Serious corporate contraventions have racked the Manufacturing, Engineering and Related Services Seta (Merseta), making it the latest in a long list of sector education and training authorities (Setas) to have been hit by allegations of financial mismanagement.
This has happened shortly after Minister of Labour Membathisi Mdladlana’s instruction last month that all 25 Setas submit applications by Friday March 19 to the Department of Labour to motivate for their continued existence. If successful, they will receive renewal certificates in terms of the Skills Development Amendment Act.
The Mail & Guardian is in possession of an auditors’ report commissioned by the Merseta executive council that reveals extensive violations by the Seta’s management of procurement policy, employment procedures and corporate governance structures involving amounts of up to R5-million.
According to the report, 20 companies contracted by Merseta for work ranging from curriculum formation to recruitment of learners and project management were hired by the current CEO, Jessie Maluleke, with no approval from the executive committee and, in some cases, Maluleke directly undermined the executive’s decisions.
In other cases companies were hired by Maluleke without a contract or were paid large sums of money before a contract had been signed. In two cases Merseta hired companies that were ”invalid entities” — companies that are not registered with the Registrar of Companies.
The Setas were established in 2000 in terms of the National Skills and Development Strategy (NSDS) to fill the skills lacunae left by apartheid. They provide training to workers in all sectors of the economy to broaden the skills base of the country.
In terms of the NSDS, business disburses 1% of its wage costs to a skills levy, which
the South African Revenue Service (Sars) controls. Sars distributes 80% (R30-billion) of this levy to the 25 Setas and the remaining 20% to the labour department for administrative costs.
Last year about R2,8-billion of the Setas budget was unspent. Labour department spokesperson Snuki Zikalala said most of this was rollover from 2002.
Merseta is the largest of the 25 Setas and employs about 80 people. Its 2004/05 budget projects expenditure for the year of about R42-million. The projected income is about R43-million.
According to Merseta’s corporate policy, any contract that exceeds R200 000 requires the approval of the executive council. Most of the 20 companies that Maluleke hired involved sums that far exceeded this. In one case, the contract was for about R2-million, of which about R287 000 was paid to the company before a contract was signed.
More than R10 000 was paid by Maluleke to six ”ad hoc” companies without contracts in place and, in a particularly glaring case, R1,1-million was paid to a recruitment agency, Acumen, which never had a contract or a service-level agreement with Merseta.
Last month Mdladlana indicated that regulations would come into force by April to stem the poor performance of Setas racked by allegations of financial mismanagement and corruption since their establishment.
Maluleke told the M&G he could not comment ”at this stage because it could prejudice the inquiry. However, I completely welcome the inquiry to lay to rest the allegations.”