South Africa

SassaGate Reloaded: Officials should be probed for possible malpractice – court panel

By Marianne Thamm 22 November 2017

While an Inter-ministerial Committee headed by Jeff Radebe, Minister in the Presidency, has overseen the signing of an implementation protocol between South African Social Security Agency (Sassa) and the South African Post Office (SAPO) for the payment of social grants, Sassa and Department of Social Development officials might find themselves facing criminal action for malpractice. A panel of experts appointed by the Constitutional Court in March has also asked that the court ensure that remedial action is taken to end Sassa’s lack of proper institutional governance, capacity and oversight. By MARIANNE THAMM.

Minister of Social Development Bathabile Dlamini, under whose political leadership the entire Sassa social grants payment scandal unravelled, taking the country to the brink in March this year when the current extended illegal CPS contract expired, arrived an hour late for Tuesday’s joint sitting of Scopa and the Portfolio Committee on Social Development.

Dlamini usually drops in accompanied by a small entourage of officials including her spokesperson Lumka Oliphant, but on Tuesday she slipped in quietly as Jeff Radebe, who stepped in at the 11th hour to prevent a repeat of the crisis, was reporting back to committee members. Radebe said that while no concrete agreement between SAPO and Sassa had been signed, an implementation protocol had been agreed to.

Meanwhile, the panel of experts appointed by the court has compiled a second report which is even more damning of Sassa officials than its first report dated 15 September.

The second report, submitted on 17 November, highlighted that Sassa officials did not seem to have “the required knowledge, experience or skills, or even the will, to execute the Sassa mandate”.

The panel found that Sassa’s reliance on “questionable and unexplained assumptions and artificial constraints has resulted in a flawed starting point for its process to implement the court’s order and is likely to lead to implementation of a sub-optimal solution”.

Sassa officials, said the panel, deflected their lack of competence and decision-making “through blaming other parties, including National Treasury” and warned that if the payment system was not implemented effectively on 1 April 2018, “such a failure would constitute a national crisis”.

The panel finds that Sassa’s repeated failure since 17 March 2017 to take the necessary decisions and execute the required actions to properly and timeously implement the various aspects of the court’s order make a smooth transition by 1 April 2018 virtually impossible.”

The lack of expertise and leadership within the agency was exacerbated by “the apparent exclusion of competent employees from decision-making structures within Sassa. It thus appears to the panel that Sassa neglected the due diligence required to find and implement an optimal solution for the payment of social grants.”

Sassa, added the panel, seemed to accept the concept of government-to-government transfer “without proper analysis of whether there are other efficient and cost-effective options available for present purposes”.

The reliance on the dedicated intervention team mandated by the IMC to determine, within a matter of days, the best model for a social grants payment system, conclude binding agreements and decide on the bid specifications for the RFP (Request for Proposals) for the services that SAPO could not render, if such services had to be procured, “is optimistic, especially if the complexity of payments systems, security and logistics are considered”.

Even if SAPO as the sole provider was an implementable option, Sassa, in pursuing this strategy, carried a systemic risk that the country would once again be locked into a particular model for the payment of social grants without being aware of the potential benefits or shortcomings of other possibilities, said the panel.

Over and above this, Sassa had not conducted a proper costing of the chosen SAPO model nor evaluated its cost-effectiveness which had been one of the conditions National Treasury had stipulated when it had approved the deviation from a competitive bidding process.

The panel also found that its initial analysis of the SAPO proposal indicated that the cost to Sassa for implementing the full SAPO solution would be significantly greater than the cost paid to CPS.

SAPO could not fulfill the payment of social grants on its own, said the panel, and should probably outsource the payment of cash to beneficiaries. It found there was no need for a biometric system as this was performed by Home Affairs through “1-to-many matching”.

The panel therefore finds that the present approach, as mandated by the IMC, in whichever permutation it manifests itself, will not necessarily yield an optimal or sustainable long-term solution for the effective, efficient and economical use of funds available for the payment of social grants and the effective distribution and payment of social grants.”

The panel has also requested the court to instruct National Treasury to investigate the conduct of Sassa employees and officials in the DSD “in relation to all actions undertaken since 2016 to issue contracts to service providers or give effect to the court’s order of 17 March in order to determine whether there has been any malpractice or obstruction and whether any person should be prosecuted in terms of section 81, 83 or section 86 of the Public Finance Management act or any other relevant law.”

The panel also requested that the court instruct the Department of Planning, Monitoring and Evaluation “to set out remedial action necessary to ensure there is an end to Sassa being a public entity without proper institutional governance, capacity and oversight”.

Previously the panel had found that Sassa’s RFP (request for proposal) for the tender had been biased and that the CSIR evaluation report “was not used for its intended purposes”.

Sassa’s RFP had a number of “fundamental flaws”, the panel found, including that requirements for the Integrated Grant Payment System and the Sassa Payment Platform were similar. The panel of experts sought to remind Sassa that it is “accountable and legally responsible for taking a decision on the system or process to pay social grants”.

Although Sassa may consult other parties to consider their opinions, it is Sassa which ultimately in terms of its statutory mandate has to apply its mind and take its own decisions as to how the payment of social grants should be effected. Sassa is and remains accountable for any decision relevant to the payment of social grants,” said the panel.

The agency had not informed the panel as to why it had opted for the insourcing option out of six possible options for the payment of social grants.

Sassa failed to provide any information as to why it opted for this choice and also failed to provide the panel with the business requirements that informed its choice of any of the options.”

This meant that Sassa’s point of departure, as far as the panel could assess, was “in itself highly questionable and not open to scrutiny”.

Sassa is not able to present cogent reasoning, evaluation or costing of why they have opted for an in-house build, operate and transfer approach, nor are they able to say what options they examined or the reasons why any of them were rejected. The panel is concerned that Sassa, possibly under pressure from political principals, will make hasty decisions driven in part by the limited time remaining, to replace CPS in accordance with the court order to get a payments system in place and prevent another payments debacle”.

Sassa could also not explain to the panel why it had pursued SAPO as its preferred service provider only to award the Post Office one portion of the services.

After stating that Sassa was convinced that SAPO has the ability and capability to take over from CPS, Sassa’s decision to change course has been left unexplained. Sassa has also failed to explain the extraordinary delays in taking decisions, especially against the background of a very limited timescale to give effect to the court’s order.”

On Tuesday Radebe told the parliamentary committees that a dedicated team – the Technical Committee – had been established with a mandate to ensure the finalisation of the agreement between Sassa and SAPO as well as to develop an implementation plan and communication strategy.

This Technical Committee has confirmed the Public Sector led hybrid model, which includes a partnership with Home Affairs, State Security Agency and financial institutions. This hybrid approach will allow a set of public sector and private sector service providers by offering beneficiaries maximum choice, access and convenience,” Radebe told the committees.

The Technical Committee, he said, had met with banks to discuss their role. This was a process led by the legal teams including those from the Office of the Chief State Law Adviser, Sassa and SAPO.

A lot has been achieved in the 10 days towards finding a sustainable solution for the payment of social grants in the country. The commitment of the IMC to yourselves and our people was to conclude an agreement between Sassa and SAPO. This includes the implementation protocol, communication strategy and implementation plan.”

Radebe, who was parachuted in about a week ago to head the committee, which had been supremely supine when headed by President Jacob Zuma, said that the IMC and the panel of experts had aligned their work with regard to time frames and expectations for the implementation of a new payment system in April 2018.

The IMC had been given the task of ensuring the implementation of the order of the Constitutional Court “in its entirety” and is, in essence, now the political authority “guiding, directing and ensuring the implementation of the Constitutional Court Order”. The panel of experts and the IMC had found convergence and all officials were working off this plan, said Radebe.

The implementation protocol allowed for SAPO to provide Sassa by 1 April 2018 with a corporate control account, special disbursement accounts, card body production and distribution (subject to price competitiveness) as well as instant account opening and card issuance at Sassa branches.

The current protocol formed the foundation “for the signing of a further detailed collaborative agreement between Sassa and SAPO with the Detailed Project Plan which will be submitted to the IMC by 6 December 2017 and the panel of Experts/Constitutional Court by 8 December”.

Dlamini and Sassa officials, who appear to have deliberately planted obstacles along the long and torturous process of finding an alternative to CPS for the payment of social grants, appear – for now – to have been sidelined and exposed. DM

Photo: Social Development Minister Bathabile Dlamini at the media briefing by Interministerial Committee on Immigration held at Tshedimosetso House in Hatfield,Pretoria. 28/4/2015 Kopano Tlape GCIS

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