Audit firm OMA was hired to investigate allegations regarding a contract that was awarded to Deloitte after the bid closed.

It was found that the CEO had interfered with the supply chain management process by expressing her desire to appoint a certain service provider. The Seta’s acting chief financial officer (from Deloitte) recommended that Deloitte be appointed for the contract.

The CEO was later suspended.

The department also requested a meeting with the Seta because there were “too many complaints received”.

Chemical Industries Seta



The department of higher education wrote a letter to the Seta because it had failed to submit a completed sector skill plan for 2010.

The letter also states that the board was dissatisfied with the Seta’s management and the perceived manipulation of the board’s resolution to relieve pressure on the budget.

“There are serious governance and operational challenges in the Seta, which, if not urgently addressed, will soon result in the Seta joining ranks of nonperforming Setas,” reads the letter.

Wholesale and Retail Seta



Last year, the Seta was investigated by Matlama Consulting, which looked into allegations that the former board chairperson pressured management to fill positions the board had already decided would not be filled.

Other allegations regard payments made by the Seta without proper authorisation. Nzimande hired a new chairperson shortly thereafter.

There are also allegations that numerous officials have been resigning after misusing Seta funds.

It is alleged one official authorised “irregular” payments worth R400?000 and then resigned. The money was not recovered.

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