Major overhaul of students’ smart card system expected

The government is to implement a major overhaul of the system processing the student maintenance grants after millions were dished out to a private contractor to maintain the smart card system.

The student smart card was originally meant to help with costs for educational material but over the years students have been able to purchase anything – including sportswear, footwear and eyewear.

The running of the system has to date cost the country over €2 million – a sum that covers only the handling fee the government pays APCO Ltd, the company which organises the smart card system. It excludes salaries and costs related to human resources deployed by the government at the University of Malta and other departments to run the system.

Asked by MaltaToday to confirm whether any changes to the system were being considered, a spokesperson for the Education Ministry replied in the affirmative.

“The government is seriously considering major changes to the smart card system,” the spokesperson said.

Informed sources however confirmed that the government wants a simpler system under which maintenance grants will not be affected. According to the sources, the government is looking to save a minimum of €178,000 per year in servicing costs.

Owned by Ian and Robert Pellicano, APCO Ltd won the bid for the implementation and administration of the system in 2000 and started operating in February 2001. Initially awarded for a three-year period, APCO’s contract was extended by another four years up to 2007. Informed sources claim that no official record of any further extension by the Department of Contracts could be traced.

MaltaToday is informed that while APCO Ltd’s original contract amounted to approximately €67,000, the first payments the company received in 2001 amounted to €88,925, which more than doubled to €179,792 in 2012.

Over and above this fee, APCO Ltd also receives almost 2% of the purchase value of items bought with the smart card. Between 2009 and 2012, the government allocated over €87.5 million in stipends. Maintenance grants make up approximately 40% of this allocation, which means that some €35 million were put in smart cards for students’ consumption.

With a 1.9% company charge to suppliers, the contractor is estimated to have raked in €665,000 in three years just from the purchases students made.

To date there are 1,000 outlets – approved by the Students Maintenance Grants Board – that accept smart cards.

Retail outlets process smart cards through a point of sale machine, costing around €500, bought from APCO Ltd as well.

Auditor General’s report

A report by the Auditor General revealed that almost €1 million were spent on sportswear and shoes in 2010 – equivalent to 15% of all payments made to retailers under the smart card scheme for university students.

The Auditor General had raised questions on the way university students are allowed to spend their annual €400 in cash under the smart card scheme, with 300 outlets that accept the smart card selling everything from fitness equipment to CDs.

“It is unclear whether a number of retail outlets participating in the Smart Card Scheme, some of which were paid substantial amounts during 2010, stock any items considered to be of an educational nature,” the National Audit Office had remarked in its annual report.

The NAO said that retail outlets also include car hire firms and pharmacies, adding that the nature of some of the businesses “sheds doubt on [their] eligibility to participate in the scheme.”

The NAO had also flagged non-compliance by retailers. For example, out of the 38 outlets claimed as visited in April, 2011, inspectors reported they had purchased 15 non-educational items, including mobile top-up cards, fitness equipment, CDs, magazines and a toy.

According to the University of Malta’s website, “the Smart Card is available only to students in receipt of a stipend and is intended to partly cover expenses related to educational material and equipment.”

Students enrolled in diploma courses receive a sum of €465.87 per academic year. “General” degree courses students receive a one-time grant of €465.87, and a sum of €465.87 per academic year, while “prescribed” degree course students receive a one-time grant of €698.81, and a sum of €698.81 per academic year.