Court proposes social grants solution
Net 1 UEPS Technologies, a provider of alternative payment systems believes that the Constitutional Court has ruled on the appropriate remedy for the distribution of social welfare grants.
Net1 UEPS Technologies subsidiary, Cash Paymaster Services (CPS) was awarded a R10 billion contract by the SA Social Security Agency (Sassa) in January 2012.
However, losing bidder and Absa company, AllPay, accused Net1 of tender manipulation and bribery. And in August 2012, the North Gauteng High Court ruled that the tender process for the Sassa contract was improper.
The High Court ruled that, while the deal was illegal and invalid, it would remain in place in order for payments to continue.
AllPay then took its case to the Supreme Court of Appeal which unanimously ruled that the tender process followed by Sassa in awarding a contract to CPS was valid and legal
AllPay then filed leave to appeal with the South African Constitutional Court.
In a statement on SENS on Thursday (17 April), Net1 said that the Constitutional Court has ruled on an appropriate remedy following its declaration on November 29, 2013, that the tender process followed by Sassa in awarding a contract to CPS was constitutionally invalid.
According to Net1, the Constitutional Court, the highest court in South Africa has proposed the following:
- The declaration of invalidity of the contract between Sassa and CPS is upheld, but suspended until a new tender has been awarded in accordance with the second point below, or for the remainder of the existing contract period if no tender award is made in accordance with point four (below).
- Sassa has to initiate a new tender process during the next 30 days. The request for proposal for the new tender must contain adequate safeguards to ensure that no loss of lawful existing social grants occurs, the payment of lawful existing grants is not interrupted, and personal data obtained in the payment process remains private and may not be used in any manner for any purpose other than payment of grants or for any purpose sanctioned by the Minister of Social Development.
- The new tender must be for a period of five years and a new and independent Bid Evaluation and Bid Adjudication Committee must be appointed to evaluate and adjudicate the new tender process. Their evaluation and adjudication must be made public by filing, with the Registrar of the Constitutional Court, a status report on the first Monday of every quarter of the year until completion of the process.
- If the new tender is not awarded, the declaration of invalidity of the current contract between Sassa and CPS will be further suspended until completion of the five-year year period for which the contract was originally awarded. In this event, Sassa must, within 14 days of its decision not to award the tender lodge a report to the Registrar of the Constitutional Court setting out all the relevant information on whether and when it will be ready to assume the duty to pay grants itself.
- Furthermore, CPS must in this event file with the Constitutional Court an audited statement of expenses incurred, income received and net profit earned during the five year completed contract period, which statement must also be verified by an independent auditor appointed by Sassa and filed with the Constitutional Court.
- AllPay has been ordered to pay Sassa’s and CPS’s costs in relation to the application to lead further evidence brought in the main merits application.
“The company cannot predict what the timing or outcome of the new tender process will be, or if a new tender award will be made at all after the new tender process,” said Serge Belamant, chair and CEO of Net1.
He said that the contract between Sassa and CPS to distribute social welfare grants to ten million South Africans every month remains in full force and effect until Sassa has completed the new process and decides to award the new tender, or for the remainder of the current five year contract if they decide not to award the new tender.
“We are relieved that the protracted two-year legal battle regarding the Sassa tender is finally over and that the court has provided guidance regarding the way forward,” Belamant said.
More on Net1
Hawks drops Net1 investigation: report
Net1 boosted by Sassa transactions
Loading ...