Dear Corruption Watch,
The saga about the awarding of the social grants contract has been going on for a while. There was recently a Constitutional Court judgment about it and Corruption Watch intervened in the case. Why did Corruption Watch decide to get involved and what are the implications of the judgment?
What Does It All Mean
Dear What Does It All Mean
The contract dispute involved three parties: the South African Social Security Agency, Cash Paymaster Services and AllPay. Prior to 2012, social grants were paid by different service providers in each province but CPS was awarded the new contract.
The matter went from the high court to the Supreme Court of Appeal, which found that the irregularities that AllPay had complained about were not serious enough to have made the award of the contract improper. It stressed that, even had Sassa followed the proper procedure, it would still have awarded the contract to CPS because the substance of its bid was better than AllPay's.
AllPay appealed to the Constitutional Court. Corruption Watch intervened as an amicus curiae, Latin for "friend of the court". It did so because a large and growing number of members of the public, public servants and losing bidders were reporting gross irregularities in tender processes.
When the requirements of the tender are changed shortly before the closing date in a way that clearly favours one party, there are reasons to suspect not only administrative negligence, but corruption.
The Constitutional Court endorsed this argument. It emphasised that the procedural requirements of a tender were designed to ensure that it was fair and not corrupt. When they are violated in a way that affects the fairness or competitiveness of the process, the contract is unlawful.
Justice Johan Froneman found that the award of the contract to CPS was unlawful. However, simply declaring the contract invalid would interrupt the payment of social grants and seriously prejudice the beneficiaries. The court therefore called for further evidence and argument about what remedy it should grant. Should it allow CPS to continue with the contract, or should it require a new tender process?
The court did not find that there was corruption, but the proven irregularities — combined with other allegations of corruption and the fact that US authorities are investigating CPS's Nasdaq-listed parent company — demand further investigation by the authorities.
• This article was first published in Sunday Times: Business Times