CPS tried to 'blackmail' government

Cash Paymaster Services (CPS) has twice given government a two-day ultimatum to agree to its demands to ensure grant payment is not disrupted, the Constitutional Court heard on Wednesday. David Unterhalter, appearing for Freedom Under Law, told the court that the company on December 28 told the South African Social Security Agency (Sasssa) that unless it agreed to an extension of its contract it would start dismantling its systems. He submitted that this was the stance of a company that felt secure in its bargaining power vis-a-vis the South African state. "The two-day threat in December is a clear manifestation of their power and it is precisely that power that we propose the court to discipline," Unterhalter argued on behalf of the rights group.

FUL, as well as the Black Sash, were arguing before the court on Wednesday that it should resume its supervision of the grant payment system, which is hanging in the balance as Sassa finds itself unable to take over from CPS when the company's contract expires at the end of the month. Unterhalter then referred to an affidavit made by Net 1, the holding company of CPS, that unless Sassa agreed to a new contract on its terms on Wednesday, it would not be able to pay out grants to 17 million beneficiaries at the end of the month. The company is also demanding an increase of its administration fee from R16.44 per grant to at least R22 to allow for inflationary adjustments. The increase was on Tuesday dismissed by National Treasury as bearing no relation to the consumer price index. Unterhalter argued that the Constitutional Court had the power to extend CPS's contract as an emergency measure, since the company incurred a constitutional duty when it signed up to carry out a function of state that guarantees the rights of beneficiaries.

Judges questioned whether the court indeed had the power to keep intact a contract that was only valid until April. The advocate replied that there was scope to do so. He proposed that the court could extend the order by which the court had suspended an earlier ruling, handed down in 2013, that the deal was invalid because of tender irregularities. A lawyer for Corruption Watch argued for the same solution. Judge Edwin Cameron suggested that rather than use this formula it would be "more candid" not to extend a period of suspension because the contract to which it pertained was gone, but would for compelling reasons impose a contract on CPS to continue grant payment in April and beyond. FUL has argued that any future contract should, contrary to CPS's demands, be stipulated by the court to be of "no benefit", in other words that the company does not make a profit. It argued that CPS should not be allowed to make financial gain from an extension of a contract that was found to be invalid.