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Corruption Watch challenges Sassa's 'irrational' R317m payment to CPS

Published Feb 22, 2018


Pretoria - Civil organisation Corruption Watch turned to the Gauteng High Court in Pretoria for an order setting aside the decision of the South African Social Services Agency (Sassa) to pay R317 million to Cash Paymaster Services (CPS) regarding the registration and payment of grant beneficiaries.

Corruption Watch want CPS to pay back the money, together with interest, to the public coffers, pending a recalculation of what the proven amount due to CPS is.

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Sassa earlier withdrew its opposition to the review application, while CPS is defending the matter.

Advocate Steven Budlender, acting for Corruption Watch, on Thursday argued that the decision taken by Sassa to vary a services contract with CPS for the distribution of social grant payments to the poorest of society, is at the heart of this case.

Corruption Watch is of the opinion that the variation, which resulted in Sassa paying CPS R317 million, was unlawful. 

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Budlender said the money was paid in circumstances where the parties had not even agreed a cost for the varied services and where Sassa had failed to establish that this amount was even owed to CPS. 

“This is irrational,” he said.

It was also paid  without prior verification or approval from the Bid Evaluation Committee, he said.  

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Budlender argued that Sassa initially paid CPS 80% of the money (R253 million), pending verification by an auditor, but it then gave in when CPS “threw its toys out of the cot” and demanded immediate full payment.

Sassa enlisted CPS to distribute social welfare grants on its behalf in 2012, after CPS was awarded the tender in this regard. 

The Constitutional Court, however, in November 2013 declared the tender to be unlawful and it was set aside.

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But prior to this Sassa and CPS concluded a services level agreement, in terms of which CPS undertook to register social grant beneficiaries onto a database for a fixed fee of R16, 44 per recipient.

It was also agreed that if CPS was required to render additional social grant related services to Sassa, the parties would negotiated a service fee for those services.

It became known in 2014 that Sassa had paid CPS R317 million. CW said it was unable to locate any documentation proving that the money was paid in relation to the service level agreement or any written agreement between the parties.

An invoice issued by CPS to Sassa reflecting the payment, was headed “financial consideration for bulk re-registration”. 

Budlender said it reflected a of R23.20 per “re-registration” of beneficiaries - thus a higher cost than the R16,44  provided for in the contract.

Budlender said in order to eliminate fraud and ghost dependents, it was agreed that CPS would re-register all 9.2-million  social grant beneficiaries at the time.

But CPS said the number of people that were required to be re-registered, more than doubled and that it had to register  and additional 11.9 million beneficiaries. It was said that the 9.2 million were social benefit card holders.

It was argued on CPS’s behalf that the the contract and service level agreement  did not at the time cater for the re-registration of child beneficiaries as well and thus the service level agreement was amended.

Advocate Alfred Cockrell, acting for CPS, said if one took this into account, the bill did come to R317 million and there was thus nothing untoward regarding the payment.

Judgment is reserved.

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Pretoria News

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