CPS pleads for ConCourt's intervention in grants cash crunch

2018-07-31 18:51
Sassa head office. (Alet Pretorius, Gallo Images)

Sassa head office. (Alet Pretorius, Gallo Images)

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Cash Paymaster Services (CPS) has again asked the Constitutional Court to give direction on outstanding money it claims the South African Social Security Agency (Sassa) owes it since April.

National Treasury made recommendations in April that CPS be paid R51 per cash beneficiary in rural areas for the remainder of its six-month contract with Sassa.

Around a quarter of all grant recipients were still reliant on the cash grant method at the renewal of the six-month contract on April 1.

In court papers filed on Thursday, July 26, CPS said it was operating at a loss as the figure recommended had not yet been approved by the court.

Waiting on R99m

The letter, filed by law firm Smit Sewgoolam Inc, said Sassa has been waiting for court approval and CPS was therefore still waiting to be paid the R99m invoiced for the months of April, May and June.

The figure is also less than its operating costs and the company has run out of cash reserves, raising doubts about its ability to continue into August and September.

CPS has "been trading at a loss of approximately R114m per month, and our instructions are that it cannot sustain these losses any longer without serious risk to its operations", the letter reads.

The company said it was still mandated to operate approximately 90% of the Sassa cash pay points it was contracted to, but the number of beneficiaries the company has served has dropped from around 2 million to 1.1 million, and will continue to do so for the remainder of the contract.

This was due to the migration of beneficiaries from the old Sassa card to the new SA Post Office card over the past three months.

READ: More than 1.8m social grants beneficiaries migrated to new Sassa card

In order to maintain its operations, CPS wants the court to issue direction so that Sassa will pay CPS in line with National Treasury's earlier recommendations for the past three months.

The company also asked for leave to approach Treasury to renegotiate the fee for the remaining three months, as the number of beneficiaries it serves continues to decline in August and September.

CPS made a similar plea in May, requesting that National Treasury be ordered to negotiate a monthly "floor fee" for the remainder of its contract.

The court had responded to that request by saying that it was entitled to lobby Treasury to renegotiate the fee.

In the meantime, it was expected to comply with the original court ruling in March to continue the contract under the old terms, at R16.44 per beneficiary.

ALSO READ: Cash grants at risk as CPS says it has not received any payment

Sassa spokesperson Paseka Letsatsi told News24 on Tuesday it would only act on the instruction of the court because anything to the contrary "is tantamount to contempt".

He said CPS by extension was an organ of the state under the extended contract until the end of September, and the company was bound by the court to implement its ruling.

ConCourt registrar Kgwadi Makgakga told News24 on Wednesday that Chief Justice Mogoeng Mogoeng had not yet issued directions on the matter.

UPDATE: This story has been updated with Makgakga's response.

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Read more on:    sassa  |  cps  |  social grants

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