MPs were outraged when Social Development Minister Bathabile Dlamini tried to leave the Scopa meeting in parliament on Tuesday without taking any questions.?
Perhaps all will be revealed in Sassa’s response on Monday to Chief Justice Mogoeng Mogoeng’s directive for Sassa to bring concrete answers to the ConCourt on how the grants crisis was allowed to fester and unfold.
But judging by previous presentations by Sassa and Minister of Social Development Bathabile Dlamini to Parliament, someone’s going to have to do a bit of root canal to get to the bottom of the rot. Meanwhile, the Department of Social Development has admitted there is no contract with CPS.
On Friday afternoon, in response to a PAIA application by DA Shadow Minister of Social Development, Bridget Masango, for information on any new contract between Sassa and CPS, the Department of Social Development’s Deputy Information Officer, Michael Machuberg, responded, “contract entered into between the department and/or Sassa with Net1/CPS for the distribution of social grants from 01 April 2017 does not exist and therefore not unavailable in our possession”.
On March 6, however, Net1 CEO Serge Belamant in an interview with Radio 702 said that the previous week his company had agreed to a set of terms with Sassa “on two very, very important issues, one of them were the commercial terms going forward, and the other set of terms is what we were going to do on behalf of Sassa in order for them to take in-house a number of technical processes we currently perform”.
So, with only three weeks to go, the entire Sassa social grants crisis still appears to be in legal limbo.
Chief Justice Mogoeng Mogoeng last Wednesday directed Sassa to furnish, by 16:00 on Monday, full details of responsible officials, dates when these officials became aware that the time frames set out by the court could not be met, why the court had not been informed and whether Minister Dlamini had been informed, and if so, when.
Hopefully, whatever it is Sassa and the department and the minister submits to the court will unravel this very thickly woven knot of obfuscation, lies, deceit and delay tactics, and most important, why. Sassa officials and the minister, hopefully, will also answer why they secretly met with President Jacob Zuma’s lawyer Michael Hulley in December 2016 who then offered legal advice overruling that offered by Advocate Wim Trengove.
One of the officials who is likely to feature in the submission to the ConCourt is Zodwa Mvulane, Sassa’s Executive Manager, Special Projects. A batch of letters accompanying Belamant’s affidavit to the ConCourt on March 7 and in response to an application by the Black Sash gives some insight into the anatomy of the train smash.
Timeline and names of officials:
On May 24, 2016, Belamant wrote to Mvulane indicating that he had met with Sassa “at your request a few months ago” to discuss “the implications for Sassa to achieve this objective [of taking the payment in-house]. We discussed both a closed loop system that could permit interoperability with the NPS [National Payments System], as well as an open loop system as is currently provided.”
Belamant told Mvulane “there is not enough time left between now on March 31, 2017 for the banks to assist in this massive task... As time is running out quite rapidly, it is critical for Sassa to decide on the way forward. In order to prevent disruption in the payment process and to protect beneficiaries, it may be better for Sassa to extend the current CPS contract for at least 12 months, during which Sassa could refine their strategy and implement a phase-out and phase-in plan.”
On May 31 Advocate Nazeer Cassim and Mias Mostert advised Sassa that the Constitutional Court would have to be informed “of the change in status pertaining to deliverables as well as the possibility of CPS tenure being extended”. Meaning that by then Sassa had been aware that it was not going to meet the seven deliverables as set out by the ConCourt.
“The court will be especially sensitive in our view to the continued involvement of CPS. Our concern is that the impression might be created that Sassa has all along been pulling the wool over the court’s eyes. To prevent this impression from being created, our suggestion is that the change in proposed time frames relating to deliverables be coupled to new information emerging from the meeting with SARB...” wrote Cassim and Mostert.
Presenting Sassa’s annual report to Parliament’s portfolio committee on social development on October 13, 2016, where the closing balance of irregular expenditure was revealed as R1-billion and fruitless and wasteful expenditure as R10.9-million, the agency dedicated one paragraph to the “institutionalisation of the payment system”.
“This is planned for implementation in four phases. Phase 0 was the Advisory Committee investigation that took place against the backdrop of the Cash Paymaster Services that ends in March 2017. Phase 1 will be led by Work Stream leaders appointed with the concurrence of the minister to guide the successful implementation of the recommendations of the Advisory Committee for the smooth transition of Sassa towards effectively and efficiently incorporating its payment role to the current in-house functions. Phase 2 and 3 entailing the transition and full roll-out respectively will be implemented during the period April 2017-March 2019”.
It was at that presentation, made by then Acting Director-General of the DSD, Dr Wiseman Magasela, that the DA’s Bridget Masango first raised the alarm saying that this was a huge project that needed to be undertaken by Sassa and which required “a lot of preparation” and that involved the lives of 17-million people who were dependent on social grants.
“Where is the plan for this project and could the portfolio committee have access to it? Also was Sassa ready to take over the process?” asked Masango.
The DA’s Lindy Wilson also asked how far the agency was in terms of the seven deliverables as set out by the Constitutional Court.
According to the Parliamentary Monitoring Group’s record of the presentation Magasela told the committee that Sassa was ready “to give details or reach an agreement of when to come back to the committee to explain progress for the takeover and not withholding any information from the Committee”.
“Mr Magasela said Sassa was fully aware that the project was a huge one with responsibility in terms of making sure that social grants for ±17-million south Africans were fully paid on time as had been the established practice. The Agency was working towards making sure that come March 2017 all south Africans would receive their grants. The Minister was providing political leadership on the issue. There was also a project manager managing this project.”
On October 19 the portfolio committee met again to review and adopt the DSD budget and recommendations report. Once again members asked about the progress for Sassa’s takeover of grant payments.
On November 16 a meeting had been planned for Sassa to brief the portfolio committee but was cancelled at short notice and replaced by a presentation by the National Development Agency.
The minutes read: “Members objecting pointed out that the Sassa briefing had been agreed upon as far back as 13 October and had been placed on the agenda following an agreement by the chairperson as far back as June that the plan would be presented to the committee. There was a suggestion that the chairperson had deliberately tried to prevent the presentation, but the chairperson explained that this had in fact happened firstly because the Minister, who wanted to accompany the Sassa delegation, was out of the country, and secondly because Sassa would be meeting with stakeholders prior to coming to brief the committee.”
On November 30 Minister Dlamini and Sassa returned to Parliament to brief the committee with regard to Sassa’s readiness to take over as paymaster for the grants. Present along with Dlamini was the newly-appointed Director-General of the Department of Social Development, Zane Dangor, as well as newly appointed CEO Thokozani Magwaza. At that meeting opposition as well as ANC members complained that the department had not sent the presentation document earlier so that members could read and interrogate it.
At that meeting Magwaza told members that Sassa “was ready for the takeover from April 1”.
However, SASSA “through the minister asked that the committee does not push it to reveal its contingency plans in public as this might jeopardise the work it has done already. What matters is that by 1 April 2017, the grant will be paid.” (our italics)
Sassa’s Executive Manager, Raphaahle Ramokgopa, at that meeting said that Sassa had fulfilled its obligations to the Constitutional Court which had assumed a supervisory role over the agency after the 2012 contract with CPS. The first report, she said had been about the fresh tender application, the second dealing with progress towards implementation of the tender, the third with the outcome of the tender process and the fourth “with the implementation process within Sassa”.
Ramokgopa admitted that “there are areas” where Sassa was not meeting deadlines and that the agency had sought a legal opinion.
“With the feedback received from legal counsel and other people, Sassa will go back to explain to the court what had happened, the work in progress and the mechanism in place for implementation,” said Ramokgopa.
At this presentation is appears as if Ramokgopa parrots some of the content of Belamant’s May 24 letter to Mvulane.
Here’s Ramokgopa on November 30; “There are two options. The first is an open architecture or open loop. This involves operating in the national payment system that is provided for by the Reserve Bank. The second option looks into a combination of both an open and closed loop system. Both options specify the need for Sassa account requirements which Sassa has done an expression of interest for. Sassa is also in discussion with the Reserve Bank, PASA and BASA on a specialised account which has limited facilities... The open loop is a system operating in the national payment system, the accounts are fully accessible and allow direct reconciliation. Biometrics is a key factor in both options. In the current payment, the Reserve Bank has given permission to Sassa to utilise biometrics for older people and disabled persons. Discussions are on the way as to whether this can be extended to all beneficiaries. The reason for the need for biometrics is for fraud and risk management. Option 1 requires a new Sassa card that operates in both a closed and open system. It must be an integrated system flexible enough to operate in both and allow cash disbursement for beneficiaries in remote areas. Generally, for both options Sassa needs to develop an internal ICT system, recruit relevant capacity and use a phase in and phase out approach.”
Here’s Belamant to Mvulane on May 24; “We discussed both a closed loop system that could permit interoperability with the NPS, as well as an open loop system as is currently provided. The reason for the two approaches which are both technologically equivalent in terms of interoperability, is that a closed loop system would allow Sassa to provide a payment solution which would be under its control in totality as Sassa would operate only under the Social Assistance Act of 2004. An open system would require Sassa to obtain or make use of a banking licence, amongst others, or to outsource this function to one or more banks resulting in a solution similar to the current system. The open loop payment solution would be governed by the banking rules, the SARB. PASA Visa and MasterCard, the FSB, etc. and, as such, Sassa would not have actually taken the payment function in house in any way but simply outsourced it to a different bank or/and service provider which would probably require a fresh tender to be issued.”
At that meeting the DA’s Wilson asked whether Sassa had accomplished the ConCourt’s seven deliverables as well as “Who is the supervisor now? Was the court informed when the deliverables were changed? Have the deliverables been extended especially once the deadline for a deliverable has passed? Was the Constitutional Court informed about it and what was the decision?”
To which Dangor replied “that the fact that some of the timelines have not been met means that Sassa has to go back to the Constitutional Court to discuss the options. The Constitutional Court is the supervisor.”
Zodwa Mvulane replied that when Sassa began to solicit advice “from other stakeholders as well as reports from the work streams” it became apparent that Sassa had been “overly ambitious about some of its timelines”.
“Hence Sassa took the advice and broke down the deliverables and start working on things that matter.”
Minister Dlamini then suggested that the committee that it invite officials from Treasury, the Reserve Bank, the Post Office and Postbank so that members could have “a clear understanding of what is going on”.
However, added Dlamini, “there are challenges Sassa cannot talk about”.
Back now to Belamant waiting in the wings.
On December 9, 2016 Belamant wrote to Dlamini expressing that he was “becoming increasingly concerned with the lack of communication from Sassa” and that CPS would also commence the dismantling of its payment infrastructure on January 1, 2017.
Belamant told Dlamini “As you are aware, on November 30, 2016, Sassa reported to Parliament that it would be ready to perform the payment of all social grants by April 1, 2017. The Contract and Service Level Agreement (“the contracts”) between Sassa and Cash Paymaster Services (Pty) Ltd (“CPS”) were declared invalid by the Constitutional Court of South Africa. The Constitutional Court, however, suspended the declaration of invalidity until a) Sassa issued and awarded a fresh tender or b) until March 31 , 2017 which ever event occurred first.”
He added that over the past six months (so at least from August) “the SARB, PASA, Grindrod bank and MasterCard have engaged with us to debate the technological issues related to the longevity of the existing Sassa branded cards and if a solution could be found to prolong their lifespan beyond April 1, 2017”. He added that these stakeholders “were of the view that finding a solution was primordial as Sassa had not finalised or disclosed their transition plan, but that such plan would undoubtedly require the Sassa branded cards to continue to operate beyond April 1, 2017 to ensure that there would be no disruption to the payment of grants’ service going forward.”
And then “As a result, we have developed and tested a plan that will ensure continuity but such plan requires your urgent endorsement and commitment”.
On December 18 the Sunday Times reported that Minister Dlamini, Dangor, Magwaza, Mvulane and Ramokgopa had met with President Zuma’s lawyer, Michael Hulley, at the Intercontinental Hotel at OR International Airport. Dlamini had summoned the officials and Hulley had arrived “out of the blue”.
Dangor and Magwaza reportedly expressed at the meeting their serious concerns with the meddling of Hulley in the matter and also quizzed his role in the matter.
On December 22 Sassa’s Mvulane responded to CPS saying that it was willing “to engage on probabilities for assistance in the transition of Sassa operations towards a new service model”, and suggested a first meeting on January 5, 2017.
On December 30 Dlamini chaired a meeting with Sassa CEO, Magwaza, Mvulane, Dlamini’s special adviser, Sipho Shezi, DSD deputy director-general Brenton van Vrede, Sassa’s legal consultant Tim Sukazi, Ramokgopa as well as head of corporate services, Dumisani Ndlovu, at President Zuma’s lawyer Michael Hulley’s office in Durban. There they discussed the CPS contract.
Dangor reportedly refused to attend this meeting.
On February 1 Sassa was back in Parliament for a briefing with the committee, a meeting Dlamini skipped, opting to attend a Cabinet lekgotla instead. Opposition members refused to accept her apology and also complained once again about the late circulation of material to be presented.
ANC committee member Hope Malgas rebuked opposition members saying the lekgotla was important and warranted the postponement of meetings.
“There is nothing wrong in postponing. The ANC being in government has to give guidance,” said Malgas.
Ramokgopa set out six options including retaining CPS (only snag being the extension of the illegal contract), procuring the services of banks [Treasury’s suggestion] “while this option may guarantee service delivery, there is no guarantee that beneficiaries will be paid who are at the cash pay point”, procuring the services of banks and the setting up of a special account [a plan that needed six months], option four using banks for some payouts and CPS for cash pay points, using SAPO and the appointment of a service provider for cash distribution and for banked beneficiaries to use existing accounts.
“Given the above circumstances, Sassa came to the conclusion that it has failed. Sassa is of the view that Option 1 carries the least risk in terms of service delivery failure and as such should pursue the option while working on Option 6. In order to pursue this option, Sassa will approach Constitutional Court as a matter of urgency, since this is likely to be virtually the only mechanism to regularise such an approach which would otherwise be irregular. Also procurement in relation to Treasury practice Note 3 of 2016/17 will need to be followed.”
It was at this meeting that Magwaza let slip with regard to the fact that Sassa’s selection of option 1, to go with CPS, had not yet approached the Constitutional Court but that “the lawyers have assured Sassa that the court will approve since it is a matter of national emergency”.
Which lawyers Magwaza did not disclose.
Was this Hulley’s advice?
The ConCourt will soon find out.
On February 2 the Minister of Finance wrote to Dlamini informing her that continuing a contract with CPS would “expose government to legal challenges”. He proposed that a tender be given to banks and the Post Office.
Sassa revealed what everyone keenly watching developments feared, and suspected: that it was nowhere near ready to assume the critical function and had, in fact, not fulfilled even a single one out of the seven deliverables set out by the Constitutional Court.
“If you ask me to choose between irregular [processes] and the country going up in flames, I choose irregular,” Thokozani Magwaza told the committee to some audible gasps in the room.
9 February Magwaza wrote to Belamant with regard to “exploratory discussions”.
16 February Belamant replies to Magwaza stating “we have... not received any formal notification from Sassa or yourself regarding the dates for such exploratory discussions. I am concerned that any further delay will significantly impact on our ability to conclude an interim arrangement. It is our view that any negotiations in this respect will require adequate time and consultation to address the following aspects of a new contract. including but not limited to duration, price, phase-in or phase-out strategy, BEE. “
Belamant added that “it is unlikely that the current contract can be extended due to the Constitutional Court judgment as well as the legal constraints of the PFMA. An extension of the contract would, in any case, be unacceptable to the Net1 board of directors due to the ongoing controversy and reputational damage to our company. I have rescheduled my diary as well as my travel arrangements to accommodate the Sassa meetings and will be available to meet with you from 1 March 2017.”
On February 22 the portfolio committee met again. This time the panic was even palpable in the minutes published later by PMG. Dlamini, with CEO Magwaza wiping his brow frequently, dominated the meeting, seldom allowing Sassa officials to speak.
It was the IPF’s Liezl Van Der Merwe at the meeting who asked, “Can you confirm they [CPS] are seeking an extra R1.3-billion from this department to pay out the social grants? I also want to know that you don’t want to pass the buck to Treasury but there are allegations that come March 31 and there is a problem of some sorts you will pass the buck and blame Minister Pravin Gordhan which will give the minister and the president more ammunition to fire Pravin Gordhan.”
Committee chair Rose Capa accused the media of “terrorising the poor”.
On February 28 Sassa appeared before Scopa to account for the mess. It was learned that Magwaza had been booked of ill with “high blood pressure” and that CEO of the National Development Agency, Thamo Mzobe, had been appointed that morning as acting CEO, and who became ill a week later. Dlamini opted to skip this Scopa meeting, which angered members. It was a shambolic presentation. Members called for Dlamini to account to Scopa.
That same day Sassa filed papers with the Constitutional Court asking it to authorise its engagement with CPS for 12 months from April 1, 2017 to March 30, 2018. Twenty-four hours later Sassa withdrew the application on orders from the minister. Mzobe, who was still on the job at that point, said that Sassa had not been “consulted” by Magwaza and were now merely sending a “follow-up report” to the court.
On the same day, the Black Sash files with the Constitutional Court asking the court to act in a supervisory role with regard to the new CPS contract. In court papers the Sash says Sassa “breached its constitutional obligations of transparency and accountability to the public‚ to Parliament and to the court”.
March 2, 2017 Dlamini and Sassa filed the “follow-up report” with the ConCourt accepting responsibility for the fiasco.
“The minister and Sassa accept responsibility for Sassa’s inability to deliver the system deliverables set out in the progress report,” reads their submission.
Sassa also claimed it only became aware in August and October 2016 after advice from “technical advisers” that it would be unable to take the payment of social grants in house after March 31. Sassa added it was not ready to move forward due to budget constraints, insufficient internal capacity and a lack of skilled personnel to implement the plan in the time frame it had contemplated.
March 3, 2017 DSD DG Zane Dangor resigns citing a breakdown in the relationship with the minister.
March 5, President Zuma met with Dlamini and Gordhan and said the Sassa crisis is “solvable”.
March 5 Dlamini and her spokesperson Lumka Oliphant call a last-minute press conference which ends up with Dlamini refusing to answer questions from journalists. Dlamini blamed the media for creating panic with regard to the payment of grants on April 1. Dlamini confirmed however that no deal with CPS had been signed, contradicting an earlier statement that a deal had in fact been concluded.
March 7 Minister Dlamini appears before Scopa and receives a grilling of note. She tells committee members that Scopa had underestimated the amount of work.
March 8 – The Chief Justice Mogoeng Mogoeng directs Sassa to reply in detail questions relating to responsible officials, a time line for the fiasco as well as when it was the minister was informed.
March 14 – 4pm – Will all be revealed?