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#Sassa: CPS was trying to coerce us into new contract

Sassa boss Thokozani Magwaza

Sassa boss Thokozani Magwaza

Published Mar 17, 2017

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Johannesburg – The South African Social Security Agency (Sassa) has lashed out at Cash Paymaster Services (CPS) for trying to "coerce" it into a new contract that had unfavourable terms to continue distributing welfare grants.

This comes after chief executive of CPS parent company Net1, Serge Belamant, claimed in an affidavit that Wednesday, should have been the deadline for signing of the new contract and that failure to do so would potentially delay the payment of grants.

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The Constitutional Court on Friday, ordered that CPS should continue paying welfare grants to some 11 million South Africans for another year, on the same terms set out in its current contract that expires in two weeks.

Speaking outside the ConCourt after the judgement on Friday, Sassa chief executive Thokozani Magwaza said the professional relationship between the agency and CPS remained intact though he lashed out at recent utterances by Belamant.

"I'm not the one to argue with Serge Belamant because I don't think he was telling the whole truth. He knows that the process starts on the 20th, not on the 16th, and money is transferred from Treasury three days before payment of grants takes place,” Magwaza said.

"[Belamant] was just playing ball as a businessman and trying to coerce us into a space where I don't think that we wanted to be. CPS is a company that is dealing in profit, we are constitutionally obliged to pay grants to beneficiaries. So our relationship is a service provider-client relationship. We do not drink coffee together."

In a majority judgment written by Judge Johan Froneman, the court said the executive had failed in its constitutional duty, and ordered that Social Development Minister Bathabile Dlamini furnish the court with reasons as to why she should not be held personally liable for the cost of the case. The court ordered Sassa back under its supervision, some 18 months after releasing it from oversight.

The agency will have to report to the court every three months on its progress in developing the capacity to take over grant payment. CPS has submitted an affidavit in which it demanded an increase of 6.6 percent in its fees to continue to pay grants for two years that would have seen the company earning R4.656 billion for the period.

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CPS has been charging R16.44 per grant and, according to the affidavit, had earned R2.06 billion from the contract in the past financial year.

CPS argued that the administration fee per grant would, based on this lump sum, be R17.52 for the first year of the contract and R18.68 for the second year. The calculation is based on a two-year consumer price index forecast and an increase in the number of grants to be paid.

But Froneman said the company could only direct itself to National Treasury if it wanted to amend its fees. If this resulted in any change to its terms, it would have to come back to the court for approval.

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African News Agency

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