Grants cri­sis wors­ens

This week’s deal struck between so­cial de­vel­op­ment and Cash Pay­mas­ter may be in jeop­ardy should it not get Trea­sury ap­proval

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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.


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.


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.

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