CPS coy on its expected profit on new Sassa deal

2017-03-15 21:57
Chief Justice Mogoeng Mogoeng. (File, GCIS)

Chief Justice Mogoeng Mogoeng. (File, GCIS)

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Johannesburg - Cash Paymaster Services (CPS) was coy about revealing to the Constitutional Court just how much it expected to gain from a new deal with the South African Social Security Agency (Sassa) which would take effect from April 1.

Speaking on behalf of CPS, Alfred Cockrell told the Constitutional Court on Wednesday that there was no commercial value in continuing a deal with Sassa beyond March 31, but said CPS would continue to render its services until a suitable replacement was found.

This could only be done if a contract was signed, allowing CPS to receive the R11bn it needed each month to distribute the grants to more than 17 million beneficiaries, he said.

Also read: No explanation for Sassa, Dlamini's 'incompetence' - Mogoeng

Cockrell said the agreement that CPS and Sassa had come to was reasonable from CPS's perspective, and that Sassa had not had any issues with it. However, after both Treasury and an inter-ministerial task team declared it null and void it meant the company and Sassa had to enter into new negotiations.

Until this was done, there was no way CPS could carry out its services next month.

Earlier the court heard that it was CPS's constitutional obligation to stay on as Sassa's grant distributor because the agency had no other party it could replace it with.

No-profit arrangement rejected

CPS acceded that it was constitutionally obligated to stay on in its role, but said if another party was found which could take over, it would be willing to step aside as there was no lucrative benefit attached to the new arrangement.

Cockrell rejected a submission made by Freedom Under Law's David Unterhalter, who called for the court to extend CPS's contract for a period of 12 months on condition that the company not make any profit off the new arrangement.

He argued that it was duty-bound to render the services, and although it should not benefit any further financially, it should also not operate at a loss.

Unterhalter had argued that the company had benefited more than enough in the five years in which it held the grants payments tender, which was deemed invalid by the Constitutional Court in 2014.

Cockrell challenged this, saying CPS would not do the job for free and would only agree to provide its services if there is a new contract.

He said CPS could not pay R11bn of its own monies to carry out the services. It was dependent on Treasury releasing the funds to it.

"Until there's a contract, it can't," he said.

'Let's cut to the chase'

He said any contract between the two parties going forward must be valid and lawful.

"If it isn't, it'll be set aside in due course. My client has seen that movie and it's not trying to see it again," he said.

He said under a new contract, Unterhalter's submission would not hold water.

"The no-benefit rule would simply not apply if it was a lawful contract. The principle would have no traction," he said.

Quizzed by Chief Justice Mogoeng Mogoeng on how much CPS expected to gain from the new deal, Cockrell danced around the topic saying he could not give a set figure because it was not immediately clear how much the company would be getting paid for each beneficiary.

"Let's cut to the chase. Your client wants more money, is that not what it really is?" Mogoeng asked.

"My client wants something for the services. He wants to get paid something and he is not going to do it for free," Cockrell replied.

"The issue here is: 'I'm not happy with what I'm getting, let's open it up so I can see how I can get more'," Mogoeng suggested. Cockrell acceded as the court gallery chuckled.

Unhelpful answers

Cockrell was then asked whether CPS would say no if the court granted an order allowing Sassa and Treasury to release the funds so that CPS could do its job without a new contract.

Cockrell said he was not prepared to debate on the continuation of the unlawful contract as he had not been advised to do so.

The main bone of contention in this matter was the difference of opinion on the price of the contract going forward, Cockrell said.

However, if the court somehow legitimised the invalid contract, allowing it to continue for a further stipulated period, CPS would be willing to still render its services, Cockrell said.

When asked how much CPS had banked monthly from its Sassa contract over the past five years and how much it was expecting to make with the new agreement, Cockrell said he could not immediately supply the court with a number.

He said he could only give Mogoeng a number once the current contract came to an end.

Mogoeng told Cockrell his lack of answers was not helpful in getting the bench to understand the difficulties CPS was attempting to show the court.

Judgment has been reserved in the matter.

Read more on:    sassa  |  cps  |  mogoeng mogoeng  |  social grants

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