Stick to your budget, Dlamini told
The Treasury has told Social Development Minister Bathabile Dlamini there would be no extra money outside of what was in the 2017-18 budget for the contract under negotiation with Net1 UEPS for the payment of social grants by its subsidiary Cash Paymaster Services (CPS).
In terms of 2012’s R10.5bn contract, declared unlawful by the Constitutional Court in 2014, CPS is paid R16.44 per grant beneficiary per month. Net1 UEPS CEO Serge Belamant has indicated Net1 would be seeking an increase on this amount.
Dlamini told Parliament’s standing committee on public accounts that if the contract cost was higher than the budget provision, the budget of the Department of Social Development would have to be reprioritised and deviations made.
Dlamini said no new contract had been signed with Net1.
The technical negotiating team was examining the outcome and would submit its report only on Thursday. The department and the South Africa Social Security Agency (Sassa) will have to get the Treasury’s approval for deviating from the Public Finance Management Act because the contract was not put out to tender.
Because of time pressure, no account had been taken of transformation or black economic empowerment issues in the negotiations with Net1, a US owned company, Dlamini said.
She appeared before the committee to explain why Sassa has to negotiate a new contract with CPS after giving an undertaking in 2015 to the
Constitutional Court that Sassa would take over the payment of grants when the CPS contract expired at the end of March.
The committee has urgently invited Finance Minister Pravin Gordhan to a committee meeting next Tuesday to give the Treasury’s side of the Sassa debacle, explain its role and provide MPs with its observations on how things unfolded.
Dlamini conceded it was known in October 2016 that Sassa would be unable to meet the deadline to take over the payments because the project was “too huge”.
Legal advisers had told Sassa a report had to be submitted to the Constitutional Court.
Teams appointed to devise the transition plan advised the minister after only one month “we are sitting on a time-bomb”. Sassa programme manager Zodwa Mvulane told the committee the Treasury had not yet approved the appointment of three work-stream leaders without a bidding process, which DA MP Tim Brauteseth noted had cost Sassa R47m.
Dlamini told MPs she had instructed Sassa to withdraw the affidavit submitted by Sassa CEO Thokozani Magwaza last Tuesday because she had not seen it, as was her right. Among the issues in Magwaza’s affidavit were that CPS, the minister of finance and the Treasury had not been cited as respondents.
It also indicated what the plans were, but did not give reasons why Sassa was in its predicament. Magwaza subsequently took “sick leave” and a new affidavit that simply reported on developments and did not ask for the Constitutional Court’s authorisation for Sassa’s new contract with CPS, was drawn up.
Dlamini said the “crisis” over social grants was a manifestation of political campaigning aimed at undermining the authority of the government in the eyes of the people.
Sassa’s lack of preparedness to take over grant payments was due to the fact that the tender put out in 2015 for an alternative service provider was in process for two years before it was withdrawn, she said.
The minister said Standard Bank owed the government about R500m for dormant accounts in which grants had not been collected. Ithala Bank owed R1.1bn, including interest for the same reason.