PSETA PRESENTATION

1. PSETA PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND ADMINISTRATION 9 MARCH 2011

2. TABLE OF CONTENTS EXISTENTIAL HISTORY: PSETA BACKGROUND TO NSF PROJECT FINANCIAL MALADMINISTRATION OF PROJECT SUMMARY OF FORENSIC INVESTIGATION REPORT ACTION BY THE PSETA and DPSA END OF PRESENTATION

3. EXISTENTIAL HISTORY: PSETA Established 2000 in terms of the Skills Development Act Turned into a DPSA unit rather than a self-standing SETA Feb 2001: Listed as Schedule 3 public entity in terms of the PFMA Nov 2001: Delisted as a public entity April 2006: relisted but: - DPSA acting as administrative and corporate management agent - Staff seconded from DPSA

4. EXISTENTIAL HISTORY: PSETA Cntnd March 2010: DPSA-PSETA decision and MOA to ensure PSETA operational independence, i.e. responsibility for own administration and corporate management Aug 2010: PSETA Board appointed CEO and CFO Sept 2010: PSETA placed under Administration by MHET Nov 2010: PSETA re-certified for a year March 2011: New Constitution finalised by stakeholders and new Board to be appointed April 2011: New organisational structure coming into effect, including Projects Office

5. BACKGROUND TO NSF PROJECT 2004: PSETA-NSF agreement for PSETA-run, NSF-funded, Learnership R106m budget: Learners’ Allowances, Training, Admin and Project Salaries Quarterly progress reports were to be submitted to DoL – according to records reports were duly submitted Project was supposed to run for 12 months – March 2005 to April 2006 Project was run in a total of 5 provinces – MP; NWP; NC; KZN; and EC Project ran its full course but was never properly closed

6. FINANCIAL MALADMINISTRATION OF PROJECT 2005 – PSETA alerted to possible fraud on two banking accounts Complaint laid with the SAPS Commercial Crimes Unit investigated the matter Project’s Finance Manager arrested, subsequently convicted in 2009 on 38 counts of fraud or theft and sentenced to 10 years in prison SIU recommended that matter be referred to forensic auditors for conclusive quantification of the extent of the fraud 2007: PWC appointed to conduct the investigation Final investigation report submitted by PWC on 1 July 2010

7. SUMMARY OF FORENSIC INVESTIGATION REPORT Interference with learners’ banking details – fraudulent alterations made Authorising officials approved some payments without proper review R1 466 319.10 paid into alleged fictitious accounts No matching of account holder with account number before payment Irregular payments of R55 100.00 processed by 2 authorizers and effected from Grant Disbursement account Some learners on SAQA records untraceable to application forms Potential R10 853 850.64 fraud – no evidence of payment to legitimate bank accounts Recommended that matter be referred back to the SIU for finalization

8. ACTION BY THE PSETA, DPSA AND THE NSF PSETA referred two former Project Members back to DPSA on suspicion of negligence. DPSA has commenced disciplinary process re the two officials PSETA and DPSA have engaged SIU in line with Investigation Report’s call Scope of the SIU since extended to include other suspected irregular and fruitless expenditure in the PSETA Joint PSETA-DPSA Team being established by MPSA to source all internal info and coordinate full PSETA and DPSA cooperation with SIU investigation Projects Office established at the PSETA for proper management of projects. Projects Manager and Project Accountant posts created PSETA and NSF have agreed on process to properly close the Project and have committed to pressing criminal and civil charges against anyone found by the SIU to have defrauded the Project and the PSETA

9. END OF PRESENTATION Thank You