Three weeks before government’s contract for welfare grant disbursement runs out, Social Development Minister Bathabile Dlamini was forced to concede on Tuesday that she has yet to secure the approval of National Treasury to sign a new contract with Cash Paymaster Services.
Dlamini was pushed on that point by members of Parliament’s watchdog Standing Committee on Public Accounts (Scopa) after initially saying she would not have time to answer any questions, prompting furious objections from MPs.
Scopa chairperson Themba Godi asked Dlamini whether her department followed the public finance rules on deviating from a regular procurement process, as she has done by entertaining CPS as the only bidder in eleventh hour talks for a new contract to run from April.
Dlamini replied that the decision belonged to the accounting officer of the negotiating department, and that National Treasury was expected to concur with that decision.
“Yes, we have processed the deviation and it is supposed to be done by the accounting officer and thereafter the Treasury will concur.”
She added that National Treasury’s approval no longer hinged on whether the Constitutional Court decides to give permission to use CPS, as technically the department was not seeking an extension of the current contract invalidated by the court because of flawed procurement, but a new deal.
“They [National Treasury] have said in case the [Constitutional Court] ConCourt agrees with the extension but we have not extended, we are negotiating for new terms.”
When Godi pressed the point, she replied that her department could not seek approval yet as it was still negotiating the new contract with CPS, a subsidiary of Net1. She indicated that technical teams from the departments could meet at the end of the week.
“We agreed in our last meeting that the technical team is going to sit and then make a presentation to the president.”
Democratic Alliance MP Tim Breuteseth interrupted: “Treasury has not approved the deviations on the negotiating process. The minister is misleading Parliament.”
Dlamini replied: “I cannot speak for Treasury.”
She has for weeks denied that there was an impasse between her department and National Treasury but the pretence slipped as the tense Scopa meeting progressed.
Asked whether National Treasury had been kept abreast of developments, Dlamini said her department asked that of Finance Minister Pravin Gordhan to send two representatives but “they never attended the negotiation process”.
Godi said he was concerned that should CPS continue to pay out more than 17 million welfare grants from April, it should be doing so on a sound legal footing.
“At this stage are you on the same page on processes? Our concern is that the payments must be done in legality.”
Dlamini replied by accusing Gordhan of “pushing” one of six options, set out in cooperation with the South African Social Security Agency (Sassa), to resolve the welfare grant crisis.
She was not in favour of the option, which proposes using both commercial banks and the Post Office to take over the payment function, as both had behaved improperly on separate scores.
“He was not happy about us not acceding to one of the options… (But) we know it is not going to work.”
She suggested that the Post Office offended CPS by contacting it to discuss cooperation on a future payment model, while banks were not to be trusted as the department was owed more more that R1 billion in interest held back by two of them.
“The service provider said you cannot bring these people through the back door because they are government,” she said.
Breuteseth suggested that it was extraordinary that a bidder, CPS, was allowed to prescribe to government whether it could entertain talking to the Post Office about a new grant payment model.
But Dlamini said National Treasury had chosen to ignore the Post Office’s missteps.
“They are trying to push away what is now being raised about the Post Office,”she said, adding that the department could do nothing about the fact that the entity was not ready to play a role in distributing grants.
“They have been given ample time to put their house in order and we cannot be blamed if they are not ready.”
The Constitutional Court suspended its ruling on the invalidity of the current contract with CPS and allowed it to run its full term until March 31, so as not to prejudice grant recipients.
Sassa had undertaken to take over the payment function itself from April but recently has disclosed that it remains years away from having the capacity to do so.
Asked why she had allowed April to approach before acting, Dlamini suggested that she only discovered the extent of the problem late last year, and blamed officials for not doing their job and keeping her in the dark.
The director general of social development, Zane Dangor, quit last week, while Sassa CEO went on sick leave after clashing with Dlamini.
She refused to respond to questions about the terms of the planned deal with CPS because talks were ongoing.
But she She reiterated that come April, grants would be paid and suggested her critics wait for this to happen before questioning her further or raising fears of a crisis.
Dlamini went on to say that it was dangerous to raise the spectre of grants not being paid next month because it could “remove the government in the eyes of the people”, an admission of how vital welfare is to the ANC’s wide support.
– African News Agency