AN investigation into allegations of procurement irregularities revealed that Services Seta (SSETA) failed to submit all relevant documentation, breached the supply chain management (SCM) policy, did not disclose conflicts of interest, and failed to comply with the typical process flow when awarding tenders.
These are some of the shocking revelations in the probe conducted by Werkmans law firm.
The report also found that there were suspicious dealings with the service providers.
These happened under the leadership of former board chairperson Themba Mhambi and chief financial officers Andile Nongogo and Tsheola Matsebe.
Werkmans was appointed after the Organisation Undoing Tax Abuse (Outa) investigated the allegations in 2018, after three whistleblowers approached Outa with damning evidence of tender manipulation on several different tenders.
The report came after the court ordered SSETA to release the report to Outa following its refusal of several requests.
Nine service providers were investigated. The companies included Grayson Reed Consulting, Star Sign, Africawide Consulting, Falametrix, IQ Telecommunications Services, Blackseed Consulting, The Institute of Anti-Corruption in Africa, The Consortium of I-Firm Trading & Projects, Ntumba & Associates Consulting, NMK Forensics, and Ntumba & Associates Consulting.
Werkmans said the report was valid only to the extent of the briefing documents that it had been furnished with. The law firm said it was placed on record that it made several requests for more documents during its review and investigation.
The law firm was informed that the major outstanding documents were the bid proposals of the unsuccessful bidders.
The company received invoices relating to service providers such as IQ Telecommunication, Ntumba (PROC T345), IACA, Blackseed, AfricaWide, Falahmetrix, and Star Sign & Print.
SSETA failed to provide invoices relating to Grayson Reed and Ntumba (PROC T240).
Werksmans added that it had also not been furnished with documents indicating that the following steps a business case or motivation by the user department, records of the Bid Evaluation Committee (BEC) deliberations, records of the Bid Adjudication Committee (BAC) deliberations, and records of the executive committee (Exco), to prove compliance.
“When we enquired about documents relating to the steps mentioned above, the SSETA SCM Function, in response to a request to further briefing documents we had made, informed us that SSETA does not record or minutes the proceedings of the SCM committees,” read the report.
The law firm also noted serious irregularities and contravention of the law regarding the signing of bid documents by some of the successful bidders.
It said it has also noticed highly compressed timelines in placing orders, delivery of products ordered, submission of invoices, requisition for payments, and payment authorisation and processing. All these processes occurred in a space of about five days on multiple occasions.
Last week, the Parliament Portfolio Committee on Higher Education lambasted SSETA for ignoring the report. SSETA was heavily criticised for failing to implement the recommendations of the report. It was also lashed for failing to hold anyone accountable.
However, board secretariat Phillip Kwampe said it was not true that SSETA had failed to implement the recommendations. He said the recommendations were implemented and the final report on other recommendations would be submitted to the board in November.
“The recommendations on SMC were implemented through the review and approval of the amended SMC policy, which was approved by the board in February 2024.
“Work has already commenced to implement the other recommendations and the final report on the matter will submitted by the Audit Committee Task Team (ACTT) at the board meeting to be held in November 2024,” Kwampe said.
He added that part of the final report is to recommend measures to be taken by the organisation to recover funds where cases of irregular expenditure have been identified.
Werkmans said there was also no evidence of the BEC verifying claims made by the bidders and their documents. The law firm discovered that several contact numbers provided by one of the bidders as references were non-existent.
The report also revealed that another bidder submitted references that were commensurate with the number of years that they had been in business.
The report also noted a possible conflict of interest in the non-disclosure by the CFO in one of the tenders. The CFO and the bidder were former colleagues.
The bidder disclosed the relationship, but the CFO did not.
“In addition, the CFO, as a chairperson of the BAC, had further approved the recommendation by the BEC to have the winning bidder awarded the tender without disclosing his relationship with the winning bidder. This is a very serious non-disclosure by a senior official who is involved at the highest level of SCM. He ought to have recused himself from the procurement process,” read the report.
Werkmans said the price quoted by the winning bidder in one of the tenders did not reflect, and the bidder was not disqualified for failure to duly complete the tender document as required.
Werkmans also discovered that the price of the tender that was awarded to Star Sign & Print was escalated by more than 1200%, from R6.6 million to R89m. The law firm said it did not find any justification for the increase.
The report recommended that SSETA must adopt ways to improve record keeping of tender files from bidders in such a way that they are easily and timeously accessible when required in the future.
Documents that require signature and a date must be signed and dated in order for the person reviewing or auditing the work done to see when the work was performed.
The chairperson of a bid committee must ensure that all members who participate in the evaluation process sign the Declaration of Confidentiality and Impartiality every time they meet for evaluations. This accords with SCM best practice.
It also added that SSETA must ensure that Request for Bids is advertised strictly in accordance with the National Treasury Regulations and the SSETA SCM policy.
Outa’s senior project manager, Rudie Heyneke, described the findings as shocking, adding that it was even more shocking that, to date, no action has been taken against employees and service providers implicated in the tender irregularities.
“We, therefore, applaud the portfolio committee for holding back in questioning SSETA executives and the Accounting Authority on the lack of action,” Heyneke said.
Heyneke also expressed disappointment at SSETA’s response to why no action was taken after the report. “It’s not good enough to say that the Werksmans report’s recommendations were implemented ‘through the review and approval of the amended SCM policy’ and that ‘work has already commenced to implement’ other recommendations,” he said.
manyane.manyane@inl.co.za