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AllPay, Cash Paymaster Services face off

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 08 May 2012

Absa unit AllPay and Net1 UEPS subsidiary Cash Paymaster Services (CPS) are set to meet in the North Gauteng High Court from the end of this month, over a R10 billion South African Social Security Agency (SASSA) contract.

AllPay alleges SASSA improperly awarded the five-year deal to CPS and that it did not comply with the necessary regulations and laws.

In January, Net1's unit won the contract to provide a payment solution for about 15 million grants to 10 million South Africans across SA. Spending on social grants is expected to rise to R172 billion in the 2013/14 financial year.

Net1 previously had a contract to distribute grants in five of SA's nine provinces. AllPay handled payments in the Free State, Western Cape, Gauteng and Eastern Cape for a decade.

Improper

AllPay claims, in an affidavit filed with the court last month, that the “process followed by SASSA in awarding the tender to CPS is very deeply flawed”. It argues it did not comply with several laws, including the Constitution.

The 10 million grant beneficiaries will be prejudiced if SASSA goes ahead with the CPS deal while the matter is pending, it argues.

In an affidavit, Charmaine Webb, AllPay Consolidated's GM of sales and service delivery, warns that 553 temporary and permanent staff will be retrenched, which will cost Absa R26 million. In addition, Absa stands to lose anywhere between a million and 1.75 million accounts.

Net1 VP of investor relations Dhruv Chopra has said the company has filed its responding papers, and while the matter is pending, CPS is implementing the tender based on the contract terms it has with SASSA. “We strongly believe we won the contract purely on merit and that a proper procurement process was followed.”

At the time of the award, chairman and CEO Serge Belamant said: “We are overjoyed by the SASSA tender award and very proud of the confidence that SASSA has placed in our company and technology.”

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