Half a million child grant beneficiaries eliminated from database

2014-02-08 11:30

Over 500 000 child grant beneficiaries were removed from the database of the Social Security Agency of South Africa (Sassa) in 2013, saving National Treasury about R2 billion.

A further 70 000 child grant beneficiaries are under scrutiny.

This is according to Dr Serge Belamant, CEO of Net1, which currently distributes welfare grants to over ten million beneficiaries, albeit amid controversy.

Belamant held a conference call with journalists and analysts yesterday after the company released its December 2013 quarterly results.

Belamant said as part of the contract, an audit was conducted with Sassa to make sure that people who were receiving grants were eligible to do so.

“The pressure from Sassa on biometric verification [a way in which a person can be uniquely identified] meant eliminating people from the database due to duplicates, but many people agreed to be removed from the database for fear of being caught,” said Belamant.

He said a further possible 70 000 child grant beneficiaries were being forensically analysed to determine if they were duplicates and he said he expected more people to be removed from the database.

Belamant also addressed some of the company’s legal woes, largely over the awarding of a tender to Net1 in 2009 to distribute welfare grants to more than 15?million beneficiaries over five years in all nine provinces.

Rival bidder and Absa subsidiary AllPay alleged foul play in the awarding of the R10?billion tender and took the Net1 subsidiary handling the tender, Cash Paymaster Services, to court.

The North Gauteng High Court ruled that the tender was invalid, but could not set it aside for fear of disrupting the welfare system, while the Supreme Court of Appeal dismissed AllPay’s complaint.

However, in November last year the Constitutional Court found in favour of AllPay and declared the awarding of the tender constitutionally invalid.

The parties are returning to the Constitutional Court on February 11 to present arguments so that the court can decide on a remedy.

In December 2013, a US law firm filed a class action lawsuit in New York against Net1, which has a primary listing on the Nasdaq.

The class action was instituted on behalf of investors who bought Net1 shares between August 27 2009 and November 27 2013.

It seeks damages for alleged violations of US federal securities laws under the Securities Exchange Act.

But Belamant said the legal complaint had no merit whatsoever. He also said there was no new information from the US Department of Justice, which is investigating Net1 under the Foreign Corrupt Practices Act.

Net1 struck a R264 million Black Economic Empowerment (BEE) deal in December 2013 with Business Venture Investments 1567 and Born Free Investments 272.

In the deal, Net1 is giving up 4.4 million shares at R60 per share.

Asked which beneficiaries were being targeted with the BEE deal, CFO Herman Kotze only referred to what was in the company’s SEC (Securities and Exchange Commission) filing in December last year, which did not detail the BEE beneficiaries.

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