An independent forensic probe into one of the government’s skills development agencies has uncovered a sorry tale of financial mismanagement, corruption and nepotism.
The probe into the Sector Education and Training Authority for Secondary Agriculture (Setasa) was conducted by the auditor general last year. A report, which has not been made public, was submitted to the Department of Labour in May 2003.
The Mail & Guardian obtained a copy of the 100-page report this week. It makes serious allegations of corruption and nepotism against Gerald Leith, who resigned as chief executive in May last year — the same month the report was submitted to the labour department. At the time, however, Leith told the M&G he had resigned so that he could pursue other ventures and that there had been no wrongdoing.
The report paints a generally gloomy picture of widespread misconduct, poor management controls and failure to adhere to statutory obligations, raising concerns about the agency’s ability to effectively discharge its mandate.
Setasa is one of 25 sector education and training authorities (Setas) established by the government in March 2000 to provide training for workers, the unemployed and those working in small businesses.
The training agencies represent the most important attempt to address the skills crisis, which hamstrings the South African economy. They receive an annual budget of R3-billion from a tax levy imposed on all companies.
Since they were established four years ago the Setas have been in the public spotlight for the wrong reasons. They came under fire last year when the amount they had failed to disburse during their three years reached R3,2-billion.
A number of senior officials attached to Setas were fired after they faced charges of fraud and corruption.
The investigation into Setasa concentrated on the procurement of goods and services by the agency. The auditor general’s probe found that a number of contracts, worth millions of rands, had been awarded to companies linked to Leith.
The report also found that three Setasa employees and five board members had business interests in companies, which have benefited contractually from the Seta.
Leith, the report says, played a crucial role in awarding a contract worth R1,1-million to a company in which he held shares, the Grain Training Institute (GTI).
GTI used another of Leith’s companies, Bedshelf Investments Number 303, for consultancy services. According to the auditor general’s report, 50% of the shares in Bedshelf are owned by Leith. The other 50% are owned by Yolandi Botha, who was the marketing coordinator at Setasa. Botha has since also resigned from the agency.
Bedshelf Investment had invoiced GTI for various services such as ”konsultasie fooie” (consultation fees) and ”herskryf van handleidings” (rewriting of manuals) between July 2002 and January last year.
The report shows Leith often used Setasa’s money to pay for services rendered to GTI. In some cases, the report indicates Leith authorised payments to service providers for services not rendered.
The report shows a relative of Leith’s was paid by Setasa for casual reception services. In that instance, ”the required quotations, terms of reference approved by the CEO and a signed agreement with payment on deliverables as required by the procurement policy were not available on the financial records.”
The report accuses Leith of orchestrating an irregular investment scheme without the approval of the board and for improperly benefiting a relative in the course of it.
According to the report, the Seta invested R15-million in Sanlam in June 2001 — and a few weeks later, a R60 000 commission was paid to a relative of Leith’s for arranging the deal.
Approached by the M&G for comment, Leith denied he has ever been involved in GTI. Although he acknowledged owning three companies called Bedshelf, two were dormant. He said he had resigned from Bedshelf Investments Number 303 before he left the Seta and denied it had benefited from either Setasa or GTI.
The report also raps the training agency’s internal audit unit. It says the internal auditors were aware of some of the agency’s irregularities but did not make any disclosures during Setasa’s audit committee meetings.
Reacting to the report this week, Monwabisi Maclean, a spokesperson for the Department of Labour, said: ”The department accepts there were allegations of corruption levelled against some officials within the Setasa. This matter has now been handed to the Scorpions, who are currently conducting the investigations,” said Maclean.
Said Sam Morotoba, the senior executive manager of Setas: ”The sooner the Scorpions act on this matter, the better.”
Len Hansen, the current chairperson of Setasa, told the M&G that the Seta has now launched legal action against Leith in an effort to recover the money, which the report indicates was obtained through fraudulent means.
n Meanwhile, the Food and Allied Workers Union (Fawu), which has seven members on Setasa’s board, has announced its withdrawal from the Seta. Setasa’s board consists of 10 members each from organised labour and business. The move follows a dispute over a plan to appoint a Setasa board member as Setasa’s CEO.
”A previous decision relating to the appointment of a CEO and made by the board has been undermined and changed in favour of a candidate whom members from business’s side want to appoint.
”Interestingly, this particular individual already sits on the board of [the] Setasa,” said Fawu president Patrick Johnson.