EXCLUSIVE: Officials defied Dlamini on social grants

2017-02-03 11:43
ANCWL president Bathabile Dlamini. (Elizabeth Sejake, City Press)

ANCWL president Bathabile Dlamini. (Elizabeth Sejake, City Press)

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Craig McKune, amaBhungane

Cape Town - Social Development Minister Bathabile Dlamini faced a revolt from social grant officials this week over her alleged meddling in their efforts to present a social grants payment plan to Parliament.

A number of alarmed officials have approached amaBhungane with separate, corroborative accounts.

They told how Dlamini tried to bigfoot the SA Social Security Agency (Sassa) with a last-minute plan to boost the role of private contractors – particularly that of the controversial incumbent, Cash Paymaster Services (CPS) – in the social grant payment scheme.

They said Dlamini’s plan contradicted an “open architecture” alternative that Sassa, Treasury, the Department of Social Development, and the SA Reserve Bank had fleshed out.

When officials refused to table Dlamini’s plan, amaBhungane’s contacts said she “went rogue” and tried to stop them from presenting to Parliament’s portfolio committee on social development.

“Staff decided to defy the order for her own good,” said one. They said officials redrafted the presentation at the last minute – although the end result was an awkward compromise.

Deep divisions

Dlamini’s favoured plan would extend CPS’s role to at least 2019. CPS currently distributes social grants nationally for Sassa. Its contract expires on March 31, after which government has no clear plan.

Officials speaking to amaBhungane worried that extending CPS’s contract and later replacing it with another proprietary solution, as Dlamini appears to want, would increase the risk of tender corruption.

In 2014, the Constitutional Court ruled that Sassa had botched its tender process so badly that CPS’s contract was invalid. But it let CPS keep it so grant payments would not be interrupted.

For weeks, amaBhungane’s contacts have consistently described deep divisions between officials and the minister on how to proceed come April 1. The impasse has hamstrung the agency in its efforts to table a viable plan for paying grants, arguably government’s most important delivery function.

Sassa pays about R10 billion to 17 million grant beneficiaries every month, keeping many from abject poverty. Should payments be interrupted, Sassa CEO Thokozani Magwaza has warned: “The country is going to burn.”

Dlamini and Sassa did not respond to written questions. Magwaza – who reportedly made the decision to sideline Dlamini’s presentation – however poured cold water on the claims in a phone conversation.

“We did not defy the minister on anything. Yes of course the presentation changes all the time. But the minister does not prepare the presentation. It was prepared by us,” he said.

Dlamini’s preferred presentation was allegedly drafted by the payment transition project manager, Zodwa Mvulane. A number of officials repeatedly complain she is Dlamini’s “point woman” in Sassa, allegedly taking instructions from the minister and not Magwaza.

They insisted Dlamini had instructed Mvulane to draft the presentation. Mvulane did not reply to questions.

amaBhungane recently exposed a web of links between Dlamini and CPS’s black economic empowerment partners. This centred on their mutual acquaintance Lunga Ncwana, a former partner of deceased fraudster Brett Kebble.

Zuma's lawyer involved

Now amaBhungane can also reveal that Dlamini recently inserted President Jacob Zuma’s lawyer Michael Hulley into the tense deliberations on whether and how to extend CPS’s contract.

Sassa used Hulley in 2012 as an “overall strategic advisor” on the now invalidated tender that led to CPS’s appointment.

Dlamini and Hulley attended Ncwana’s high profile wedding in 2015 – and CPS’s main BEE partner was Ncwana’s best man.

When amaBhungane phoned Hulley this week, he tried denial first: “No I don’t have any role as far as whatever the plan is. I’m not involved.” He said he simply followed the matter through the media.

Then he volunteered that “from time to time I speak to the minister”.

This was at odds with what amaBhungane learned separately from a number of people. This was that Dlamini, senior social grant officials and external consultants travelled to Durban to meet Hulley in the last week of December, where the lawyer allegedly made a strong case for Sassa to retain CPS.

Finally, Hulley admitted: “My advice was sought [by Dlamini] upon what is permissible in terms of what the [Constitutional] court order says and what is impermissible.” He refused to discuss the advice he gave.

But it makes little sense for Dlamini to have consulted on that. By that point, Sassa had already obtained three external legal opinions from senior advocates. Insiders say they were sceptical that the Constitutional Court would allow a continuation of CPS’s invalid contract after March 31.

Dlamini absent

Back to Parliament: On Wednesday, Sassa and Dlamini were due to present their state of readiness to the portfolio committee on social development.

But Dlamini did not arrive. This was the first signal that all was not well in camp Sassa.

Within seconds of the meeting opening, DA MP Lindy Wilson thundered into her microphone on a point of order: “This is not acceptable. What is more important to the minister? Seventeen million South Africans or the ANC lekgotla? I do not accept her apology, and I think it’s a damn disgrace.”

The second signal was that Mvulane, the top official in charge of the grants payment transition, had “missed her flight”. MPs were told another Sassa executive, Raphaahle Ramokgopa, would present instead.

When Mvulane arrived 40 minutes late, Magwaza commented: “Oh, the project leader has just walked in. She’s catching her breath over there. She’ll join us when it is question time.” He handed the floor to Ramokgopa as Mvulane slumped onto a seat at the door, where she remained for the meeting.

Behind the scenes, things were even more tense than they appeared.

“The minister has gone completely rogue,” one official told amaBhungane.

“She instructed officials not to attend the portfolio committee meeting. She did not like the government agreement on the long-term solution re open architecture. Staff decided to defy the order for her own good.”

The official said: “She had Zodwa [Mvulane] prepare a presentation that was against the agreement made by the department, National Treasury, Sassa, and the SA Reserve Bank.

“This was overturned by officials. So Dlamini instructed nobody to attend, threatening insubordination. Crazy. But the correct and agreed presentation was eventually made,” she continued.

Said another: “Raphaahle Ramokgopa reworked the presentation and it was not as Zodwa [Mvulane] was instructed. Dlamini’s group was mooting a CPS extension for two to three years. What Ramokgopa presented is a compromise because National Treasury had suggested a CPS-free option, which Dlamini completely refused.

“It is possible that taking over this morning was Magwaza stamping on his authority, which has been undermined since he took over.”

Last-minute changes

Giving a third signal of the internal divisions, a parliamentary staffer mistakenly distributed printouts of Mvulane’s slide presentation – the one that Dlamini allegedly preferred – while Ramokgopa delivered a plan that was worlds apart.

While MPs bickered about the document arriving too late for them to study it, Dlamini’s special advisor Sipho Shezi admitted that changes were being made until very late the night before.

“In the middle of the night I myself got a call from the director-general, just querying certain things about the presentation,” he said.

Dlamini’s preferred document is barely coherent. It is a mishmash of pages copied from an earlier presentation, obviously incorrect dates, impenetrable technical jargon and no acknowledgement that April 1 represents a crisis point requiring a clear, fast answer to the questions: “Who is going to pay the grants, and how?”

Second, it appears to assume as a fact that CPS and its infrastructure will be available to Sassa until late 2018 or early 2019.

And third, it appears to favour replacing CPS with a new outsourced payment service provider at some unclear point in the future.

Ramokgopa presented something completely different.

She told committee members that Sassa would try to convince the Constitutional Court next week to allow it extend CPS’s contract by one year to eliminate the risk of grant payments being missed.

Ramokgopa acknowledged that government would need to negotiate new terms with CPS from a desperate position. She pointed out that Treasury did not support the extension of CPS’s invalid contract.

Ramokgopa said by early 2018, Sassa planned to phase out CPS completely and pay about 60% of the grants into beneficiaries’ accounts at various South African banks. A contractor would deliver 40% of the grants in cash to mobile paypoints in rural areas.

The long-term plan involved a more central role for Sassa, but the details were vague.

'This is a national crisis'

While Ramokgpopa’s plan was more tangible than Mvulane’s and assigned a lesser role to CPS, it angered opposition MPs.

IFP MP Liezl van der Merwe complained that because Sassa had still not obtained Constitutional Court and National Treasury approval to extend CPS’s contract, this was not a plan.

“We are now in a predicament where the only option you have got left is to extend an invalid and unlawful contract. So really, we have to walk away and say this is a national crisis,” she said.

“You are now handing CPS, for all intents and purposes a bunch of crooks, another lifeline. Also what stops you from coming in a year from now and telling us again you are not ready?”

DA MP Bridget Masango complained that Sassa had delayed its planning for so long that it appeared to be deliberate: “Now I could be forgiven for saying that these delays – with skills, experience, resources – have been done so that we can manufacture a very nicely packaged emergency so that we can be allowed to go ahead and do the work with [CPS].”

Serge Belamant, the executive chairman of CPS’s parent Net 1, told amaBhungane: “You are incorrigible! Why don't you investigate what Sassa wishes for and if anyone except CPS can deliver it? I will give you a starting point if you like. Our system has saved Treasury and continues to save Treasury R2 billion per annum.”

One of amaBhungane’s sources defended the decision to try to extend CPS’s contract by one year: “In the end it was our last option. We went through six options, and in the end decided on the worst one as at this stage it was the least-risk option.”

That stance may be defensible. The real questions are: Why did minister Dlamini lead us to a position where the options are “the country is going to burn” or “we negotiate with CPS with a gun to our head”. And what has Michael Hulley got to do with it? Watch this space.

- The amaBhungane Centre for Investigative Journalism, an independent non-profit, produced this story. Like it? Be an amaB supporter to help it do more. Sign up for its newsletter to get more.


Read more on:    sassa  |  bathabile dlamini  |  parliament 2017  |  tenders

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