Allpay battles Sassa for R10bn contract

Absa subsidiary Allpay Consolidated Investment Holdings and the SA Social Security Agency (Sassa) will square off in the North Gauteng High Court at the end of next month in a dispute over a R10 billion contract. The matter was scheduled for hearing this week but it was postponed by the court, according to information in Allpay’s replying affidavit, which was submitted to the court in Pretoria last week. Allpay, which distributes social grants, filed an application last month to have the court set aside a contract that Sassa had awarded to Cash Paymaster Services, a division of listed Net1 UEPS Technologies, in January.

The contract was to manage the nationwide distribution of social grant payments to more than 10 million people. Allpay alleged that the award was conducted in an irregular manner. Charmaine Webb, AllPay’s general manager of sales and service delivery, said on behalf of Absa in the affidavit that the main dispute concerned the “eleventh hour” mandatory requirement of bidders to be able to provide biometric verification of grant beneficiaries in a revised invitation to bidders. This requirement was marked “preferable” in the first invitation to bidders. “This had a profound effect on Allpay’s ability to submit a bid which complied with tender requirements,” Webb said.

She said Standard Bank and FNB had withdrawn from the bid as a result of the change. Her affidavit also mentions a tape recording, which will be presented to court, of a Sassa official saying Allpay was eliminated because it would beat Cash Paymaster on “pricing”. Absa declined to comment yesterday, saying “the matter is sub judice”. In court papers Sassa has maintained that the ability to provide biometric validation was always a requirement. The Mail & Guardian newspaper has carried successive stories alleging that Human Settlements Minister Tokyo Sexwale’s Mvelaphanda Holdings and Mosomo, an empowerment firm aligned to Sexwale, stand to benefit from the execution of the contract by Cash Paymaster Services.

Mosomo is said to be part of a consortium that acquired a 20 percent stake in Net1 UEPS Technologies. Human Settlements Department director-general Tabane Zulu is alleged to have received a R1.4 million payment in his bank account soon after Cash Paymaster Services was awarded the contract. Sassa claims on its website that the biometric system would provide an annual saving of R800m from previous contracts. The system would minimise fraud and corruption and beneficiaries could be enrolled within close proximity of their communities, it claims. Herman Kotze, the chief financial officer for Net1 UEPS Technologies, did not respond to a telephone enquiry. One of Cash Paymaster Services’ immediate task is to implement a new biometric payment system platform in a two-phase approach which began last month and ends on December 31.