Sassa enlisted CPS in January 2012 to distribute social welfare grants on its behalf. Picture: Oupa Mokoena/ANA
Pretoria - The South African Social Services Agency (Sassa) received a severe tongue lashing from the Gauteng High Court, Pretoria, on Friday for paying R316 million to Cash Paymaster Services (CPS) for the registration of social grant beneficiaries.

The court ordered CPS to pay back the money as the payment was unlawful and was “effected for ulterior purposes or motive” and was unlawful.

Judge Moroa Tsoka said: “As a result of Sassa’s unlawful conduct, the fiscus has been robbed of a substantial amount of money intended for the most vulnerable and poor people of our country.

“The fiscus is poorer as it did not receive fair value for what it paid. It is just and equitable that the payment of R316 447 361 made by Sassa to CPS, together with interest, be returned to the fiscus for the benefit of those for whom it was intended in the first place. This, in my view, is a just and equitable remedy that would effectively vindicate the fair process violated by the parties. The remedy would entrench the rule of law,” the judge said.

Corruption Watch (CW) turned to court last month for an order setting aside the decision of Sassa to pay R317m to CPS regarding the registration and payment of grant beneficiaries.

Read: CPS ordered to pay back more than R300m to Sassa

Sassa enlisted CPS in January 2012 to distribute social welfare grants on its behalf. In November 2013, the Constitutional Court declared the agreement to be unlawful. The following year, the Constitutional Court ordered Sassa to initiate a new tender process for the payment of social grants. That court suspended the declaration of invalidity of the tender pending compliance with the new tender process to be initiated. To date, no new tender has been awarded.

Before the tender was set aside, Sassa and CPS concluded a Service Level Agreement (SLA) in terms of which CPS was to pay social grants on behalf of Sassa.

In terms of the SLA, CPS was responsible for the bulk enrolment and ongoing enrolment of new recipients. This entailed the capturing and registration of the data relating to the name, surname, digital picture (excluding children) and ID number of the recipient.

Sassa also requested CPS to capture and register the present address, cellphone numbers and schools attended by the children on whose behalf grants were claimed. The parties agreed that Sassa would pay CPS R16.44 to process this information regarding each recipient. But an invoice issued by CPS to Sassa for the payment of R316m reflected a price of R23.20 per “re-registration” of beneficiaries - thus a higher cost than the R16.44 provided for in the contract.

It also charged extra to capture the information regarding the children.

Read more: ConCourt extends Sassa's contract with CPS for six months

Advocate Steven Budlender, acting for CW, earlier 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 was at the heart of this case.

CW argued that the variation, which resulted in Sassa paying CPS R316m, was unlawful. Budlender said the money was paid in circumstances where the parties had not even agreed on 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.

Judge Tsoka agreed with these arguments and said this payment was unjustified and unreasonable and made without any valid reasons. She declared the agreement between Sassa and CPS for the payment of R316m to be unlawful and said it thus had to be set aside.

“The payment was unreasonable in that no reasonable person in the position of Sassa could have effected such payment without any valid reasons,” the judge said.

CW’s executive director David Lewis welcomed the judgment. He said: ““This judgment reinforces the immense importance of procurement processes as a bulwark against corruption and maladministration. However, while we are confined to reviewing administrative irregularities, we have long called on the criminal justice authorities to investigate the relationship between CPS, Sassa and the social development ministry. We repeat that call, as we do our call for the International Finance Corporation to review its significant shareholding in a company that conducts itself in the manner that CPS does.”

Pretoria News