OUTA and Services SETA fight over report into irregularities

Published Jun 30, 2024


The Organisation Undoing Tax Abuse (OUTA) and Services Sector Education and Training Authority (Services SETA), are squabbling after the SETA refused to grant OUTA access to a report compiled by law firm Werksmans Attorneys.

Werksmans was appointed after OUTA investigated allegations of procurement irregularities at the Services SETA in 2018. This came after whistleblowers approached the organisation with information that the SETA had awarded a tender to companies led by Grayson Reed Consortium, to procure and manage biometric devices or units to track attendance of students participating in service-related learnership programmes, and for making payments of monthly stipends to 100 000 learners at a charge of R121.67 each.

The tender was valued at more than R162 million and expected to run until March 2020.

The Services SETA said that Werksmans had made adverse findings and conclusions against individuals but refused to share the report with OUTA, saying those implicated had not been offered a right to be heard and that it would not be in the public interest to disclose the report.

This resulted in OUTA recently lodging a formal complaint to the Information Regulator against SETA over the refusal to share the investigative report, in terms of section 77A of the Promotion of Access to Information Act (PAIA).

OUTA had earlier failed to access the report after a PAIA request to Service SETA on November 27, 2023.

Duduzile Mwelase, spokesperson for the Services SETA, said they were aware of OUTA’s complaint to the Information Regulator and had responded on June 20, 2024.

“As the Information Regulator is considering this matter, we will await their ruling and guidance on the way forward,” said Mwelase, adding that reasons for withholding access to the report had been given to OUTA.

The Information Regulator’s spokesperson, Nomzamo Zondi, who confirmed receipt of the complaint, said: “We are conducting a pre-investigation on the matter.”

“The complainant will be advised in due course of the outcome, therefore we cannot pre-empt the outcome of the pre-investigation and subsequently our assertions on the matter at this moment,” said Zondi.

Werksmans did not respond.

Speaking to Sunday Independent, OUTA’s legal project manager Asavela Kakaza said the Services SETA as a public entity, should foster transparency and accountability.

Kakaza added that Werksmans investigation came as a result of a probe initiated by OUTA, into allegations in respect of the tenders that Services SETA awarded to different service providers including Grayson Reed Consortium, Star Sign, and Five Star Communications and Projects.

OUTA found that Grayson Reed Consortium was not the business’s real name. It was reported that the company was made up of Grayson Reed Consulting (Pty) Ltd, Kulanati Financial Solutions and Dram Group Holdings. Grayson Reed was a member of the consortium with 70% responsibility for the work sharing and financial benefit according to the contract.

Kulanati was the only company out of the three that was registered with the Companies and Intellectual Property Commission (CIPC). Grayson Reed Consulting (Pty) Ltd was described as the trading name of a company called Muroba Group Holdings, whose value-added tax (VAT) registration number and company registration were used in the tender documents.

OUTA found that Muroba’s use of Grayson Reed as a trading name raised a legal problem. The Companies Act requires that if a trading name is used, then all documents such as invoices must have both names on them. Also, in documents, Grayson Reed was presented as Grayson Reed (Pty) Ltd which was misleading as it purported to be its registered name.

OUTA also found that learners had struggled to get stipend payments as the biometric units were either not delivered or did not work. A list of payments to businesses for learner stipends appeared to have been falsified, with unregistered businesses listed as recipients for huge amounts and figures that did not make sense.

It added that the SETA was supposedly paying stipends for 100 000 learners but its own record showed that it had paid stipends for a maximum of 28 715 learning opportunities a year, only 13 500 of these were learnerships.

Kakaza said a meeting was held between OUTA and the Services SETA following these findings, and it was agreed that the SETA would use the report as a basis for a further investigation to determine whether the processes were flawed or manipulated.

“Therefore, it is important for OUTA to have access to the Werksmans report so that we can establish what their findings and recommendations were, so we can hold Services SETA accountable,” said Kakaza.

Kakaza said OUTA would make sure that the Werksmans recommendations were implemented.

“If there are individuals that ought to be held accountable, ensure that those individuals are held accountable and basically put pressure on Services SETA to put consequence management in place.”

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