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SASSA deal declared invalid

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 30 Nov 2013

The Constitutional Court has ruled Net 1's R10 billion deal to provide the payment solution for the South African Social Security Agency's (SASSA's) distribution of grants is invalid.

Net 1, which is listed in Johannesburg and on the Nasdaq, said in a statement to shareholders yesterday that SA's highest court had found SASSA's tender process to be invalid.

Losing bidder AllPay, a unit of big four bank Absa, turned to the Constitutional Court in yet another attempt to have the multibillion-rand tender process declared invalid. The tender was awarded to Net 1 unit Cash Paymaster Services (CPS). Both CPS and SASSA opposed AllPay's application.

AllPay argued the five-year deal, to service around 15 million grant recipients, was not awarded lawfully. The Constitutional Court has now ruled that the award was not constitutionally valid, but "suspended its declaration of invalidity pending determination of a just and equitable remedy," says Net 1 in a statement.

AllPay's action followed its loss in the Supreme Court of Appeal, which is where the matter was heard after the North Gauteng High Court ruled that, while the deal was illegal and invalid, it would remain in place so that payments could continue.

There will now be a hearing on 11 February to arrive at a solution. Net 1 and SASSA have been ordered to pay AllPay's costs.

Net 1 has also been under investigation by the US Securities and Exchange Commission and the Department of Justice's Criminal Division to determine whether there was bribery involved in the R10 billion contract with SASSA.

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