Cape Town - Social Development Minister Bathabile Dlamini on Thursday issued an ultimatum to Cash Paymaster Services (CPS) to ensure the company bars any unauthorised deductions from social grant beneficiaries' bank accounts.
CPS is the company contracted to pay social grants to some 16 million beneficiaries.
In a media briefing in Cape Town, Dlamini revealed the outcome of a probe into the debiting of beneficiaries bank accounts by, among others, lending companies and cellphone airtime providers.
Dlamini said “sharks in suits” were preying on social grant beneficiaries and looting their bank accounts.
“Since 2012, when the contract to pay social grants was awarded to Cash Paymaster Services (CPS),... the rate of debit deductions from grant beneficiaries appeared to increase significantly,” Dlamini said.
The deductions were made from the SA Social Security Agency (Sassa-branded) Grindrod bank accounts into which grants are paid.
CPS is a subsidiary of Net 1 Holdings.
“The team found evidence of other financial institutions that may be linked to Net 1 Holdings, which is a holding company of CPS, that offer financial products including micro-loans to grant beneficiaries,” Dlamini said.
“The deductions associated with these products are then deducted via EFT payment system within the national payment system.”
The lending practices were in contravention of the Social Assistance Act, its regulations and the Sassa Act.
“The legislation allows for the social grants not to be burdened or ceded and allows for one deduction not exceeding 10 percent for funeral insurance only,” Dlamini said.
“Furthermore, the contract compels CPS to protect the confidential information of grant beneficiaries, including biometric data gathered during re-registration in 2012.”
At the same time, Dlamini said the deductions could be “technically legal”, but insisted they were “immoral” as they served to “rob the poor”.
Dlamini said a revised service level agreement (SLA) was drawn up and given to CPS to sign.
“The reviewed service level agreement has been with CPS for more than six months and what is the main issue...is the deductions,” Dlamini said.
“They have refused to sign it and we are giving them 14 working days to sign the service level agreement....”
Dlamini said the state contract with CPS provided for the SLA to be reviewed.
If CPS does not sign the revised the new agreement, Dlamini has threatened court action.
Sapa