CUT COUNCIL VS MINISTER OF HIGHER EDUCATION AND TRAINING HIGH COURT CASE
(Case Numbers 2776/2012 and 2786/2012)
14 November 2012
BACKGROUND
In a letter dated 29 August 2012, CUT was requested by Adv I Malale, MP, Chairperson of the Higher Education and Training Portfolio Committee (HETPC) to provide information the committee needed to understand the CUT vs the Minister of Higher Education and Training (MHET) High Court case from CUT’s perspective. On request by CUT to ensure that our voluminous documents are well contextualized, explained and understood, a meeting with the HETPC was scheduled for 14 November 2012.
The following major documents, amongst others, were submitted to the HETPC:
- CUT’s response to the independent assessor’s report, entitled “Issues from the Independent Assessor’s Report” and dated 31 May 2012;
- Judge Johann Daffue’s Judgement on the CUT vs MHET cases 2776/2012 and 2786/2012;
- Two Adv Jannie Lubbe Reports dated 20 October 2011 and 21 January 2012;
- Two KPMG Reports dated 16 and 29 September 2012;
This document seeks to provide, in tabular format, a chronology and a summary of the matters in the documents mentioned above, especially in the Smith report, the CUT rebuttal thereto and the Judge Johann Daffue judgement.
The Daffue judgement does not conclude on a number of matters as will be indicated in the table. As a result, Council resolved in its meeting of 7 September 2012 that a Commission of Enquiry be established to deal with all of those as yet undetermined matters, including all new ones that may emerge that are similar to them.
SUMMARY OF THE MATTERS
From the outset, it must be understood that one of the major reasons Judge Daffue ruled in favour of CUT was that no evidence could be advanced to contradict what CUT had provided in its rebuttal and affidavits. Neither was there evidence contradicting CUT’s submissions in Prof Smith’s report, in the affidavits, heads of argument and in oral argument by the Minister’s senior counsel.
According to Judge Daffue:
“The Council filed a 71 page report and three level arch files of documents consisting of over 1000 in support of its submissions in reply to Prof Smith’s report. Neither in coming to his conclusions nor in any of the affidavits before me were averments made on behalf of the CUT challenged in any manner save for the issues I shall deal with infra. In fact, an impressive report was tendered to the assessor’s report and I would have expected the Minister to deal with these allegations and documentary proof provided prior to making his decision or at the very least in his opposition to the Council’s application.” “As a direct consequence of the vagueness in the Minister’s affidavits, Mr Kennedy in his written heads of argument as well as in oral argument was equally vague in this regard: [pp.65-66 of Judge Daffue’s judgement].
It must be noted that the information provided in the table below is, therefore, a summary of about 1500 of pages of information and pieces of documentary evidence from the three main documents referred to above.
The table thus provides the initial ‘findings’ in Prof Smith’s report. It then provides a summary of what CUT’s rebuttal had been. Further, it provides relevant findings and direct quotes from Judge Daffue’s judgement in respect of each of the original ‘findings’ from Prof Smith’s report. Finally, it identifies matters that Judge Daffue concluded and those that have been referred to the Commission. Page numbers from the relevant documents and relevant pieces of evidence have also been identified for ease of reference.
SMITH REPORT FINDINGS(Received by CUT on 14 May 2012) / CUT’S REBUTTAL
(Submitted to the Minister on 1 June 2012) / THE DAFFUE JUDGEMENT
(13 August 2013) / OUTSTANDING MATTERS
(Commission of Enquiry, resolved by Council on 7 September 2012 and now in process for a 30 November 2012 conclusion)
- The Minister was misled by Council with regard to the existence of the KPMG report when he enquired about it in November 2011 [p.3]
“The clear documentary proof was not placed before me and it is specifically not contained in Prof Smith’s report to the Minister” [p.69] / One of the terms of reference is to investigate: “How the KPMG reports were submitted, received and then managed by various parties including some members of council, management and administration”
- (a) The report finds that the re-appointment of the Vice-Chancellor did not “reflect a thorough and inclusive process warranted at this level.” In particular, it contends that Senate and the IF “did not have the opportunity to give formal input into the process.” [p.3]
2. (b)Part of the second finding is the conclusion that general financial oversight “may also be regarded” as “insufficient”… and the reserves of the university have been eroding [p.3] / Different categories of university reserves and funds have increased substantially since 2006, as reflected below.
Unrestricted use fund reserves:
- Unrestricted reserves increased from R 74.291 million in 2006 to R213.715million in 2011. This is an increase of 188% over a period of 5 years.
- Unrestricted reserves as a percentage of total equity increased from 29.30% in 2006 to 42.12% in 2011, which has bolstered CUT’s balance sheet substantially.
- Non-current investments increased from R90.5million in 2006 to R169.781million in 2011. This is an increase of 88% over 5 years.
- Cash & Cash equivalents increased from R31.918million in 2006 to R202.699million in 2011. This is an increase of 535% over 5 years.
- The Cash & Cash equivalents include a portion of unspent infrastructure grant held in a separate ring-fenced account with a balance of R76.37million. Excluding this amount, the Cash & Cash equivalents increased by 296%.
- (c) Significant increase in expenditure on external consultants, legal fees and management services.[p.3]
- External consultants were needed in respect of the restructuring process that helped to reduce the salary bill from 74% in 2007 to 61% as of the end of 2011 and achieved savings of close to R20 million in recurrent expenditure. All this had been budgeted for to the tune of R11million (not all of it used) and approved by Council as part of restructuring costs [pp.12-13; Documentary evidence in CUT09 – CUT15]
- Legal fees indeed increased from 2009 onwards because of the restructuring exercise and for which Council had allocated R5 million (not all of its used) in anticipation of the increased costs as staff challenge the process. As of 2011, legal costs have been reduced from a total of R6 million in 2010 (including staff costs of about R3.5 million) to a basic outsourced staff and service cost of about R1 million (excluding high court costs) [pp.15-19; Documentary evidence in CUT16 - CUT21
- Management services costs mentioned were in respect of investment management. As of November 2011, a new investment management system has been introduced to contain the costs [p.19; Documentary evidence in CUT22- CUT24]
2.(d)Several other management and staff related allegations like “unplanned increase in the number of employees”; establishment of the CUT Enterprises and Services Trust; the establishment of the Free State IT Hub; management of financial aid allocations; management of allocations from the National Lottery Distribution trust Fund; the Ceramics project; the World Cup 2010 Facilities improvement Project; resignation of or disciplinary processes against some CUT Council members. [p.3] / Specific information and documentary evidence were provided in respect of each and every one of the allegations and perceptions relating to these projects. For example, the Trust was not established by the VC, but Council itself in June 2010, in a process that had started from about 2005 before the VC was appointed. [pp.22-32; Documentary evidence in CUT27-CUT62] / “One does not use a sledgehammer to kill a mosquito. The reasonable decision-maker would have expected clear evidence of financial and other maladministration of a serious nature and/or serious undermining of the effective functioning of the CUT before a drastic decision such as in casu is taken. No such proof was placed before the Minister. I find therefore that no reasonable decision-maker could have come to the decision arrived at by the Minister. The jurisdictional facts of section 41A have not been met. In my view he pre-judged the issue, as he made it clear, even before the CUT response was received, that CUT should be stabilized.” [p.72] / No evidence could be put before the Minister nor put to the judge contrary to what CUT had provided in its response, unless new evidence is presented before the Commission.
- Several Human Resources matters including: prolonged staff restructuring; high staff turnover, severance packages; flouting of the labour relations Act; instability at executive level; lack of focus on staff wellness. [p.4]
- Vulnerability and aloofness including: aloofness to the strategic management of finances. [p.4]
- The Vice-Chancellor has not followed through on strategic matters and tasks. Further, that severances at DVC level have been high. [p.4]
- The report significantly accepts that “transformation is required as a priority [by CUT] and that some progress has been made regarding certain aspects thereof.” But the report records that “the institutional culture seems [sic] to be influenced [sic]” by “a culture of fear”. [p.9]
- While there are encouraging developments with regard to the improvement of physical infrastructure at the Welkom Campus, the general impression gained is that it does not get consistent and ongoing attention in order for the effects of the merger to be mitigated and opportunities to be optimized. There is a further allegation about tenders at the Welkom Campus, but without details having been provided. [p.5]
9.Prof Smith’s conclusion (admitting CUT’s several international and local partnerships) that “the proximity of the UFS does not seem to be formally exploited to the advantage of CUT”. [p.5] / CUT could not respond to this criticism as it had not been clear what it had failed the UFS with and perhaps vice-versa, in the context of the two universities being autonomous universities.[p.49] / There is nothing in the judgement about this matter.
- Prof Smith repeats and amplifies his ‘finding’ about Council’s deficiency in exercising its governance function relating to the KPMG reports. This is essentially the same as what appears in 1 above, [p.10]
- Prof Smith refers to poor adherence to good governance and an unsatisfactory level of fiduciary responsibility concerning Council’s handling of the re-appointment of the Vice-Chancellor. This is a repeat of a finding on p.3 dealt with under 2 above. [p.12]
- A matter that was constantly raised was the payment of bonuses to the management team only, and not to other excellently performing staff at other levels. Further, that a member of Council who was not supportive of the way in which these bonuses were handled, had disciplinary measures instituted against her. [p.14]
- Prof Smith alleged that there are weaknesses in the executive management structure. He also expressed his worry about letters of warnings that were issued to some members of the executive team. Further he intimated that the reconstitution of the MANCOM which lead to the former executive deans becoming “regular” deans without membership of this management structure has been found to be a sensitive matter. [pp.14-15]
- Apart from the aloofness to strategic management of the finances, ignorance of the key financially significant policies and practices are matters of concern. This is a repeat of 4 above [p.15]
- Prof Smith expressed concern about the Vice-Chancellor’s trip to the U.S. in which he was accompanied by a partner (a 28 year old daughter of his) and a CUT staff member whose ticket had been upgraded; concerns about the approval processes for overseas trips; concerns about an overseas trip undertaken by some members of Council [p.16]
- ‘allegations about the trip that some members of council took to the United States of America in November 2009.”
- “allegations about the vice-chancellor’s trip to the United States of America in mid June 2011, including the matter of who accompanied the vice-chancellor and on what basis, how the accompanying persons travelled and whether the CUT policies allow for all of this.”
- Prof Smith alleged abuse of power by the Vice-Chancellor regarding written warnings, investigations in departments, disciplinary processes,. and in appointments and promotions [pp.18-20]
- Victimization has been experienced and remains an ever-present possibility. Instances quoted during the assessment were the Events Unit (in process), the Legal Affairs section and the Campus Protection Services [p.20]
__The End__