SASSA is trying to blackmail Constitutional Court, says judge

Social Security Agency argues for extension of CPS contract

Photo of lawyer in court
Nazeem Cassim, representing SASSA, made a submission to the Constitutional Court on Tuesday requesting that it extend the CPS contract by six months. Photo: Zoe Postman

The SA Social Security Agency (SASSA) is trying to “blackmail the Constitutional Court” into extending the social grants contract with Cash Paymaster Services (CPS), Justice Sisi Khampepe said on Tuesday.

The Court has been asked to allow SASSA to extend CPS’s contract by six months and to rule on the conditions of the extension. The Black Sash, Freedom Under Law, CPS, the SA Post Office and SASSA have all made submissions to the Court.

The CPS contract was declared “unlawful” by the Court in 2014 but it was impractical to end the contract immediately, so the Court allowed CPS to continue paying social grants until March 2017. In 2015, SASSA promised the Court that it would take over the payment of social grants by April 2017. But a month before the deadline, the Court had to extend the CPS contract by another year because SASSA was not yet ready to take over the social grants payments.

SASSA filed another application in February this year requesting that the Court extend the CPS contract by a further six months to allow a transitional phase between the Post Office and CPS. According to SASSA’s lawyer Nazeem Cassim, if the Court does not extend the contract “there will be chaos”. He said about 2.8 million beneficiaries, the beneficiaries who get cash payments, would not get their social grants on 1 April.

Chief Justice Mogoeng Mogoeng said it looked like SASSA wanted to “bind the court” by submitting the application in February when SASSA knew it needed to extend the CPS contract in December last year.

“It’s like we [the Constitutional Court] are being laughed at by SASSA and CPS. It is sad,” said Mogoeng.

Deputy Chief Justice Raymond Zondo said he was also concerned with the period before December. He said he noticed “gaps of two or three months” before SASSA decided to deal with pressing issues. “If you look at what steps were being taken either by SASSA or the Department [of Social Development] to deal with issues, they seem to be taking their own time. They don’t deal with issues with the urgency they deserve.”

But Nazeem Cassim, the lawyer representing SASSA, maintained that SASSA “acted to the best of their ability”. He said SASSA was operating under difficult circumstances and faced many challenges, one of them being the Inter-Ministerial Committee interfering with SASSA’s work.

He also said SASSA had delayed the application to the Court because the agency had hoped to “get its act together”. But, he said, SASSA had no alternative other than to use CPS’ services for the cash payment of grants.

Gilbert Marcus, representing Freedom Under the Law, said there was no doubt that the Court would have to extend the CPS contract to avoid a crisis. But, he said the argument was around the conditions of extension. He said the Court should rule that R700 million profit made by CPS should be paid back.

“The court ordered in three judgments that CPS should adhere to the non-profit principle which states that CPS may not gain any profit or run at a loss from the invalid contract. It was just meant to break even,” said Marcus. “The Court needs to show that the judgment was not just an academic exercise and the money needs to be paid back.”

But CPS’s lawyer Les Morison said the Court had ruled CPS should not run at a loss but could make a “reasonable profit”. He said CPS was not liable to pay back its profits because the invalidity of the contract had been suspended by the Court. He said the terms and conditions of the contract included the profit and CPS was entitled to the R700 million.

Morison also said CPS could not operate under the “non-profit principle” for much longer. He said CPS’s reserve funds would only last until the end of May this year.

He said CPS would negotiate with National Treasury a reasonable price for the remainder of its contract with SASSA.

Judgment was reserved.

© 2018 GroundUp. Creative Commons License
This article is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.

You may republish this article, so long as you credit the authors and GroundUp, and do not change the text. Please include a link back to the original article.