The R2-billion-a-year deal retail bank FNB failed to score with the National Students Financial Aid Scheme (NSFAS) has been highlighted as one of the main reasons for the sacking of the scheme’s CEO Andile Nongogo.
This is contained in court papers submitted by the NSFAS board in the Labour Court in Joburg recently.
In the court papers, which we have seen, NSFAS submitted that Nongogo breached his fiduciary duties by, among others, “terminating the process towards the appointment of FNB, which had been recommended by the bid evaluation committee, in respect of the 2020 tender process”.
“Prior approval from the National Treasury is required when a tender is to be cancelled for a second time. The applicant should have ensured that Treasury approval was obtained as he issued the instruction to cancel the tender.”
The tender for the direct payment of student allowances was first opened in July 2020 but “the bid was subsequently cancelled as it was deemed non-responsive”. The tender was re-issued in November 2020, and the bid evaluation committee recommended FNB.
Nongogo joined NSFAS during this period, and following a status update from senior managers, he allegedly “stated that the bid was exclusionary and should be cancelled”.
While the same reason was recorded in the supply chain letter directing that the bid should be canned, the NSFAS website stated that the services were no longer required.
The board said the tender was issued again in January 2022 with “extensive differences”.
The listed changes included the new requirement for the bidder to subcontract 30% to a 51% black-owned company. “Mandatory requirements such as the need to provide a banking licence were amended to require an alternative option of bank sponsorship or affiliate. FNB was again among the 18 bidders, including Nedbank, Absa, and Standard Bank. However, only fin-techs, namely Coinvest
Africa, Tenet Technology, eZaga Holdings, and Norraco Corporation were appointed to facilitate direct payment to students.
“I understand that fin-techs are businesses that use technology to automate financial services; however, fin-techs are not regulated as banks. Fin-techs are also not required to have a banking licence in order to operate. None of the banks that tendered were appointed,” board chairperson Ernest Khosa said in court papers.
Nongogo’s sympathisers said his actions angered “the country’s overlords”, and that is why he is being persecuted without even going through a formal
disciplinary hearing.
Sunday World learnt that in terms of the scuppered FNB deal, the bank wanted to open bank accounts for the fund’s student beneficiaries, put money for them in the accounts, and keep them as customers.
“It was big business for the banks because then they would retain those students forever as customers. Right now, the students have a choice of where to go and which bank to use. They get an NSFAS card, with which they can use any other bank.”
Sources said another thorny issue was that retail banks were not prepared to take on black business partners. Nongogo then changed the specifications, which favoured fin-tech companies with a BEE component.
“That is a R2-bilion-a-year deal. That is huge. And now it is in black hands. That is why the banks were angry because the R2-billion would have circulated among them and they were going to keep the database for themselves, and that is forever.”
But some disagree and said Nongogo “did not even know about FNB being recommended. He cancelled because he had just arrived in December 2020”.
“His reasoning was that the deal was the core of the business. He wanted the new board, starting in January 2021, to be aware of and up to speed with the deal.”
But the source asked: “If you are going to dismiss him because he meddled in the process in 2021, why are you firing him in 2023? Why didn’t you act then? The tender was done in 2021. Why did they trust him from then on when the tender was approved, adjudicated, and started running? When did their trust break? They are worried that if they put him through disciplinary hearing, what is he going to say?”
The board relied on the outcomes of an investigation by law firm Werksmans and advocate Tembeka Ngcukaitobi to fire Nongogo.
