COSATU welcomes Concourt ruling against CPS contract
The Congress of South African Trade Unions welcomes the ruling by the Constitutional Court that the award of the contract for the distribution of pensions and social grants - by South African Social Security Agency (Sassa) - to Cash Paymaster Services (CPS) was constitutionally invalid.
The federation notes however that the Court did not set aside the contract, pending a further hearing in February next year to decide on a remedy. They say they did this to avoid disruption in the payments of grants to the 15 million beneficiaries.
The contract award to CPS had been challenged by losing bidder AllPay, a division of ABSA Bank. AllPay's argument was rejected by both the High Court and the Supreme Court of Appeal, but the Concourt found in their favour, ruling that Sassa had failed to regard the importance of black economic empowerment (BEE) in procurement and should have verified the BEE credentials of CPS before awarding the contract.
COSATU agrees with Lumka Oliphant, the spokeswoman for the Department of Social Development, that the outcome was not necessarily a victory for AllPay as the contract was not set aside. The federation however welcomes the ruling, because of other issues of great concern surrounding the CPS contract which we highlighted in a statement on 21 October 2013.
The federation expressed anger at the serious allegations against CPS - a subsidiary of Net1 UEPS Technologies (Net1), that it was using Sassa's social grants database in a scheme called Umoya Manje, to market airtime to social grant beneficiaries.
The SABC had reported they were "illegally deducting" money from grant beneficiaries, which meant that in some cases, the beneficiaries receive only a few rands at the end of the month.
This was confirmed in an email to COSATU by a citizen of Mpumalanga whose 63-year old father was a victim of this fraud. When he went to receive his monthly grant for October 2013 in Volksrust, Mpumalanga, his money was short of R99 and he was told by the staff members of CPS that he had bought airtime with his money.
"My father knew nothing about this," he wrote, "and when he complained they gave him a number to call, and that was for Net1. On 11th of November 2013 he called Net1 about this, and a staff member confirmed that indeed they have deducted R99 from my father's pension grant. He said the airtime was going to 0737058980 and that is not even my father's number.
"This number, 0737058980, used to be my father's. When Sassa was re-registering the pensioners he was still using this number and was requested to provide his cell number, which he did. After that my father stopped using that number and changed to another network. When Net1 was sending an SMS to this number selling its airtime product, MTN had already transferred the number to someone else and that person followed all the steps provided on the SMS and she started receiving airtime for free.
"She said the SMS she received was from Sassa, promising her free airtime if she dialled *130*4444#. My father had no clue of this happening; it was only Net1 and this lady who knew what was going on.
"When another deduction was made from my father's grant payment, after they had promised to stop this deduction and refund him, the gentleman from Net1 on the 13th November 2013 explained to me how this works.
"He said they take all the cell numbers of the pensioners that they have from Sassa's database and send them SMSs to convince them to buy airtime from them. The cell numbers' users, i.e. pensioners, have to follow the steps provided by the SMS.
"Already they have their details like IDs, etc, from the Sassa database, so if the cell number user accepts everything from the SMS they will automatically pick it up and start sending out airtime knowing that come month-end they will deduct it from the grant.
"Since this Net1 Company has fraudulently deducted from my father's grant, and we don't know if it's only my father because they are targeting the elderly in the rural areas, it is my wish for this email to get any necessary attention it may received, to fight corruption in our country."
Concourt Judge Johan Froneman said the outcome of the case was a matter of national importance and public interest because "procurement so palpably implicates socio-economic rights that the public has an interest in its being conducted in a fair, equitable, transparent, competitive and cost-effective manner".
The Social Development Department said it is talking to the Reserve Bank to stop the debit orders going through and is considering legal action against CPS and even terminating its multi-billion rand contract with it.
COSATU encourages the Department to follow up on these moves, and on even more serious charges, now being investigated by the Public Protector, that CPS/Net1 have been operating an illegal loan scheme targeting social grant beneficiaries. It is alleged that their officials offer and provide certain beneficiaries "interest-free" microloans with repayments automatically deducted from their social grants - some with interest rates as high as 50%.
The federation reiterates that, if true, this mashonisa scheme is not only exploiting then poorest of the poor but contravenes the Social Assistance Act.
These developments reinforce COSATU's opposition to outsourcing or privatising our basic social services, which provide fertile ground for abuse, exploitation and corruption. The federation calls for the Department of Social Development to cut out middle-men altogether, and itself administer the distribution of grants and pensions directly to the beneficiaries, so that every cent goes to the poor and none to capitalist profiteers like CPS, Net1 or AllPay.
Statement issued by Patrick Craven, COSATU national spokesperson, December 3 2013
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