The embattled SA Social Security Agency has let former officials responsible for overpayment of R316 million to service provider Cash Paymaster Services off the hook without accounting for their actions.
THE EMBATTLED SA Social Security Agency (Sassa) has let former officials responsible for overpayment of R316 million to service provider Cash Paymaster Services off the hook without accounting for their actions.
The entity cited a legal opinion that no action could be taken against the officials following a forensic investigation.
This was disclosed by Auditor-General Tsakani Maluleke in her report where she audited the finances of the entity during the 2022/23 financial year.
She picked up the material irregularity in October 2021 and demanded that Sassa explain the steps it had taken to address this and recover the financial loss.
In her report, Maluleke said the saga dated back to June 2014 when Sassa made a R316 million payment to CPS to administer grant payments.
“The payment was made as part of a variation to the service level agreement with the service provider. However, this variation was concluded contrary to the entity’s supply chain management policy as no prior approval had been sought or given from the bid adjudication committee,” she said.
Civil society organisation Corruption Watch had challenged the agreement in the North Gauteng High Court in March 2015.
At the centre of the court challenge was the lawfulness of a variation agreement, which sought to include the verification and registration of children beneficiaries and authorise the additional payment to CPS.
The high court reviewed and set aside the variation agreement in March 2018 and ordered CPS to repay Sassa with interest.
When CPS took the matter on appeal, the Supreme Court of Appeal upheld the judgment in September 2019 in that the original agreement included the registration of recipients and beneficiaries, who included children.
Maluleke said since the court confirmed that the variation was not necessary as the additional services referred to were covered by the original agreement, CPS was not entitled to the additional payment of R316 million.
She said she notified Sassa CEO Busisiwe Memela-Khambula of the material irregularity two years ago and invited a written submission on their actions to address the matter.
Memela-Khambula provided a comprehensive account of the circumstances that led to the material irregularity, steps taken to address the material irregularity, and recourse to recover the financial loss incurred.
A private firm was appointed in February 2022 to conduct a forensic investigation into the R316m payment and a final report was submitted in December 2022.
“The recommendations of the investigation report indicated that the entity considers obtaining legal advice regarding any possible actions that can be taken against any former employee in their role in the approval of the services and the payment thereof, taking into account the law of prescription.
“Legal advice was obtained on 12 December 2022, which indicated that no action can be taken against the former officials,” she said.
Maluleke said since the liquidation process to recover the overpayment from CPS was still in progress, the material irregularity was considered resolved.
Reacting to this development on Tuesday, Black Sash and Corruption Watch expressed shock that neither money was recovered nor officials held accountable.
Corruption Watch executive director Karama Singh said it did not seem as if there was a situation of accountability in the matter and that they were not aware that there was legal opinion.
“We do know that there are powers to hold individuals responsible for these types of maladministration accountable. It is disappointing that in this case we don’t see reports of a finding or responsibility of a person. It is a disappointing state of affairs,” he said.
Black Sash said in a statement that the Supreme Court of Appeal held that former Sassa CEO Virginia Peterson unilaterally varied the service level agreement, the payment to CPS was not rationally connected with the purpose it was made for and that those responsible for perpetrating corruption must be held accountable for their actions.
“The fact that no one has been held accountable or a single cent recovered is unacceptable. It undermines the hard work of civil society and courts to hold those involved in corruption accountable,” said the human rights organisation.
“We are deeply disappointed by the AG’s findings. It is a travesty of justice.”
Meanwhile, Memela-Khambula said there was a fruitless and wasteful expenditure involving payment of the social grants fee made before the end of March 2018 when CPS invoiced Sassa R74.8 million for the number of grants recipients directly paid through BankservAfrica.
Memela-Khambula said the transaction was made in error because CPS did not render the services.
“CPS has since been placed in liquidation, and a claim for recovering the said amount has been lodged with the liquidators, and the process is yet to be completed,” she said.
