Dlamini at new height of absurdity
IF the air of calamity that currently surrounded the contract to distribute 17-million or so social grants has any redeeming quality, it’s that we are beginning to understand in slightly more detail what is actually happening.
It should be said that this is not because of, but despite, Social Development Minister Bathabile Dlamini, who held one of the most absurd news conferences ever at the weekend. She read a nine-page statement saying grants would be paid, but no deal had been struck then with operator, Cash Paymaster Services (CPS).
Huh? This contradicted a statement the department made three days earlier saying, triumphantly, that there was a contract, achieved after three days of negotiations.
Dlamini answered questions on this apparent contradiction by staring fixedly ahead.
Her director-general, Zane Dangor, shockingly resigned on Friday in the middle of this crisis. Questions on that were met with claims that comment was impossible because the situation was sub judice.
This is laughable since one of the things we do know is that Dlamini fired Dangor for going to the Constitutional Court and she was the one who forced the department to withdraw the application. There is currently no extant legal action precisely because she insists there shouldn’t be any, making the “sub-judice” claim redundant.
The reason Dangor went to the Constitutional Court is simple: he is sitting with a legal opinion that he is required to do so.
A little more than three years ago, the court rendered the contract with CPS null and void, but gave the department three years to redo it.
That the department failed to do, so here we sit on the edge of a catastrophe.
Dangor’s advice was simple: throw yourself at the feet of the Constitutional Court and beg for mercy.
But this is where it gets interesting. Three years ago, the court found fault with the bidding process because right at the last minute, the department insisted that the bidders had to have “biometric technologies”, which is a fancy way of saying that they had to have a way of personally identifying recipients each month.
By doing so, the department in effect narrowed the bidders down to one: CPS, which is owned by the US company Net1 UEPS Technologies.
One has to have a little laugh. Dlamini, as head of the ANC Women’s League, has been ranting about “white monopoly capital”, but has no problem handing a R2-billion contract to conduct a crucial state service to an American company with an all-white board.
Clearly, white monopoly capital is despicable in all circumstances except when it isn’t. And what circumstances might those be? This week, Ground Up published a really interesting article by Erin Torkelson, a PhD candidate at the University of California, Berkeley, who did some digging about these “biometric technologies”. The tech is, of course, intended to prevent fraud, and two systems to achieve biometric evaluation were forwarded: fingerprinting and voice recognition.
Torkelson writes: “In practice . . . the voice verification technology was never sophisticated enough to work effectively and has been virtually abandoned. As a result, the 60% of grant recipients who use ATMs or merchants essentially receive their grants as All-Pay (the Absa-owned alternative bidder) had proposed, without monthly verification.” Wow.
Torkelson also records how CPS makes its real money.
On the face of it, the distribution contract is cheap. As fund manager Allan Gray, Net1’s biggest shareholder, pointed out, the costs of distributing the grants are small, about 1% of the total contract value.
Under the existing Sassa contract, Net1 receives about R1.8-billion (excluding VAT) per year for distributing the grants, the fund manager says. There is a small maths kink here because apparently Net1 gets R16.44 for every grant it distributes every month.
That would suggest an annual income of R3.35-billion, but apparently, it comes in lower because some recipients get more than one grant.
Torkelson points out that the contract does allow CPS to send “marketing” information to recipients so long as they ask for it. Hmm.
Over the years CPS has developed a range of services for cellular airtime (called Umoya Manje), insurance (SmartLife) and loans (Moneyline). Payments for these services are deducted before the grant is made.
This has been one of the big bugbears of the department and it tried to insist that the new contract should exclude these services.
We don’t know whether it does, nor do we know the new rates and the length of the new contract.
So why would Dlamini, a paid-up member of the white monopoly capital set, be so keen to reassign a contract with a white foreign company and why would she also be desperate to ensure the highest court should have no say in its legality? I think we all know the answer.