The Citizen previously revealed how the Compensation Fund's financial losses have ballooned to a staggering R71 million over the past two financial years.
The Compensation Fund faces allegations of wasting over R96 million on consultants for work reportedly already completed under a previous R46 million contract. Picture: Gallo Images
The Compensation Fund allegedly blew over R96 million on consultants to perform work that had already been largely completed by a previous contractor at a cost of approximately R46 million, with a whistle-blower claiming there is little to show for the total of R142 million.
According to the whistle-blower, the entity had previously engaged FTMG Africa Advisory Services in 2022 to assist in addressing its long-standing audit failures and governance weaknesses.
Questions over legality of consultant appointment
The intervention was authorised by then employment and labour minister Thulas Nxesi through Section 15 of the Public Service Act and involved the deployment of 20 consultants tasked with improving audit outcomes, strengthening financial controls and transferring critical skills to fund officials.
However, the arrangement may itself have been unlawful. While Section 15 provides for the secondment of public servants, it is alleged that FTMG, a private company, was effectively contracted through procurement processes and paid approximately R46.6 million between January 2022 and January 2024.
Under the Public Finance Management Act (PFMA), service contracts above R1 million must go through competitive bidding.
Sources point out that this transformed the arrangement into a service contract that should have been subjected to normal supply chain management requirements.
These are requirements that were allegedly bypassed entirely.
Concerns raised over duplicate tender process
The concerns deepened when the Compensation Fund subsequently issued Tender TCF 03:2024-25 for what is alleged to have been substantially the same scope of work previously assigned to FTMG.
FTMG had reportedly completed between 75% and 85% of the project when EMS Solutions was awarded the new contract.
“The logical step would have been to conduct a gap analysis and procure only the outstanding work. Instead, the entire scope was retendered at more than double the cost,” said a senior official with direct knowledge of the procurement process.
Questions also linger about the procurement process itself.
According to documents seen by The Citizen, chief financial officer Monét Mokena acted as project manager while simultaneously serving on the bid committee responsible for selecting the successful bidder, raising conflict of interest concerns under Treasury procurement regulations.
Further allegations suggest that the deputy director of financial reporting, Martina Munonde, was suspended before the tender was finalised, after raising concerns about the process.
Her suspension was later overturned, but allegedly no action was taken against officials responsible for instituting the disciplinary proceedings against her.
Munonde said her constructive dismissal case was with the Commission for Conciliation, Mediation and Arbitration and would not comment to avoid jeopardising the matter.
Audit failures continue despite consultant spending
Additional concerns include allegations that supply chain officials were excluded from parts of the evaluation process, that the director of financial reporting position has remained vacant for years and that key acting appointments may have enabled the approval of consultant invoices despite limited and in some instances, negligible improvements in audit outcomes.
The Citizen has revealed how the Compensation Fund’s financial losses have ballooned to a staggering R71 million over the past two financial years, up from R10 million in the 2022-23 financial year, due to alleged fraudulent activities.
The consultant expenditure raises further questions about whether public money was being adequately protected at an entity whose core mandate is to provide insurance to workers injured, diseased or killed on the job.
Despite spending millions of rands on consultants over the past three years, it has continued to receive adverse audit findings for almost 15 years, with no sustained improvement in sight.
The labour department, FTMG Africa Advisory and EMS Solutions had not responded to questions by the time of publishing.
