The South African Social Security Agency (Sassa) has saved over R1.3 billion after Cash Paymaster Services (CPS) failed to prove a case it had lodged against the agency. The case lodged by CPS claimed that Sassa had violated a contractual agreement which provided CPS with exclusive access and rights to provide the pay-outs of social grants. CPS has also been ordered to pay the costs of the arbitration process.

The main claim by CPS in March 2009 was that it was entitled to enrol all beneficiaries on its computerised system, irrespective of whether they were to be paid by themselves. They also claimed that SASSA was not entitled to pay grants by electronic transfer to bank accounts of beneficiaries. They further claimed that SASSA was not entitled to cause grants to be paid in cash at post offices and other South African Post Office facilities, and by electronic transfer to Postbank and other bank accounts of beneficiaries, and that the SASSA was not entitled to enrol all beneficiaries on its database. CPS lost on all the three claims and were ordered to pay the costs in each case.

CPS has, during the financial years 2009/2010 and 2010/2011, initiated various claims against SASSA and had them referred to arbitration.

The claims were for a total of R1.3bn and were based on the alleged deprivation of an opportunity for CPS to earn full service fees for the period April 2006 to June 2010 as a result of the contract concluded between Sassa and certain banking institutions and Sapo for the rendering of social grant payment services.

CPS claimed this constituted a breach of its exclusive rights to render the services in respect of the provinces that it serviced, being the Eastern Cape, KwaZulu-Natal, Limpopo, North West and the Northern Cape.

National director of Black Sash, Lynette Maart says that CPS essentially tried to close the grant beneficiary payment space. She says that when CPS realised that was not going to happen, it hoped a litigative process would provide it with the monopoly it desired.

“This has been coming on for a long time,” says Maart.

“What we understand was that CPS claimed about R1.3 billion from Sassa…they wanted to close down any opportunity for Sassa contracting the Post Office…basically closing the space for anybody to operate in the grant beneficiary payment space.”

“I think, as the Sassa statement says, the CPS company does not necessarily consider negotiating and working through things. Their preferred way of operating is going through litigation. They have launched several cases – some of which are still open, and there are many others the Black Sash participated in. Their [the CPS’] way of solving problems is through litigation and I don’t think that’s a good way to work with the state.”

Maart indicates that the regulations at the time of CPS’ involvement in grant payments made provision for two kinds of payments, namely: into the personal bank accounts of grant beneficiaries and into institutional bank accounts wherein a beneficiary resides (old age homes etc).

“The regulations made provisions for two kinds of payments. One was payment into the personal bank accounts of grant beneficiaries and also into the institutional bank accounts in which the grant beneficiary resides, for example, an old age home.”

Maart says that CPS attempting to tie Sassa up into litigation is unwelcome considering the possible impact it may have on the provision of services within the agency.

“I think just tying Sassa up into legal battles resulted in them having to focus on the legal battles and in turn services might be compromised…but I think Sassa has moved quite swiftly through this,” says Maart.

“The court asked Sassa to order all the financial statements of CPS from the 2012 contract to when it ended in 2018 September. CPS has submitted the first five years of the financial statements and they declared a profit of R1 billion. That process hasn’t been completed yet – Sassa must still order it [the money] back, plus the additional amount for the extension of the contract. We’re waiting for Sassa to complete that process and for that money to be returned to the state.”

“At least with the CPS contract behind us there’s no more illegal deductions from the beneficiaries’ bank accounts.”

VOC