Legal battle over millions far from over
New court bid launched to recover R74m from company unlawfully contracted to pay social grants
THE SA Social Security Agency (Sassa’s) long-running legal battle over millions it is owed by the company previously unlawfully contracted to pay social grants, Cash Paymaster Services (CPS), appears to be far from over.
Sassa has launched a new court bid to recover another R74 million from the controversial subsidiary of Net1.
The agency says CPS owes it the money it invoiced claiming to have paid nearly 4.55 million social grants recipients in February and March 2018 just before the SA Post Office (Sapo) took over the function.
In turn, CPS has demanded that Sassa provide the contractual basis upon which the claim is based, according to Social Development Minister Lindiwe Zulu.
Sassa indicated that the contract in question was signed with CPS in 2012 for the payment of social grant services after the company demanded that the agency provide the basis for claiming R74m.
The claim is still pending for arguments in court.
Zulu revealed details of the lawsuit in answers to DA MP Bridget Masango’s parliamentary questions.
Masango had demanded an update on the status of all court cases Zulu’s department brought against CPS.
The lawsuit comes as CPS has approached the Constitutional Court to avoid paying more than R316m it was ordered to pay back to Sassa by the Gauteng High Court, Pretoria, in March 2018 even though the agency had no proper basis for concluding that the amount was correct.
Sassa paid the R316m in 2014 after initially conceding that it should withhold 20% of the amount until an audit had been completed.
The high court found that Sassa’s decision to pay R316m to CPS was unlawful and invalid and ordered the money to be repaid with interest.
CPS then approached the Supreme Court of Appeal (SCA) in respect of a variation agreement it entered verbally with Sassa.
The SCA dismissed CPS’s appeal. The company also claimed it was entitled to the R316m because the enrolment of children as social grants beneficiaries was not part of its initial scope of work.
In his founding affidavit filed at the Constitutional Court as part of CPS’s application for leave to appeal the SCA judgment, its director Nunthakumarin Pillay said the company was appealing the decision of the country’s second highest court on the basis that the company and Sassa were expressly required by certain clauses of their contract to vary the agreement to provide for the enrolment of children.
“The provisions carved out the registration of children as an additional function subject to a separate remuneration regime. There was thus a lawful basis for the variation agreement,” reads Pillay’s affidavit.
He insisted that CPS incurred costs as a result of the additional costs and registered more than double the number of beneficiaries initially planned in terms of the proposal.
Non-profit organisation Corruption Watch, which launched the initial successful high court challenge to force CPS to pay back the R316m and opposes its Constitutional Court appeal, says the company maintains it is entitled to the additional R316m in public funds even though the SCA rightly found the services it was paid for were already covered by the agreement between it (CPS) and Sassa and by the billions of rand it received.
Zulu said the official who authorised the R316m (payment) was no longer employed by Sassa.