In March this year a massive national crisis was narrowly averted when lobby groups, the Black Sash and Freedom Under Law, were forced to approach the Constitutional Court to play an oversight role when it became horrifyingly evident that the South African Social Security Agency (Sassa)was nowhere near ready to assume the role of paymaster of some 17 million social grants when an extended contract with CPS – a subsidiary of Net1 UEPS Technologies, a US, Nasdaq listed company – expired.
Black Sash had requested the court to ensure that the relationship with CPS was based on terms that were not harmful to or exploitative of the grant system, its beneficiaries, the personal data of these beneficiaries owned by Sassa as well as to ensure that this data was not be used for marketing purposes targeting these beneficiaries.
The relationship between Sassa and CPS has been dogged by allegations that the contract was handed to the company without a proper examination of its BEE partners which an amaBhungane investigation revealed as a front. CPS director Serge Belamant later dumped these partners in favour of businessman Brian Mosehla, who is connected to Lunga Ncwana, who, in turn, is a close friend of Minister Dlamini.
In May, CPS, through its auditors KPMG, declared that the company had made a before-tax-profit of R1.09 billion over the five years of its contract ending March 2017 and that its net profit was R705-million. However, the Alternative Information & Development Centre (AIDC), commissioned by Black Sash Trust and the Centre for Applied Legal Studies to conduct an independent analysis of CPS’s report to the court suggested that CPS had understated its pre-tax profit by up to R614.4-million.
Sassa had known in April 2016 already that it was nowhere near ready to assume the role when the extended irregularly awarded contract to Net1 and CPS expired on 31 March 2017 but Dlamini claimed she had only been made aware of this in October 2016. The contract with CPS was declared invalid by the Constitutional Court in 2014 which suspended the invalidity till March 2017.
In March, Justice Johan Froneman, in handing down judgment, said Dlamini bore the primary responsibility to ensure that Sassa fulfilled its functions. Froneman was scathing of Dlamini’s actions saying that attempts to obtain evidence of steps Dlamini had taken to ensure a smooth transition of payments had “drawn a blank”.
In April, Zane Dangor, former Director General for the Department of Social Development, who resigned in March after only a few months in the hot seat, filed an affidavit detailing that the Sassa crisis was “self made” and that Dlamni’s role in this had been pivotal.
Dangor’s affidavit was filed in response to Dlamini’s submission as to why she should not be held personally liable for the legal costs of the case. Dlamini blamed former Sassa CEO, Thokozani Magwaza, for the mess. Magwaza was forced to resign in July shortly after signing an agreement with SAPO for the future distribution of grants.
Both Dangor and Magwaza claimed that Dlamini had bypassed department and Sassa officials by creating these parallel work streams that reported directly to her. Dangor, in his affidavit, claimed the work streams may have been intentionally created to ensure that the relationship between CPS and Sassa continued under conditions that favoured the company.
Dlamini recently filed her witness statement in terms of an inquiry to take place under Section 38 of the Superior Courts Act of 2013 and to be presided over Justice Bernard Ngoepe as directed by the Constitutional Court. The inquiry will act as a fact finding exercise with regard to Dlamini’s role in the crisis and the extent of her personal responsibility.
Dlamini was ordered by the Constitutional Court in March to explain the appointment of the work streams as well as why she did not disclose their existence to the the court.
The Minister sets out in her statement the “broad powers” she possessed in supervising and monitoring the activities of Sassa and the conduct of its employees. She claimed that she was empowered to appoint the CEO as well as terminate his/her contract. Dlamini, in fact, sets out the extent of her role in the day-to-day operations of Sassa.
“My involvement in the appointment of the work streams and my monitoring of their progress must be evaluated in the context of the broad powers given to me by the Sassa Act”.
The extend of the instability of Sassa is set out by Dlamini indicating a musical chairs of CEOs and acting CEOs who passed through the agency during the period relevant to the Section 38 inquiry.
“During the period relevant to this inquiry Ms Virginia Petersen, Ms Raphaahle Ramokgopa and Mr Thokozani Magwaza occupied the position of CEO. Mr Wiseman Magasela also acted as CEO for the short period during which Mr Magwaza was sick (during March 2017). Ms Ramokgoba replaced Ms Petersen in an acting capacity before Mr Magwaza took office,” wrote Dlamini.
Dlamini states that “the CEO of Sassa is required to work closely with the Minister and to obtain the Minister’s approval for any of the decisions taken by him/her”.
“In this regard the Sassa Act stipulates that a number of the statutory functions of the CEO are to be carried out subject only to my direction or approval,” she claimed.
“Sassa may only enter into an agreement to ensure effective payments of social grants to beneficiaries with my consent,” she said, adding “the CEO is accountable to me and must report to me on the activities of Sassa”.
She also said that she was responsible for the code of conduct for all staff at the agency in consultation with the CEO.
Dlamini said it had always been the intention for Sassa to “one day” be in a position to make payments of social grants by itself without the need for assistance from a third party.
“However in order to achieve this, Sassa would first have to obtain expert advice on how best to achieve this objective,” said Dlamini.
To achieve this on September 2013 she had announced the appointment of an advisory committee “to investigate and recommend the appropriate model for the future payment of social grants”.
It later emerged at a Scopa hearing that while this committee had cost R47-million, it had not been approved by Treasury. In a letter addressed to Magwaza and dated May 25, 2017, Treasury’s Director of Governance, Monitoring and Compliance, Solly Tshitangano, informed Magwaza that the procurement of the advisers was non-compliant with Treasury’s supply chain management process and was regarded as irregular.
“The reason for continuity is not justified because the advisers were not initially appointed through SCM process and were not going to continue rendering advisory roles,” said Tshitangano.
In November 2013, two months after the appointment by Dlamini of the work streams, the Constitutional Court declared that the CPS contract was invalid.
“The advisory committee concluded their work in March 2015 and during the period of appointment submitted to me an interim report in October 2014 and a final report and recommendation on the way forward in December 2014.”
The advisory committee had recommended, said Dlamini, the appointment of the work streams “to manage the work required for insourcing of the payment of social grants”.
While she had originally contemplated appointing a project management company to do the work, she ultimately decided “it would be more efficient and cost effective for Sassa to appoint the work stream leaders directly and for a Sassa executive manager to be specifically tasked with managing the process of the work streams”.
Dlamini, it seems, saw no problem appointing individuals from the advisory committee who had recommended the work streams in the first place, to head up these work streams. What happened in effect is some members of the advisory committee had created positions that they were then appointed to fill.
“It is true that I directed that the specified work stream leaders be appointed by Sassa to lead work streams and that the leaders of the work streams would report directly to me during the implementation process. There is nothing sinister or inappropriate in this decision.”
This was because the decision to appoint the work streams had been preceded by consultation with Sassa Exco (and presumably former CEO Virginia Petersen) and that this Exco had agreed to the appointment of the work streams.
She explained that the “retention of the advisory committee’s expertise and collective knowledge gained over the preceding 16 months was critical”.
“My decision to retain the services of certain members who were on the advisory committee was in no way intended to usurp the authority of Sassa over the procurement of work streams or the manner in which the work streams were to function.”
She then goes on to blame Sassa for implementing the correct procurement processes for the appointment of the individuals.
“I was not involved in any aspect of the procurement procedure and am not familiar with the content or adjudication of the various bid submissions received by Sassa.”
(Under the bus you go Virginia Petersen and Raphaahle Ramokgopa.)
She admits however, that she was made aware in May 2016 of the letters of award issued to work stream leaders Tim Sukazi, Tangkiso Parkies and Patrick Moyeni of Rangewave Consulting.
Parkies, who led the Local Economic Development stream was a former official with the KwaZulu-Natal Department of Economic Development while Sukazi, led the Legislative and Policy Requirements stream. Monyeki is an IT veteran who headed the Information Management, Business Systems and Banking Services stream.
Scopa later learned that Parkies received just under R5-million, Sukazi R7-million, and Monyeki and his company R35-million.
An investigation by amaBhungane found that Monyeki had been previously linked to the Sassa contract awarded to CPS in 2012. Monyeki had been contracted to serve as the IT technical adviser to the bid evaluation committee, chaired by Tom Moyane. President Jacob Zuma’s lawyer, Michael Hulley, had also been contracted by Sassa as an “overall strategic adviser”.
Dlamini in her witness statement says that the work stream leaders were not contractually obliged to report to her “and they did not do so”. Instead, she says, they reported to Change Programmes Manager, Zodwa Mvulane.
In order to keep abreast of developments, said Dlamni, she had frequently liaised with Mvulane and Ramokgoba.
She said in October 2016 she had convened a meeting with work stream leaders as well as then acting CEO Ramokgopa, Dangor, Sihpo Shezi and Mvulane. She says this was the first time the penny dropped for her that there was a possibility that Sassa would not meet its 1 April 2017 deadline of paying grants itself as Sassa had undertaken to do in its November 2015 report to the Constitutional Court.
She said from minutes of that meeting she had indicated that “a continued relationship with CPS was out of the question and that Sassa needed to move with all speed towards being able to insource the payment of grants”.
As to why she had not disclosed to the ConCourt in her March 2017 affidavit, the the existence of the work streams and that they reported to her, Dlamini said she did not believe this information was relevant.
“This is all the more so because I regarded the work streams to have been engaged by Sassa and to be completing technical work on behalf of Sassa. At no stage did I regard the work streams as a parallel process to that of Sassa as I knew that Sassa had taken no alternative steps to meet the 31 March, 2017 deadline.”
In the meantime is has been emerged in a services agreement between SAPO and Sassa that CPS might be contracted to play a role for several months after its contract expires in March 2018. An agreement with SAPO sets out a phased migration time frame during which CPS will hand over its responsibilities by September 3, 2018.
Members of parliament’s Standing Committee on Public Accounts have consistently accused Sassa and Minister Dlamini of trying to get CPS back in the game “through the back door”.
The agreement with SAPO sets out that it will be able to buy cash-dispensing equipment owned by CPS “in consultation with Sassa”. Net1 owns the technology to pay grants while the CPS owned the hardware, the cash machines.
Net1 reportedly said it would consider the request by the Post Office “in accordance with our business strategy”. Net1 would might also tender for the new contract.
Scopa Chair Temba Godi has asked the Inter Ministerial Committee who brokered the deal with SAPO to report to it in January with regard to the potential involvement of CPS in the new deal.
Dlamini will face the Section 38 inquiry in January. DM
Watch Pauli van Wyk’s Cat Play The Piano Here!
No, not really. But now that we have your attention, we wanted to tell you a little bit about what happened at SARS.
Tom Moyane and his cronies bequeathed South Africa with a R48-billion tax shortfall, as of February 2018. It's the only thing that grew under Moyane's tenure... the year before, the hole had been R30.7-billion. And to fund those shortfalls, you know who has to cough up? You - the South African taxpayer.
It was the sterling work of a team of investigative journalists, Scorpio’s Pauli van Wyk and Marianne Thamm along with our great friends at amaBhungane, that caused the SARS capturers to be finally flushed out of the system. Moyane, Makwakwa… the lot of them... gone.
But our job is not yet done. We need more readers to become Maverick Insiders, the friends who will help ensure that many more investigations will come. Contributions go directly towards growing our editorial team and ensuring that Daily Maverick and Scorpio have a sustainable future. We can’t rely on advertising and don't want to restrict access to only those who can afford a paywall subscription. Membership is about more than just contributing financially – it is about how we Defend Truth, together.
So, if you feel so inclined, and would like a way to support the cause, please join our community of Maverick Insiders.... you could view it as the opposite of a sin tax. And if you are already Maverick Insider, tell your mother, call a friend, whisper to your loved one, shout at your boss, write to a stranger, announce it on your social network. The battle for the future of South Africa is on, and you can be part of it.
Katy Perry is the only artist to rival Michael Jackson's five billboard #one singles off one album.