FBI probe grant firm in SA

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iol news pic sassa welfare grant card aug 28 INDEPENDENT NEWSPAPERS File photo: David Ritchie

Cape Town - The American Federal Bureau of Investigation (FBI) is looking into the rot that has plagued South Africa’s country’s social grant payouts in recent months.

In the Western Cape, 1.3 million people alone depend on grant payouts every month.

But the system has descended into chaos since new operators, Net1 UEPS technologies took over.

Net1 is jointly listed on the American Stock Exchange, the Nasdaq and on the JSE.

The US Department of Justice Criminal Division and the FBI have now teamed up to investigate possible corruption in how that company secured a R10 billion tender to issue grants here.

In August, the North Gauteng High Court ruled that the process of awarding the tender was illegal and invalid.

Despite this, the South African Social Security Agency (Sassa) was allowed to continue using Net1 through its subsidiary Cash Paymaster Services (CPS).

The judge decided that although the process was flawed, cancelling the contract would be disastrous and the social service would collapse.

If the American investigation is successful, Net1 could be out of business and senior managers could face arrest.

Sassa and the Social Development Department say they have not been contacted by the FBI or the US Department of Justice Criminal Division.

Social Development spokesperson Lumka Oliphant says by law, government has a constitutional duty to make sure grant monies are paid.

“We have a five-year contract with CPS and we don’t forsee any problems,” she said.

“We have not had any contact with anyone from America, everything we [are] hearing is from the media.”

Meanwhile, the previous grant payout company AllPay, a subsidiary of ABSA, is also still going ahead with its legal appeals.

They want CPS to be replaced after the court ruling that the tender awarded to them was invalid.

This case will resume next year on the Supreme Court of Appeal’s roll.

This double court action has raised concerns that Sassa must have a back-up plan to continue paying grants if Net1 is found guilty of corruption.

The Western Cape government says it is out of their hands because the money is paid by the national authority.

Western Cape Social Development spokesperson Samatha Fourie says they also had no idea about the possible payout crisis: “We have not been informed of any developments pertaining to the issue raised.”

*This article was published in the Daily Voice

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