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16 December 2017 10:51 (South Africa)
South Africa

Social Grants: While Bathabile Dlamini waffles at Scopa, court papers reveal behind-the-scenes chaos

  • Marianne Thamm
    marianne-thamm.jpg
    Marianne Thamm
  • South Africa
Photo: Minister of Social Development Bathabile Dlamini during the Media Breakfast on Operation Fielaheld at GCIS – Tshedimosetso House, Pretoria, 26/06/2015. (Siyasanga Mbambani)

Even the most sympathetic listener at Tuesday’s Scopa meeting addressed by Minister of Social Development Bathabile Dlamini with regard to the payout of social grants after March 31 would have left the session none the wiser. The only “certainty” is that grants will be paid on April 1. Whether the new contract with CPS is legal or whether the company is BEE compliant is still outstanding. Meanwhile CPS, in an affidavit responding to a ConCourt application by the Black Sash, has revealed the behind-the-scenes chaos as it dawned on Sassa that it was nowhere near ready to assume its responsibility as paymaster. The court papers also confirm that CPS sought to increase its current R16.44 per person rate to R25 for a 90-day commitment or R22 for a 24-month fixed contract. Only problem is, the Sassa cupboard is bare. Next week the Minister of Finance has been called to appear at Scopa on the matter. By MARIANNE THAMM.

When in doubt, talk vegetables.

We have been here before. It was the early 2000s under the disastrous tenure of then health Minister of Health, Dr Manto Tshabalala-Msimang at the height of the HIV/AIDS epidemic, that she suggested a cure lay in fruit and vegetables and not ARVs.

On Tuesday, appearing before Parliament’s Standing Committee on Public Accounts (Scopa) and in reply to a question by the EFF’s Mbuyiseni Ndlozi (sitting in for regular EFF committee member Hlayiseka Chewane) as to the BEE qualifications of CPS and how this dovetailed with the ANC’s rhetoric of “radical economic transformation”, Dlamini replied that part of this was a programme of co-operatives and vegetable gardens established as part of the department’s Social Relief of Distress (SRD) programme.

Even if Dlamini had done a Ngugi Wa Thiong (or a Lumka Oliphant) and replied in her mother tongue, isiZulu, the explanation would still not have made sense in the context of the pointed questions about negotiations with regard to CPS’s new contract and which has yet to be signed off as a result of a “self manufactured emergency” by Sassa and Minister Dlamini.

Pressed on the matter by Ndlozi, Dlamini dodged the bullet, saying CPS’s BEE compliance had been “discussed in court previously”.

I am asking you here, not in court,” Ndlozi shot back.

(An aside. For the first time on Tuesday it appeared as if Ndlozi’s presence at Scopa had also attracted a small squadron of Parliament’s “white shirts” who clustered around a lift outside committee room V454 while the minister was grilled, for about three hours, inside.)

In the end, Ndlozi said the ANC’s idea of radical economic transformation in relation to this contract with CPS as a service provider seemed to relegate black ownership “to gardens and small deals”.

On Tuesday Dlamini attempted to account for the last-minute crisis saying that when the department and Sassa had originally reported back to the Constitutional Court that the agency would be ready to act as paymaster by April 1, 2017, it had underestimated the amount of work that would need to be done.

The minister spent most of her session at Scopa outlining the history of the previous irregular CPS contract, court challenges and how Sassa and the Department of Social Development had responded to an order to take the payment system in-house. At the end of her hour-long presentation the minister suddenly announced she had to leave and would not be taking questions. This elicited a chorus of disapproval from committee members. It was committee chair, Themba Godi, who handled Tuesday’s potentially explosive meeting with quiet diplomacy, convincing the minister to remain and take questions on this crucial issue.

DA Scopa member Tim Brauteseth asked the minister about the cost of a hand-picked advisory committee which had recommended the setting up of “work streams” and then ended up leading those work streams, and whether these services had been procured legally in compliance with the PFMA and Treasury regulations.

When the advisory committee submitted its final report in December 2014 the minister instructed in a communication to Virginia Petersen, then Sassa CEO, that certain people be retained to run work streams... and how does that tie in with the notion of a competitive bidding process.”

Brauteseth added that Dlamini’s instruction had led to “various members in Sassa going back and forth” requesting a deviation in protocol of procurement processes.

Does she not think it is improper that persons who served on an advisory committee were then given work to the tune of R47-million? Tim Sukazi, head of the legal work stream, received R7-million. Patrick Monyeki, head of ICT and his company RangeWave [consulting] received R35-million and Tangkiso Parkies under R5-million. They all received work without a competitive bidding process for that kind of money. Treasury had in fact raised concerns about the advisory committee.”

They have not come back to me,” replied the minister.

Asked what the details were of the new CPS contract and that she could not “walk away without giving us some idea of how much this will cost the SA taxpayer”, Dlamini replied “I am not an expert.”

Paying a capped amount of R16.44 per grant recipient is what we are going to come up with but we have not yet agreed. And therefore when we have our meeting with the minister after the technical team we will make an announcement,” she said.

The minister’s statement to Scopa on Tuesday contradicts an earlier statement by her spokesperson, Lumka Oliphant, on March 3 that an agreement with CPS had been reached.

However, in an affidavit filed on Tuesday in response to an application by the Black Sash to the Constitutional Court to have the court act in a supervisory role with regard to the new contract, Net1 CPS CEO Serge Belamant revealed that there would certainly be a cost to “unavoidable additional infrastructure investments” for the new contract.

In a letter to Zodwa Mvulane, executive manager of SASSA's Special Projects, dated December 28, 2016 and included in court papers, Belamant wrote:

To maintain the level of service delivery to which beneficiaries have become accustomed to, we will need to commence with the upgrade of our payment infrastructure, specifically our vehicles and payment equipment. The cost of these unavoidable additional infrastructure investments will have to be recovered over the new contract period. As a result, we estimate our short-term price offer to increase from R16.44 (incl. VAT) to R25 (incl. VAT) for a 90-days rolling commitment period (i.e. 90 days termination notice may be given at any time), or R22 (incl. VAT) for a 24-month contract (i.e. a fixed-term two-year contract). The above pricing assumes no changes to the terms and conditions of the existing SLA and does not incorporate any phase-out/migration plan.”

Belamant, in his affidavit, stated that CPS supported the re-instatement of the oversight role of the court and that “CPS welcomes transparency and accountability in all matters concerned”.

He said CPS had no difficulty with the reporting mechanisms that the Black Sash had proposed and that the company “wishes to avoid litigation in respect of the envisaged contract to be concluded with Sassa. It is anxious to avoid becoming embroiled in further protracted and costly legal battles as a result of irregularities that are entirely of Sassa’s making. Regardless of its innocence, CPS’s reputation is inevitably compromised when it is required to conduct business under contracts that have been declared invalid – or, indeed, which are concluded in circumstances that require deviations from prescribed procedures. CPS would, therefore, welcome an order that the terms of the envisaged agreement be sanctioned by this court before the agreement is finally concluded between the parties.”

Belamant said CPS “readily accepts that it is under a duty to act reasonably and with due regard to its constitutional obligations in negotiating and contracting with Sassa. This court has already made clear that CPS bears constitutional obligations in the administration of social grant payments.”

What Belamant did object to, however, is the Sash’s insistence that the contract concluded by Sassa “must provide that personal information of beneficiaries is the property of Sassa”.

CPS does not consider these prayers to be lawful and competent. In particular, it appears that these orders would contravene the Protection of Personal Information Act”.

Belamant outlined that on May 24, 2016 CPS had addressed correspondence to Sassa “expressing its concern over the short time period remaining for a phase-in/phase out strategy, and proposing alternative solutions to Sassa to this end”.

On 9 December 2016, becoming increasingly concerned with the lack of communication from Sassa, CPS again wrote to enquire about the assistance that Sassa required in the transition process. CPS also informed Sassa that it would commence dismantling its payment infrastructure on 1 January 2017.”

Sassa, said Belamant, responded to CPS on December 22, 2016 expressing an intent to engage with the company “on probabilities for assistance in the transition of Sassa operations towards a new service model”, and had proposed a first meeting as late as January 5, 2017.

Sassa had also sought responses to a range of queries on technical matters pertaining to the transition to the new model.

CPS had responded on December 28, furnishing Sassa with the requested technical information, and had advised the agency that, should it be required to continue providing services beyond March 31, 2017, a new contract had to be concluded “as a matter of urgency and before 1 January 2017, when it would begin implementing its plans to close down its operations”.

On February 10, 2017, CPS had responded to Sassa’s Request for Information (issued on December 9, 2016) and on February 16 again wrote to Sassa “noting that Sassa had not advised it of dates for the exploratory meeting”.

It was then agreed that a meeting would take place on March 1 which is when CPS and Sassa met for the first time “to discuss the possibility of an interim agreement.

These discussions are ongoing. An agreement has been reached which will ensure that beneficiaries are paid beyond 1 April 2017. The agreement is presently being reduced to writing,” said Belamant.

He added that he had repeatedly stated, under oath, that CPS did not share beneficiary data that it captures during beneficiary enrolment or receives from Sassa with any third parties – including Net1 subsidiaries.

The Black Sash’s suggestion that certain of Net1’s subsidiaries have ‘de facto unrestricted access’ to the Sassa-branded bank accounts held by beneficiaries is untrue and is firmly denied.”

He said the allegation that CPS and other Net1 subsidiaries “engage in unlawful marketing practices is unfounded”.

As regards CPS, it does not market or sell any goods or products to beneficiaries. CPS’s sole function is the administration of grant payments. Certain other Net1 subsidiary companies do market and provide financial products to beneficiaries. They do not, however, engage in unlawful marketing practices or conduct ‘ambush marketing’ as the Black Sash suggests. The services are provided within a strictly regulated environment, under the scrutiny of the National Credit Regulator, the Financial Services Board and the SARB, and operate entirely independently from CPS.”

CPS accepted “fully” that unauthorised deductions – those made without the informed consent of the account-holder – were unlawful and unacceptable, and that “all lawful and reasonable measures must be taken to prevent unauthorised deductions from beneficiaries’ accounts” and then the revealing clause that CPS “also readily accept that the provision of financial products and services must comply with relevant legislation”.

And while CPS accepted that Sassa alone had to retain possession and control of the personal information of beneficiaries at the termination of contracts, “this does not mean that the information becomes ‘the property of Sassa’.”

Dlamini concluded her submission to Scopa on Tuesday saying that a technical team which included the state’s law adviser was currently reviewing the new terms of the contract and would report back on Friday.

She told committee members that she could not comment on whether Treasury would support the new deal in terms of the PFMA and that it should “speak for itself”.

Which is exactly what might happen. Scopa has requested the Minister of Finance, Pravin Gordhan, to appear before it.

In a statement Godi said, “Scopa would like the Minister of Finance to clarify the National Treasury’s position and understanding of the current contract negotiations with Cash Paymaster Services and to confirm and assure the public that social grants will be paid on April 1, 2017.”

While the fat lady might be in the spotlight on the national stage, she has not yet sung. DM

Photo: Minister of Social Development Bathabile Dlamini during the Media Breakfast on Operation Fielaheld at GCIS – Tshedimosetso House, Pretoria, 26/06/2015. (Siyasanga Mbambani)

  • Marianne Thamm
    marianne-thamm.jpg
    Marianne Thamm
  • South Africa

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