Finance minister Enoch Godongwana warned his now disgraced cabinet colleague Nobuhle Nkabane about malfeasance at the local government sector education & training authority (LGSeta) three months ago — but she ignored the warning until this week.
The Sunday Times can reveal that Godongwana told the former minister of higher education in April that the process to appoint the CEO of the LGSeta, Ineeleng Molete, was beset with irregularities and possible criminal conduct.
The information had come to light during an investigation by the Treasury’s specialised audit services following a tip-off from a whistleblower.
As a consequence, all remuneration earned by Molete since his appointment would amount to irregular expenditure as defined in section 1 of the Public Finance Management Act (PFMA).
According to a parliamentary reply in January 2023, the CEO of the LGSeta earns R2.5m a year. Molete was appointed in January 2021, so his income since then could amount to at least R11m.
You are further advised to report the matter to the police to facilitate compliance with section 34 of the Prevention & Combating of Corrupt Activities Act
In his letter, Godongwana told Nkabane that the Treasury had also uncovered irregularities in the dissolution of the LGSeta’s audit & risk committee (ARC) by the board.
But Nkabane only wrote back to Godongwana, asking for a copy of the investigation report, on Monday this week, hours before President Cyril Ramaphosa announced her axing.
While Godongwana did not give details in his letter as to why Molete’s appointment was irregular, or what irregularities had been uncovered in the dissolution of the board, he recommended that Nkabane take disciplinary action against the members of the selection and interview panel that oversaw Molete’s appointment.
He also advised Nkabane to open a criminal inquiry into board members, including the chair, for “not acting in line with the prescripts outlined in sections 50 and 51 of the PFMA”.
“You are further advised to report the matter to the police to facilitate compliance with section 34 of the Prevention & Combating of Corrupt Activities Act.”
The finance minister said: “The LGSeta board contravened the ... PFMA by misrepresenting the deliberations of the special board meeting when communicating the dissolution of the ARC to the former ARC members.”
He said the board had “gravely failed to act with honesty and integrity” and the ARC had therefore been irregularly dissolved. There was no basis for the suspension of the head of the committee as outlined in the minutes of the special LGSeta board meeting of October 27 2021.
The finance minister accused certain board members of failing to “avail themselves to be interviewed on the agreed-upon date and time”.
“Despite a board resolution that the forensic investigation will be concluded with the support of the board members by completing questionnaires to be issued by forensic investigators to the individuals not yet interviewed, two board members did not respond to the forensic investigators,” read the letter.
The LGSeta develops and implements training and development for municipal employees, the unemployed, ward councillors and traditional leaders working within the structures of local government.
Although Nkabane’s inaction reinforces criticism that she overlooked serious problems at some of the Setas, her defenders argue that she was busy with other matters.
In her reply to Godongwana on Monday, Nkabane asked him to send her the full forensic investigation report.
“There are challenges facing the Setas, and I am seized with the process of addressing these challenges,” she wrote. “Specifically, I intend to take critical decisions regarding LGSeta during this week.”
Nkabane’s backers claim she had sought legal advice on how to proceed and was told to get the full forensic report as a first step.
She did not respond to questions sent to her on Friday by the Sunday Times.
A source close to the former minister said Nkabane’s back was against the wall, as she increasingly could not trust those tasked with advising her within the ministry.
“She saw that the department was full of her predecessor’s infrastructure, she could not trust those who had misled her, and were throwing her under the bus, to advise her on sensitive matters like this one.
“The minister deals with many matters, we need to be fair.”
Approached for comment, the LGSeta said it had been alerted to the Treasury’s forensic investigation in May 2022. “The former LGSeta board has since participated in the inquiry with a firm appointed for this purpose.”
However, Nkabane had not contacted the Seta or asked it to make submissions on the draft or preliminary findings.
“The LGSeta has not received any communication from the ministry and ... the report cannot be finalised without allowing the institution, through its previous board of directors, an opportunity to comment on the final report.”
Historically, the LGSeta has been marred by systemic corruption, maladministration and governance failures.
A portfolio committee meeting revealed in May that the Seta suffered significant procurement irregularities, including a R2.3bn tender that showed noncompliance, the irregular appointment of training providers, discretionary grant allocations made without board approval and instances of financial bias and overpayment.
According to the Parliamentary Monitoring Group, the discussions highlighted conflicts of interest involving individuals serving on multiple procurement committees.
A criminal case has been opened with the Hawks, and the LGSeta said this meant it could not disclose names.
Nkabane was removed by Ramaphosa following weeks of public scrutiny over her abortive attempt to push through Seta chair appointments that were loaded with ANC cronies.
In an attempt to defend the list, Nkabane is alleged to have misled parliament by stating that the names on it were put forward by an independent panel, but she could not back this up with evidence.
Several of the people she said served on the panel, including the supposed chair Terry Motau, denied this was the case.
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