The National Student Financial Aid Scheme (NSFAS) board announced that it will advise all four of its direct payment service providers that their contracts will be terminated.

Giving an update on the outcome of the investigation report into allegations on the appointment of direct payment services providers, NSFAS chairperson Ernest Khosa explained that the board would ensure that this termination did not negatively affect students.

The board noted that decisions would be implemented progressively, from Wednesday.

The NSFAS board appointed Werksmans Attorneys and Advocate Tembeka Ngcukaitobi to conduct an investigation into the allegations of irregularities against NSFAS CEO Andile Nongogo.

The investigations relate to his conflict of interest in the appointment of service providers. Four service providers – Tenet Technology, eZaga Holdings, the Noracco Corporation and Coinvest Africa – were appointed to facilitate the direct payment of allowances to students.

Khosa highlighted that the report established that Nongogo actively participated in the presentation to the Bid Evaluation Committee (BEC) of proposals by service providers. This is a material violation of public procurement processes of NSFAS which he was employed to safeguard and uphold, Khosa said.

Furthermore, the report revealed that there seems to have been a conflict of interest in the appointment of these four fin-tech service providers.

“The report also states that the CEO appointed [a] Dr Chirwa to assist the BEC as a technical adviser. This appointment was inherently incorrect, as the 2021 Supply Chain Management [SCM] Policy does not provide for the appointment of an expert to the BEC,” Khosa said.

He added that the report noted that the SCM policy and position were altered to cure the defect of appointing Chirwa in the BEC when the 2021 SCM Policy did not provide for such.

“What is more noteworthy is Dr Chirwa’s association with certain companies that were appointed as service providers, both at the Service SETA and at NSFAS,” Khosa explained.

The board noted that there was no feasibility study before the current implementation of the direct payment system, particularly the justification for the appointment of the four service providers.

“There was no reason furnished to the investigators why the feasibility study was not conducted, which is a critical part of the project preparation for the implementation of the project. Such an assessment would have enabled NSFAS to make an informed decision on the proposed solution and to evaluate the practicability and chances of success of the proposed direct payment solution,” explained Khosa.

The board has decided to write to Nongogo and grant him an opportunity to argue why his contract should not be terminated.

Staff members associated with wrong-doing, as mentioned in the report, are recommended to face a disciplinary enquiry, Khosa said.

He said the board had also decided to review the SCM Policy, in line with the National Treasury Regulations and Policies, including the Public Finance Management Amendment Act.