Corruption Watch has learned of the resignation of a senior executive at the South African Social Services Agency (Sassa) who was linked to the alleged irregular payment to (CPS) of almost R317-million. This amount was for the re-registration of grant recipients.
Frank Earl tendered his registration several weeks ago in what a reliable source to Corruption Watch believes is a move linked to the controversial transaction. He was executive manager of grants benefits transfer and thus worked closely with CPS on the terms of its grant distribution contract with Sassa.
Corruption Watch has since filed for a review with the North Gauteng High Court of the payout, citing irregularities and failure on Sassa’s part to follow its own processes in the matter. Asked to verify whether Earl had been pressured to leave Sassa because of the situation arising from the court action, Sassa spokesperson Kgomoco Diseko said: “The matter of Frank Earl is a personal matter.”
In May this year Net1 UEPS Technologies, CPS’s parent company, announced its withdrawal from the R10-billion Sassa tender bid, after it re-entered the process following a 2014 Constitutional Court ruling that compelled Sassa to re-advertise it.
“Management has recommended to the company’s board of directors that CPS should withdraw from the Sassa tender process and the board has accordingly agreed that CPS should not submit a bid,” Net1 said in a statement.
The tender, which had been won by CPS in 2012, was initially ruled invalid by the North Gauteng High Court in 2013 after losing bidder AllPay took Sassa to court to dispute the award. The court also found that the tender process had not complied with the requirements set out in the tender documents and was “procedurally unfair”. The high court had determined, however, that the tender not be set aside as that would disrupt the monthly distribution of Sassa’s millions of grants.
AllPay then approached the Supreme Court of Appeals – which overturned the high court ruling – before taking the Constitutional Court route. Concourt then ruled that a revised request for proposals (RFP) be completed by Sassa, and set a timeframe for the awarding of the new tender.
CW asks questions
Corruption Watch filed a second affidavit in September, to support the review application made by the organisation in March.
Corruption Watch’s first application in the North Gauteng High Court cited improper procedure as the basis for the legal action. Sassa had contracted CPS to carry out its re-registration project between 2012 and 2013, but the payment, made in April of last year, was not adequately audited by Sassa. According to the agency’s own supply chain management policy, this makes the transaction illegal.
“The reasons provided by Sassa to explain this payment were unfathomable to say the least,” said Corruption Watch executive director David Lewis at the time. “The initial contract between Sassa and CPS, concluded in 2012 and since set aside by the Constitutional Court, clearly provided for the registration of all beneficiaries but not for a re-registration process.”
Neither the contract between Sassa and CPS, nor the service level agreement that spells out the two organisations’ obligations, make provision for a re-registration process. Such a process would fall under ‘additional service’ and would require both parties to enter into a separate contract. The non-existence of this contract, argues Corruption Watch in its September affidavit, makes the payment irregular.
Furthermore, Sassa’s bid adjudication committee has to approve all payments to suppliers for over R15-million, which does not appear to have occurred in this case.
The organisation says that Sassa continues to withhold documentation that would assist the court in its decision on the requested review. “There remain relevant documents specified in the letter of 1 June 2015 [from Corruption Watch to Sassa] which have not yet been provided by Sassa,” says Lewis in the new affidavit. “Corruption Watch considers the entire record to be of relevance to the review.”
Lewis further acknowledged that in response to the letter sent by Corruption Watch, both Sassa and CPS had denied being in possession of the documents referred to. The documents, according to Lewis, support the review as set out in Corruption Watch’s founding affidavit. They would show that Sassa engaged in the transaction:
- without any indication in its contract with CPS for the provision of such a service
- in a manner that contravened its own supply chain policy
- in circumstances where it had not conducted an internal audit at the time that it paid CPS, despite having advised the service provider that payment would only be made when an internal audit had been completed
- on the basis of a report compiled by KPMG at Sassa’s request, that was however not an audit, even though Sassa regarded it as such
- without any justification of the amount charged by CPS for re-registration
Lewis said Sassa had also not filed any written answers to the review application by Corruption Watch, despite this option being open to it under Rule 53.
Sassa has taken a close-mouthed approach to questions we put to it. “As you are aware, the issues you are raising are connected to a matter you put before the courts,” said Diseko. “Sassa has to respect the justice process and avoid pre-empting court decisions.”
Download Corruption Watch’s court documents:
Corruption Watch’s founding affidavit in PDF form.