The SA Social Security Agency (Sassa) intends to recover “every cent which is owed” by former grant payment company Cash Paymaster Services, a spokesperson says.
Paseka Letsatsi told GroundUp on Tuesday that the liquidation of CPS, ordered by the North Gauteng High Court on October 16, would not absolve the company from paying its debts, including the profits earned from the social grants contracts.
CPS, a subsidiary of Net1, which is listed on the JSE and on the Nasdaq in the US, was contracted to pay social grants by Sassa in 2012 and the contract was extended twice.
The Constitutional Court ruled in 2014 that CPS may not retain profits from the contracts as they were unlawful. It ordered the company to file audited statements of expenses, income and net profit earned under the contract, and ordered Sassa to obtain “an independent audited verification” of the CPS statements and file this with the court.
Letsatsi told GroundUp that CPS owed SASSA about R1.5bn, including R800m in profit, which Sassa’s auditors say CPS made under the social grants contracts. CPS’s auditors, however, have told the Constitutional Court that CPS made only R252m in profit. The exact profit has not yet been determined by the court.
Sassa said CPS’s debt also included R316m which, with interest, amounted to R629m.
This follows a decision by judge Moroa Tsoka who ordered CPS to pay back R316m, plus interest, to Sassa after Corruption Watch asked the North Gauteng High Court to review Sassa’s decision to pay CPS extra money for registration of beneficiaries.
The R1.5bn also included a R74m fee which Sassa says was paid for services CPS had not rendered.
“Sassa intends to recover from CPS every cent which is owed, and if needs be, the sister companies in the Net1 group will be held responsible for the payment of all amounts owing,” Letsatsi told GroundUp.
Net1 applied to put CPS into business rescue after the loss of the social grant payment contract which CEO Herman Kotze said had left the company “financially distressed”. But Sassa, CPS’s main creditor, opposed the company’s decision to go into business rescue in court papers filed on September 10 and said it should be liquidated instead. Sassa argued that CPS had no chance of recovery considering the debts it had.
The business rescue practitioners had no choice but to agree to liquidation, one of the practitioners, Ralph Lutchman, told GroundUp on Tuesday.
“The money owed by CPS is public money and Sassa will stop at nothing to ensure that what rightfully belongs to the public is returned to the public purse,” said Sassa CEO Totsie Memela on Monday.
“No amount of ducking and diving will stop Sassa from seeking justice and righting the historic wrongs committed by CPS.”