NSFAS says its taking action after fraudulent withdrawals

The MyNSFAS bank card has been a source of misery to many students. FILE

The MyNSFAS bank card has been a source of misery to many students. FILE

Published Apr 23, 2023


The National Student Aid Financial Scheme  (NSFAS) has launched an investigation into the alleged fraudulent withdrawals of allowances from students' accounts.

The move comes after the Weekend Argus published a story last week detailing the students' financial frustrations after NSFAS piloted a direct payment system through a third party.

The National Student Financial Aid Scheme (NSFAS) hired a consortium of four service providers to disburse student allowances from 2023 over a five year period, breaking away from past systems of  disbursing allowances through vouchers and institutions.

According to NSFAS the voucher system had shortfalls which resulted in students being defrauded and the institution system also caused delayed payments.

"The direct payment system as it is built on the banking platform was designed to eliminate the fraud risk, and also ensure that the beneficiaries receive their allowances on time," said NSFAS Spokesperson Slumezi Skosana.

However, the new payment system has also left hundreds of students without money and no-one to account after fraudulent withdrawals were made on their allowances.

The tender for the programme estimated to cost about R1.5 billion was awarded to Norraco  Corporation, Coinvest Africa, Tenet Technology and Ezaga Holdings.

Students at various campuses in the Western Cape told Weekend Argus of numerous glitches, alleged hacking and fraudulent withdrawals from the e-accounts.

Now they faced an uncertain future because of the "unabated scam",  and some said they were considering cancelling studies  as they could not afford to travel to campus or pay for landlords for accommodation.

"Imagine receiving a notification that there is R14 000 in your account in the evening . And you don't have data to transfer it to your private bank account. And then in the dead of night someone is helping themselves to the money," said one student at Boland College, Caledon campus.

The alleged fraudsters appeared as Joy Monza, Magandula, Mohammed or Nonja on the students' bank statements.

The students also complained of  exorbitant service charges that they had to pay.

They also said the College made it mandatory for students to achieve at least 80 % attendance before sitting for exams and this was now becoming a challenge as they had no travel allowances.

NSFAS said it was aware of the "reported allegations" and had launched a probe.

"NSFAS and direct payment partners are currently investigating the reported allegations and appropriate remedial actions will be undertaken on conclusion of the investigations", said Skosana.

He also denied that the appointment of the service providers was irregular as alleged by the Organisation Undoing Tax Abuse (OUTA)

The organisation conducted an investigation into the tender and found that at the time of their bid submissions only one of the four suppliers, Ezaga Holdings, held an affiliated banking licence with Access Bank.

A banking licence or affiliation with a bank with a banking licence was a compulsory bid requirement.

OUTA also found that Norraco Corporation and Tenet Technology were also not registered as VAT vendors when they submitted their tenders.

" We believe these tender awards are irregular. We question whether awards such as these are unnecessarily draining NSFAS resources and contributing to its cuts to student subsidies'', said the civil rights  organisation.

The latest woes come as other students expressed frustration over a lack of decision on appeals for funding.

An insider alleged that the delays were due to a "hack of the portal" in 2022, resulting in students not being able to log into their accounts and to submit appeal applications.

"A new system was introduced and all student data migrated into the new upgraded system. However, part of the migrated information is the wrong data that was used by the hackers", alleged the source.

Skosana denied the alleged hack and said last year an increased number of students reported that their accounts "had been compromised".

"After conducting further investigations, we discovered that many students had clicked on links posted on social media that directed them to fraudulent websites which were designed to look and feel like our official NSFAS login portals.

“The majority of students we interviewed were unaware that their credentials had been compromised in this way", said Skosana.

The Special Investigating Unit (SIU) told the Standing Committee on Public Accounts (SCOPA) earlier this week that  NSFAS paid over R5 billion to students not qualifying for funding from 2018 to 2021.

NSFAS has over the years been plagued by a lack or weak internal controls.

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