Compensation Fund faces fresh procurement and governance allegations
· Citizen
The Compensation Fund, an embattled state entity that has R150 billion in reserve funds, has been hit by fresh allegations of procurement manipulation, governance failures and questionable appointments.
Some of the fund’s officials are raising concerns about persistent instability and weak governance.
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Officials raise procurement concerns
Several officials have pointed to alleged dodgy procurement processes allegedly overseen by chief financial officer Monaheng Mokoena.
These include the appointment of service providers, changes to bid committees, vacancies in key financial positions and the awarding of contracts worth hundreds of millions of rands.
According to sources, Mokoena was appointed in November 2022, through a head-hunting process, rather than an open recruitment process.
One senior official alleged that “the appointment proceeded despite Mokoena previously facing scrutiny during his tenure at the Free State Provincial Treasury, where he was removed, following controversy surrounding personal protective equipment (PPE) procurement before he later resigned”.
The officials claim the fund failed to obtain the necessary security clearance before appointing Mokoena to oversee one of government’s largest public funds.
It also allegedly did not adequately consider findings contained in a Special Investigating Unit (SIU) report on the PPE scandal.
According to Hlonitshwa Mpaka, the fund’s spokesperson, Mokoena was appointed through an open and competitive recruitment process, not through head-hunting.
She said pre-employment screening was conducted before his appointment and that no criminal record was identified.
Responding to questions on allegations relating to Mokoena’s previous employment and any SIU findings, Mpaka said the fund followed its standard recruitment procedures.
“Like any applicant, he was subjected to the entire recruitment process that included pre-screening,” she said.
Contract awards under scrutiny
Officials also claim that within 18 months of assuming office, Mokoena oversaw the appointment of a Bloemfontein-based accounting firm on a three-month contract worth R1.5 million, to prepare the fund’s annual financial statements.
According to the sources, the official responsible for preparing the financial statements was suspended shortly before the contract was awarded, while the service provider reported directly to Mokoena.
“The company ultimately produced financial statements containing significant errors and misstatements,” alleged one source.
“In 2023, the Compensation Fund advertised a tender for financial and accounting services initially estimated at R60 million over three years. However, the value increased to R100 million before adjudication.”
The official also claim that bid committee members who questioned aspects of the procurement process were removed and replaced with officials subordinate to Mokoena.
Meanwhile experienced supply chain and finance officials were allegedly excluded from the evaluation process.
They also allege the bid specifications were amended during the procurement process to favour a particular service provider, which ultimately secured the contract.
“The successful bidder had previously worked with Mokoena during his tenure in the Free State government,” another official claimed.
Fund rejects allegations
Responding to questions about the appointment of the accounting firm, Mpaka said the procurement followed an open and competitive bidding process.
“Procurement through tender is an open process done through a competitive bidding process. The bidder with the highest points is awarded the bid,” she said.
Addressing the allegation of an increase in the tender value, Mpaka said demand management processes informed the estimated cost of the required services.
She said the procurement complied with Section 217 of the constitution, the Preferential Procurement Policy Framework Act and the Public Finance Management Act.
The sources further allege that several experienced directors and deputy directors were excluded from procurement committees, while junior officials were appointed to oversee contract administration.
According to the allegations, a junior assistant director was tasked with approving work performed by the service provider despite more senior financial officials being available.
“This arrangement enabled invoices to be approved largely on billable hours, rather than measurable deliverables. Mokoena also removed the chairs of both the bid adjudication committee and the sub-adjudication committee before assuming both roles himself,” the source alleged.
Procurement processes defended
The Compensation Fund has denied that procurement committees were improperly reconstituted. Mpaka said the fund’s supply chain management policy provides for bid specification and bid evaluation committees to be appointed on a project-by-project basis.
The commissioner plays no role in bid committee processes, she said.
“It is important to place on record that the commissioner is not involved in the bid specification, bid evaluation or bid adjudication committee processes. These procurement processes are managed by duly delegated officials through the fund’s established supply chain management governance framework and in accordance with applicable laws, National Treasury prescripts and internal policies,” Mpaka added.
Mokoena had not responded to questions by the time of publication.
The Compensation Fund, a public entity within the department of employment and labour, administers compensation for employees who suffer occupational injuries, diseases or death arising from workplace incidents.
It pays for medical treatment, rehabilitation and loss of income, while protecting employers from direct civil liability for qualifying workplace injuries and diseases.