Weekend Argus (Saturday Edition)
Court orders CPS to pay back grant registration money
THE SA Social Services Agency (Sassa) received a tongue-lashing from the Gauteng High Court in Pretoria yesterday for paying R316 million to Cash Paymaster Services (CPS) for the registration of social grant beneficiaries.
The court ordered CPS to pay back the money as the payment was “effected for ulterior purposes or motive” and was unlawful.
Judge Moroa Tsoka said: “As a result of Sassa’s unlawful conduct, the fiscus has been robbed of a substantial amount of money intended for the most vulnerable and poor people of our country.
“The fiscus is poorer as it did not receive fair value for what it paid. It is just and equitable that the payment of R316 447 361 made by Sassa to CPS, together with interest, be returned to the fiscus for the benefit of those for whom it was intended in the first place.
“This, in my view, is a just and equitable remedy that would effectively vindicate the fair process violated by the parties. The remedy would entrench the rule of law,” the judge said.
Corruption Watch turned to the court last month for an order setting aside Sassa’s decision to pay R317m to CPS for the registration of and payment to grant beneficiaries.
Sassa enlisted CPS in January 2012 to distribute social welfare grants on its behalf.
In November 2013 the Constitutional Court declared the agreement unlawful. The following year the court ordered Sassa to initiate a new tender process for the payment of social grants.
The declaration of invalidity of the contract pending compliance was suspended by the court, with the understanding that a new tender process was to be initiated. To date, no new contract has been awarded.
Before the contract was set aside, Sassa and CPS concluded a service level agreement (SLA) in terms of which CPS was to pay social grants on behalf of Sassa.
In terms of the SLA, CPS was responsible for the bulk enrolment and ongoing enrolment of new recipients.
This entailed the capturing and registration of data relating to the name, surname, digital picture (excluding children) and ID number of the recipients.
Sassa also requested CPS to capture and register the present address, cellphone numbers and schools attended by the children on whose behalf grants were claimed.
The parties agreed that Sassa would pay CPS R16.44 to process this information regarding each recipient.
But an invoice issued by CPS to Sassa for the payment of R316m reflected a price of R23.20 per re- registration of beneficiaries – thus an additional R6.76 per re-registration was provided for in the contract.
An additional amount was also charged to capture the information regarding the children.
Advocate Steven Budlender, acting for Corruption Watch, earlier argued that the decision taken by Sassa to vary a services contract with CPS for the distribution of social grant payments to the poorest of society, was at the heart of this case.
Corruption Watch argued that the variation, which resulted in Sassa paying CPS R316m, was unlawful.
Budlender said the money was paid in circumstances where the parties had not even agreed to a cost for the varied services, and in which Sassa had failed to establish that this amount was even owed to CPS. “This is irrational,” he said.
Judge Tsoka agreed with these arguments and said the payment was unjustified and unreasonable and made without any valid reasons.
She declared the agreement between Sassa and CPS for the payment of R316m to be unlawful and said it had to be set aside.
“The payment was unreasonable in that no reasonable person in the position of Sassa could have effected such payment without any valid reasons,” the judge said.
Corruption Watch’s executive director, David Lewis, welcomed the judgment. “This judgment reinforces the immense importance of procurement processes as a bulwark against corruption and maladministration.
“However, while we are confined to reviewing administrative irregularities, we have long called on the criminal justice authorities to investigate the relationship between CPS, Sassa and the Social Development ministry.
“We repeat that call, as we do our call for the International Finance Corporation ( IFC) to review its significant shareholding in a company that conducts itself in the manner that CPS does.”
Meanwhile, under-fire former Social Development minister Bathabile Dlamini may have to pay the costs of yet another round of litigation for her prominent role in the social grants crisis.
Yesterday, the Constitutional Court extended Sassa’s unlawful contract with CPS to pay social grants for a further six months under strict conditions.
Last month, Sassa filed an urgent application to have the declaration of invalidity, granted a year ago, suspended to allow it to extend CPS’s unlawful multibillion-rand contract for another six months and for the controversial firm to continue paying nearly 3 million beneficiaries who receive their grants in cash.
In a unanimous judgment, the court also ordered that Dlamini and acting Sassa chief executive Pearl Bhengu show cause why they should not be joined in the Constitutional Court matter in their personal capacities and not be held personally liable to pay the legal costs, or a portion.
Should Dlamini be held liable in her personal capacities, it would be the second time in less than a year that she is made party to social grants cases by the Constitutional Court.
In June last year, the court penalised Dlamini in her personal capacity to establish why she set up work streams, a parallel decision-making and communications process that bypassed Sassa and Social Development Department officials. The work streams cost taxpayers R48m.
Dlamini and Bhengu have until April 16 to file their affidavits to show why they should not be held personally liable. Interested parties will be given until April 25 to file their affidavits.