NSFAS at high risk of fraud, theft

Disgruntled: Many NSFAS students have complained about receiving far less money than was allocated to them. (Fredrik Lerneryd, MG)

Disgruntled: Many NSFAS students have complained about receiving far less money than was allocated to them. (Fredrik Lerneryd, MG)

A new electronic system the National Student Financial Aid Scheme (NSFAS) is using to allocate millions of rands to poor students is apparently so vulnerable to fraud by the agency’s own employees that an IT specialist allegedly managed to swindle R100?000 out of it with ease. That is just one example.

The employee was suspended more than a month ago for allegedly defrauding Sbux, a cellphone-based system through which NSFAS loan and bursary recipients access accommodation, transport and textbook allowances. Tuition fees are paid directly to institutions.

“He logged into the system using details of two ladies working in the call centre. He then accessed the Sbux system to change students’ cellphone numbers to [his numbers] … and then transacted at ­various Shoprite and Checkers outlets,” a source at NSFAS said.

He committed the alleged fraud over a year, the source said. The source, who is in middle management, asked to remain anonymous because “there’s a lot of purging at this institution”.

Sbux is a cellphone application that sends secret pin numbers to students each month to access cash for transport and accommodation, and vouchers for textbooks and food, which are redeemable at merchants such as Shoprite and Checkers.

The scheme was allocated R9.5-billion this year by the treasury. This includes R4.1-billion for university study loans targeting 205?000 students and R2.2-billion for bursaries for 200?000 students at technical and vocational training colleges.

Despite a budget that has increased from R441-million since its inception in 1991, each year NSFAS rejects funding applications from thousands of deserving students, citing a shortage of funds.

NSFAS spokesperson Kagisho Mamabolo said he “cannot confirm or deny” that the employee was suspended for the alleged fraud of R100?000 from the Sbux system.

“An NSFAS employee’s legitimate expectation of privacy and confidentiality is qualified by NSFAS policies irrespective of the extent to which the information is already in the public domain,” he said. 

The source said the Sbux system “is not secure and very open to manipulation and fraud”.

Asked about this, Mamabolo said: “It would be naive of the M&G to assume that any financial system is 100% secure. Fraud at financial institutions involving credit cards, ATMs, as well as the proliferation of phishing scams, attests to this.”

NSFAS has been piloting Sbux at several institutions since 2014 and wants to implement it across all public universities and colleges. More than R400-million has been disbursed to students through the system to date, according to Mamabolo.

But it has already faced its fair share of controversy. Bursary holders for the teacher training Funza Lushaka scheme, which NSFAS administers, last year blew the lid off what they suspected was fraud in the system.

The group, which studies at Unisa, signed contracts with NSFAS for thousands of rands for 2014 study fees, sometimes as much as R80?000, but struggled to get the money.

Thando Mathebula, a final-year Funza Lushaka student at Unisa in Durban, recalled this week how she never got all the funds she signed up for last year. “I ended up getting R12?000. That’s the only money I received last year, but I was allocated a lot [more].”

Mathebula was part of the group that led a petition calling for the cancellation of Sbux. “We used to receive different funds. Some got R23?000, while others got R8?000. We suspected there was fraud.”

Mathebula says the system has “improved a lot this year. I’d be lying if I said it didn’t. This year everything is going smoothly. We didn’t have any problems at all. We got our full amounts as well. They’ve given me R23?000 this year in the first semester.”

But Nelson Mandela Metro- politan University’s students representative council president, Hlomela Bucwa, said technical glitches in the Sbux system were “a big problem”.

“You will go to a shop thinking you have so much funds left and then you find out there’s nothing left,” she said. “Or there is delayed allocation of funds.”

Bucwa said students sign a contract with NSFAS and are supposed to receive a pin within 48 hours “but sometimes it’s not automatically sent and because the system is centralised you can’t just go to your financial aid office [to query it]”.

“You have to phone the NSFAS office in Cape Town and then you might run out of airtime.” She said these glitches happen “quite a bit and students end up going hungry. We should have a more stringent system that is transparent and can detect issues.”

This week, the ANC called for “improved administration of NSFAS”. But NSFAS chief executive Msulwa Daca revealed in the organisation’s current annual report that the “major capacity constraint affecting [us] is still related to human capital”.

“This is against the backdrop of a significant increase in headcount to fully support a transformed entity. The focus has been to recruit personnel in the areas of information and communication technology and operations.

“There is now a full complement of executives and the next drive is to fill various senior and middle management positions that remain vacant.”

 
Victoria John
Bongani Nkosi

Victoria John

Victoria studied journalism, specialising in photojournalism, at Rhodes University from 2004 to 2007. After traveling around the US and a brief stint in the UK she did a year's internship at The Independent on Saturday in Durban. She then worked as a reporter for the South African Press Association for a year before joining the Mail & Guardian as an education reporter in August 2011.
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