Allpay gets a scolding

The appeal application by AllPay, a division of Absa, over a R10 billion tender to distribute social grants was tainted with innuendos about corruption and dishonesty, the Supreme Court of Appeal (SCA), unanimously held in a scathing judgment on Wednesday. David Barritt, a spokesman for Cash Paymaster Services (CPS), the winning bidder for the tender, said the company would sue AllPay for more than R1bn following the judgment. He said shareholders of the parent company, Net1 UEPS Technologies, which is listed on the Nasdaq and in Johannesburg, might also sue for many billions because of the overnight drop of 63 percent of its share price when the allegation surfaced.

The SCA said mere suspicion of malfeasance or moral turpitude had no place in the courts. It was unfair, if not improper, to impute these by innuendo and suggestion. The court said: “A litigant who alleges such conduct must do so openly and forthrightly, so as to allow the person accused a fair opportunity to respond. It is also prejudicial to the judicial process if cases are adjudicated with innuendo and suggestion hovering in the air without the allegations being clearly articulated. “Confidence in the process is built on transparency, and that calls for the grounds upon which cases are argued and decided to be openly ventilated.”The appeal arose out of an invitation to tender by the SA Social Security Agency for the payment of social grants. The contract was awarded to CPS. AllPay also tendered but was unsuccessful. AllPay, aggrieved by the tender award, applied to the North Gauteng High Court for orders setting aside the contract because of irregularities in awarding the tender. The court declared the process to be illegal and invalid but also ordered the “award is not set aside”. This was because it would have been detrimental to the beneficiaries of the social grants if the tendering process had to start afresh.

The SCA said there would be few cases in which flaws in the public procurement process could not be found, particularly where it was scrutinised intensely with the objective of doing so. “But a fair process does not demand perfection and not every flaw is fatal... It would be gravely prejudicial to the public interest if the law was to invalidate public contracts for inconsequential irregularities.”

Like the lower court, the SCA said: “We need no evidence to know the immense disruption that would be caused, with dire consequences to millions of the elderly, children and the poor, if this contract were to be summarily set aside… It is unthinkable that (that) should occur.” Absa shares retreated 2.08 percent to close at R155 on Thursday, while Net1’s Johannesburg listed shares surged 8.23 percent to close at R66.01.