DHET on decision to place NSFAS under administration; with Minister of Higher Education

Video The Portfolio Committee met in Parliament with the Minister of Higher Education, his legal representatives, the Department of Higher Education and Training Director-General and seven former National Student Financial Aid Scheme (NSFAS) board members to interrogate the decision taken on 4 May 2026 to place NSFAS under administration in terms of section 17 of the National Student Financial Aid Scheme Act 56 of 1999. Before proceedings commenced, the Committee's legal adviser clarified the application of the  sub judice  principle under Rule 89 of the National Assembly Rules, advising that the rule did not preclude oversight but required Members to focus on procedural and factual questions rather than pronouncing on the merits of matters pending before court. The Committee accepted this guidance and proceeded on that basis. The Minister outlined the rationale for his decision, framing it around cumulative governance failures since 2019, concerns arising from the 2024/25 Auditor-General of South Africa’s audit findings, dysfunction in critical governance structures including the executive and finance committee, unresolved questions about the board's legal constitution and a series of resignations in late April 2026 that included the interim Chairperson, the Deputy Chairperson and the Chairperson of the Human Resources Committee, reducing the board from 13 to seven members. He cited the information and communication technology strategy as a specific example of delayed action, noting it had been due for board approval in September 2025 but had not been approved for seven to eight months until his directive compelled it. Members probed whether the 2024/25 Auditor-General of South Africa’s report, which was only discussed with the board in late March 2026 and responded to by 30 April 2026, could legitimately serve as a basis for the administration decision and questioned whether it was fair to characterise the board's response as inaction given that timeframe. Former board members presented a sharply different account of the board's performance of the events that preceded administration. When the Minister issued his directive on 27 March 2026, the board responded comprehensively and on time, submitting by 30 April 2026 an audit improvement plan, a consequence management plan, a digital transformation strategy, data security policies, South African Revenue Services (SARS) reintegration documentation, a closeout report, a monitoring and evaluation report on NSFAS-accredited student accommodation, a comprehensive appeals report on the 2026 application cycle and a board position on the sustainable funding model. Former board members further placed on record that the board had achieved an un-audited performance level of 64%, representing a significant improvement on prior years and had been on track to submit its annual and financial reports on time, noted as the first occasion in several years that this had been achievable. The SARS reintegration had been completed under the board and that its impact would be measurable in the following reporting cycle. Former board members drew the Committee's attention to the Minister's own public statements as independent corroboration of the board's record. On 24 February 2026, the Minister had told the National Assembly that NSFAS performance had improved and that, for the first time, entering students knew their funding status before matric results were released and continuing students knew their status before the end of the previous academic year. On 14 November 2025, the Minister had stated publicly that the board had not committed any wrongdoing and had done nothing warranting a sanction. On 14 February 2026, the Minister had stated that the board had been fulfilling its mandate under the NSAFS Act. The Minister, when pressed on these statements during the meeting, acknowledged that his February 2026 remarks may have been overstated in certain respects but did not recede from the broader picture of operational improvement. The Committee noted the tension between these public affirmations and the subsequent decision to place the institution under administration. Members further noted that the Minister had acknowledged, as far back as August or September of the year he assumed office, that there were legal defects in the board's appointment. The board had been appointed on 20 February 2025 and the legal irregularities related to the published gazette, which had exceeded the minimum statutory requirements by, among other things, specifying a master's degree as a qualification criterion. The Department's legal unit confirmed it had not been consulted and had not cleared the appointment process. A self-review application was initiated by the Minister following engagement with the board on 4 November 2025, but the board was not dissolved on that basis; instead, it continued to function while the matter was before court. Members queried why, having been aware of the constitutional defect for several months, the Department had not acted sooner and whether the simultaneous pursuit of self-review and administration was procedurally consistent. The Minister confirmed that student allowances, tuition, transport, accommodation payments and the 2027 application cycle would not be affected by the administration. Members welcomed this assurance but required a firmer, detailed commitment on how the irregularities in beneficiary records would be resolved, noting the 2024/25 audit findings which identified approximately 8 000 deceased persons on the beneficiary list, non-qualifying students receiving funding and qualifying students being excluded. Members also raised the broader concern that NSFAS was entering its third administration since 2019, following administrations under Mr Randall Carollisen from 2019 to 2021 and under Mr Freeman Nomvalo thereafter, the latter's handover report remaining outstanding at the time of the meeting. Members asked what would be structurally different about the current administration to justify confidence that it would succeed where its predecessors had not. The most contested area of the meeting concerned an informal engagement between the Minister and board members held on 13 April 2026 and a pattern of contacts in the weeks preceding it. The meeting was arranged with two days' notice over a weekend by the Minister's Community and Stakeholder Relations Manager, acting under the Minister's instruction and communicated telephonically to board members. Board members attended in Johannesburg without a written invitation, a written agenda or any record-keeping. On arrival, cell phones were placed in white envelopes and stored. No company secretary or NSFAS support staff were present. The meeting lasted under an hour. One board member, Advocate Lavan Gopaul, was not invited and confirmed to the Committee that he had not known about the meeting. Travel costs for the board members who attended were borne by NSFAS. The Department's own legal representative confirmed under direct questioning that such a practice should not be followed and advised that it should not be repeated. Before the 13 April 2026 meeting, former board members described a sequence of contacts they characterised as attempts to influence the chief executive officer (CEO) recruitment process. A text message received on 28 March 2026 from the Services SETA administrator described him as "just a messenger" and stated he was "due to meet with the principal shortly." During subsequently discussions, he conveyed that the Minister was not comfortable with the trajectory of the board's CEO recruitment and that a candidate with a National School of Government background should be considered. On 7 April 2026, a board member called at 16:04, named the Acting CEO as a candidate the Minister viewed as not ready for the role again referenced the preferred candidate. On 20 April 2026, following the human resources committee's completion of its work, the Services SETA administrator contacted board members again to relay that the Minister's special adviser had said the human resources committee had acted outside the Minister's expectations. Former board members submitted that these contacts, taken together with the events of 13 April 2026, constituted a coordinated attempt to steer the outcome of a process that was legally the board's alone to conduct. Former board members described the 13 April 2026 meeting itself as an instruction session rather than a consultation. Their account was that the Minister conveyed that the board was not to proceed with the CEO appointment until further instructions were given within approximately two weeks. This was corroborated by multiple former board members present. One former board member said he rejected this instruction by subsequently messaging the Acting CEO and Chairperson via WhatsApp to demand that the appointment process be finalised without delay. The board ultimately concluded the process, submitted its final CEO recommendation to the Minister on 30 April 2026. The board was dissolved the following Monday. The Minister denied that any instruction had been issued at the 13 April 2026 meeting. He maintained that his purpose had been to receive a briefing in response to concerns raised by the interim Chairperson regarding a petition to finalise the CEO appointment before all internal processes were complete. He stated that the only written instruction he had given the board was to appoint a CEO by no later than 31 May 2026. He further maintained that he had not authorised the contacts made by members of his office or associated administrators in the weeks prior to the meeting. The Committee noted that the absence of any record of the 13 April meeting made it impossible to verify either version of events, and that this evidentiary gap was a direct consequence of the failure to document a formal engagement between a Minister and a public entity. Members probed in detail the two stated bases for administration: the board's alleged failure to address audit findings, and the claim that the reduced board was no longer capable of functioning. The Minister confirmed the audit directive first deadline was 30 April 2026 and the second was 31 May 2026. The board confirmed it met the first deadline with its comprehensive submission. Members noted that the board was placed under administration on 4 May 2026, before the second deadline had arrived and questioned how non-compliance with an outstanding deadline could serve as a justification for action taken before that deadline had elapsed. The Minister's position was that, given the resignations, he had no confidence the remaining board could competently meet the second deadline, but Members were not persuaded that this prospective assessment, made before the deadline fell, was a sufficient basis for the decision. On the question of whether the seven remaining board members could legally function, the Committee established that the legal basis for the Department's position had not been adequately worked out. The Department's legal representative initially indicated the reduced board did not meet quorum requirements but could not substantiate this assertion when directed to section 13(3) of the NSFAS Act, which provides that a quorum is determined by the board's own rules and not by the NSFAS Act itself. Members then consulted the board charter, which provides that a majority of members present constitutes a quorum, provided at least three executive committee members are present. Former board members confirmed on record that three of the seven remaining members were executive committee members. Members concluded that the claim that the board lacked a quorum had not been properly substantiated and amounted to an unverified assumption. It was further confirmed that the board had, following the resignations, sought an independent legal opinion that concluded it was properly constituted, and had communicated this to the Minister. The Department's legal representative confirmed that decisions taken by a properly constituted board prior to administration would have been lawful and binding. Members highlighted a structural inconsistency in the Minister's position. The board's total intended complement was 13 members. The vacancies that arose included positions that were the Minister's own responsibility to fill, specifically National Treasury representation and ministerial appointees. The Minister had not filled those vacancies on the basis that making further appointments while the self-review was before court could undermine that process. Members put it directly that the Minister had relied on  sub judice  to justify not filling vacancies and then used the resulting vacancies as a reason to place the board under administration. The Department's legal representative declined to characterise this as an inconsistency, describing the two processes as legally separate, but did not dispute the factual sequence Members had described. Members raised serious concerns about the standard applied in selecting administrators across the higher education and training sector. On the NSFAS administrator, Professor (Prof) Mathebula, Members established that the findings of the Nugent Commission of Inquiry into the South African Revenue Service had not been set aside by any court. The Nugent Commission had found that Prof Mathebula had been willing to investigate SARS employees at the request of Mr Moyane without being given sufficient grounds and had signed off on approvals without proper consideration under pressure he had not formally reported. The Minister maintained that Prof Mathebula had cooperated with the Nugent Commission, had not been barred from public office, and had subsequently served on multiple boards. Members argued that the absence of a criminal conviction was not the same as a clean record and that NSFAS, given its scale and the institutional complexity it faced, required a person of unquestionable integrity. The Minister confirmed that Prof Mathebula's remuneration and terms of appointment were still being finalised in consultation with the National Treasury and undertook to brief the Committee once those terms were settled. Members noted that the same concerns applied to the pattern of appointments across the sector. The Construction SETA, Local Government SETA, and Services SETA administrators had each attracted serious questions prior to and since their appointment, and Members were not satisfied that the Department had applied a consistent and demonstrably rigorous standard. The Committee took the position that the credibility of the administration process depended not only on identifying the right problems but on appointing people with the unambiguous capacity and track record to fix them. In his closing, the Committee raised several concerns going beyond the specific disputes about the 13 April 2026 meeting. The gravity of the 2024/25 audit findings: more than 15 000 people had defrauded the state, effectively closing the door on a corresponding number of qualifying poor students, and more than 822 deceased persons had been receiving NSFAS funding. Members were of the view that the sophistication and scale of the scheme pointed to possible organised criminal activity within NSFAS and inside the banking system, noting that South African banks had the biometric and Home Affairs integration capacity to detect deceased account holders and that the volume of payments in question could not plausibly be attributed to systems failure alone. The Committee's position was that neither version of events could be fully verified given the absence of any record of the 13 April 2026 meeting, the outstanding status of court papers not placed before Members, and the conflicting accounts that remained unresolved at the close of the meeting. The Committee identified this as a direct consequence of governance practices that fell below the standard required when a Minister exercises public power in relation to a public entity. It noted that the legal basis for the quorum finding had not been properly substantiated, that the administration decision was taken before the second audit directive deadline had elapsed and that the structural inconsistency between relying on sub judice to avoid filling vacancies while simultaneously using those vacancies as justification for administration had not been satisfactorily resolved. The Committee was equally clear that, irrespective of the competing accounts, the protection of students throughout the administration period was non-negotiable, and that allowances, tuition, accommodation and the 2027 application cycle must proceed without interruption. The Committee resolved to meet in camera to reflect on the evidence, determine a formal position and issue a consolidated set of written questions to the Ministry, the Department and former board members. It indicated that it would require documentary evidence including text messages, WhatsApp exchanges and any records of relevant communications before arriving at conclusions on the most contested issues. Key resolutions Members resolved that the Committee should meet in camera to reflect on the evidence, identify the key contradictions and determine a formal way forward. Members resolved that written questions and requests for supporting documentary evidence, including records of the 13 April meeting, text messages and WhatsApp exchanges regarding the CEO process, and the legal advice relied upon in the administration decision, should be issued to the Ministry, the Department and relevant former board members. Members resolved that future engagements between the Ministry and public entities must be formally convened with written invitations, agendas and minutes, to protect accountability, ensure administrative justice and prevent conflicting versions from being unverifiable. Members resolved that continuity of student funding, accommodation and allowance payments must be treated as non-negotiable throughout the administration period, and that the Committee would monitor compliance closely. Members resolved that the Department should bring forward legislative amendments to address identified gaps in the NSFAS Act, including clearer provisions on quorum determination, board composition, ministerial concurrence, and intervention mechanisms. Members resolved that the allegations pointing to fraud, irregular beneficiary records and possible organised criminal activity in the disbursement of NSFAS funds, including payments totalling hundreds of millions of rands into the accounts of over 822 deceased persons, should be pursued through the appropriate investigative and security channels.