AT least six million SA Social Service Agency (Sassa) grant recipients are in danger of not getting their money from April 1 when the contract with Cash Paymaster Services ends.
This comes after the National Treasury turned down Sassa’s request to open bank accounts with Postbank. In a letter sent to Sassa on March 5, the Treasury’s acting accountant-general said the request could not be approved as the SA Post Office’s Postbank was not registered in South Africa.
“In terms of section 7(2)(a) of the Public Finance Management Act (PFMA), 1999 (Act No 1 of 1999), a public entity may open a bank account only with a bank registered in South Africa and approved in writing by the National Treasury.
“The Sapo/Postbank is not a bank registered in South Africa and not approved in writing by the National Treasury.
“The National Treasury can therefore not grant approval to open a bank account with Sapo/Postbank,” the letter reads.
The Treasury further indicated that it was of the opinion that the non-approval of bank accounts with Sapo/Postbank should not prevent Sassa from continuing with the service level agreement with Sapo/Postbank.
It said Sassa has direct access to Bankserve to transfer the funds directly into bank accounts of the beneficiaries at the Sapo/Postbank. It called on Sapo/Postbank to provide the bank account details of the relevant beneficiaries to Sassa.
“Once bank account details are verified, Sassa can process payments to the beneficiaries through Bankserve and for the distribution of cash to the cash payment contractor. After the tender has been awarded, a payment can be made directly by Sassa to the bank account of the contractor,” it said.
A highly placed source within Sassa told The Sunday Independent that the decision has thrown their operations into disarray. The source said at the centre of their need to open the accounts with Sapo/Postbank was the need to have a corporate account.
“It’s a serious problem when Treasury says we can’t open an account. Our strategy is that we need a corporate account and we need all the beneficiaries’ accounts to be linked to that particular corporate account,” said an insider, who asked not to be named.
By having a corporate account, the source said, they would avoid loose accounts of beneficiaries as currently happens with money being taken from their accounts.
One of the biggest headaches the decision will create will be with regard to uncollected monies, said the insider.
“It also makes it cost-efficient because you just transfer. It’s similar to having a corporate company with one account and people having credit cards. We are trying to do that but it means Sassa must now change its entire strategy.
“The way we do things will change and the reconciliation process will be affected. We need to reconcile everything and, without the corporate account for ease of reference, we won’t know if people are not collecting their money.
“Currently, if they don’t collect their money from CPS, in three months’ time the money comes back to us. We won’t have that because there won’t be any connection.
“With a corporate account, you can always view the activities and beneficiaries to know the movement of the money. It also makes it easier to solve the problems beneficiaries encounter. The decision has serious implications. It is going to affect 5.7 million people going forward,” said the source.
Sapo and Sassa have been at loggerheads over the process since the announcement and signing of service level agreements for Sapo to administer the grants.
In January, Post Office chief executive Mark Barnes wrote to Sassa complaining about a lack of responsiveness on critical matters. He said the non-responsiveness was causing a delay in Sapo’s ability to fulfil its obligations.
Sassa acting CEO Pearl Bhengu responded to the letter by lashing out at Barnes and accusing him of using the media to communicate with the department.
She added that before the service agreement was signed, Barnes was extremely vocal that the payment of social grants was simple and had no complexities.
“I want to point out to you that you have not delivered on even the simplest of your obligations in terms of the agreement, which involves the opening of a corporate account.
“This leads me to question whether you indeed have an understanding of exactly what is required in delivering on these tasks and whether Sapo does have the requisite ability and capability to deliver on projects of these magnitudes,” Bhengu said in the letter dated January 29.
Contacted for comment, Barnes said he could not speak on the matter as it was still due to be decided in court. He promised to respond next week.
Sassa and Sapo were lambasted by the Constitutional Court two weeks ago.
Chief Justice Mogoeng Mogoeng questioned why Sassa had waited until the eleventh hour to approach the court to grant the agency an extension.
“This is sad. It’s like we are being laughed at by Sassa,” Mogoeng said.
In February, Bengu wrote another letter to Barnes requesting an update to establish if Postbank would be able to meet the deadline of April 1. She requested an undertaking and plans for the implementation. Bhengu further asked if they should have a contingency plan in place.
Despite Sapo/Postbank struggling to meet the requirements set out by Sassa, Treasury remains adamant that the service agreements should continue.
The source said continuation of the Service Level Agreements would force Sassa to continue using an account opened with the Reserve Bank which is not a corporate account.
“Treasury says we must carry on with Sapo even though it does not have the capacity to provide what we need. It means Sassa must carry on with the Reserve Bank account.
“That account was only meant for this time while Sapo is getting ready. Sassa will now be forced to carry on with that process because we are being ordered to do so.
“The plan was never to use the Reserve bank account forever. It was just an interim measure but now we are told to stay with the Reserve bank account but it’s not a suitable account for reconciling and viewing all the transactions. It has a lot of disadvantages, we were just doing it to assist Sapo to take over once they have their ducks in a row,” said the source.