In 2015, former Sassa CEO Virginia Petersen authorised the payment of R317m to CPS when she received an invoice for the reregistration of children.
Corruption Watch has called for the payment to be set aside and the money repaid. It claims Sassa deviated from the main contract with CPS without securing approval.
Corruption Watch first instituted the court challenge in March 2015, alleging the payment followed an unlawful variation to the original contract and it was made without verifying the work done by CPS. Sassa initially opposed Corruption Watch's action, arguing that Petersen's decision to make the payment was taken on the basis of a report into CPS's claim by audit firm KPMG.
It emerged during the court proceedings that KPMG had attached a disclaimer to its report and said that it should not be relied upon by Sassa.
In 2017, following Petersen's retirement, Sassa withdrew its opposition to the review application by Corruption Watch.
Corruption Watch says the case highlights the role of a civil society organisation in taking steps to recover public funds from a private sector source obtained through an irregular procurement process. "It should be the public institution, in this case Sassa, driving this action," said Leanne Govindsamy, Corruption Watch's legal adviser. Govindsamy said the case highlighted the flaws in the mechanisms for the recovery of irregular, fruitless and wasteful expenditure. "Although the auditor-general highlights such expenditure in annual reports for various state entities, the investigation and recovery of such losses are exceptionally slow, often resulting in the responsible persons being held unaccountable in addition to the nonrecovery of losses."
The court action comes at a difficult time for CPS. It is trying to get clarity from Sassa about the extent of the services it may be required to continue providing to social grant recipients after the March 31 deadline. It is also unclear what, if any, increase in fees CPS might receive for any services it provides after that date.
The high court action is only one of the legal forums in which CPS is involved. It is also spending a considerable amount of time engaging with the Constitutional Court.
It has applied to the Constitutional Court to be allowed to participate in the tender for the distribution of cash to a portion of the 10.7-million social grant beneficiaries after the current invalid contract expires.
In response to that application, Sassa CEO Pearl Bhengu criticised CPS for abusing its position to push the loan business of its holding company, Net1. Bhengu told the Constitutional Court that CPS had to be prohibited from participating in the tender because it "has constantly and perennially abused its position to sell its financial products to social grant beneficiaries and to procure payment directly from the commercial card it issued to beneficiaries".
In another Constitutional Court matter, Bhengu said CPS had a moral duty to continue distributing cash to 2.5-million social grant beneficiaries until 30 September.
Source: Business Day
