The Constitutional Court has ordered the SA Social Security Agency (SASSA) to initiate a new tender process for the payment of social grants, dealing a heavy blow to Net1's R10 billion contract to handle payments, the Sunday Times reports.
The paper reports that Justice Johan Froneman said SASSA "must initiate a new tender process for the payment of social grants within 30 days" in a ruling handed down on Thursday.
The court had found in December that the tender awarded by SASSA to Net1 subsidiary Cash Paymaster Services (CPS) in January 2012 was "unlawful".
The Sunday Times says Thursday's ruling sparked a R729 million plunge in the value of Net1's stock on the JSE - a 28% drop -, before recovering some ground to close 12.8% down at R85. 50.
The paper says nervous investors unnerved by the ruling will have further doubts over whether Net1 can retain the R10 billion contract, which makes up 60% to 70% of the company's revenue.
Justice Froneman slammed SASSA's "irregular" conduct, calling it "unhelpful and obstructionist" but the court left open the possibility for Net1 to continue handling social grants.
Balancing act
The paper reports Froneman said the court had to balance the imperative to ensure grant beneficiaries are not left in the lurch against the fact that there was a need to remedy "irregularities' which led to the tender being "invalid".
While the court ordered that the tender be reopened, it noted the "decision on the proposed final solution lies with SASSA" - which could opt not to cancel its existing contract with Net1.
"If the tender is not awarded, the declaration of invalidity of the contract will be further suspended until completion of the contract," the court said.
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