Row over pension billions

Corrupt social development officials gave the losing bidding company less than 48 hours to prepare for a technical briefing to a hostile adjudication committee whose members had links to the winning company’s BEE partners. The officials shifted the goalposts, changing tender specifications at the last minute to ensure one company could win a R10 billion bonanza to administer the country’s pensions and social grants system. These are just some of the claims the Department of Social Development will have to answer in the Pretoria High Court when Allpay Consolidated Investment asks the court today to set aside the four-month-old tender awarded to the US-listed Cash Payment Services (CPS), to which Human Settlements Minister Tokyo Sexwale has been allegedly linked through a former business associate.

Sexwale resigned from Mvelaphanda Resources after being appointed minister. The Mail & Guardian reported that Mosomo Investment Holding, a company owned by a former director and employee of Mvelaphanda Resources, Brian Mosehla, acquired a 20% stake in CPS. Mosehla has interests in Mvelaphanda’s subsidiaries. Mvelaphanda has repeatedly denied any involvement in the tender. The tender, to dispense and administer grants to 14.8 million people every month, has been mired in controversy ever since the SA Social Security Agency decided not to renew Absa’s contract and to award it to CPS in January.

The dispute has spawned a tsunami of legal papers, 6 500 filed by the end of last month, and allegations of corruption. Last month, the Pretoria News’s sister newspaper, The Sunday Independent, reported that R1.4m had been deposited into the private bank account of human settlements director-general, Thabane Zulu, a month before he took part, as a member of the adjudicating committee, in the awarding of the contract. Zulu dismissed the allegations as “preposterous”, challenging critics to report him to the law enforcement agencies. CPS is wholly owned by Nasdaq listed Net1 UEPS Technologies. Serge Belamant, the CEO of Net1 UEPS, and Social Development Minister Bathabile Dlamini’s spokeswoman, Lumka Oliphant, have repeatedly denied any wrong-doing, political interference or manipulation of the tender.

Allpay is to urge the court today to set the contract aside on the grounds of procedural unfairness. Allpay is to tell the court that, called to make its technical presentation to Sassa in Stellenbosch, it received a hostile reception from a bid adjudication committee, which dismissed its solutions to questions it received only on arrival, without even assessing their merits. It is to allege that some members of the bid evaluation and adjudication committees had relationships with CPS’s BEE partners. Alternatively, Allpay is to argue that even if the court was to consider the merits of the technical report, Sassa breached the rules and procedures of its tender by changing the tender requirements at the last minute to suit CPS.

A key part of this was the shifting of biometrics verification (finger prints) from “preference” to a “requirement” to verify the authenticity of grant recipients, which didn’t clarify the requirements of the tender but changed the rules of the game. Sassa is expected to argue, in return, that it acted properly and thoroughly in a nine-month process, establishing committees for the different stages of the bidding process in line with its policy and Treasury regulations. It will claim that all these processes were vetted and approved by independent monitors and that ultimately Allpay failed to meet the minimum threshold of 70 percent on technical points.

The Centre for Child Law and Empilweni have intervened as friends of the court. Empilweni is the losing bidder for the Mpumalanga leg of the contrac. The centre is expected to ask that the court put precautions in place to ensure the 10 million children who depend on social grants are not affected if the contract is set aside.