Concerns raised in court about providers who prey on grant beneficiaries

2014-02-11 17:20

Now familiar legal foes, Absa subsidiary AllPay and technology company Net1’s Cash Paymaster Services, met again at the Constitutional Court today to help the court decide whether the tender to distribute welfare grants should be sent out again.

AllPay cried foul when Cash Paymaster Services won the five-year R10 billion tender in 2011 to distribute welfare grants to more than 15 million beneficiaries in all nine provinces. The tender was previously split between AllPay and Cash Paymaster Services .

AllPay launched a legal challenge at the North Gauteng High Court, which found that the tender was invalid, but could not set it aside for fear of disrupting the welfare system. The Supreme Court dismissed AllPay’s complaint.

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

The Constitutional Court must still decide on a just and equitable remedy without disrupting the welfare system.

AllPay wants the tender process to be started again, but the SA Social Security Agency and Cash Paymaster Services are not in favour of this.

One of the issues raised in court was how welfare beneficiaries were preyed on by other service providers and how garnishee orders were placed against the money. Some of these service providers are alleged to be associated with Cash Paymaster Services .

However, Advocate Fanie Cilliers, representing the SA Social Security Agency, said the deductions were not illegal and that once the beneficiaries received the money, the agency had no control over claims against that money.

But Deputy Justice Dikgang Moseneke found Cilliers’ submission on the matter “startling”.

“I thought the SA Social Security Agency would be concerned, and I am surprised by your reaction,” said Moseneke.

According to Cash Paymaster Services, only about 44% of welfare beneficiaries withdraw the full amount due to them.

AllPay said about 16% to 20% is deducted off about 500 000 welfare beneficiaries. This means on a R300 child grant, up to R60 is docked before the money is in the beneficiary’s hands.

AllPay also argued that a biometric voice recognition system, which was one of the major reasons cited by SA Social Security Agency for awarding the tender to Cash Paymaster Services, has not been implemented.

But Cash Paymaster Services said it had about 6 million beneficiaries on voice recognition and that the process was ongoing.

Another concern was the possible disruption to welfare beneficiaries if the tender process was restarted.

Gilbert Marcus, on behalf of AllPay, argued that when tenders are issued for new providers, there may be minor inconveniences, but never disruptions.

Cash Paymaster Services and the SA Social Security Agency disagreed and said beneficiaries would have to be re-registered and that even though the agency may own the database, it does not own the operability with the smart card.

The separation of powers between the judiciary, executive and legislative was also a bone of contention.

The remedy sought by AllPay is a new tender process for another five-year tender, and not just for the remaining period.

However, Moseneke cautioned that due to the separation of powers, the court may not be able to tell the SA Security Agency how long the period of the tender should be.

Cilliers said there was a huge risk to the welfare system if the tender is re-issued and Cash Paymaster Services does not win.

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