Services Seta, one of the most troubled sector education and training authorities (Setas), on Wednesday told parliament how it went from no wasteful and fruitless expenditure last year to approximately recording R100m under the same accounting item this year.
This emerged during a heated appearance of the Services Seta and Construction Seta (Ceta) before the portfolio committee on higher education and training in parliament.
READ: Minister Buti Manamela moves to clean up troubled SETAs
Administrator and ANC cadre deployment beneficiary Lehlogonolo Masoga explained how the massive jump happened, blaming years of open season free-for-all at the Services Seta.
According to Masoga, some of the service providers would be paid a portion for a service but would run for the hills immediately after being paid without delivering.
Some of the companies that scored millions of public money have long closed shop and disappeared into thin air, leaving Masoga and his team clutching at the straws.
Such was the level of impunity at the Services Seta before it was placed under administration last year by troubled minister Buti Manamela.
Quantum leap in fruitless expenditure
“I want to report, chairperson, that we are currently sitting at a total of R92.4-million wasteful and fruitless expenditure, moving literally from zero in the previous year in terms of the audit outcome,” said Masoga.
“We then have to account for this quantum leap from zero to R92-million. This work we do of correcting the past errors is bringing us to a point wherein a can has been kicked down the road since 2020. Now we arrive at that damage.
“This because projects that have been in the system for the past seven years that did not produce results, and when we look at the commitments, we discover that these projects have – some of them – service providers no longer in existence in the company registration database. They are out of business,” Masoga went on.
READ: Services SETA offers compensation to axed whistleblowers
“But those problems have been carried through over the years as work-in-progress, and now when we decisively intervened and cancelled projects of people who have stolen – what we call the first-tranche eaters. They get the first tranche and run away with our money.
“If you would have spent money in 2021 and the service provider ran away, when you cancel that project and you disclose it now, it then amounts to wasteful expenditure because you have not trained anybody successfully because those students that were in those programmes fizzle out with the disappearance of the service provider who ran away with the first tranche payment.”
Errant service providers billing for no work
Masoga said an example was an ICT project systems project from 2018 wherein R17-million was paid but the system was never utilised and was never declared obsolete over the years.
“Now when we confront that issue and we disclose what would have in the last eight years been declared as work-in-progress, now we declare it as material loss, it then contributes to adding into the fruitless expenditure because we are exposing the rot that is in the system that has been covered in the name of ‘work-in-progress’ and not disclosed for what they are.
“We are dealing with historical commitments that involves literally and legally confronting errant service providers that abandoned work and removing them from the system but when we remove them, the monies that would have been paid to them is declared as wasteful expenditure. It is a pain we have to go through so that we can enter into healing period.”
- Services Seta reported an increase from zero to approximately R92.4 million in wasteful and fruitless expenditure within a year.
- The jump in wasteful expenditure is due to service providers being paid but failing to deliver services, with some companies closing and disappearing.
- The problems traced back to projects ongoing since 2020, some involving service providers no longer existing in official company registries.
- Former payments to errant service providers now result in wasteful expenditure when projects are canceled without successful training outcomes.
- A specific case cited involved R17 million spent on an ICT system project in 2018 that was never utilized or declared obsolete, contributing to material losses.
