Grindrod Bank is owned by logistics company, Grindrod Limited, a R10.5-billion market cap company listed on the Johannesburg Stock Exchange. Grindrod Bank is a relatively small part of the Grindrod group and does not really fit into its overall business model. It is grouped under Financial Services, together with the asset management and stockbroking divisions of Grindrod. In fact, Grindrod Bank was put up for sale at least two years ago. Bidvest did an extensive, well-publicised due diligence on the bank in 2014 before walking away, citing reputational risks associated with the negative publicity relating to the Sassa contract.

Grindrod Bank describes “retail” as comprising mainly management of the Sassa payments to 10-million debit card holders. They also own 1,000 ATM machines, all offering the ability to authenticate the transactions using fingerprint biometrics. (And there I thought Net1 was unique in being able to offer this capability?)

The latest available financials of the bank, as at December 31, 2015, show that retail banking brought in revenue of R69-million. Since I am not aware of that many individuals who own Grindrod Bank accounts, I would assume that the grant recipients’ bank accounts are classified as “retail banking”. I assume that this charge must be added to what Net1/CPS charges for the contract. I don’t know if this is included in the R16.44 per recipient that Sassa pays CPS, but it would be interesting to find out.

I went back a couple of years to before Net1/CPS were appointed as grant payment administrators. The same retail banking revenue for 2012 showed R18.6-million. In the 2013 financial statements this jumps to R57-million. Hence I would assume the jump is associated with the award of the Sassa contract.

This, of course, pales in comparison to the revenue made by Net1 from grant recipients which for 12 months to 30 June 2016 was:

More interestingly, however, is the question of the nature of the relationship between Grindrod Bank and CPS. Grindrod Bank describes the relationship as such:

“We pay grants to 9.77-million distinct cardholders in close association with Cash Payment Services (CPS), who provide the card technology and manage the card programme.”

Not that insightful. I thus decided to take a look at the Terms and Conditions associated with the Grindrod Bank accounts. These were more illuminating.

Clause 2: Introduction

2.1. You are registered on Sassa’s national social grant payment system and, in order for you to receive your monthly grant payment, the Bank has opened a Sassa Account and issued a linked Sassa Card to you.

This clause seems to imply that the account is operated on behalf of Sassa rather than CPS. This is relevant in terms of the ultimate ownership of the account. Does the account belong to the grant recipient, Sassa or CPS? In this equation, I would rank “ownership” in the order that I listed the parties.

Clause 3: Validity of Sassa card

3.1. The Sassa Card shall remain the property of the Bank.

3.2. The Sassa Card is valid from the date of issue until your right to use it is terminated in terms of clause 10.

So the card is the property of Grindrod Bank, and not CPS, after all? If that is the case, surely the card cannot be cancelled by CPS. We will get to clause 10 shortly.

Clause 5: Complaints

5.2. For any dispute relating to debit orders, you should first attempt to resolve the dispute with the party with whom the debit order was signed (the User). Should this fail, you may contact the Call Centre to report the disputed debit order. If you inform us of the dispute within 40 (forty) days of the disputed debit order, we will immediately credit your Sassa Account and return the debit to the User.

This is very interesting in the light of grant recipients questioning deductions they have not authorised. In theory, any disputed deduction from a grant payment, if reported to Grindrod Bank within 40 days, would be refunded by Grindrod Bank. Has anyone told the grant recipients? I wonder if there is a similar clause in the EasyPay Everywhere accounts. Probably yes! We need those terms and conditions publicised more widely.

Clause 6: Consent and disclosure

6. You consent to us:

2. using your personal information, as defined in the ?Protection of Personal Information Act 3 of 2014, to render the banking services set out in these Terms and Conditions, and to send marketing material from us and our affiliates to you, if you elected to receive same during enrolment;?
3. providing your personal information to third party service providers, subsidiaries and affiliates for the express purpose of providing you with the banking services referred to in these Terms and Conditions, and in this regard, you also consent to CPS as well as the aforementioned parties storing and processing your personal information.

There is good and bad in this clause. The bad is obvious. The good is that someone should advise Sassa that Grindrod Bank holds a parallel database of all grant recipients’ information and that they are not at the mercy of CPS when it comes to accessing that information.

And this is how CPS holds South Africa to ransom:

Clause 10: Suspension, closure and termination of Sassa account

10.4. The Bank shall be entitled to close your Sassa Account immediately upon receipt of instructions from CPS to do so.

10.5. We may, in our sole discretion, suspend or terminate your use of your Sassa Account and Sassa Card at any time and without any liability to you whatsoever. If we terminate your right to use the Sassa Card it must be returned to us immediately or destroyed.

If I were Sassa these are the clauses I would challenge in court. But herein also lies the opportunity for the Board of Directors of Grindrod Limited to step in and intervene.

Clause 13: General

13.3. We may amend these Terms and Conditions at any time. Publication of such amendments by such means as we may select will constitute valid notice of the amendment to you and such amendments will be effective immediately.

I challenge Grindrod Limited and Grindrod Bank to delete clause 10.4. In return I will not question the legality of the wording used in clause 13.7 (below). I always thought the courts decided on who pays legal costs.

13.7. In the event that we take legal action against you, you agree to pay our legal costs on an attorney and own?client scale as well as tracing agents charges and collection fees.

I also call on the Board of Directors to live up to their pride in the company being included in the FTSE/JSE Responsible Investment Top 30 Index during 2015. The companies included in the index are rated on environmental, social and governance performance.

So here it is. Yet another party deeply involved in the saga. A party which, on the surface, holds tremendous power and potentially the future of South African grant recipients in their corporate palm. DM