The Black Sash has condemned the 'scandalous profiteering by Cash Paymaster Services (CPS) during its invalid contract' with the South African Social Security Agency (SASSA) for the period 1 April 2012 to 31 March 2017.
This comes after papers filed in the Constitutional Court (ConCourt) by KPMG on 30 May revealed that CPS made almost R1.1 billion in pre-tax profit for distributing social grants.
In a statement, the human rights organisation says the audited statement of expenses and income, signed off by KPMG, provides very little details of how so much profit was made from an unlawful contract.
"As per the SASSA contract, CPS, a subsidiary of Net1, was paid R10 billion over the contract period of five years. However, only R8.9 billion is listed as income in CPS' statement and not the full R10 billion. Why is this? We are concerned that the full amount of income received may not be accounted for.
"We note that the CPS KPMG audited statement excludes the revenue from the sale of airtime, electricity, loans and funeral policies sold to grant beneficiaries by CPS' sister companies in the Net1 fold. We believe these profits have been made off the back of the CPS SASSA contract and must also be accounted for."
It adds: "Grant beneficiaries, the poorest of the poor, continue to be short-changed when it comes to recourse and refunds. CPS and Net1 did not refund grant beneficiaries for any unauthorised, fraudulent and unlawful deductions between October 2016 and January 2017. Under the pretext that CPS and Net1 are conducting internal investigations outside of the SASSA dispute recourse system, many grant beneficiaries continue to wait indefinitely for refunds."
Unlawful deductions
A subsidiary of Net1, CPS distributes social grant payments on behalf of SASSA. The company attracted negative attention during the recent social grants debacle.
CPS also faced allegations that it authorised deductions on beneficiaries' accounts before their social grants were paid out. Net 1 has refuted these claims, saying its subsidiary does not share any personal beneficiary data with its other subsidiaries, or sell financial services and products to recipients.
Efforts to restrict deductions from the bank accounts of recipients were dealt a blow when a court ruled in favour of deductions. Last month, the North Gauteng High Court declared that SASSA and the social development minister Bathabile Dlamini can't impose rules and restrictions on electronic payments.
Black Sash says: "It is obscene that CPS enjoys huge profits while social grant beneficiaries receive less and less of their social grant money because of unauthorised, fraudulent and unlawful deductions, placing their very survival at risk. South Africa will remain one of the most unequal countries in the world if companies like CPS continue to profit at the expense of the poor."
Black Sash is considering the options on how to get these unlawful profits back into the hands of South Africans, where it rightfully belongs, it states.
Payout backlash
Meanwhile, founder and now former Net1 CEO and director, Serge Belamant, continues to receive backlash for the $8 million (R105 million) payout he will receive for leaving the company, which major shareholder Allan Gray says it has noted `with outrage'.
According to the US Securities and Exchange Commission filing, Belamant will receive a severance payment of $1 million (R13 million) `representing compensation for 27 years of service with the company, less applicable withholdings and deductions' as well as another payment of $7 million (R92 million) for his `cooperative resignation'.
The payments will be part of a `separation and release of claims agreement' that Net1 and Belamant entered into on 24 May.
Net1 announced last month that Belamant would retire as the company's CEO and director and current CFO Herman Kotz'e would take over as CEO. Belamant was only due to retire at age 65 in 2018.
Belamant caught flak for his comments in the media, when he reportedly said unless government uses pigeons to deliver social grants, it wouldn't happen as only CPS has the capacity to fulfil payments on 1 April.
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