The SA Social Services Agency (SASSA) refutes allegations it incurred an R800 million loss as a result of "unlawful deductions" conducted by the company contracted to disburse social grants.
Last week, a statement issued by the chairperson of the standing committee on community development in the Western Cape Provincial Parliament challenged SASSA's move to continue its contract with EasyPay and Cash Paymaster Services (CPS), both subsidiaries of Net 1 UEPS Technologies.
According to statement, SASSA is continuing with the contract to disburse social grants to millions of beneficiaries despite reports of unlawful deductions taking place under its tenure, which has led to an R800 million loss to SASSA, of which only R1.5 million has been recovered.
SASSA national spokesperson Kgomoco Diseko told ITWeb that only CPS disburses social grants in SA and that contract ends next March. It is not true to say EasyPay disburses grants, he says.
"I'm not sure how that astronomic figure of R800 million in fraud was arrived at by the DA [Democratic Alliance]," says Diseko.
"The truth is that the biggest fraud investigation in our history is happening and it concerns a figure of R2.3 million. Eighteen suspects have been arrested through our efforts to combat fraud within our system and the Hawks are following leads to bring all the collaborators to justice."
Legal moves
CPS was awarded the contract in 2012 to handle social grant payments for South Africans. The digital payments firm's contract, however, has been marred with allegations of unlawful dealings and corruption.
Last year, the South African Constitutional Court ruled SASSA had to re-issue a new tender process for the distribution of social grants in the country. In terms of the ruling, awarding the tender for grants distribution to CPS was "irregular".
The ruling meant the Net 1 subsidiary, and among others, Absa's AllPay, would have to apply for the tender to distribute social grants in the country. Net 1, however, announced the withdrawal of its subsidiary from the tender process for a five-year R10 billion contract.
There was further court action against the company following social grant beneficiaries' complaints that loans were recouped before their grants were paid out.
According to reports, CPS allegedly allowed another Net 1 unit, Moneyline Financial Services, to access Grindrod Bank accounts of social security recipients and then use this information to provide those South Africans with loans, without following the requirements of the National Credit Act.
It was further alleged CPS abused its position as the contractor handling social grant payments to more than 15 million South Africans.
However, the National Consumer Tribunal cleared the company of allegedly loaning social grant beneficiaries money in contravention of the law.
In the statement from the DA, the opposition party's Lorraine Botha says SASSA must explain the impact of loss in grant money. Botha notes she will call on the entity to report on all matters relating to its financial management.
Botha has commissioned a report to detail all the unlawful deductions, to focus on SASSA's dispute resolution measures that have been in place since 2012, as well as the submissions made by the public to the committee.
"It is of grave concern SASSA will continue to use the corrupt CPS to disburse the grants for another nine months until the contract with CPS expires...
"We are extremely concerned about the R800 million that has been lost by SASSA due to corruption and the impact this may have on its ability to deliver to beneficiaries who totally depend on social grants," reads the statement.
Botha alleges SASSA is being held hostage by CPS and will continue to lose public money for the next nine months at least.
However, Diseko states: "Our current challenges can be resolved without being impulsive and cancelling the contract, thereby compromising the livelihoods of over 16 million beneficiaries who rely on social grants."
Court order
On Friday, Net 1 filed for a declaratory order with the South African High Court to provide certainty on "the interpretation of the Social Assistance Act of 2004 and recent regulations promulgated in terms thereof".
"The regulations limit direct deductions from social grants paid to beneficiaries. The company interprets the meaning of the word 'deductions' to be specific to the practice of collecting life insurance premiums from grants, before the grants are paid to social welfare beneficiaries' bank accounts, and is of the opinion that the legislature did not intend to curtail the right of beneficiaries to transact freely once the money is deposited into their bank accounts," according to the announcement.
The statement adds: "SASSA seeks to lend a broader interpretation to the meaning of the term 'deductions' to incorporate any debit orders, EFT debits, purchase transactions, or fund transfers that are effected after the transfer of social grants to beneficiaries' bank accounts...The company believes that forcing beneficiaries to pay for these products or services in cash would be a major setback to the national objective of financial inclusiveness, introduce financial and security risks for beneficiaries, and result in significant price increases for these products and services."
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