Concourt will be asked to bar CPS from making profit out of new grants deal

One of the rights groups who have approached the Constitutional Court over the welfare grant crisis, will ask it to declare that Cash Paymaster Services may not make a profit from a new deal to distribute grants.

Freedom Under Law argues that a “no benefit” order imposed by the court in relation to CPS’s current contract, should also be made to apply to a new deal being hammered out with the company.

Its court papers state that CPS “should not be allowed to charge more than it is currently charging under the 2012 contract for the period of the proposed interim contract”.

FUL executive officer Nicole Fritz said on Friday, it had taken this position because CPS was considered the only company that was able to administer grants because of its experience of doing so for the past five years, under a contract declared invalid.

“We are saying whether it is an extension or a new contract, what puts it in this position of incumbency is a contract that was constitutionally invalid.”

FUL is taking a harder line on the point than the Black Sash, the other rights group that have approached the court in the matter, who merely asks that the terms of a new contract should be “reasonable”.

The Constitutional Court will hear argument from the Black Sash next Wednesday, as well as FUL’s application to intervene in the matter.

Fritz said she expected the court to agree to hear FUL’s argument on the same.

In the meanwhile, Chief Justice Mogoeng Mogoeng has set down Monday as a deadline for the South African Social Security Agency (Sassa) to give a detailed account of how it came about that it declared itself unable to take over the administration of grants from April, leaving a vacuum almost certain to be filled by CPS.

The court, which had earlier discharged itself of its oversight role, stepped in after Sassa disclosed at the eleventh hour that it would not be ready to take over grant payment to millions of beneficiaries in April.

Social Development Minister Bathabile Dlamini has settled on CPS as the only viable alternative, and has sidestepped the need to secure the Constitutional Court’s approval for extending the contract by stipulating that instead she was renewing it.

Advocate Paul Hoffman, the director of Accountability Now, another rights group that has considered petitioning the court, said he believed it would dismiss the technical distinction Dlamini is seeking to make.

“That is an egg dance. I don’t think the Constitutional Court will be fooled by it.”

Hoffmann said since the government was effectively seeking to extend its contract with CPS, court approval would be needed. He added that since the court found the existing contract with CPS to be unlawful, and therefore declared that the company may not reap financial benefit, the same should apply to the extension.

“If you allow a situation where illegality is profitable, we are on slippery slope leading to corruption,” Hoffmann told the African News Agency (ANA).

The Constitutional Court in 2013 declared the contract with CPS unlawful because it flowed from a flawed tender process, but it suspended the ruling for the duration of the contract so as not to compromise the poor.

Sassa last week formally opened negotiations to retain CPS’s services, but again deviated from normal procurement rules in that it negotiated with a single bidder. Dlamini would therefore need National Treasury to approve the deviation, which it has said it cannot do.

Finance Minister Pravin Gordhan is expected to appear before Parliament’s watchdog Standing Committee on Public Accounts on Tuesday to explain his stance on the matter.

This week, Dlamini appeared before the committee. She declined to answer questions on the terms negotiated with CPS, saying an agreement had not been concluded. This contradicted a statement by her spokeswoman last Friday that a new deal had already been reached.

Dlamini did, however, confirm that CPS had been seeking to have its fees increased from R16.44 per grant to more than R22.

Hofmann said a no benefit order would see any profit that CPS made or makes in the future, paid back to the State.

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