The Treasury has raised serious concerns about the extent of mismanagement and inefficiency bedevilling the Sector Education and Training Authorities (Setas).
The government established the 25 sectoral training agencies in March 2000 to provide training for workers, the unemployed and those working in small businesses. They represent the most important attempt to address the skills crisis that hamstrings the South African economy.
The Setas receive an annual budget of R3-billion from a tax levy imposed on all companies. They have so far failed to make a meaningful impact on the huge skills backlog.
The problems prompted Department of Finance Deputy Director General Andrew Donaldson to write to the Department of Labour Director General Rams Ramashia, voicing misgivings about the state of the Setas.
In the confidential letter, which is in the possession of the Mail & Guardian, Donaldson complained about the pace with which Setas were distributing funds, saying this reflected a delay in the productive use of significant government revenue.
”The unspent Setas money places a burden on taxpayers without productive use of government’s money,” said Donaldson.
In an interview with the M&G Donaldson declined to comment on the letter, but confirmed that the department was concerned about poor financial management within the Setas.
He said the labour department should ensure that Setas tighten up on reporting requirements and on financial management.
The Treasury’s raising of the alarm came as an increasing number of the training agencies were dogged by a series of management problems. The crime-busting Scorpions unit has been called in to probe allegations of corruption and fraud in some of the Setas.
A number of senior officials attached to Setas have allegedly been fired on internal charges of fraud and corruption.
The Setas involved include the Secondary Agriculture Sector Education and Training Authority (Setasa), the Tourism and Hospitality Education and Training Authority (Theta), the criminal justice system Seta and the Forest Industries Sector Education and Training Authority.
The latest scandal to hit the Setas involves Theta. Last week it fired its deputy CEO, Vincent Hays, after he allegedly embezzled thousands of rands from the organisation.
Hays’s dismissal came barely six months after the Seta’s former CEO, Tony Ansara, was allegedly forced to resign on charges of corruption. Hays was dismissed after an internal inquiry found that:
He irregularly increased his salary;
He put his wife’s name on the payroll of Theta, even though she was never employed by the Seta; and
He granted leave to independent contractors without the authority of the board.
Approached for comment this week, Hays maintained he was innocent. He claimed that he had been retrenched by the Seta in January.
”As far as I am concerned the charges levelled against me fell away because I was no longer an employee of Theta,” Hays said.
Asked why his wife’s name was on Theta’s payroll, Hays said: ”I am not prepared to discuss confidential arrangements. This matter was dealt with by the remuneration committee. My wife was paid for certain services she rendered.”
Kananelo Makheta, Theta’s chairperson, confirmed that Hays had been dismissed last week.
Ansara declined to comment, saying he was bound by an agreement with Theta that he would not disclose details of his resignation to unauthorised parties.
The Department of Labour is investigating Ansara’s case.
The M&G has learned that Setasa CEO Gerald Leith, who was accused of corruption and fraud, resigned last week.
The Scorpions are investigating Leith on allegations that he irregularly awarded contracts to a company in which he had an interest. Leith allegedly failed to disclose his interest in the Pretoria-based company. Sipho Ngwema, spokesperson for the Scorpions, confirmed that his unit was investigating Leith.
Leith said he had resigned to pursue other ventures. He dismissed all the allegations against him, saying everything that he had done was for the benefit of Setasa.
”I was trying to get the infrastructure in place so that we could deliver in terms of skills development,” said Leith.
Sam Morotoba, senior executive manager responsible for Setas in the Department of Labour, said the department shared the Treasury’s concerns about the agencies’ failure to distribute funds.
He said the Setas underspent their budgets because they took a long time verifying skills plans and checking that actual training had taken place.
The regulations allowed Setas to pay grants only after submission of reports. ”The minister has now amended this regulation to allow Setas to pay interim grants on submission of progress reports,” said Morotoba.
Key players in the business and labour sectors claim the current Seta funding system is flawed.
Ken Hall, the South African Chamber of Business’s (Sacob) representative in Business South Africa, said he believes that ”the sheer sums of money involved present a huge temptation to potential fraudsters”.
Hall said the government should consider chanelling some of the money to the South African Qualification Authority (Saqa), which depends mainly on foreign donors.
He said Saqa could be faced with collapse when foreign funding comes to an end in 18 months. ”This will bring about a collapse of the whole skills-development system,” Hall said.
Carol O’Brien of Sacob shares Hall’s sentiments. ”Setas’s inability to deliver takes away the credibility of the need to uplift skills and creates distrust among the various stakeholders. Steps should be put in place to prevent Setas from abusing the power accorded to them,” O’Brien said.
The Congress of South African Trade Unions believes that Setas should be subjected to the regulatory framework of the Public Finance Management Act.
Chez Milani, general secretary for the Federation of Unions of South Africa, warned that if the trend within the Setas continues, the government might not meet its 2005 target to reach 80 000 learners. Only 26 000 learners have signed an agreement for training to date.
The latest survey conducted by Sacob shows a 13% decrease in a number of companies who claim their skills levies from Setas. The reasons cited for the decrease of claims is that the payout is not worth the effort involved, and that the administrative burden is too onerous.
A number of Setas that have spoken to the M&G blamed the government for not providing adequate infrastructure to address skills development.
”The government miscalculated the infrastructure. They don’t have enough capacity to deal with a number of issues facing the Setas. If there is not enough infrastructure the 2005 deadline won’t be practical,” said Tahir Muhammed, board chairperson for the criminal justice system Seta.
Setasa board chairperson Patrick Janson said the reason a number of Setas have been riddled with problems in the past was that CEOs were given too much power.
”In many cases you will find that the employment situation is free to CEOs and they end up not following correct procedures in terms of employing,” said Janson.
Snuki Zikalala, spokesperson for the Department of Labour, said his department was aware of the problems facing Setas.
He acknowledged that corruption was also becoming a ”trend” within Setas. The department, he said, was considering amendments to the Skills Development Act to increase its monitoring capacity.
He said the draft amendments would stipulate stricter criteria on how money received by the Setas would be utilised. Such measures could include interventions by the minister of labour to influence spending levels for administration of Setas.