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

The Supreme Court of Appeal has dismissed a bid by Cash Paymaster Services (CPS), which used to administer social grants, to appeal against a judgment that it repay R316m to the South African Social Security Agency (Sassa).

In March 2018, the high court in Johannesburg found that R316m in “irregular expenditure” was paid to CPS by Sassa, which is responsible for disbursing welfare grants.

CPS had been ordered to pay back the money plus interest accrued since June 2014.

Corruption Watch approached the high court in March 2015 to review and set aside the variation agreement and the decision to pay R316m to CPS for the registration of social grant beneficiaries. Corruption Watch argued the payment was irregular as the registration had been catered for in the original contract between Sassa and CPS.

Net1, the parent company of CPS, has delayed submitting its company filings in the US after the appeal court’s ruling.

Net1 CEO Herman Kotzé said the company was considering its options, and that it “once again finds itself being prejudiced by apparent shortcomings in Sassa’s procurement process”.

“We are disappointed with the judgment and will study it to determine our next course of action,” he said.

In June, CPS also lost its R1.3bn lawsuit against Sassa. The dispute related to a contract previously concluded in the provinces, which was taken over by Sassa and both parties agreed to refer the matter for arbitration. Judge Robert Nugent, who was appointed the arbitrator in the matter, ruled in favour of the agency in all the claims lodged by CPS.

CPS’s contract with Sassa came to an end in 2018 after a number of Constitutional Court judgments. In 2014, the top 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 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 to distribute grants.

Corruption Watch’s executive director David Lewis said the appeal court’s judgment was important and reaffirmed the watchdog role that civil society organisations played in ensuring integrity and accountability in the procurement process.

“Let it be noted by those who enter into agreements with the state that are either corrupt or do not follow the rules governing public procurement that they will be required to pay back money received in this way,” he said.

Sassa welcomed the judgment. The agency said its legal department was studying it to determine its implications and would advise management on anything that needed to be implemented arising from the judgment. /With Karl Gernetkzy

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