South Africa

SASSA Grants: The rogue minister and the great treasury stitch up

By Marianne Thamm 1 March 2017

The SASSA crisis deepened on Wednesday when the agency withdrew, within 24 hours, a late application to the Constitutional Court for an extension to the Cash Paymaster Services contract after March 31 when it expires. This after Minister of Social Development Bathabile Dlamini's open defiance of parliament on Tuesday and a disastrous presentation by SASSA officials to parliament's standing committee on public accounts on the agency's state of readiness to pay social grants on April 1. As events unfold like a slow-motion train smash, it has become increasingly evident that treasury, which has stated it cannot violate the PFMA in agreeing to a deviation, is being blackmailed and set up to be fingered as the bad guy in the national crisis. By MARIANNE THAMM.

It was the IFP’s Liezl van der Merwe who first suggested it during Minister Bathabile Dlamini’s presentation to parliament’s portfolio committee on social development on February 23.

“Can you confirm they [CPS] are seeking an extra R1.3-billion from this department to pay out the social grants. I also want to know that you don’t want to pass the buck to Treasury but there are allegations that come March 31 and there is a problem of some sorts you will pass the buck and blame Minister Pravin Gordhan which will give the minister and the president more ammunition to fire Pravin Gordhan,” Van der Merwe asked the Minister and SASSA officials.

It was a comment that appeared to have hit a nerve as committee chair, the ANC’s Rosemary Capa hastily rebuked Van Der Merwe telling her she was “bringing things into this meeting from the outside.”

On Tuesday Dlamini and SASSA officials were due to appear before parliament’s standing committee on public accounts on the over R1 billion in irregular expenditure but more importantly on the supposed new contract to be negotiated with CPS beyond the March 31 expiry date of this already extended contract [ruled irregular by the Con Court].

Dlamini simply failed to pitch, but told the media at another press conference a few hundred metres away that she did not need to account to SCOPA but to the Social Development Committee, while SASSA officials, sans their CEO who had been booked off sick, fumbled through a shambolic presentation. Committee members across the political spectrum condemned the “manufactured crisis/emergency” with regard to who would be paying some 17 million beneficiaries of grants on April 1.

On Wednesday, SASSA officials, accompanied by officials from treasury and the South African Reserve bank were reportedly negotiating with  CPS/Net1 UEPS Technology CEO Serge Belamant with regard to renegotiating a new contract with CPS. Late on Tuesday SASSA filed an urgent application with the Constitutional Court asking for an extension of the invalid 2014 contract only to withdraw this 24 hours later. The Ministry of Social Development would now be filing a supplementary application by March 31, spokesperson Lumka Olifant told media. This is in compliance with its legal obligations.

It was the DA’s Tim Brauteseth who raised at Tuesday’s SCOPA briefing that Belamant had, during an earnings conference call with shareholders on February 10, let slip that his company had been in talks with SASSA, this while SASSA officials denied that any such discussions had occurred.

On Wednesday, SASSA officials, accompanied by officials from treasury and the South African Reserve bank were reportedly negotiating with Belamant with regard to renegotiating a new contract with CPS. Minister Dlamini too was due to give a media briefing but no details were forthcoming at the time of writing.

On February 10, Belamant and other UEPS Technologies Inc executives including Dhruv Chopra, head of investor relations and Herman Kotze, CEO, treasurer and secretary and director briefed shareholders.

Belamant opened the teleconference saying: “But perhaps before I kick off, it is important to note that last night our President, President Zuma addressed the nation. His speech was pretty much focused on economic transformation for South Africa, South African businesses and South African citizens. I think it is important that this message is understood clearly by all businesses that operate in South Africa. And we believe we are one of those that have merit and supported any transformation plan that the government wishes to put in place.”

He added that this message “should be understood clearly and is a sign that there are many changes that will occur in South Africa over time, rather sooner rather than later. And we believe that we are probably better placed both financially, more importantly, mentally to be able to tackle these changes and to ensure that we can deliver our piece to both the South African government and South African people.”

And then “the second important piece of information from last night is that we have received a letter from SASSA that is asking us if we were willing and able to engage with them to assist them with what they call a transition plan, which may occur over the next year two years. I will discuss that a little bit more in detail, because already a number of conversations since this letter have taken place. And I will be able to hopefully throw a little bit better light in terms of what this plan is all about and if we believe that this plan is a viable plan or not.”

With regard to the tender having being declared irregular in 2014 by Judge Johan Froneman, Belamant told shareholders, quoting Froneman, that it was SASSA’s irregular conduct that had been the sole cause “for the declaration of invalidity and for the setting aside of the contract between it and CPS”.

“Therefore SASSA was solely responsible for the administrative irregularities in the tender process with no blame assigned to CPS. Two, even today, certain parties slanderously posture that there was corruption involved that resulted in the award of the tender to CPS,” said Belamant.

Reporting back on the current status of CPS’s relationship with SASSA Belamant said: “Yesterday, we received an official request from SASSA to see if we would be willing and able to meet with them to explore, what they call the probabilities of assisting SASSA through a transaction. We have already provided a response accepting their offer to meet.”

“We have spent time with numerous SASSA executives and committees over the last year, to make them away of each facets of our current solution. Unfortunately, these in-depth discussions are not shared with other treasury or members of the public, who do not really understand the enormous complexities and logistical challenges of what this job actually entails.”

In other words, as the DA’s Brauteseth suggested to SASSA and Department of Social Development officials on Tuesday, Treasury (with its highly skilled staff) are basically too stupid to grasp the complexity of “this job”.

Belamant also reveals what is bound to take place during the meeting with SASSA, SARB and Treasury on Wednesday. “This being said, we have put in place a continuation plan, which would accommodate a new contract with us if this proves to be required. We are of the belief that it is not feasible for any one institution, or for that matter, a combination of providers, to take over our activities by April 1, 2017. Any new solution would require 10 million cards to be reissued to all people, specifically those that live in deep rural areas and such new registration would require precise planning and probably more than 12 months to achieve from the time a new tender is issued and awarded.”

He added that “more than 10 000 pay points that need to be serviced monthly” and that this “simply cannot be achieved by any existing infrastructure, specifically in the rural areas where there are no ATMs, bank branches or post offices.”

What this certainly suggests is that SASSA is no position to effect payouts on its own. Also it is highly unlikely that CPS will accept any new contract, no matter how illegally or irregularly awarded, on the same budget as the Department of Social Development has claimed will have to be done.

And here is where the blackmailing and setting up of Treasury is revealed. Treasury has repeatedly asserted that it will be guided by the Con Court’s ruling and the PFMA.

With an impending catastrophe which will affect the lives of the 17 million who depend on grants, it will be Treasury who will be scapegoated and blamed and not Dlamini or SASSA who have wasted billions, including on an advisory committee personally irregularly appointed by the Minister.

This could prove to be the final nail those who seek to remove Gordhan or who view him as an obstacle, will use to engineer his removal.

Officials have told parliament they only began working on their “transitional” plan in October last year. However, from 2014 the Department, Dlamini and SASSA have been aware of plans to “transition” as the only paymaster for social grants but appear to have done very little to realise this goal.

Should Treasury and Gordhan insist that SASSA and the Minister of Social Development respect the rule of law, it is THEY and not the real culprits who will be blamed for what must rank as one of the most serious manufactured crisis in post-apartheid South Africa.

Why there has been such a concerted attempt by Minister Dlamini to impose her will with regard to CPS remains a mystery, apart from her apparent links to those BEE members who formed part of Belamant’s R10 billion bid for the tender.

SASSAgate will come to be remembered as a seminal moment in the desperate pushback against what appears to be an attack on treasury, the Constitutional Court and the rule of law. DM

Photo: Social Development Minister Bathabile Dlamini at the media briefing by Interministerial Committee on Immigration held at Tshedimosetso House in Hatfield,Pretoria. 2842015 Kopano Tlape GCIS

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