‘We’re not holding Sassa to ransom’ - Net1 CEO

Net1 UEPS Technologies CEO Serge Belamant. (Supplied)
Net1 UEPS Technologies CEO Serge Belamant. (Supplied)

Johannesburg - The company that distributes social grants in South Africa said it isn’t holding government to ransom, and that it already asked officials last year about the fate of the system.

This is according to court papers filed by Net1 UEPS Technologies [JSE:NT1]CEO Serge Belamant on Tuesday in his response to a Constitutional Court bid brought forward by human rights body Black Sash.

Black Sash has asked the Constitutional Court to resume its oversight of the processes around the payment of grants, amid concern over the continuation of the welfare system.

Drama has engulfed social grants with the South African Social Security Agency (Sassa) admitting it isn’t ready to assume the payment function itself by April 1, as previously planned.

READ: Bathabile Dlamini denies she is to blame for Sassa crisis

In 2014, the Constitutional Court declared the R10bn grant payments tender run by Net1 UEPS’ Cash Paymaster Services (CPS) invalid amid irregularities in the awarding of the deal. The court ordered Sassa to reissue the tender process, which Net1 ultimately decided not to participate in. But Sassa ended up not awarding a new contract as it said the bids it received were non-compliant.

Sassa subsequently said it would take over the payment function of grants but then, earlier this year, conceded that it wasn’t ready.

And in court papers on Tuesday, Belamant indicated that as Net1 - which is listed on the JSE and New York's Nasdaq - started to consider the end of its social grants contract, his company contacted Sassa in a bid to determine the next step.

“On May 24 2016, CPS addressed correspondence to Sassa expressing its concern over the short time period remaining for a phase in/phase out strategy, and proposing alternative solutions to Sassa to this end,” said Belamant in his affidavit.

“On December 9 2016, becoming increasingly concerned with the lack of communication from Sassa, CPS again wrote to enquire about the assistance that Sassa required in the transition process. CPS also informed Sassa that it would commence dismantling its payment infrastructure on January 1 2017,” said Belamant.

Belamant said Sassa responded to CPS on December 22 2016 and expressed an intent "to engage on probabilities for assistance in the transition of Sassa operations towards a new service model".

CPS then advised Sassa that if it was required to continue providing services beyond March 31 2017, a new contract had to be concluded. CPS said it further aimed implementing its plans to close down its operations from January 1 2017.  

Then on February 9 2017, Sassa wrote to CPS and called for a meeting "to explore the possibilities to avail the company's services as an interim arrangement regarding the payment of social grants for the period extending from 31 March 2017", said Belamant.

Following a series of correspondence, the two parties then agreed on a meeting, according to Belamant’s court papers.

“CPS and Sassa accordingly met for the first time to discuss the possibility of an interim agreement on March 1 2017. These discussions are ongoing. An agreement has been reached which will ensure that beneficiaries are paid beyond April 1 2017. The agreement is presently being reduced to writing,” said Belamant.

Net1 responds to Black Sash

Belamant said that CPS supports Black Sash's application to the court to oversee the process, but that his company disagrees with the civil rights body’s call that personal information of beneficiaries must be the property of Sassa.

Belamant also moved to counter claims by Black Sash that his company is in the pound seats regarding the Sassa deal.

“The suggestion by the Black Sash that CPS has ‘built itself into an impregnable position’ and somehow positioned itself to hold Sassa or the state ‘to ransom’ is unsubstantiated, utterly unfounded and unfair,” said Belamant.

“CPS has no control over the process, cannot be blamed for the fact that there were no responsive bidders to Sassa's last tender and has offered to assist Sassa in its endeavour to take over the payment of social grants. CPS has now engaged with Sassa out of necessity.

“It bears mention that CPS elected not to bid for the new tender issued by Sassa in 2015 and had planned to terminate its services as soon as the new service provider was ready to take over,” Belamant added.

Meanwhile, he also responded to allegations that CPS has “unrestricted access” to Sassa branded bank accounts.

READ: Play open cards, Bathabile urged

“I point out that both the National Consumer Tribunal and the Competition Commission have been called on to investigate such claims, and properly rejected them as unfounded. Beneficiaries' Sassa-branded Grindrod bank accounts operate like any other transactional bank account and are subject to the same levels of protection (but with the added protection of biometric verification to the extent permitted by the SARB and/or PASA),” he said.

Belamant in the court papers further denied that CPS is involved in “unlawful marketing practices” to recipients or that it sells goods or products to beneficiaries.

However, his court papers indicated that Net1 subsidiary companies “market and provide financial products to beneficiaries”.

“They do not, however, engage in unlawful marketing practices or conduct ‘ambush marketing’ as the Black Sash suggests. The services are provided within a strictly regulated environment, under the scrutiny of the National Credit Regulator, the Financial Services Board and the SARB, and operate entirely independently from CPS,” said Belamant.

He added that grant recipients are also required to agree with terms and conditions regarding the Sassa-branded Grindrod bank accounts, and that “these are displayed when beneficiaries are enrolled”.

He added that a matter dealing with the legality of the processing of debit orders and EFT instructions from beneficiaries’ Sassa accounts is awaiting a judgment in the High Court and may “ultimately reach this Court on appeal”.

Government faces criticism

Meanwhile, the situation around grants and the confusion over continued payments has sparked calls for Social Development Minister Bathabile Dlamini to step down from the likes of trade federation Cosatu and opposition parties.

On Tuesday, Dlamini faced Parliament’s Standing Committee on Public Accounts over the social grant payments debacle.

At the briefing, Dlamini denied she was responsible for failing to ensure plans are in place to dispense welfare grants to more more than 17 million people on April 1.

READ: Bathabile Dlamini denies she is to blame for Sassa crisis

She is also assured recipients that payments won’t be disrupted.

Read Fin24's top stories trending on Twitter:

ZAR/USD
16.96
(+0.34)
ZAR/GBP
21.17
(+0.36)
ZAR/EUR
19.08
(+0.51)
ZAR/AUD
11.76
(+0.18)
ZAR/JPY
0.16
(+0.52)
Gold
1772.50
(+0.38)
Silver
17.92
(-0.22)
Platinum
809.00
(-1.22)
Brent Crude
42.09
(+1.84)
Palladium
1899.00
(+0.13)
All Share
54617.19
(+1.54)
Top 40
50309.77
(+1.49)
Financial 15
10214.89
(+2.12)
Industrial 25
76156.33
(+1.23)
Resource 10
50768.18
(+1.58)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1545 votes
I am taking a hit, but should be able to recover in the next year
23% - 2008 votes
My finances have been devastated
34% - 3014 votes
It's still too early to know what the full effect will be
25% - 2191 votes
Vote