25 May 2024 | 12:56 AM

Sedibeng College funds for sale to sharp investors

Key Takeaways

A sharp-eyed middleman spots a business opportunity at a technical college and calls his friend, an ANC politician, to set up a meeting with senior college officials. Three months later, having done no work to speak of, he walks away with a cool R3.4-million. An avaricious daydream? An amaBhungane investigation has shown that it really happened. 

The investigation revealed how the principal and former chief financial officer of the Sedibeng Technical and Vocational Education and Training College in Vereeniging, in the Vaal area, channelled R150-million of college funds through the entrepreneur’s investment company in defiance of internal procedures and a ruling by the college council.

The company, Gundo Wealth Solutions, received a 2% “initiation fee” for investing the college millions with Investec.

AmaBhungane has also established that a prominent Gauteng government official facilitated the deal by introducing Gundo’s sole director, Ralliom Razwinane, to college principal Dr Abe Mashele and its CFO, Felix Mpofu.

Anda Bici, a former ANC Youth League activist and former spokesperson for Gauteng MEC for economic development Lebogang Maile, confirmed facilitating the meeting in late 2015.

“All I know and confirm is that I was asked by this Ralliom fellow to link them with Sedibeng TVET College for an opportunity he wanted to pursue. I never asked the nature of the opportunity but I did link them,” said Bici.

He added that on his first and last visit to the college, he spoke to both the principal and the CFO and asked them to meet Gundo. “I was not (at that meeting) and I do not know what they discussed and what was agreed to,” he said.

A source, who did not want to be named, alleged that the R150-million investment was fast-tracked after Gundo met the two college officials.

According to a Sizwe Ntsaluba Gobodo forensic report, which amaBhungane has seen, the two bypassed a resolution by the council of the college on December 1, 2015 suspending all financial policies. This followed an adverse report by the auditor-general.

According to the Gobodo report, Mpofu, the CFO, used a financial committee resolution dated November 8, 2015 to invest the funds, even though this had been revoked. The money was placed with Investec on January 18, 2016.

Principal Mashele told the auditors that when he signed the Investec bond application form, he did not pay attention to what he was signing “as he signed the form together with another pack of documents that required his approval”.

“He further indicated that had he known he would not have signed the application form …”

The report also found that by hiring Gundo the CFO ignored the institution’s banking policy, which prohibits the use of third parties to invest college funds.

Council chairman Dr John Maloma said he was shocked to hear that the R150-million was invested despite an instruction not to proceed.

According to the forensic report, Mpofu, the CFO, tried to get Maloma and a member of the financial committee to sign off on the investment, but they both refused.

“There was no urgency… We are not in the business of making profit. We are a public institution; we should be spending that money on students’ needs,” said Maloma.

Why principal Mashele and CFO Mpofu were in such a hurry to release the funds, and why they circumvented policies and controls, remains unclear.

The scandal over the irregular investment of college funds takes place amid concerns that TVET colleges are floundering because of corruption and weak leadership.

In January this year students shut down colleges across the country in a bid to draw the attention of the Higher Education and Training Minister to their complaints. For the 2017/18 financial year the colleges have been allocated a total of R19.8-billion.

Maloma said he suspended all supply chain management activities in December 2015 after the college had received negative findings from the auditor-general and audit firm KPMG. He said he wanted the council to discuss how best to close the loopholes identified in the findings.

The reports raised concerns about internal control deficiencies, especially on the supply chain management side, which put the college – whose annual budget is in the region of R400-million – at risk of fraud and corruption.

Maloma said the council was considering legal action to recoup the funds.

How Gundo was hired also remains a mystery, as the Gobodo forensic audit report found that there was no contract between Sedibeng and the company.

Gundo’s Razwinane sidestepped an amaBhungane question about how he was hired and the alleged absence of a contract, but said Gundo had advised the college to invest with Investec, “which was duly accepted by management”. According to the auditor’s report, he was paid R3,4-million for providing this service.

Despite Bici’s confirmation, principal Mashele denied that the ANC official had introduced Gundo to the college. He said meetings may have taken place about the investment, but that “there is no single meeting where Gundo was discussed or mentioned in my presence. It is surprising if Bici says he introduced Gundo to us.”

Principal Mashele said he first encountered Bici at a meeting with Investec after the deal was concluded. “There were two gentlemen and I would like to believe one of them was Bici. I will not recognise him again because there is no relationship between us,” he said.

Razwinane denied knowing Bici, saying he had only dealt with the college. But he and principal Mashele were contradicted by the CFO Mpofu, who corroborated Bici’s version of events.

Mpofu said principal Mashele had introduced him to Bici and confirmed that a meeting involving himself, Bici and Mashele had indeed taken place before the investment was made. However, he defended his role, saying he was following principal Mashele’s instructions.

Maloma said that during a meeting to discuss the possible cancellation of the deal, the principal received a telephone call from Bici, which he placed on speaker phone.

Maloma said Bici wanted to find out which officials wanted to cancel the investment and if they wanted the money to remain with Absa, where it was being held. The college funds were held at Absa and then transferred to Investec.

He said the principal Mashele told him after the call that Bici had been on the line. Mashele responded that he had put Bici on speaker phone because he wanted to show officials at the meeting that there was nothing secret between him and Bici.

Bici confirmed the call and said: “The principal and whomever that is dropping my name must make a sworn affidavit on the matter… Mpofu did inform me telephonically that the principal is invoking my name in the discussions and I called the principal to ask him why was he doing that and to kindly refrain from such. That was the last time I spoke to him.”

The Gobodo report was scathing about principal Mashele’s role, calling for the college to consider corrective action against him for investing without applying his mind and exposing the institution to risk.

The auditors also recommended that the college report a case of possible fraud against CFO Mpofu for further investigation.

Council chairman Maloma said he had notified the national higher education department of the college’s its intention to suspend principal Mashele but was told that the department would institute its own investigation. More than a year later no action had been taken.

Mpofu’s contract was not renewed, but amaBhungane has learnt that he now has his own investment company, Eland Investments.

The department of higher education and training’s national spokesperson, Madikwe Mabotha, said the department was aware of the details of the forensic auditors’ report.

“The investment is earning good interest returns, as it is a well-structured and secure investment,” she said. The department had no evidence suggesting that public money had been lost or stolen.

Mabotha did not answer a question about whether the department was happy with the way the money was invested.

  • Read the whole Sizwe Ntsaluba Gobodo forensic report HERE.

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