Legal View

ConCourt extends social grants contract, blames Dlamini

Read time 6min 30sec
The judgement was based on the minister and SASSA failing to keep their promise to the people of SA.
The judgement was based on the minister and SASSA failing to keep their promise to the people of SA.

In a unanimous judgement, chief justice Mogoeng Mogoeng and justices of the Constitutional Court (ConCourt) have permitted the extension of the current invalid social grants payments contract for another 12 months.

With the looming end of the Cash Paymaster Services (CPS) social grants contract, it took the highest court in the land to provide a way forward concerning the payment of millions of beneficiaries on 1 April.

Delivering the ConCourt judgement this morning, justice Johan Froneman said the process that led to the judgement is based on the failure of social development minister Bathabile Dlamini and the SA Social Security Agency (SASSA) to keep their promise to the court and the people of SA.

The underlying danger to us all is that when the institutions of government established under the Constitution are undermined, the fabric of our society comes under threat, said the judge. A graphic illustration will be if social grants are not paid beyond 31 March, he noted.

It is to the practical avoidance of that catastrophe that we must now turn, added Froneman.

"The Constitutional obligations of both SASSA and CPS as organs of state performing a Constitutional function for a considerable period do not end on the 31st of March this year; both SASSA and CPS accept that.

"SASSA failed to honour its assurance to this court that it will be in a position to make payment of social grants after 31 March. It and CPS failed to timeously conclude a lawful contract to provide for that payment...

"This court's extensive powers to grant a just and equitable order [are] permitted to extend the contract that would otherwise expire on 31 March. Since the contract was declared invalid in AllPay 1, if we extend the contract it will also be necessary to extend the declaration of invalidity and the suspension of that declaration for the period of the extension of the contract."

Froneman also ordered the continuation of the CPS contract under the 2012 terms. "No party has any claim to profit from the threatened invasion of people's rights; at the same time no one should usually be expected to be out of pocket for ensuring the continued exercise of those rights.

"Our order reflects that SASSA and CPS should continue to fulfil their respective Constitutional obligations in the payment of social grants for a period of 12 months as an extension of the current contract."

This week, the ConCourt heard arguments to determine whether to extend the invalid contract and the suspension order of invalidity, or to order a new contract between CPS and SASSA.

Human rights group Black Sash sought to bring the matter to the attention of the court, fearing the country's most vulnerable citizens will be left stranded on 1 April. The organisation is looking to the ConCourt to play a supervisory role to ensure grants are not disturbed.

Banking on it

A Net1 subsidiary, CPS has been the sole paymaster of social grants in SA, despite an invalid contract ? the court suspended the invalidity declaration pending the contract's expiration and the contract will reach its sell-by date in two weeks.

On Wednesday, the ConCourt heard that with the proposal of a new interim contract, CPS wants to be paid more for the services it provides after 1 April.

Although CPS was reluctant to reveal its newly proposed fee structure, it has now come to light that the payments distributor will profit by R4.6 billion over a period of two years.

In terms of the contract in place, CPS charges a fee of R16.44 each month for each beneficiary. A new contract proposes a new rate of R17.53 (including VAT) in year one and R18.68 (including VAT) in year two.

"[...] it was proposed that the cost of the interim contract over the two-year period would be fixed at R194 million (including VAT) per month, regardless of the number of beneficiaries paid by CPS. The total cost of the interim contract over the two-year period would therefore amount to R4.656 billion (including VAT)."

Premature debate

While the chief justice has provided direction for payments for the interim period, it appears the minister at the forefront of the social grants crisis will walk away unscathed.

Mogoeng has heavily criticised Dlamini for failure to be in control of the core function within her portfolio. It has been noted SASSA officials knew from April 2016 that the agency would not be able to pay grants itself, but the minister says she didn't know about the situation for six months and was only made aware of it in October last year.

Both Dlamini and president Jacob Zuma have made light of the legal implications of the situation, insisting only that grants will be paid next month.

Zuma had to explain to the National Assembly yesterday what steps he intends to take against Dlamini, who has shown disregard for the rule of law and ConCourt ruling on the CPS contract.

Responding to questions from members, the president brushed the matter aside and said "there is no crisis", despite the chief justice declaring otherwise.

According to Zuma, it would be premature to punish someone before anything happens. The president continued by saying he "can't judge a person before 1 April".

"How do you evaluate something that has not yet happened? That is an impossible demand. The minister is working to see people get their money. The first of April has not come; even now as I speak National Treasury and Department of Social Development are meeting to make sure that beneficiaries get paid."

He told the National Assembly it is only after 1 April that members can say to him "why are you not taking action against this minister?" Now, it's a premature debate, Zuma pointed out.

Meanwhile, a ministerial task team that includes Dlamini has been set up to address the issue of the payment of social grants to beneficiaries.

According to a statement, the task team headed by minister Jeff Radebe will include ministers Pravin Gordhan, Naledi Pandor, Malusi Gigaba and Siyabonga Cwele.

Yesterday, Radebe said Cabinet deeply regrets the anxiety caused by uncertainty over the payment of social grants, and that is why the task team has been established.

The task team has been mandated to address the following issues, among other things:

* Seek legal advice on the viability of further legal action by the state, especially in addressing unlawful and irregular conduct where necessary.
* Review the conduct of SASSA, especially in relation to its administrative capacity and management and make a recommendation.
* Develop a contingent plan.
* Devise a comprehensive institutionalised payment system for social grants.

Radebe stated: "Cabinet assures South Africans that we are dealing with the matter at the highest levels.

"The timeframes [for the task team] are very urgent because the most urgent task is to ensure that by 1 April, grants are distributed."

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