Volume 16, No. 07, 16 March 2017
The social grants crisis has exposed hypocrisy, but certainly it needs an independent forensic and corruption investigation to get to the root of the matter
By Umsebenzi Online
The issue whether social grants will be paid on 1 April has taken the centre stage in our national discourse. On a lighter note there are many possibilities on that day given that it will be April Fool's Day. The social grants payment uncertainty crisis resulted on Wednesday 15 March to the Constitutional Court sitting to hear arguments about the situation and the way forward. There must be an independent forensic and corruption investigation into how as a country we were driven to this point. All those who have been involved in building up the situation, whether by omission or commission, must be held accountable for their negligence, complicity and other forms of wrongdoing!
The Department of Social Development under the political leadership of Minister Bathabile Dlamini supported by President Jacob Zuma recently assured the country that the grants will be paid. The social grants were paid but by means of an unlawful tender awarded to a foreign monopoly capital, the United States based NET1 UEPS via its Cash Paymaster Services (CPS) in South Africa.
Rather than whether the grants will be paid, which is, of course, itself a matter of grave concern, a deeper problem lies in the activist posture by, and that makes, the Department of Social Development appear to be dedicated at having the illegal contract awarded to the CPS extended. All indicators in the conduct of the department point to a consistent effort to have the extension of the illegal contract become the mechanism by which the social grants will again be paid. This directly contradicts the countless pronouncements by the ANC-headed Alliance and government to fight corruption and move our democratic transition on to a second radical phase with radical economic transformation as its key pillar. The vexing question that the South African society will have to answer through history is what underpins the inconsistency.
It is nevertheless important to note that there are state entities that display an encouraging commitment to national democratic transformation.
In this regard the South African Post Office (SAPO) must be congratulated.
On Wednesday SAPO told the Constitutional Court that: "We approached this court as amicus curiae [friend of the court]. In our submissions what we seek to propose to this Court, having regard to the fact that we are faced with a national crisis, and further to that there is the very uncomfortable aspect that a private institution or private institutions can hold the state as it were into ransom in a contract... But what is the fundamental aspect of how does the state provide services to the most marginalised in society? And, in having regard to that, SAPO has come out with an alternative, which it says, it is an organ of state, it can provide an alternative solution."
SAPO further exposed the rhetoric that was used to feed the interests of the illegal CPS social grants contract when it said: "The issue that was bandied about was the CPS was the only party capable of carrying out this task. The South African Post Office has indicated that it is equally capable of carrying out the task. Now the question that we want and we support, and we want this court to promote, is the idea that where there are intergovernmental organisations and organs of state, that those organs of state, if they are capable of performing the functions, and if they are properly capacitated, and if they have the sufficient resources, that organs of state need not look out, to private institutions. This is in promoting the constitution. It is also promoting the values that are set out in the Intergovernmental Framework Act."
What the Court was sitting with, and indeed faced with as SAPO said, was an issue of extending the social grants contract that was illegally awarded to the CPS. SAPO was absolutely right, both in terms of the fundamental principles that it articulated and the illegality of the social grants contract that was awarded to the CPS. It is in fact the Constitutional Court itself that ruled almost three years ago, on 17 April 2013, that: "The Contract for the Payment of Social Grants between the South African Social Security Agency (SASSA) and Cash Paymaster Services (Pty) Ltd (Cash Paymaster) dated 3 February 2012 is declared invalid".
The Department of Social Development supported by the President should actually have been the one seen both in policy and practice elaborating the fundamental principles articulated by SAPO. This is part of a contribution towards the realisation of a democratic developmental state with strategic discipline, professional and technical capacity that we seek to build rather than rely on unlawfully awarded tenders to deliver on its mandate.
The failure to establish a lawful social grants disbursement mechanism through the state for a period of five years, from 3 February 2012, including the approximately three years from 17 April 2013 when the Constitutional Court ruled that the social grants contract with the CPS was unlawful, must be viewed in a serious light. It is also important to recall that there was no independent forensic or corruption investigation following up on the ruling to get to the bottom of the matter, expose and decisively deal with all the private interests underlying this fiasco.
The defenders of the rise of the Gupta oligarchy have been engaging in loud-mouthed rhetoric appearing to be genuinely campaigning against economic dominance by "white monopoly capital". They have now been exposed for all to see. Their silence about the problematic activism displayed by the Department of Social Development to extend the illegal social grants contract with the CPS is deafening.
In addition, the CPS's banking partner is Grindrod, which is owned, among others by the Ruperts of this world. Remgro Limited is holding a major stake in Grindrod. Johann Rupert is Remgro Limited's Chairman. In its website, Grindrod states that "Grindrod Bank proudly provides banking services for the South African Social Security Agency (SASSA) grant recipients, paying 17 million grants to 10.6 million distinct cardholders amounting to R11bn per month in close association with CPS who provide the card technology and manage the card programme on behalf of the government of South Africa."
Further, according to Grindrod, "Each grant recipient has a Grindrod Bank account". During his presentation in Parliament early this week on matters relating to this contract, the Minister of Finance Pravin Gordhan correctly stated that the interests generated by the manner in which the money is transferred to pass through the hands of the Grindrod Bank must be returned to the state because they belong to the state. The pseudo-radicals who have been defending the Guptas and displaying "militancy" against "white monopoly capital" have gone silent. The factionalist essence of their rhetoric and their vulgar radical economic transformation has been exposed for all who care to see!
By the way the fundamental principles presented by SAPO to the constitutional court are very much similar to the perspectives articulated by the ANC-headed Alliance. The Alliance has been calling for SAPO, through the Post Bank, to be fully capacitated, equipped and transformed as a state bank to handle social grants and other public finances and provide developmental banking services to our people as opposed to commercial banks that are interested only in profit.
The CPS-Grindrod social grants disbursement-baking contracts directly contradict what the Alliance has pronounced on. This is clearly part of the decisions that are ruining the capacity of state entities in addition to disempowering them, in manners similar to the way that SAPO was disempowered of social grants disbursement. This begs the question as to who else are benefitting directly or indirectly from such defiance against the ANC-headed Alliance's shared policy perspectives and the rule of law.
Umsebenzi Online is an online voice of the South African working class