Hundreds of millions of rands intended to help young South Africans develop skills are going down the drain due to the shortcomings of sector education & training authorities (Setas), which include overpayments, failure to meet targets and conflicts of interest on the part of board members.
Meant to address skills shortages and improve the overall quality of education and training in South Africa, these entities have been riddled with corruption and maladministration, with poor accountability systems leading to millions being spent with little to show.
The last audited financial statements, for financial 2024, show dire problems of irregular expenditure amounting to more than R700m for that year and the previous year. However, some Setas claim the auditor-general (AG) findings were false.
Shortly before her axing this week, former higher education & training minister Nobuhle Nkabane said measures had been put in place to strengthen the monitoring and evaluation of Setas, including quarterly performance reviews and ad hoc performance assessment review sessions with the audit and risk committees.
At the local government Seta (LGSeta), which received a qualified audit, the AG found that the chair of its risk and audit committee was involved in one of the companies that did business with the entity.
“The chairperson ... is a director/member of a private company that is doing business with the public entity and therefore this relationship impairs the independence of the audit committee,” the AG stated.
The Seta board nomination and appointment processes create ANC-aligned boards that are not independent and allow for co-ordinated manipulation of accountability systems
— Prof Alex van den Heever
The AG also found that financial statements of the LGSeta had not disclosed all the bank accounts of the entity and had not given the interest earned from all reinvested funds.
Contingent liabilities were understated by R52.2m. “The entity wrote off commitments to the value of R52,251,826, even though there was evidence that part of the goods/service had been delivered and should have rather been recognised as a contingent liability,” the AG wrote.
The manufacturing, engineering & related services Seta, which received a qualified audit outcome, reported that nine unemployed engineering graduates had completed a training programme funded by the Seta.
“An achievement of nine was reported against a target of 21. However, the audit evidence showed the actual achievement to be [zero]. Consequently, the achievement against the target was lower than reported,” the AG stated.
The construction education & training authority (Ceta) received a qualified audit opinion. It spent R15.7m on an artisans project that ran for more than a year but “failed to meet its objectives, and as a result, the entity decided to discontinue the project”.
The AG found that some payments exceeded the service level agreement — one service provider, appointed to assist Ceta in “analysing data for adequate decision-making and to undertake conflict of interest verifications”, was paid more than the agreed hourly rate.
After being ordered by the AG to investigate the matter, two officials were identified as having been responsible for the financial loss but no action was taken against them because they resigned.
The AG identified several overpayments for the “war on leaks” project at the energy & water Seta.
A two-month preliminary investigation by a private audit firm cleared CEO Mpho Mookapele of corruption, fraud and mismanagement.
But the Seta remains under investigation by the Special Investigating Unit (SIU) for possible corruption related to the department of water & sanitation’s “war on leaks” programme.
A proclamation for an SIU investigation into the chemical industries Seta was signed in June, with investigations expected to commence soon.
SIU spokesperson Kaizer Kganyago said over the last four years three probes had been finalised at the agricultural Seta (AgriSeta) and two at the media, information & communication technologies Seta.
Bloemfontein pastor Lerato Raphael Mokoteli, who fraudulently received R1.9m from AgriSeta, was made to pay back the money two years ago as part of a plea agreement with the state.
Mokoteli and Anthony Dywili told AgriSeta in requesting the money 10 years ago that it was for training and mentoring in food garden operations in Kimberley.
Mokoteli and Dywili claimed the application was a joint venture between Business Against Crime and Dipalemo Training Strategic Services, an AgriSeta-accredited service provider. “However, such a joint venture did not exist. Dipalemo was not aware of the application and did not receive a cent,” the SIU stated.
The Setas declined to answer question from the Sunday Times.
Wayne Duvenage, the CEO of Organisation Undoing Tax Abuse, said a quick way to address maladministration, corruption and poor governance in Setas would be the appointment of “strong, apolitical and experienced board chairpersons and members”.
“The new board members should be given instructions to ensure that outgoing CEOs are not reappointed, especially those whose Setas have had qualified audits and too many findings pertaining to maladministration and irregular expenditure,” he said.
Duvenage said political patronage and the deliberate appointment of connected cadres was to blame for the way Setas had become riddled with corruption and maladministration.
He said Nkabane’s predecessor, Blade Nzimande, had given “nonchalant responses to our many reports on our discovery of numerous incidents of gross misconduct”.
Prof Alex van den Heever, chair of social security system administration and management studies at the Wits University School of Governance, said the corruption in Setas flowed directly from “the corporate governance designs, embedded in statute, that expose them to capture via the executive of government”.
“The Seta board nomination and appointment processes create ANC-aligned boards that are not independent and allow for co-ordinated manipulation of accountability systems. Given the extensive risk of patronage and corrupt practices, this approach is deeply flawed,” Van den Heever said.
He said because the boards appointed the CEOs with the approval of the department, those leading the entities would also be political appointments.
“All accountability systems are consequently compromised from the top. For instance, the audit and risk committees are appointed by the board, which already have a conflict with the CEO, which is also a political appointment.”
Van den Heever said the Seta system was vulnerable to substantial patronage directed through the political party that appoints the minister of higher education.
“If universities were run like this, they would also fail. The Setas, to the extent that they have a coherent rationale ... should have corporate governance arrangements that are entirely independent of the department, the minister and political parties.”
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