Sassa Crisis in Concourt: The Guardians, the People and the Predator State
Ranjeni Munusamy
Ranjeni Munusamy is a survivor of the Salem witch trials and has the scars to show it. She has a substantial collection of tattered t-shirts from having “been there and done it” – from government, the Zuma trials, spin-doctoring and upsetting the applecart in South African newsrooms. Following a rather unexciting exorcism ceremony, she traded her femme-fatale gear for a Macbook and a packet of Liquorice Allsorts. Her graduation Cum Laude from the School of Hard Knocks means she knows a thing or two about telling the South African story.702 Reactions
“There is absolute incompetence.” Minister Bathabile Dlamini probably does not care that Chief Justice Mogoeng Mogoeng delivered this damning assessment of her handling of the social grants system. From her performance in the National Assembly on Tuesday, it is clear criticism bounces off her. But if the ANC has any hope of continuing to run South Africa, they should care. Their policy documents say they need to focus on building “a capable and developmental state”. But we have reached a situation where the judiciary, civil society and Chapter Nine institutions have to protect us from an executive and Parliament that repeatedly breach the Constitution and fail in their duties. 22
Last week, the Office of the Public Protector sent letters to Social Development Minister Bathabile Dlamini and the director-general of her department requesting information about the multibillion-rand grant payment contract run by the South Africa Social Security Agency (Sassa). Daily Maverick has learnt that the inquiry was initiated by Deputy Public Protector Kevin Malunga as the basis of an investigation into possible maladministration in the awarding of the contract. 13
The expiry at the end of March of the invalid contract held by Cash Paymaster Services (CPS) to disburse the grants has opened the country to a crisis of epic proportions. The livelihoods of millions of South Africa’s most vulnerable citizens are under threat because of the “absolute incompetence” of people charged with their welfare. With Dlamini and Sassa failing to set up a legal and valid contract, National Treasury is unable to authorize the allocation of R11-billion to pay the grants. 13
The case was brought before the Constitutional Court by non-governmental organisation Black Sash, joined by Freedom Under Law (FUL), to ensure there is oversight over how social grants are paid from April 1 and that Sassa complies with their constitutional obligations to protect the rights of the over 17-million beneficiaries. 6
Dlamini, who has been insistent that “there is no crisis’, is resolute that CPS continues paying the grants, even if it means pushing the country to the precipice to ensure this is achieved. The conduct of both Dlamini and CPS boss Serge Belamant has been an assault on human decency and their swagger is based on the fact that at this late stage, there is no alternative. Belamant was arrogant enough to tell reporters at the court that the only other agency that could step in at this stage, the South African Post Office, would have to send “pigeons to fly around” to deliver the grants. 28
In court papers, Dlamini and Sassa argued that the Public Protector and Auditor-General should monitor whatever new or extended contract is negotiated with CPS, while the other parties, Black Sash, FUL and Corruption Watch want the Constitutional Court to retain supervisory jurisdiction. With the Public Protector’s office now looking into maladministration in the contract, Dlamini would not be able to use that institution as a buffer and wriggle out of accounting to the Constitutional Court. 20
The proceedings in the Constitutional Court on Wednesday were a masterclass in examining the failure of a government to perform its functions. The judges were irritated and perplexed as to why, given that the time period of the contract was known and legal advice was on hand, the minister and Sassa were not able to ensure a system was in place to pay the grants. 11
Chief Justice Mogoeng Mogoeng wanted to know from Andrew Breitenbach, the lawyer representing Dlamini and Sassa, why his clients did not do their jobs. 6
“How do you get to a point where they make themselves look incompetent? How do you get to that point? Honestly!” 23
He said it was “embarrassing enough” that a contract awarded by her department had been declared unconstitutional and enquired why Dlamini had not spent sleepless nights ensuring that there was no recurrence. 17
“How it got to this level can be characterized as absolute incompetence?” Mogoeng asked. Breitenbach was unable to answer. 27
Mogoeng also asked probing questions of the advocates about why Sassa was not capable of disbursing the grants themselves. “Is it unthinkable that a properly resourced Sassa can shoulder the responsibility (to pay the grants)?” 13
Later he asked Breitenbach: “Why can’t we just focus on Sassa? Why can’t we order Sassa to do what it exists to do?” 15
This goes to the heart of the problem with the ANC government. Because of incompetence and incapacity of the state and its institutions to carry out their basic functions, their roles are outsourced, opening up opportunities for corruption and patronage to thrive. 31
In the ANC’s policy documents distributed for discussion this week, it is clear that the party is not oblivious to the problem. The draft strategy and tactics document says “there is a long way to go in building a capable, developmental state”. 5
“The state should be able to attract the best and the brightest in society, as part of their career paths. Professionalism in the bureaucracy and stability especially in the management echelons are critical.” 12
The document goes on to say: “Corruption and attempts at capturing state institutions to serve the interests of individuals and families should be combatted, both to ensure that the state meets its obligations and to maintain popular confidence in the polity at large.” 12
On paper, the ANC is an expert at diagnosing its own problems. In reality, it continues to promote outsourcing of government work to offset the incompetence of its deployees and lack of capacity of state departments and institutions. Recent history has shown that even presidential prerogative to hire and fire members of Cabinet have been outsourced. 49
But more than that, the ANC continues to shield those in its ranks who fail in their responsibilities, betray their mandate and breach their constitutional obligations. Last year the ANC was humiliated when President Jacob Zuma and the Speaker of Parliament were found to have violated the Constitution on the Nkandla matter. The ANC tried to protect Zuma from accountability for the Nkandla upgrades until he was made to pay back the money by the Constitutional Court. 17
The ANC is well aware that Dlamini is a hopeless failure and that the Sassa crisis is her doing. The leadership of the ANC has failed to call her to order because she is a bully who enjoys protection from a faction in the party. Zuma protects Dlamini because she is a useful idiot, running the campaign of his preferred successor, Nkosazana Dlamini-Zuma. 61
When Dlamini stood at the podium in the National Assembly on Tuesday to speak during a debate on the Sassa crisis, she received uproarious applause from the ANC. ANC MPs also ran interference for her during the debate, attacking and interrupting opposition MPs with frivolous points of order so that attempts to hold the minister accountable were disrupted. Like at her appearance before the Standing Committee on Public Accounts, Dlamini did not provide the National Assembly with any details about the way forward. She continued to blame the media and opposition for creating perceptions of a crisis. 34
Representing Black Sash in the Constitutional Court, Geoff Budlender said Dlamini made no explanation or apology for why she did not exercise her responsibility. He said in the court papers she had simply taken a “gratuitous swipe” at the Sassa CEO Thokozani Magwaza for trying to remedy the situation. 23
“The painful truth is that executive failed to carry out its duties. Parliament has also failed in its oversight duties,” Budlender said. 31
With the situation again arising of the executive and Parliament breaching their constitutional obligations, the responsibility now falls on the judiciary, civil society organisations and the Public Protector’s office to step in to protect the people of our country and state resources from being squandered. It is apparent that the ANC and its deployees in government and Parliament are again betraying those who elected them in order to shield their own and protect the patronage networks. 31
It is up to non-governmental organisations to represent the interests of the elderly, the poor, the disabled and young children who are dependent on grants for survival because our government does not care. It is up to the judges of the Constitutional Court to, quite ridiculously, have to haggle with CPS over how much of an increase they want in order to pay the grants. It is up to the media to keep asking questions that the minister and her acolytes refuse to answer. 31
In the words of the Chief Justice: “This is a crisis; we must do whatever is necessary to intervene to avoid the proliferation of the crisis.” 25
It seems that everyone apart from Dlamini and her party understands this. 31
This case is the point in history when the ANC government effectively became the enemy, the masters of the predator state from which the people of South Africa need to be protected. DM 63
South Africa’s social grants system: there’s more than just money at stake
March 13, 2017
Specialist Scientist, South African Medical Research Council
In South Africa social grants address key social determinants of health such as food insecurity, access to health services, income and early childhood development. About 17 million South Africans receive social grants every month. Of these, about 12 million are children in receipt of the child support grant.
For many households, the child support grant and the old age grant are the only forms of predictable income that they rely on.
While many in the medical profession – as well as beneficiaries - have long bemoaned the inadequacy of the child support grant to meet even the most basic needs of its beneficiaries, such as adequate nutrition, there has never been any doubt that it’s indispensable to millions of households across the country.
The South African government has allocated R151.6-billion to social grants in its 2017/2018 budget. There are four main grants that are disbursed under the system: an old age grant for pensioners over the age of 60 of US$ 120 (R1600) and for those over 75 a grant of US$ 122 (R1620); a disability and care dependency grant of US$ 120 (R1600); a foster care grant of US$ 69 (R920), and child support grant of US$ 28 (R380) a month for children under the age of 18.
The importance of South Africa’s grants system is worth revisiting in the wake of a crisis unfolding over their disbursement. The country’s Constitutional Court ruled 3 years ago that the contract of the current service provider Cash Paymaster Systems was illegal – and the Department of Social Development which the South African Social Security Agency falls under, needed to find a new service provider. It has failed to do so, placing the disbursements of the grants in jeopardy.
The child support grant and the old age pensioner’s grant make up by far the biggest allocation. Should they not be disbursed, many households will lose the only source of income they have. The impact on households would be profound.
Why the grants matter
Evidence shows that the child support grant not only supports children within a household. In most instances, it has to help everyone in the household.
Mothers and caregivers use it to buy food; pay for school fees and other school related costs as well as health care. This includes transport to clinics or hospital, and for purchasing medication.
Research also shows that it enhances women’s agency, allowing them to mitigate financial crises and access reciprocal exchange networks for informal credit and swapping of food.
The importance of the child support grant becomes ever more salient when one listens to the stories of those who – though they are eligible – are not in receipt of the grant.
Anecdotal evidence in my research has shown that children who don’t receive the grant experience extended periods of hunger, have difficulties accessing health care services especially in remote areas where facilities are far, and have problems meeting school-related expenses.
The old age grant is about four times the amount of the child support grant. Despite the fact that the beneficiaries are the elderly, the grant is used to care for entire households, essentially bearing the burden and closing the gap created by high rates of unemployment in the country.
It’s also associated with improved nutritional outcomes for children in poor households.
Taken together, these two grants are doing the work of government in South Africa: providing for those who have been left out in the cold.
Catastrophic consequences
Any threat to the distribution of the grants would have catastrophic consequences for individuals and households across South Africa. Households will lose the only source of income they have. Children and adults alike will go without food. Some children who live in remote rural areas far from health facilities will miss important immunization visits at the clinics.
The most vulnerable people in society and those who need the help of the government most face the biggest risk to any threat to their disbursement.
Social grants: why a new contract with CPS may be invalid and what the Con Court can do to fix the mess
7 MARCH 2017
Constitutionally Speaking
The Department of Social Development and SASSA have gone to great lengths to avoid asking the Constitutional Court for help to ensure that social grants are paid in a legal and cost effective manner after the current invalid contract of Cash Paymaster Services (CPS) comes to an end on 31 March this year. To understand why this failure is either catastrophically incompetent or corrupt (or both) it is important to understand why the Constitutional Court’s help is needed and what the Court can do to fix the problems created by the Department and SASSA’s incomprehensible conduct.
Several years ago, when the Constitutional Court declared invalid the awarding of a tender to CPS to deliver social grants, it suspended the order invalidating the contract until a new tender could be awarded or, if no contract was awarded, until the contract came to an end. As no new tender was awarded, this means that the original (invalid) contract will lapse on the 31 of March.
Because the contract is invalid and because it will come to an end on 31 March, it is not legally possible to extend the contract. SASSA therefore either had to make another plan (which it did not do – despite falsely promising the Constitutional Court that it would) or it had to conclude a new contract with CPS (something SASSA and the Department seemed suspiciously eager to do).
Why the Department and SASSA have been so eager to conclude a new contract with CPS (a company who, in other circumstances, Minister Bathabile Dlamini and other defenders of the Gupta family would have described as a blue-chip member of White Monopoly Capital), remains a great mystery – especially for those who are reluctant to impute corrupt motives to the Departments, SASSA and CPS.
In any event, the legal problem faced by the Department, SASSA and CPS is that the Constitution, the relevant legislation and Treasury regulations appear to prohibit the role players from entering into a legally valid new contract at this stage. Pertinently, section 217 of the Constitution states:
When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.
Even if CPS had not unlawfully been granted the original tender and had not been placed in a unique position to benefit from the unlawful contract by being positioned as the only private company with the ability to deliver grants for the foreseeable future, the new contract would probably have been invalid. This is because the contract would not have been concluded in terms of a fair, equitable, transparent, competitive and cost-effective process.
Treasury regulations allow for a deviation of the normal procedures to contract services in exceptional circumstances such as an emergency situation. But these are not applicable when the emergency situation was created by the parties to the contract. Because SASSA and the Department appear to be responsible for creating the crisis which has placed CPS in the position of being the only private company who are capable at such short notice to deliver social grants, it does not seem as if Treasury has the legal power to grant permission for deviating from the requirements of section 217 of the Constitution.
SASSA insisted that the reason why CPS was originally chosen and why no other private company or the Post Office could deliver grants was because CPS had the technology to validate every grant recipient through a biometric system. CPS said it would be able to verify the identity of each recipient whose money is paid into a bank account through voice recognition technology. It is partly on this basis that it was awarded the illegal tender and why it is now again the only private company in the running to pay grants. But the system is not currently working. If you phone SASSA’s voice verification number you are told SASSA no longer requires voice verification.
SASSA has also not done what it promised the Constitutional Court it would do to fix the problem. In this context, it is difficult not to conclude that SASSA and the Department are responsible for the crisis. So even if it wanted to, the Treasury does not seem to have the legal power to allow for a deviation from the normal procedures to contract services as required by section 217 of the Constitution.
Entering into a new contract with CPS will therefore almost certainly be unconstitutional and the contract is likely to be found to be invalid if challenged in court.
This is why SASSA and the Department should have approached the Constitutional Court months ago to assist it to deal with the problem.
The Constitutional Court has always maintained that the most pressing concern is to ensure that there is no disruption in the payment of social grants as the paying of these grants affect the lives of millions of vulnerable citizens and because it forms part of the constitutional obligation of the state (contained in section 27(1)(c) of the Bill of Rights) to provide access to social security to everyone.
When confronted with a breach of any provision of the Constitution (including the flouting of section 217 by SASSA, the Department and CPS), the Constitutional must declare that conduct unconstitutional and invalid. This means that the Constitutional Court may have to declare that the new contract entered into between SASSA and CPS are unconstitutional and invalid.
But this is not the end of the matter. In terms of section 172(1)(b) of the Constitution the court has the power to make any order that is just and equitable, including an order suspending the declaration of invalidity for any period and on any conditions, to allow the competent authority to correct the defect.
This means the Constitutional Court can suspend the order that the new contract entered into between SASSA and CPS is invalid for a specific period of time in order to ensure – as the court must and will – that the payment of grants is not interrupted. During this time, CPS would continue to be obligated to pay social grants to all beneficiaries.
The Court can order CPS to continue to pay the grants and can even cite CPS director Serge Belamant directly to comply with this order. If CPS fails to pay the grants and just walks away because the company is unhappy with the size of the profits it will be making, the company and Mr Belamant would then be in contempt of court and Belamant could then be jailed.
Furthermore, as the Court has said in the judgment declaring invalid the original awarding of the tender to CPS, the private company is not supposed to benefit from an unlawful contract. This means that the Court has the power to impose any conditions on the parties to ensure that CPS does not unduly benefit from an unlawful contract, a contract which it was only in a position to enter into because it had previously been awarded an unlawful contract.
What kinds of conditions could the Court impose and why would CPS and its friends at the Department and in SASSA be so eager to avoid this at any cost?
First, the Court could impose limits on the profits that CPS would be allowed to rake in from the unlawful contract. It could prohibit CPS from charging more than a certain amount for handling each grant recipient or could even – in an extreme case – order CPS to deliver the grants without profiting in any way from the unlawful contract. This would obviously not be something that CPS (or their friends at SASSA and the Department) would wish to happen.
Second, the Court will almost certainly also retain supervisory jurisdiction over the matter to ensure that CPS, the Department and SASSA comply with the court order. Given the fact that SASSA previously gave assurances to the Court which turned out to be false, the Court may also want to cite individuals (including Minister Dlamini and Serge Belamant) to take personal responsibility for implementing the court order, which could allow the Court later to find them in contempt of court and to have them jailed for flouting the orders of the court if that turned out to be necessary.
Third, the Court could also require all the parties to report back to it every month or every three months on what they have done to fix the problem. It could also require SASSA and CPS to submit financial statements to the Court so that the Court could check whether SASSA was being overcharged or whether CPS was unduly benefiting from an unlawful contract.
Fourth, as CPS and its associate companies have allegedly abused their privileged position as the distributor of social grants, by selling products to grant recipients and by making deductions from their grants, the Court may well prohibit CPS or any of its associate companies from using the personal details of the more than 10 million recipients of grants to market any products to grant recipients and from exploiting vulnerable grant recipients in any other way.
As CPS and associate companies are said to make much of their profit from exploiting the privileged information of grant recipients that CPS is in possession of because it was given an unlawful contract, one can imagine that CPS would do anything in its power to prevent the Constitutional Court from making such an order.
Lastly, the Constitutional Court could also declare that the SASSA grant cards held by beneficiaries as well as the data of all grant beneficiaries held by CPS do not belong to CPS, but belong to the state. The list containing the details of the more than 10 million people who receive social grants is an enormously valuable asset and any company wishing to exploit vulnerable and poor people by selling them products they may not need or could not afford, would probably do anything it could (maybe even outside the four corners of the law?) to hold on to such an asset.
It must be clear that the Constitutional Court has been placed in a difficult position. If CPS is the only company who could deliver social grants from 1 April the Court would have to suspend the invalidity of the contract with CPS for a second time. But as I tried to explain, the Court has enormous power to impose conditions on the parties to limit abuse.
While it makes sense that CPS would do everything in its power to avoid judicial oversight for fear of losing out on making huge profits, what does not make sense is that SASSA and the Department similarly acted to try and protect CPS by avoiding the Constitutional Court at all cost.
The unanswered question is why SASSA and the Department have been so anxious to avoid oversight by the Constitutional Court.
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Grants crisis worsens
2017-03-05
Rapule Tabane and Hlengiwe Nhlabathi
The fiasco over who will pay social grants and how they will be paid is far from over, prompting a last-minute crisis meeting yesterday between President Jacob Zuma, Social Development Minister Bathabile Dlamini and Finance Minister Pravin Gordhan.
And now the crisis that threatens the livelihoods of more than 17 million South Africans is pitting Dlamini against Treasury and her Cabinet colleagues.
City Press understands that although the department of social development reached an agreement to secure a contract to distribute grants with Cash Paymaster Services (CPS) late Friday night, this still needs to be approved by Treasury, which is not in favour of it.
Treasury officials insist the deal can only be condoned if it is within the law and the allocated budget.
Dlamini’s handling of the crisis has also pitted her against her own senior officials, who have refused to follow her orders.
Some have alleged this was a manufactured crisis and the strategy all along was to ensure that CPS continued to hold the contract. They have also accused Dlamini of deliberately blocking all attempts to resolve the impasse.
One senior government official told City Press: “It was clear to me that processes to find a solution were being deliberately delayed so that the contract could go to CPS.
They were even ignoring advice from senior advocate Wim Trengove, who was suggesting possible solutions.”
Treasury seems to agree that the crisis was self-made.
In a letter last month, Solly Tshitangano, Treasury’s chief director of supply chain management governance, monitoring and compliance, wrote:
“The SA Social Security Agency (Sassa) should have requested a deviation to advertise a new tender for a short period from December 2016 to early January 2017 to avoid a self-created emergency.”
Lumka Oliphant, Dlamini’s spokesperson, did not respond to requests for comment this week.
Asked to respond to allegations that the grants crisis was created deliberately to benefit CPS, Sassa spokesperson Kgomoco Diseko said: “These remain claims and not fact.
"We put this contract out in the market in a transparent manner and the market failed us.”
In 2014, the Constitutional Court ruled that the process Sassa had followed to award the contract to CPS was extremely flawed and had to be scrapped.
The state was given three years to correct it or find a new service provider.
The deadline to do so is March 31.
Sassa has not awarded a new tender and with just less than four weeks to go, it remains unclear how the grants to South Africa’s poorest are going to be paid.
No end in sight
After weeks of panic, the social development department announced in a short statement on Friday that the nature of the agreement it had reached with CPS would be communicated “in due course”.
No details were revealed.
But government officials say whatever agreement was reached, it would still need to be condoned by Treasury.
But Treasury has long made it clear that it would not support the extension of a contract declared invalid by the Constitutional Court.
A government official privy to developments warned:
“If Treasury condones something this big, knowing that it could have been prevented and that the urgent situation was deliberately created, then you are weakening the fiscus rules of procurement.”
Last month, Treasury turned down Sassa’s request to be allowed to deviate from the Public Finance Management Act and approve the extension of CPS’s existing contract.
It also wanted to hike the company’s initially agreed rate of R16.44 per beneficiary to between R22 and R25 per payee.
Turning down the request, Tshitangano wrote:
“Requesting National Treasury to extend a contract that was declared invalid by the highest court will not only be seen as being defiant to the judicial system, but may further be seen as perpetuating the illegal and unconstitutional deviation actions reprimanded by the highest court in the