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22 August 2017 11:09 (South Africa)
Opinionista Pierre de Vos

Myths about the SASSA social grants fiasco and the power of the Constitutional Court

  • Pierre de Vos
    Pierre de vos
    Pierre de Vos

    Pierre De Vos teaches Constitutional law at the University of Cape Town Law Faculty, where he serves as deputy dean and as the Claude Leon Foundation Chair in Constitutional Governance. He writes a regular blog, entitled 'Constitutionally Speaking', in which he attempts to mix one part righteous anger, one part cold legal reasoning and one part irreverence to help keep South Africans informed about Constitutional and other legal developments related to the democracy.

The Sassa social grants fiasco, which culminated in a Constitutional Court hearing on Wednesday where justices expressed their concern about the failure of Minister of Social Development Bathabile Dlamini to do her job, revealed just how entrenched conservative legal culture is in South Africa. It also revealed that many commentators are ill-informed about issues on which they pontificate.

Many journalists and media commentators have perpetrated several myths about the Sassa social grants fiasco. Without actually reading the original order made by the Constitutional Court in its 2014 judgment (usually referred to as Allpay 2), some journalists and commentators have perpetuated the myth that Sassa and the minister did not comply with the original court order. They did in every formal sense of the term.

The trouble started after they complied with the order.

In 2014, the Constitutional Court ordered Sassa to initiate a new tender process for the payment of social grants. This Sassa did. But no bidder met the minimum requirements of the tender so it was not awarded.

(It remains possible, even likely, that Sassa – encouraged by the Minister – manipulated the tender requirements to engineer this state of affairs in order to protect the position of Cash Paymaster Services (CPS) as the deliverer of social grants and, ultimately, to help CPS to rake in huge profits from the unlawful deal.)

In the 2014 judgment the court also ordered Sassa to report to it on what steps it would take to deal with the situation after the conclusion of the five-year contract with CPS in the event that no tender was awarded. This Sassa also did, informing the Constitutional Court in detail how it planned to take over the payment of social grants. At this point, Sassa had complied with the order issued by the Constitutional Court. It was at this point that the Constitutional Court relinquished its supervisory jurisdiction over the case.

To suggest – as many journalists and commentators have done – that Sassa and the minister were in contempt of court because of a failure to comply with the 2014 order is therefore no more than uninformed nonsense.

Of course, after Sassa complied with the Constitutional Court order and after the court relinquished its supervisory jurisdiction over the case because of the compliance by the parties, the shenanigans started in all earnest. The real scandal only occurred after Sassa and the minister complied with the original court order.

On one version, Sassa discovered that it was over-ambitious when it assured the Constitutional Court that it would take over the payment of social grants at the end of March 2017.

On another (in my opinion, more likely) version, Minister Dlamini sabotaged Sassa’s efforts to deal with the crisis by appointing trusted confidants to oversee “work streams” to work out the practical details of how Sassa would deliver social grants itself. Those involved in these work streams concluded that Sassa would not be able to do what it told the Constitutional Court it would do and that only CPS would be able to deliver grants come April 1, 2017.

The minister (and whoever else, for whatever reason, decided to protect CPS to ensure it clinched an extremely lucrative – possibly even extortionist – deal to continue paying social grants on April 1) had one problem. It was always going to be illegal to enter into a new agreement with CPS (on whatever terms).

This meant that the minister either had to convince the Treasury to do something that it was not legally entitled to do – allow a deviation of the normal procedures for contracting for services despite the fact that this was not allowed – or she had to approach the Constitutional Court to legalise a new contract with CPS.

On three occasions the minister stopped Sassa from doing the latter. As the patronage faction had not yet managed to capture the Treasury, the Treasury also refused to do what it was not legally entitled to do. (It was not entitled to grant a deviation because the crisis was self-created by Sassa and the Minister.)

The minister (and judging from assurances by President Zuma, also the president) seemed to have decided at this point to give up on trying to provide a legal smoke screen for its scheme to protect the profits of a private company. It thus ignored the illegality and seemingly decided to go ahead and enter into a new (unlawful and invalid) contract with CPS on terms advantageous to CPS. It was at this point that the Social Development Director General, Zane Dangor, resigned, citing a breakdown of trust with Minister Dlamini. (I make no comment on whether it would ever be possible to have a relationship of trust with the Minister.)

It is at this point that the Black Sash stepped forward. Knowing that the Constitutional Court could not intervene unless approached by a party acting on its own behalf or on behalf of grant recipients, the Black Sash approached the court and asked it to intervene to ensure grants were paid on April 1 in a legal way and in a manner that would minimise the exploitation of grant recipients by CPS and its affiliate companies.

So, what can the Constitutional Court do to fix this mess, entirely created (or perhaps engineered) by Minister Dlamini and her confidants?

In my opinion, much unnecessary time was taken up at the Constitutional Court hearing with a discussion of whether the Constitutional Court had the power to extend an invalid contract that is coming to an end on March 31. Arguments about whether the Constitutional Court could extend the suspension of the order of invalidity to allow it to extend this unlawful contract were addressed in several exchanges with the justices of the Constitutional Court.

Perhaps because I am a constitutional lawyer not entirely embedded in the formal legal culture dominated by private law practitioners, or perhaps because I have strong opinions about the private reach of the Bill of Rights, the solution seems obvious to me – and it has nothing to do with the extensions of an illegal contract.

In my opinion the most elegant solution for the problem is for the Constitutional Court to hold that CPS has a constitutional obligation to pay social grants and to order the company to comply with this constitutional duty by continuing to pay the social grants on terms to be decided at a later date for a period stipulated by the court.

There is a relatively straightforward reason why the court has the power to do this. In terms of section 8(2) of the Constitution:

“A provision of the Bill of Rights binds a natural and juristic person if, and to the extent that, it is applicable, taking into account the nature of the right and the nature of the duty imposed by the right.”

Section 27(1)(c) of the Bill of Rights guarantees for everyone the right of access to social security. In the second Allpay judgment the Constitutional Court already held that CPS was obliged to fulfil this constitutional duty and that it could not simply walk away from any contract entered into with Sassa.

CPS finds itself in the peculiar position: it is arguably – in the short term, at least – the only body that could deliver social grants to ensure that the section 27(1)(c) rights of everyone are respected, protected, promoted and fulfilled as required by the Bill of Rights. CPS found itself in this position because it was awarded an unlawful and invalid contract, probably because Sassa changed the tender specifications at the last minute to ensure that CPS was the only party which qualified to receive the tender.

In this context, CPS is bound by the provisions of section 27(1)(c) – just as many other private individuals and institutions are bound by various other provisions in the Bill of Rights.

A legal formalist is likely not to understand that this is not, in essence, a situation in which a private party contracts with the state in terms of a private law contract, freely entered into by two parties. This is a situation in which the Constitution has imposed a constitutional obligation on a private party to give effect to a constitutionally protected right. In this context, the Constitutional Court has the power to order CPS to continue to deliver social grants. This order, I contend, needs to be communicated urgently so that grants will be paid on April 1.

The court need not decide now how much CPS should be paid to fulfil its constitutional duty. The Constitutional Court could ask all parties to make proper submissions to it on this matter. It could also ask the Treasury to be involved and to advise the court on whether the terms would be reasonable.

The court could even declare that reasonable terms would be terms that would enable CPS to deliver the grants without making a loss but that would not entitle CPS to make any profit from delivering the grants. After all, CPS is only in the privileged position of arguably being the only party that can deliver social grants because it was awarded an unlawful and invalid contract – an unlawful and invalid contract from which it has been handsomely profiting.

The Constitutional Court could also impose any other restrictions on CPS to prevent it from using (or, let us be more honest, from abusing) its privileged position to promote or sell any products to grant recipients on its own behalf or on behalf of any of its subsidiaries. CPS is in this privileged position which grants it enormous power because it has access to all the details of all the grant recipients, which it has been allowed to use for commercial purposes.

The court could therefore hand down an order to protect the rights of grant recipients who can never have the same bargaining power that CPS and its affiliates have.

(Middle class people may be able to understand why CPS is in such a powerful position by imagining that moment that they contracted with a cellphone company and were asked to sign a contract. The legal myth in our law is that both parties have equal bargaining power and are free to contract with each other or walk away. But in fact, the cellphone company has all the power and consumers have no choice but to sign the contract whose terms they will never read, terms phrased in such obtuse legalise that even lawyers won’t understand it, printed in such small print that – if you are my age – you are even unlikely to be able to read.)

A note of caution. I am not predicting what the court will decide and how it will justify the order it makes. I am suggesting, from my own perspective as a constitutional lawyer, what I see as the most honest and elegant solution to a crisis that was clearly manufactured by Minister Dlamini – either because she is catastrophically incompetent or because she is trying to protect the profits of a private company for illegitimate reasons (or both).

In a world in which politicians were held accountable, Minister Dlamini would, of course, be fired from her position for the way she handled the grants crisis. In such a world she might, at best, have hoped to be redeployed as ambassador to Tjikitjikistan (only to discover later that no such country exists). But, alas, that is unlikely to happen. (I would, of course, be delighted to be proven wrong.) DM

  • Pierre de Vos
    Pierre de vos
    Pierre de Vos

    Pierre De Vos teaches Constitutional law at the University of Cape Town Law Faculty, where he serves as deputy dean and as the Claude Leon Foundation Chair in Constitutional Governance. He writes a regular blog, entitled 'Constitutionally Speaking', in which he attempts to mix one part righteous anger, one part cold legal reasoning and one part irreverence to help keep South Africans informed about Constitutional and other legal developments related to the democracy.

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