Fresh allegations place Compensation Fund procurement under the spotlight

The Compensation Fund, one of South Africa’s largest public entities with reserve funds estimated at around R150 billion, is once again facing scrutiny after fresh allegations emerged around procurement practices, governance and senior appointments.

While the Fund has firmly rejected claims of wrongdoing, the latest accusations have renewed questions about governance within an institution responsible for compensating workers injured or made ill on the job.

Officials raise concerns over procurement decisions

According to several officials within the organisation, concerns centre on procurement processes allegedly overseen by Chief Financial Officer Monaheng Mokoena.

The allegations include:

• Changes to bid committees during procurement processes.
• Questions over the appointment of external service providers.
• Vacancies in key financial positions.
• Contracts worth hundreds of millions of rand.
• The removal of experienced officials from procurement-related decision-making.

The claims come at a time when governance at state institutions remains under intense public scrutiny, particularly after years of investigations into corruption and maladministration across various government departments and entities.

Questions over the CFO’s appointment

Some officials allege Mokoena was appointed in November 2022 through a head-hunting process rather than an open recruitment process.

They further claim concerns were raised about his previous tenure at the Free State Provincial Treasury and whether sufficient background checks, including security clearance and findings linked to previous investigations, were considered before his appointment.

The Compensation Fund disputes these allegations.

Spokesperson Hlonitshwa Mpaka said Mokoena was appointed through a competitive recruitment process and underwent the required pre-employment screening.

According to Mpaka, no criminal record was identified during the recruitment process.

Tender awards also under the microscope

Another area attracting attention is the appointment of an accounting firm to assist with the Fund’s annual financial statements.

Officials allege the company received a short-term contract valued at approximately R1.5 million after the official responsible for preparing the statements was suspended.

Sources also claim the financial statements produced under the arrangement contained significant errors.

Separate concerns have also been raised about a larger tender for financial and accounting services.

Officials allege the project was initially estimated at R60 million over three years before later increasing to R100 million during the procurement process.

They further claim bid specifications were amended and experienced finance and supply chain officials were excluded from parts of the evaluation process.

One source also alleged the successful bidder had previously worked with Mokoena during his time in the Free State government.

Compensation Fund rejects claims

The Compensation Fund has denied that procurement processes were manipulated.

Mpaka said the appointment of service providers followed an open and competitive tender process, with contracts awarded according to established procurement rules.

She added that the tender value was determined through demand management processes and complied with:

• Section 217 of the Constitution;
• the Preferential Procurement Policy Framework Act; and
• the Public Finance Management Act (PFMA).

The Fund also rejected allegations that procurement committees were improperly restructured.

According to Mpaka, bid specification and evaluation committees are appointed on a project-by-project basis under the Fund’s supply chain management policy.

She also stressed that the commissioner is not involved in procurement committee decisions.

“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 said.

Why this matters

The Compensation Fund plays a vital role in South Africa’s labour system.

The entity administers compensation for employees who suffer workplace injuries, occupational diseases or fatal accidents while on duty. It also covers medical treatment, rehabilitation and income replacement, while protecting employers from direct civil claims in qualifying cases.

Given the size of its financial reserves and its responsibility for supporting injured workers, any allegations involving procurement and governance are likely to attract significant public attention.

What happens next?

At this stage, the allegations remain contested.

While officials have raised concerns about procurement decisions and governance practices, the Compensation Fund maintains that its recruitment and procurement processes comply with legal requirements and Treasury regulations.

No findings of wrongdoing have been made, and Mokoena had not responded to questions by the time the original allegations were published.

Whether these claims result in further investigations or oversight will likely depend on whether additional evidence emerges in the coming weeks.

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Source: thecitizen.co.za