CPS running out of money, ConCourt warned

CASH Paymaster Services (CPS) – the company responsible for paying social grants to millions of poor South Africans – has told the Constitutional Court it would run out of money by the end of May if the R16.44 it is currently paid per beneficiary is not increased.

Les Morison, representing CPS, warned that if the company was obliged to trade at a loss it would not be in business beyond May.

CPS would only pay grants until the end of May if the SA Social Security Agency (Sassa) pays its March invoices, but would do so at a monthly loss of R70 million, according to Morison.

The Constitutional Court heard arguments in Sassa’s urgent application to have the declaration of invalidity – granted a year ago – suspended and the suspension to be extended for six months.

If Sassa succeeds in its application, the agency will be allowed to extend its unlawful contract with CPS by a further six months to September.

Justice Johan Froneman asked Morison: “I accept that CPS should not operate at a loss, but why does it feel entitled to profit?”

Morison said CPS was entitled to the benefits of its contract.

“Because the declaration of invalidity is suspended, the contract is practically lawful,” he said.

The Treasury should determine the pricing of the contract extension to ensure CPS received reasonable remuneration,” Morison added.

Gilbert Marcus, counsel for Freedom Under Law (FUL), said CPS should pay back the R705m after tax profit it had received from the contract.

He said FUL could not accept that CPS should not pay back anything at all.

Chief Justice Mogoeng Mogoeng said FUL should approach the high court and launch an application to have the millions paid back to Treasury.

“Shouldn’t your client start at the high court on whether CPS should pay back any of the profits?” Mogoeng asked, adding that the matter would be more appropriately dealt with in the lower court.

Marcus warned that the matter has dragged for some time and did not want a spectre of incessant litigation.

CPS said it has successfully paid social grants worth R720 billion since it was awarded the contract in 2012, and extended by a further 12 months in March last year.

Judgment was reserved.