Grants crisis worsens
This week’s deal struck between social development and Cash Paymaster may be in jeopardy should it not get Treasury approval
The fiasco over who will pay social grants and how they will be paid is far from over, prompting a last-minute crisis meeting yesterday between President Jacob Zuma, Social Development Minister Bathabile Dlamini and Finance Minister Pravin Gordhan. And now the crisis that threatens the livelihoods of more than 17 million South Africans is pitting Dlamini against Treasury and her Cabinet colleagues.
City Press understands that although the department of social development reached an agreement to secure a contract to distribute grants with Cash Paymaster Services (CPS) late Friday night, this still needs to be approved by Treasury, which is not in favour of it.
Treasury officials insist the deal can only be condoned if it is within the law and the allocated budget.
Dlamini’s handling of the crisis has also pitted her against her own senior officials, who have refused to follow her orders.
Some have alleged this was a manufactured crisis and the strategy all along was to ensure that CPS continued to hold the contract. They have also accused Dlamini of deliberately blocking all attempts to resolve the impasse.
One senior government official told City Press: “It was clear to me that processes to find a solution were being deliberately delayed so that the contract could go to CPS. They were even ignoring advice from senior advocate Wim Trengove, who was suggesting possible solutions.”
Treasury seems to agree that the crisis was self-made. In a letter last month, Solly Tshitangano, Treasury’s chief director of supply chain management governance, monitoring and compliance, wrote: “The SA Social Security Agency (Sassa) should have requested a deviation to advertise a new tender for a short period from December 2016 to early January 2017 to avoid a self-created emergency.”
Lumka Oliphant, Dlamini’s spokesperson, did not respond to requests for comment this week.
Asked to respond to allegations that the grants crisis was created deliberately to benefit CPS, Sassa spokesperson Kgomoco Diseko said: “These remain claims and not fact. We put this contract out in the market in a transparent manner and the market failed us.”
In 2014, the Constitutional Court ruled that the process Sassa had followed to award the contract to CPS was extremely flawed and had to be scrapped.
The state was given three years to correct it or find a new service provider. The deadline to do so is March 31. Sassa has not awarded a new tender and with just less than four weeks to go, it remains unclear how the grants to South Africa’s poorest are going to be paid.
NO END IN SIGHT
After weeks of panic, the social development department announced in a short statement on Friday that the nature of the agreement it had reached with CPS would be communicated “in due course”. No details were revealed. But government officials say whatever agreement was reached, it would still need to be condoned by Treasury. But Treasury has long made it clear that it would not support the extension of a contract declared invalid by the Constitutional Court. A government official privy to developments warned: “If Treasury condones something this big, knowing that it could have been prevented and that the urgent situation was deliberately created, then you are weakening the fiscus rules of procurement.” Last month, Treasury turned down Sassa’s request to be allowed to deviate from the Public Finance Management Act and approve the extension of CPS’s existing contract. It also wanted to hike the company’s initially agreed rate of R16.44 per beneficiary to between R22 and R25 per payee. Turning down the request, Tshitangano wrote: “Requesting National Treasury to extend a contract that was declared invalid by the highest court will not only be seen as being defiant to the judicial system, but may further be seen as perpetuating the illegal and unconstitutional deviation actions reprimanded by the highest court in the land.”
However, officials are concerned that if Treasury refuses to condone the agreement with CPS, that could be used as further ammunition to discredit it and portray it as uncaring towards the country’s poor.
Gordhan has come under attack from various Zuma supporters, who have accused him of driving an antipoor budget.
In a statement after yesterday’s meeting, the presidency said Zuma “is of the view that the matters are solvable”.
“He has directed the two ministers [Dlamini and Gordhan] to mandate their technical teams to work on the outstanding issues in order to ensure that social grant beneficiaries receive their grants on April 1.”
City Press has learnt that Treasury was expected to be pressured at the meeting to “assist” social development.
But Treasury has said it would only regularise an agreement with CPS if the Constitutional Court extended the suspension of the invalid contract.
However, even if Treasury was pushed to sign off on the agreement, there was still no guarantee that the Constitutional Court would endorse it.
Sassa and Dlamini are due to appear before the Constitutional Court on March 15 to defend government in an application brought against them by civil rights organisation Black Sash.
Treasury has warned that even if the department of social development said it no longer wanted an extension while implementing a new contract, this would still be unlawful. This is because any new contract is required to go through an open, competitive and fair tender process. If not, other parties would be able to challenge the contract in court because they were not allowed an opportunity to bid.
THE SHAMBLES DLAMINI CREATED
Dlamini has been slammed for her handling of the crisis, particularly for her reluctance to allow officials to report to the Constitutional Court.
On February 28, Sassa filed papers in that court, asking it to authorise negotiations with CPS with a view to entering into another contract.
But the agency later withdrew those papers, allegedly on Dlamini’s orders.
This led to a fallout with the department of social development’s new director-general, Zane Dangor, who had only been in the position for three months.
Dangor resigned on Friday. He confirmed his resignation on Saturday, saying it was prompted by a breakdown in the relationship between him and Dlamini, and a deep disagreement about how the crisis was being managed.
“This [dispute] was particularly [about] issues related to Sassa’s legal obligations in relation to the Constitutional Court,” he said.
Parliament’s standing committee on public accounts (Scopa) issued a statement yesterday, saying it noted his resignation with anger.
“In our brief interactions with Mr Dangor, he had proven himself to be an honest and hard-working civil servant. He was one of the many officials in the department of social development and in Sassa who have been frustrated by Minister Bathabile Dlamini’s heavy-handed interference in Sassa’s administrative matters.”
Scopa has scheduled a meeting with Dlamini on Tuesday.
Senior social development officials told City Press that Dlamini sidelined Sassa chief executive Thokozani Magwaza and other officials, preferring to work directly with Zodwa Mvulane, appointed as special programme leader on new payment systems.
Sassa and Dlamini claim in court papers, filed on Friday in response to the legal challenge by Black Sash, that they made it clear from the start that a complete takeover by government of social grant payments was dependent on the outcome of “various consultations”.
They say this was flagged in November 2015 in a report handed to the Constitutional Court, which had taken on a supervisory role.
The department initially promised to develop the capacity to pay the grants itself, but Dlamini and Sassa say in their legal papers that they were advised by a technical team that the plan was “overly optimistic, unrealistic and underpinned by insufficient research”.
The reason for this was that Sassa did not have the budget, internal capacity and enough skilled people to implement the plan.
Dlamini went on to claim in court papers this week that she only became aware of the scale of the problem in October.
“As at late August or early September 2016, Sassa officials started to fully appreciate that Sassa will not be in a position to substantially implement the progress report within the time frames specified. The minister appreciated the position in October. The minister and Sassa accept that they ought to have been aware earlier,” they say in court papers.
The technical team, they claimed, advised Sassa to continue to use CPS beyond the March deadline for at least the next two to three years.
This contradicted legal advice from Trengove that the proposed interim agreement with CPS would not be legal. Trengove found there would be nothing left to renew with CPS.