SASSA skimming the poor

2 March 2017

In a series of barefaced lies, misinformation and distortions, the South African Social Security Agency (SASSA) is yet again seeking refuge behind almost 17 million poor people, to cover up its inaction and connivance in giving effect to a Constitutional Court judgment rendering its contract with Cash Paymaster Services (CPS) invalid and illegal. In four weeks the Court’s grace period of 36 months for SASSA to get its house in order will come and go, and still we wait.

For most of the 17 million grant beneficiaries - and to the taxpayer - the elaborate but empty PowerPoint presentation made to the Portfolio Committee on Social Services in February 2017 is worthless, particularly when neither Minister Bathabile Dlamini nor the CEO of the agency, Thokozani Magwaza, bothered to show up at the meeting. The disregard for the poor is matched by the absence of accountability to the Legislature too.

Further damage to SASSA’s reputation was heralded when it simultaneously explained to the Portfolio Committee this week that it was planning a new contract but filed papers to the Constitutional Court to renew the current contract with CPS.

Speaking through both sides of the mouth appears to be routine practice for the Minister and the responsible agency, as is not speaking at all, as is the case with the Minister who failed to show up for a press conference on 1 March to explain her absence from proceedings yesterday, as well as explain next steps going forward.       

The substantial matter of seeking an extension of an invalid contract appears to be lost on Minister Dlamini and SASSA, who are pressing for a “transitional arrangement” with CPS as service provider for another year. In papers filed before the Constitutional Court on 28 February, an elaborate but jargon-filled explanation is provided for why the Agency has not complied with the Court order over the 36-month period it was awarded to remedy an invalid contract.

The conduct of the Minister and SASSA has received stern rebuke by members of the opposition benches in Parliament, by civil society and crucially, by Treasury. The latter threw down the gauntlet when it responded to a deviation request from SASSA (dated 7 February 2017) for a renewal of the CPS contract. Treasury responded a day later, “the reason to extend this invalid contract is not justifiable.

Requesting National Treasury to extend a contract that was declared invalid by the highest court will not only be seen as being defiant to the judicial system but may further be seen as perpetuating the illegal and unconstitutional actions reprimanded by the highest court in the land.

SASSA should have requested a deviation to advertise a new tender for a short period in December 2016 or early January 2017 to avoid a self-created emergency. Your institution has an obligation to ensure that any contract for goods and services is in accordance with a system which is fair, equitable, transparent, competitive and cost-effective”. The absence of ambiguity in Treasury’s response to SASSA is a powerful reminder that despite it facing a storm on several fronts, the custodians of the fiscus will fight on, for now.

Over the past hours, several news agencies have reported on the commencement of negotiations between SASSA and CPS. The confidence to begin negotiations with a service provider whose existing contract is illegal and invalid is audacious, to say the least. Equally inexcusable is SASSA’s tabling of revised administration costs to be paid to CPS.

The current fee of R16.44 per grant will be increased, per an extended contract, to a range of between R22.00 and R25.00. SASSA’s self-inflicted wound will cost the taxpayer a whole lot more of a shrinking economic pie, while shareholders of Net1 will be smiling all the way to the bank, as its share price reached a 12-month high this week.

Civic organisations have not taken the matter lying down and litigation efforts are underway, with a notice of application being submitted by the Black Sash on 28 February to the Constitutional Court for direct access, in the light of the urgency of the matter. The basis of the application is founded in the belief that no adequate remedial measures will be in place come 1 April - when almost 17 million grant beneficiaries must be paid - and that a limited extension to CPS is unavoidable.

However, in its papers, the NGO stresses that, “The South African Social Security Agency (SASSA) is forthwith to file with the Court a report on affidavit in which it states how it proposes to award an “interim” contract with Cash Paymaster Services (Pty) Ltd (CPS) or any other person for payment of social grants after 31 March 2017 in a lawful manner, having regard to the provisions of section 217 of the Constitution and the relevant statutory provisions in that regard”. 

A crucial matter for reflection, and one highlighted in the papers filed by the Black Sash, is that of supervisory jurisdiction of the Constitutional Court if and when an extension is approved. Minister Dlamini and SASSA have proved again and again that their word, and certainly their lack of action, does not engender confidence in them. This despite the elaborate medium and long-term proposals set out to the Portfolio Committee.

Pending an outcome of the two matters before the Constitutional Court - i.e. SASSA’s overture for an order “authorising SASSA to engage the respondent (CPS) to provide services for the payment of social grants for the period 1 April 2017 to 30 March 2018” and the Black Sash’s application to “compel the Minister of Social Development and the South African Social Security Agency (SASSA) to take necessary measures to ensure that the social grants system and its beneficiaries are protected when the contract between SASSA and CPS comes to an end on 31 March 2017” - the lives of more than a third of the population in the country hangs in the balance.

If the Constitutional Court accedes to the request from SASSA, almost 17 million beneficiaries will be paid their grants, CPS will smile all the way to the bank and Minister Dlamini and SASSA officials will be let off the hook. Yet again, the failure of government ministers and agencies will be mediated by the courts. 

Postscript: At the time of writing, confusion reigns as to whether SASSA has withdrawn its order asking the Constitutional Court to approve an extension of its contract with CPS. In a statement late on 1 March, the Director-General of Social Development said that while a statement of intent was filed with the Constitutional Court on 28 February, this was withdrawn later that same day as the Agency intended to file supplementary documentation and is set to approach the Court again.

He also said that SASSA was intent on approaching Treasury to allow for a deviation order. The route being pursued by SASSA remains unclear as filing of supplementary papers with a court does not require withdrawal of the original statement of intent. Furthermore, and in the light of Treasury’s known position on SASSA, per the quote above, leaning on Treasury to fix the mess remains an unknown.     

By Zohra Dawood, Director: Centre for Unity in Diversity, 2 March 2017