Court mandates CPS to refund R81m in unlawful contract profits
The Constitutional Court has ordered the Cash Paymaster Services to repay the South African Social Security Agency (Sassa) an amount of more than R81 million secured through an unlawful contract.
Image: File
The Constitutional Court has ordered Cash Paymaster Services (CPS) to repay over R81 million in profits to the South African Social Security Agency (Sassa) from a contract deemed unlawful.
This ruling follows 12 years of legal battles since the apex court's 2014 declaration of the contract's illegality, which was suspended three times to ensure uninterrupted grant payments while Sassa struggled to find alternatives.
Sassa, under the political leadership of former Social Development minister Bathabile Dlamini, awarded a R10 billion contract to CPS for the national distribution of social grants in 2012.
The losing bidder, AllPay Consolidated Investment, challenged the award in court, citing serious irregularities in the procurement process.
The court officially declared the contract unlawful in 2014.
The court also held Dlamini personally liable for 20% of the legal costs incurred by the Black Sash Trust and Freedom Under Law.
The decision followed an inquiry into her role in the Sassa social grants crisis, specifically regarding the extension of an invalid contract with CPS.
The court found that she misled the court regarding the existence and role of “work streams” she established that bypassed Sassa's formal structures.
The new order, granted on April 8, arose from an application by Freedom Under Law seeking to compel CPS to furnish information required by the National Treasury to determine whether and in what amount the service provider (now liquidated) had made a profit from an unlawful contract.
The application also sought consequential relief relating to information held by Lesaka Technologies (Pty) Limited and an order requiring the Treasury to determine CPS’s profit.
Delivering his judgment, Justice Steven Arnold Majiedt said CPS had performed a public function of constitutional importance and had been held to be an organ of state for purposes of the contract.
He added that the continuation of the contract had been ordered to ensure the uninterrupted payment of social grants, not to preserve the company’s private rights.
“Having regard to all relevant adjustments, the court concluded that the appropriate adjusted certified profit was R81 286 177.
"As to costs, the court held that the conduct of parties did not warrant a costs order in favour of any party and ordered that each party bear its own costs,” he said, adding that CPS was ordered to refund certified profit of R81 286 177 to Sassa.
Welcoming the court order, Sassa CEO, Themba Matlou, said the judgment serves as an affirmation of the South African legal system.
"We are satisfied with the order handed down by the justices of the Constitutional Court. We believe this is a vital precursor to addressing other outstanding issues concerning CPS and finally close the chapter,” he said.