Poisoned chalice looks set to remain with Net1
It seems that when the Constitutional Court heard the South African Social Security Agency (Sassa) CEO Pearl Bengu address a media conference about a contingency plan, it assumed she had one.
The joint statement issued by Sassa and the South African Post Office at the time made no mention of a contingency plan; the question of whether or not Sassa had a contingency plan was raised by journalists.
Presumably, as with the justices of the court, journalists could not believe Sassa did not have a plan to deal with the 2.8-million social grant recipients who go to Sassa paypoints managed by Cash Paymaster Services (CPS) after the CPS contract expires on March 31.
In her response, Bengu spoke about a contingency plan. Indeed, it seemed Sassa was working on contingency plans for its contingency plans. But as the court will have realised after a cursory reading of Bengu’s comments and Sassa’s March 8 progress report, there is no contingency plan if the CPS contract is not extended.
At the March 8 media conference, Bengu said Sassa was “in the process of appointing a cash payments service provider”. Three weeks before the CPS contract expires, how is that possible? And it’s no surprise that there have been a few snags with Sassa’s replacement process. The process was only launched in December. The initial February 28 bid closing date was extended to March 12 and then to March 30.
Net1 shareholders can look forward to at least another six months with Sassa but just how profitable that business is will depend on the court, which has been asked to approve the pricing. And the court should ensure that Bengu is on hand to deal with queries from some of the cash recipients on April 1.
The trustees put in place by the Gupta family to oversee nearly R2bn in rehabilitation funds at the Optimum and Koornfontein collieries are surely having sleepless nights and lining up lawyers after the National Prosecutions Authority (NPA) outlined its arguments to seize the funds as proceeds from criminal activities. Judge Rabie agreed and gave an order for the funds to be moved from seven Bank of Baroda accounts to Nedbank.
The NPA’s application for the order was damning on the behaviour of the trustees and the department. It pointed out that there were serious breaches in terms of three acts in mining, the environment and tax. These violations, in terms of the National Environmental Management Act, carried a R10m fine and/or 10 years of imprisonment.
“I submit, in the circumstances, that the respective rehabilitation trust funds played a central role in the commission of the alleged unlawful activities by the trustees,” said the NPA’s Motlalekhotso Molelle, head of operations in the Asset Forfeiture Unit, in his affidavit.
There were fears that the Gupta family would plunder the R1.47bn in the Optimum colliery rehabilitation fund and the R280m for their Koornfontein colliery to pay Glencore for Optimum. The public protector’s State of Capture report flagged flows of cash in and out of the two trust funds, which by law have to be ringfenced.
Acting CEO of Bank of Baroda in SA, Anthony Jha, has told the Reserve Bank the funds are secure and were unencumbered even though the Koornfontein trust was used for collateral for a R150m loan that had been repaid, again completely in violation of the acts.