Reappointing CEOs With Poor Track Records Sends the Wrong Message About Accountability

The Organisation Undoing Tax Abuse (OUTA) expresses its deep disappointment in the decision by the Minister of Higher Education, Buti Manamela, to reappoint Gugu Mkhize as Chief Executive Officer of the Insurance Sector Education and Training Authority (Inseta) for a further five-year term.

OUTA believes the Minister has erred in reappointing Mkhize, given the serious governance and performance concerns that have plagued Inseta under her leadership over the past five years. The Regulations for the Conditions of Service and Appointment of the CEO of a SETA, in clause 2(8), make it clear that any recommendation for reappointment must be subject to “satisfactory performance”.

On this measure, Mkhize has failed dismally.

Under Mkhize’s leadership, Inseta has:

• Received four consecutive qualified audits from the Auditor-General of South Africa.
• Ignored a court order — reportedly under Mkhize’s instruction — to reinstate Graduate Institute of Financial Sciences (GIFS) as a service
• provider, exposing Inseta to potential damages claims exceeding R200 million.

Inseta has been implicated in highly irregular procurement practices, including:

• An office fit out and relocation contract worth R14.1 million;
• A R14.5 million contract to develop an ERP system with QI Solutions that was not needed and has been problematic;
• A data-cleaning contract awarded to HV Holdings for R18.3 million, which was terminated six months into the project. It’s important to note that HV Holdings was also registered as a skills development provider to Inseta — which signals a serious conflict of interest; and
• Allegations of ghost learners, system inefficiencies, delayed learner certificates and purging of staff who dared to challenge questionable decisions and alleged abuse of power.

OUTA has submitted multiple applications in terms of the Promotion of Access to Information Act (PAIA) to obtain information on these irregularities over the past two years, but has been met with resistance, insufficient feedback and obfuscation.

Adding to the concern is research conducted earlier this year by the Bureau for Economic Research (BER) at Stellenbosch University, which found that despite R164 billion in levy revenue collected over 13 years for the combined SETAs, performance across the SETA system has deteriorated — with certifications down 23% while revenue rose 46%.

The BER report further highlighted that the cost per SETA certification (R181 000) is more than double that of a university enrolment (R76 000).

These findings, together with OUTA’s own investigations across a number of SETAs, paint a troubling picture of declining efficiency, weak governance and systemic rot across the collective environment. Inseta and the three SETAs that were recently placed under administration — the Services SETA, Construction SETA (CETA) and the Local Government SETA (LGSETA) — are shocking examples of these problems.

In addition, OUTA maintains that the previous Inseta board failed to demonstrate meaningful oversight or to address credible allegations of corruption and mismanagement raised by civil society and the repeated qualified audits. They chose to look away, instead of meaningfully instituting independent investigations into the serious allegations and holding the CEO and other executives to account.

“If government is serious about restoring integrity and effectiveness to the SETA system, then reappointing CEOs with such problematic and poor performance track records sends the wrong message,” says OUTA CEO Wayne Duvenage. “South Africa cannot continue rewarding failure and misconduct with renewed contracts. Doing so undermines public confidence and perpetuates a cycle of decay in institutions meant to empower and develop our workforce.”

OUTA further notes with concern that repeated requests to meet with Minister Manamela to raise these and other related issues have been ignored.

“Had the Minister met with us, he would have been better informed of the scale of mismanagement at Inseta. We believe that an independent forensic investigation undertaken at Inseta will reveal serious concerns and possible corruption at Inseta under Gugu Mkhize’s tenure,” says Advocate Stefanie Fick, OUTA’s Executive Director for Accountability.

Given the gravity of these concerns, OUTA is now weighing up legal options to challenge the Minister’s decision to reappoint Mkhize and other possible irregularities that have transpired with the reappointment of all outgoing SETA CEOs.

OUTA believes these recent developments should spur business and employer organisations to engage with the Minister and the Presidency on this matter. There is urgent need for a reform of the SETA environment, which has seen significant abuse and irregularities in the discretionary funding, and inconsistencies with allocations of grant funding.

“If the Department of Higher Education continues to endorse poor leadership at SETAs, we believe that business will begin to contemplate the value they receive from Skills Development Levies,” says Duvenage.

Mkhize’s reappointment is a step backward for the credibility of the skills development sector. OUTA remains committed to pursuing transparency, accountability and ethical leadership within all public institutions, including SETAs, which are vital to South Africa’s economic and human capital development.