Pensioners queue to collect their grants at a Sassa pay point in Jeppes Reef, Mpumalanga. Picture: SOWETAN/SANDILE NDLOVU
Pensioners queue to collect their grants at a Sassa pay point in Jeppes Reef, Mpumalanga. Picture: SOWETAN/SANDILE NDLOVU

Cash Paymaster Services (CPS), which used to administer social grants to more than 17-million people, has lost its R1.3bn lawsuit against the SA Social Security Agency (Sassa). 

On Wednesday, Sassa said Judge Robert Nugent, who was appointed the arbitrator in the matter, ruled in favour of the agency in all the claims lodged by CPS. Sassa said it welcomed Nugent’s “well thought out awards” in the matter.

CPS’s contract with Sassa came to an end in 2018 after a number of Constitutional Court judgments. In 2014, the Court found that the contract Sassa had signed with CPS two years earlier was illegal and invalid. However, the contract was allowed to continue to allow Sassa to find another alternative for distributing social grants.

In 2017, then social development minister Bathabile Dlamini, at the 11th hour, again approached the Court to have the contract extended because Sassa was not in a position to distribute grants itself. In August 2018, an extension was granted until the end of September that year.

Sassa has now partnered with the SA Post Office (Sapo) to distribute grants.

“The contract between Sassa and CPS has a history of litigation brought by CPS in an effort to amass maximum and, in many cases, unreasonable financial benefit,” Sassa said, claiming that in this case CPS attempted to monopolise the payment of grants and shut Sapo and other commercial banks out.

“The fiscus has been saved a whopping R1.3bn and we are of the belief that this money will be put to good use by the state, which needs every cent in these financially trying times,” it said.

One of the claims lodged by CPS at arbitration related to the company believing it was entitled to enroll all beneficiaries on its computerised system, irrespective of whether they were to be paid by it.

CPS also claimed that Sassa was not entitled to pay grants by electronic transfer to bank accounts of beneficiaries and that Sassa was not entitled to cause grants to be paid in cash at post offices and other Sapo facilities, nor by electronic transfer to Postbank and other bank accounts of beneficiaries, and that Sassa was not entitled to enroll all beneficiaries on its database.

CPS lost on all the claims and was ordered to pay costs in each case.

Sassa said that during the financial years 2009/2010 and 2010/2011, CPS initiated various claims against it and had them referred to arbitration.

The claims were for a total of R1.3bn and were based on the alleged deprivation of an opportunity for CPS to earn full service fees for the period April 2006 to June 2010 as a result of the contract concluded between Sassa and certain banking institutions and Sapo for the rendering of social grant payment services.

CPS claimed this constituted a breach of its exclusive rights to render the services in respect of the provinces that it serviced, being the Eastern Cape, KwaZulu-Natal, Limpopo, North West and the Northern Cape.

Net 1 UEPS Technologies, the parent company of CPS said, it accepted the outcome of the arbitration and considered the matter closed.

It said the dispute related to a contract previously concluded in the provinces, which was then taken over by Sassa and both parties agreed to refer the matter for arbitration.

"It is important to note that there was no quantum with respect to the claim which could only have been determined if the CPS interpretation was correct," Net1 said in a statement.

quintalg@businesslive.co.za