Rufus Kharidzha, director of public relations and development at the University of Venda, has quit instead of facing a misconduct hearing.
Sources say Kharidzha's resignation comes after his R1million settlement proposal was rejected by management and he was advised to resign instead.
He was due to appear before the disciplinary committee last week on allegations that he and former executive director of finance and planning Tendani Ramulongo channelled more than R70 000 in bursary funds into their relatives' bank accounts.
Kharidzha and Ramulongo were suspended in April.
According to the university's manual on disciplinary procedures the two directors were not supposed to have benefited from the bursary funds since they were eligible for other grants on offer to staff members.
Sowetan was reliably informed that the university council and management were at odds as to how the two men's cases should be resolved.
Registrar Khuliso Nemadzivhanani said they rejected the settlement proposal and accepted his resignation instead for the benefit of the institution.
"We accepted his resignation in line with university policy," Nemadzivhanani said.
"Initially he did not want to resign but suggested a settlement. We found that unacceptable."
The funds in question were donated by Xstrata and the South African Reserve Bank.
In his report Nemadzivhanani said the beneficiaries should not have benefitted from the bursary funds since they were related to him.
He also said that neither the university foundation nor the board were informed of the relationship.
The audit report shows that there are six other officials who have also violated the same procedures.
The report also discloses that some of the students were not supposed to have benefited since there were blatant instances of conflict of interest.
But Nemadzivhanani said the university had not opened a civil case against fired employee Ndina Eunice Nevhulamba, who allegedly issued a contract to her own company, Fhulufhelani Printing.
Nevhulamba generated more than R2 million from the university during the period of her employment.
She was sacked as a result of her corrupt activities.
But Sowetan understands that Nemadzivhanani also authorised the order made by Fhulufhelani for the supply of diaries, calendars and notebooks to the university.