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Net1 'delighted' with court judgement

Social development minister Bathabile Dlamini.

Net1 UEPS is delighted with the High Court's decision to “validate its agreement” with the South African Social Security Agency (SASSA), says Serge Belamant, chairman and CEO.

This is despite judge Elias Matojane saying the R10 billion tender awarded to its subsidiary, Cash Paymaster Systems (CPS), on 17 January, was illegal.

Although Matojane ruled that the tender was illegal, the contract will stand, because – without a service provider – millions of citizens won't have grants paid out come month-end. For this reason, the contract will remain in place until it is reissued.

The Net1 unit won the contract to provide a payment solution for about 15 million grants to 10 million South Africans across the country.

Absa unit AllPay, which also bid for the contract, alleges SASSA improperly awarded the five-year deal to CPS and that it did not comply with the necessary regulations and laws.

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

Contract stands

Net1 yesterday issued a statement saying the North Gauteng High Court has ruled that the contract between CPS and SASSA, for the payment of social welfare grants on a national basis, for a five-year period, remains valid and will not be set aside.

"We agree with the court that the continued deliverance of a high-level service to our beneficiaries is of tantamount importance and, as such, we remain absolutely committed to SASSA and our beneficiaries," says Belamant.

Social development minister Bathabile Dlamini this morning addressed the issue at a briefing.

She explained that SASSA introduced the new biometric system this year. It was introduced to deliver an improved payment experience for beneficiaries, to reduce costs and curb the vulnerability of the system to fraud and corruption.

“SASSA identified weaknesses in the methodology of payment, which resulted in, among other deficiencies, duplicated payments, payments to persons who were not eligible beneficiaries and other fraudulent conduct, which had an adverse impact on the budget allocated by Parliament, for social grants to persons who qualified.”

The minister said that, as a result of the deficiencies in the system, SASSA continued to receive adverse and qualified audit opinions from the office of the auditor-general.

“The means to ensure an improved beneficiary experience was to provide an automated biometric payment solution to reduce inconsistent reviews and a tedious life certification process.”

Illegal tender

As a result, SASSA went to tender on 15 April 2011. The contract was subsequently awarded to CPS, on 17 January 2012.

“The process was challenged by the unsuccessful companies who submitted applications to the High Court for review and setting aside of the award. The court ruled that there were irregularities in the supply chain management processes, which led to the tender award being declared 'illegal and invalid'.”

Dlamini explained that the court acknowledged these irregularities do not warrant the continued provision of the payment of social grants to be aborted or disrupted.

“We agree with the court that the continued service to the citizen is of paramount importance. Going forth, SASSA will factor the prudent feedback observed on the integrity of SASSA's procurement processes in order to correct and strengthen its processes.”

Improved service

The minister also said greater levels of service delivery have been achieved since the implementation of the new system in March.

“We have seen 13 911 grants voluntarily cancelled, which translates into a further saving of taxpayers' money; the initial saving when the award was made was R800 million.

“We now have the automated intelligence to track where grants are being paid out and have discovered that 482 beneficiaries are receiving their social grants outside the boarders of SA. Officials of SASSA have been arrested and are under different phases of the judicial process. This and duplicated biometrics on the SASSA payroll is currently under investigation to track patterns of potential fraud.”

Further investigation

Democratic Alliance shadow minister of social development Mike Waters says Matojane ruled that the R10 billion tender awarded to CPS to administer social grants across all nine provinces, was illegal and invalid.

However, to avoid disruptions in the grants process, the tender was not set aside for the moment. “A process to have the tender re-awarded will, however, have to be initiated.”

Waters says there are outstanding issues regarding the tender that need to be investigated by the Public Protector. These include the modification of the tender after the closing date; insufficient timeframes for oral presentations made by certain bidders; the criteria for selecting members of the bid evaluation committee; and the decision of CEO Virginia Peterson to alter the request for proposals nine days before the closing date.

“If tender procedures were violated, disciplinary or criminal proceedings must be instituted against those involved. Given the scale of the tender, the importance of the tender (to the poorest of the poor) and the period of the tender (10 years), the re-issuing and re-awarding of the tender must be made as independent and transparent as possible.”

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