Freedom Under Law also takes Sassa on in court
7 March 2017
Durban – Public interest group Freedom Under Law (FUL) has entered the social grant fray, asking the Constitutional Court to order Social Development Minister Bathabile Dlamini to play open cards and file with the court all documents relating to negotiations and approvals for any last-minute contract signed with Cash Paymaster Services.
The previous contract with the company – to make monthly payments of more than 17 million grants on behalf of the South African Social Security Agency (Sassa) – was declared invalid by the court in 2014. It found that the agency had not properly investigated its empowerment credentials.
The court set a deadline of March 31 this year to put a new contract in place.
In November 2015, the agency promised that all was in order, that it would not enter into a new contract, but would take over the payments itself from April 1.
But it has since emerged that the Department of Social Development intends signing a new contract with the company because Sassa has not gotten its act together.
The Black Sash and the DA have launched an urgent application, asking for the court’s intervention.
FUL, in papers filed with the court on Monday, says it supports the application, but takes the matter further, saying it wants to scrutinise all the relevant documents, including company audits which are to be approved by National Treasury.
FUL wants the court to cap what Cash Paymaster Services earns, ordering that it can be no more than the R16.44 (excl. VAT) per beneficiary, as per its original 2012 contract, and ordering that any "interim contract" can endure for no more than 18 months.
Executive Officer Nicole Fritz, in her affidavit, says a third of the population receives grants, and that new figures show this could cost between R2.45bn and R3.5bn for just one year.
"It seems the minister and the agency are intent on contracting without oversight of this court and in violation of its judgment.
"We need to ensure that the interim contract is disciplined by the relevant constitutional obligations."
She said the court had made clear in its judgment that Cash Paymaster Services was not entitled to benefit from the invalid contract.
"Yet the company is currently still distributing grants. And it is proposed that it still does so for a period of two years.
"To ensure it does not benefit, it should be stopped from charging more than it was, it should not be entitled to refuse to distribute social grants unless it is paid more," Fritz said.
"The proposed interim contract must be in place for no longer than is necessary for a new tender process to take place."
She said FUL had a direct and substantial interest in the matter and was asking to join the application in the public interest.
Detailing the "making of a constitutional crisis", Fritz accuses the minister and the agency of improper conduct.
"There has been lengthy litigation process relating to a constitutional obligation and one of the most important functions of the State – caring for the poor," Fritz said.
"Yet the minister and the agency have acted in such a way, not only to put in jeopardy payment to the poor, but have done so in such a way as to potentially incur additional and unnecessary costs for the fiscus. They are now beholden to a third party. It has become a one horse race."
She said Cash Paymaster Services had also failed to appreciate its obligations, saying it would only provide the service at an increased cost.
"It is seeking to exact a profit, or will refuse to distribute the grants. Unlike a private contract, the increased dependence that the company has been able to create for its services, does not entitle it to any greater bargaining power," Fritz said.
"It cannot walk away and it bears a constitutional obligation to ensure a workable payment system remains in place until a new one is operational."
On the issue of transparency, Fritz said the agency and the minister were about to award a contract worth more than R2.46bn, without again following proper tender processes and the orders of the court.
The matter has been set down for hearing next Wednesday.
