CPS is now claiming over R1-billion from Sassa

Net1 subsidiary Cash Paymaster Services is demanding that the South African Social Security Agency (Sassa) pay it more than R1-billion, in a dispute stretching back close to a decade.

This revelation is contained in documents and correspondence between the embattled Sassa and CPS, which shows that since 2006 the two have been at odds over the billion-rand claim.

According to a series of letters CPS wrote to Sassas between 2009 and 2010, the company claims it suffered damages because the agency, with which it had a contract, sidelined it by concluding agreements with banks to provide services to new social grant recipients, with CPS losing out as a result.

“It has recently come to our client’s attention that the department concluded unlawful agreements with certain banking institutions in breach of the service level agreement, contracting these banking institutions to render payment services to beneficiaries,” reads a letter dated August 2010.

“Sassa, after 1 April 2006, perpetuated the aforementioned breach by continuing to give effect to the unlawful agreements. Moreover, during or about June 2007, Sassa concluded similar unlawful agreements…with the South African Post Office.”

The claims, CPS states in the documents the Mail & Guardian has seen, arose in the time when the company was paying grant recipients in parts of the Eastern Cape, North West, KwaZulu Natal and Limpopo.

CPS claims that it suffered damages:

  • In the Eastern Cape CPS makes two claims amounting to more than R465-million
  • In Limpopo more than R300-million has been claimed
  • In North West CPS says it incurred damages of more than R300-million
  • In KwaZulu-Natal CPS claims that the agency failed to pay certain invoices on time and for that was owed more than R18-million.

For years the two have been in talks trying to resolve the dispute and according to letters an arbitration process has once again been postponed to July 2018.

One letter states that there is no capacity to hold the hearings because of the Constitutional Court’s deadline for Sassa to use a new grant payment service provider.

CPS said that it could not comment as the “matter is sub judice.”

“There are many reasons for the nine-year delay on these matters.
In fact, these matters precede the formation of Sassa in 2007 when CPS was the paymaster in the various provinces. It is quite complex in nature … Communication has been ongoing, however, there have been many changes in structure which has complicated the resolution of the matters,” reads its statement.

Sassa has not yet responded to questions stating they would by midday.

Last week the M&G reported than Sassa had approached the Constitutional Court to request that the invalid CPS contract be extended for a further six months even though the court ruled that the contract is to end on March 31.