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Net1 UEPS Technologies, the US-based parent company of Cash Paymaster Services (CPS), will challenge a South Gauteng High Court ruling handed down on Friday last week that says its subsidiary must pay back an amount of R316-million paid irregularly by the South African Social Grants Agency (Sassa) in 2014.

The company will apply for leave to appeal the ruling, but will only be able to go ahead if the court decides that such a move will have a high chance of success, and grants leave to appeal.

Corruption Watch took CPS and Sassa to court in March 2015 in light of the payment, made separately from the contract payments to the social grants distributor. Corruption Watch argued that both Sassa and CPS had said the payment was for purposes of the re-registration of beneficiaries of social grants, but this process was already catered for in the original contract between the two parties. It thus did not make sense for an extra payment to be made to CPS.

“As previously disclosed by the company in June 2014, CPS received approximately R277-million from Sassa related to the recovery of additional implementation costs it incurred during the beneficiary re-registration process in fiscal 2012 and 2013,” reads the Net1 statement. “After the award of the tender, Sassa requested that CPS biometrically register all social grant beneficiaries (including child grant beneficiaries) and collect additional information for each child grant recipient.

“CPS agreed to Sassas’s request, and as a result CPS performed approximately 11-million additional registrations beyond those that it tendered to register for the quoted service fee. Accordingly, CPS claimed a cost recovery from Sassa, supported by a factual findings certificate from an independent auditing firm. Sassa agreed to pay CPS the R277-million as full settlement of the additional costs incurred by CPS.”

Herman Kotzé, CEO of Net1, added: “The additional registrations we performed at Sassa’s request, resulted in the identification and removal of a significant number of ghost beneficiaries and duplicate grants, and had the direct result of saving the South African government more than R2-billion per year for the last five years. The cost incurred for the additional registrations was recovered without any profit component.

“CPS performed the work requested by Sassa on a bona-fide basis and it is unfortunate that it once again finds itself being prejudiced by apparent shortcomings in Sassa’s processes.”

Meanwhile, Corruption Watch executive director David Lewis welcomed the judgment, saying it “it reinforces the immense importance of procurement processes as a bulwark against corruption and maladministration.”

CPS was also ordered to pay back the full amount, with interest, to the state. The interest would have to be backdated to the time of the transaction, May 2014.