BRIEFING OF THE HIGHER EDUCATION AND TRAINING PORTFOLIO COMMITTEE
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.
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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.
CENTRAL UNIVERSITY OF TECHNOLOGY, Free State
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SMITH REPORT FINDINGS
CUT’S REBUTTAL
THE DAFFUE JUDGEMENT
OUTSTANDING MATTERS
(Received by CUT on 14 May 2012)
(Submitted to the Minister on 1
June 2012)
(13 August 2013)
(Commission of Enquiry, resolved
by Council on 7 September 2012
and now in process for a 30
November 2012 conclusion)
1. 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]
Council never received the KPMG
report from any quarter until 22 May
2012 [pp.7-8; Documentary evidence
in CUT03-CUT05]
“Certain individuals might be accused
of trying to conceal contents thereof,
but to blame Council of misleading the
Minister or for improper governance is
taking it too far” [p.67-68]
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”
“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]
2. (a) The report finds that the reappointment
of
the
ViceChancellor 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]
The report first of all overlooks the
specific provision in the Institutional
Statute for CUT (section 10.4.1 and
10.5.1) that such procedures are, in
law, “in the manner determined by the
Council” and “based on institutional
criteria as determined by Council”. The
IF and Senate never ever complained
about the process of appointing the
Vice-Chancellor.
Documentary
evidence of the processes Council
followed was presented in 14
documents. [pp.8-10; Documentary
evidence in CUT06; CUT07.1 CUT07.13]
CENTRAL UNIVERSITY OF TECHNOLOGY, Free State
“A proper approach in line with the
CUT Statute was followed and the
professor [Smith] merely mentioned
that he would have expected Council
to refer the issue to inter alia Senate
before a decision was taken [p.70]
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No outstanding matters to be pursued
further, unless new evidence is
presented before the Commission.
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:
“Pertaining to financial matters at
CUT, the CUT reserves have trebled
recently and its reserves have not
decreased as alleged. It has received
clean audits several years in a
row.”[p.71]
a. Unrestricted reserves increased
from R 74.291 million in 2006 to
R 213.715 million in 2011. This is
an increase of 188% over a
period of 5 years.
b. 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.
Investments,
equivalents:
c.
cash
and
cash
Non-current
investments
increased from R 90.5 million in
2006 to R 169.781 million in
2011. This is an increase of 88%
over 5 years.
d. Cash
&
Cash
equivalents
increased from R 31.918 million in
2006 to R 202.699 million in
2011. This is an increase of
535% over 5 years.
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No outstanding matters to be pursued
further, unless new evidence is
presented before the Commission.
e. The Cash & Cash equivalents
include a portion of unspent
infrastructure grant held in a
separate ring-fenced account with
a balance of R 76.37 million.
Excluding this amount, the Cash
& Cash equivalents increased by
296%.
It is thus evident that the reserves did
not decrease but actually substantially
increased over the past 5 years.
[pp.11-12; Documentary evidence in
CUT08.1 – CUT08.4]
2. (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.1213; 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
CENTRAL UNIVERSITY OF TECHNOLOGY, Free State
“The Human Resources issues,
specifically pertaining to disciplinary
hearings and high staff turnover have
been explained satisfactorily by
Council as is the case in respect of all
other perceptions raised.” [pp.71-72]
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No outstanding matters to be pursued
further, unless new evidence is
presented before the Commission.

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 CUT27CUT62]
“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 prejudged 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.
3. Several
Human
Resources
matters including: prolonged staff
restructuring; high staff turnover,
Specific information and documentary
evidence were provided in respect to
each and every one of these
“The Human Resources issues,
specifically pertaining to disciplinary
hearings and high staff turnover have
No outstanding matters to be pursued
further, unless new evidence is
presented before the Commission.
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Page 7
severance packages; flouting of
the labour relations Act; instability
at executive level; lack of focus on
staff wellness. [p.4]
allegations. [pp.32-36; Documentary
evidence in CUT63-CUT81]
been explained satisfactorily by
Council as is the case in respect of all
other perceptions raised. [pp.71-72]
4. Vulnerability
and
aloofness
including:
aloofness
to
the
strategic management of finances.
[p.4]
CUT provided extracts of minutes of
Mancom where financial management
matters are discussed and resolved
and minutes of the Finance and Audit
Committees that show likewise [pp.3639; Documentary evidence in CUT82
– CUT94]
See quotes on financial matters in 1
above, and lack of evidence put before
the Minister and the judge, and a lack
of jurisdictional factors that had to be
met.
No outstanding matters have to be
pursued further, unless new evidence
is presented before the Commission.
5. The Vice-Chancellor has not
followed through on strategic
matters and tasks. Further, that
severances at DVC level have
been high. [p.4]
CUT provided its Governance and
Management Framework of 2007 and
beyond. This has been the guiding
document on what Management had
to do. Details of achievements and
challenges were provided. The current
Vision 2020 document adopted by
Council in March 2010 was also
provided together with what we hope
to
achieve
by
2020.
Some
achievements like the STEPS process
for curriculum development under
which 9 new programmes were
developed, were presented. [pp.40-45;
Documentary evidence in CUT95 –
CUT112]
“However, the Minister has high
regard for the person of the Vicechancellor and it is apparent that the
CUT is a university that is held in high
esteem not only in this country, but
overseas. The Minister’s complaint in
respect of the re-appointment of the
Vice-Chancellor has nothing to do with
him as a suitable person, but the
process followed. His reliance on Prof
Smith’s
so-called
finding
was
misplaced.” [p.70]
No outstanding matters have to be
pursued further, unless new evidence
is presented before the Commission.
6. 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
CUT could not respond to this
allegation as no details had been
provided. [pp.47-48]
“It appears from both the KPMG and
Lubbe reports, as well as Prof Smith’s
report that some of the people
interviewed feared retribution and/or
victimization and Prof Smith even
referred to “a culture of fear” at the
CUT. This should be addressed by
One of the Commission’s terms of
reference is to investigate: “allegations
that at CUT there is a culture of
victimisation and fear and that the
vice-chancellor has an autocratic
management style.”
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Page 8
be influenced [sic]” by “a culture of
fear”. [p.9]
Council and this judgement should not
be seen as encouragement that a
solution does not have to be found to
reduce or eliminate such fear, but
there was no justification for
intervention in this regard.” [p.70-71]
7. 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]
Information and documentation were
provided on essentially two elements
of Welkom Campus’ development
beyond
physical
infrastructure,
namely, the re-alignment of its PQM to
that of a university of technology and
away from Vista University type of
programmes (which is complete) and
the introduction of new UoT-type
programmes in its PQM. [p.48;
Documentary evidence in CUT124 –
CUT127]
There is nothing in the judgement
about this.
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 viceversa, in the context of the two
universities
being
autonomous
universities.[p.49]
There is nothing in the judgement
about this matter.
10. 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
CUT’s response provides further
information and evidence about the
handling of the KPMG reports [p.4950; Documentary evidence in CUT128
– CUT132]
Extracts from the judgement under 1
above are still relevant here.
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One of the Commission’s terms of
reference is to investigate: “allegations
referred to in a report by Prof Julian
Smith dated May 2012”.
See 1 above in terms of what the
Commission of Enquiry will be
investigating in this regard.
above, [p.10]
11. Prof Smith refers to poor
adherence to good governance
and an unsatisfactory level of
fiduciary responsibility concerning
Council’s handling of the reappointment
of
the
ViceChancellor. This is a repeat of a
finding on p.3 dealt with under 2
above. [p.12]
See CUT’s response under 2 above.
“A proper approach in line with the
CUT Statute was followed and the
professor [Smith] merely mentioned
that he would have expected Council
to refer the issue to inter alia Senate
before a decision was taken [p.70]
No outstanding matters to be pursued
further, unless new evidence is
presented before the Commission.
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]
CUT
provided
information
and
documentary evidence to show that
this was patently false as all staff had
received performance awards when
those had been available to distribute.
Further, the real circumstances of the
resignation of Council members that
had resigned so far were provided
[p.51; Documentary evidence in
CUT133 – CUT136 and in CUT60 –
CUT62
“The Human Resources issues,
specifically pertaining to disciplinary
hearings and high staff turnover have
been explained satisfactorily by
Council as is the case in respect of all
other perceptions raised. [pp.71-72]
No outstanding matters to be pursued.
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.
13. 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
There were patently false statements
about composition of Mancom. Deans
have been members of Mancom all
along and continue to be. The letters
of warnings had been issued as the
last resort when those executives
involved had repeatedly refused to
adhere to a Mancom resolution and
the
Vice-Chancellor’s
instruction.
[pp.52-54; Documentary evidence in
CUT18; CUT64-CUT65; CUT95 –
CUT109; CUT137 – CUT145]
There was nothing specific in the
judgement about these. No evidence
to contradict CUT’s was placed before
the judge.
No outstanding matters to be pursued.
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.
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Page 10
found to be a sensitive matter.
[pp.14-15]
14. 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]
It was not clear which significant
financial policies and practices were
being referred to here. However,
further information and evidence were
presented with regard to some
projects around which there had been
allegations of impropriety [p.55;
Documentary evidence in CUT27 –
CUT34]
“Pertaining to financial matters at CUT
the CUT reserves have trebled
recently and its reserves have not
decreased as alleged. It has received
clean audits several years in a
row.[p.71] Further, there was a lack of
evidence put before the Minister and
the judge, and a lack of jurisdictional
factors that had to be met.
No outstanding matters to be pursued.
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.
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]
Information
and
documentary
evidence were provided regarding
CUT’s policy about travel with
spouse/partner on one international
trip per year; about a lack of clarity in
the policy regarding upgrading, which
had then be left at the discretion of the
Vice-Chancellor. Further, evidence
was provided that it was not Prof
Schultz or anybody else (as Prof
Smith had suggested) who approved
trips, but the Chairperson of Council
and/or Exco of Council. Information
was also provided about the trips
undertaken and their relevance to
CUT’s
vision
2020.
[pp.56-60;
Documentary evidence in CUT101 –
CUT106; CUT146 – CUT157]
No particular finding
Daffue on these.
Judge
Two of the Commission’s terms of
references is to investigate:
 ‘allegations about the trip that
some members of council took to
the United States of America in
November 2009.”
 “allegations
about
the
vicechancellor’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.”
16. Prof Smith alleged abuse of power
by the Vice-Chancellor regarding
written warnings, investigations in
departments,
disciplinary
processes,. and in appointments
Details and pieces of evidence that
provide the context and actions taken
on each of the specific cases
mentioned were provided. [pp.62-69;
Documentary evidence as in CUT67;
No particular findings from Judge
Daffue on these.
One of the Commission’s terms of
reference is to investigate: allegations
that at CUT there is a culture of
victimisation and fear and that the
vice-chancellor has an autocratic
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Page 11
from
and promotions [pp.18-20]
17. Victimization
has
been
experienced and remains an everpresent
possibility.
Instances
quoted during the assessment
were the Events Unit (in process),
the Legal Affairs section and the
Campus Protection Services [p.20]
CUT158 – CUT181]
management style.
Information and related evidence on
each of these cases is provided under
16
above.
[p.69;
Documentary
evidence as identified immediately
above]
No particular findings from Judge
Daffue on these
__The End__
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One of the Commission’s terms of
reference is to investigate: allegations
that at CUT there is a culture of
victimisation and fear and that the
vice-chancellor has an autocratic
management style.