A shameful period in South Africa’s recent history
Today, the Black Sash in partnership with the Human Sciences Research Council, launches Hands off our Grants, a book which records a shameful period in South Africa’s post-apartheid democracy. The very poor and most vulnerable in society found themselves pitted against the combined strength of elements within the state and the private sector that threatened their meagre social grants.
The right to social security is entrenched in our Constitution and international treaties signed by government. This right was threatened by the unlawful contract between the South African Social Security Agency (SASSA) and Cash Paymaster Services (CPS), a subsidiary of Net1. The Black Sash’s Hands Off Our Grants campaign in late 2013 was launched to resolve the increasing problem of unauthorised, fraudulent deductions. The campaign was based on the power of grant beneficiaries to hold those responsible to account.
Maolaotse Grace Bohokwane, a pensioner living in Makwassie, a small grain-producing town 270km south of Johannesburg, received an old age pension. In November 2013 she saw that R99 had been deducted from her bank account for airtime. In December 2013, R50 was deducted and a further R99 in January 2014. She also received an advance request for airtime in February 2014. Bohokwane, with the help of Lebaleng Advice Office, went to the local SASSA office where officials blamed her relatives for requesting airtime. But no further attempt was made to resolve her query.
The advice office tried the CPS helpline to find out who had bought airtime without Bohokwane’s consent. CPS claimed it could not trace the name associated with the cellphone number associated with the airtime deductions. The number did not belong to anyone in Bohokwane’s household. The CPS agent insisted that Bohokwane had provided that number in her initial application form for the SASSA-branded Grindrod card, which she denied. At a meeting on 26 February 2014 with civil society, beneficiaries and government, Minister Bathabile Dlamini instructed SASSA to refund Bohokwane with immediate effect. While it took months to resolve, Bohokwane’s case officially opened the door to refunds.
In November 2014, Bukiwe Lakey from the Paarl office was surrounded by SASSA beneficiaries from the Franschhoek area, desperately trying to stop a 1Life funeral policy debit deduction from their Grindrod bank accounts. Beneficiaries told Bukiwe and the Black Sash about a broker from Emerald Wealth Management (Bellville), who said beneficiaries were instructed by SASSA and the Minister of Social Development to take out 1 Life funeral policies. 1Life was the underwriter of the policies sold by Emerald Wealth Management.
Although beneficiaries told the broker they already had funeral policies, he nevertheless demanded their identity documents and proceeded to complete application forms for them. He was in a great rush and insisted on placing beneficiaries’ fingerprints on the completed forms, which some found undignified. Beneficiaries were told that they must pay their first funeral policy instalment over the counter at the Post Office and that subsequent payments would be debited from their SASSA bank accounts. But the first instalment was in fact deducted from their bank accounts.
Jacob and Dorene Juries from Franschhoek exposed the unauthorised funeral policy deductions in a Special Assignment documentary titled Grant Grabs. Soon after the screening, an Emerald Wealth Management agent arrived at the Juries’ home. They were very intimidating and informed the Juries that they were former police officers. They told them that while the Juries could cancel the funeral policies to stop the deductions, they were not entitled to a refund of the instalments already paid.
In a follow-up meeting, all 18 of the beneficiaries affected gave the Black Sash the go-ahead to demand a refund. Subsequently 1Life senior management came, in person from Gauteng, to refund social beneficiaries in Franschhoek and table an apology. A further 21 cases were stopped and the beneficiaries refunded. 1Life terminated its relationship with Emerald Wealth Management.
Sipho Bani from Nyanga, Cape Town, received an old age pension of R1,140 monthly. In September 2015 he was only paid half his grant, an amount of R723. Bani had a loan from Kuyasa of R394 to erect a fence. But the sum of R1,843 was deducted from his Sassa branded Grindrod bank account. Bani tried to find reasons for these unexplained ‘loan’ deductions. He started at the SASSA office in Nyanga, only to be sent to the SASSA office in Gugulethu, then to Gugulethu Paralegal Advice Office, then to the CPS office in Lansdowne, then to Finbank in central Cape Town and finally to the SASSA provincial office. By this time, he had spent between R400 and R500 on airtime, taxis and petrol to get to the bottom of the deductions. His case exposed the absence and inadequacy of the SASSA recourse and refund system, controlled by CPS. After a presentation to the Western Cape Parliament which was reported in the media, Bani was refunded but only in part.
The rise of the “green card”
In 2015, with the appointment of a new SASSA grants payment service provider looming, Net1 subsidiary Moneyline, in partnership with Grindrod Bank, launched the Easy Pay Everywhere Account (EPE), known as the green card. CPS agents working at SASSA pay points were also sales persons for Net1’s basket of financial products, including Smartlife funeral policies and Moneyline loans.
An agent signing up a grant beneficiary for an Easy Pay Everywhere (EPE) bank account seems to have automatic access, via a card chip, to the personal information of that beneficiary. EPE cards were aggressively marketed and easily opened from the boots of cars, at homes, community halls and churches.
However, closing accounts or sorting out complaints was almost impossible as there were very few walk-in branches. The Call Centre service was mostly available in English and enquiries were often cut short when complainants had insufficient airtime or placed on hold indefinitely, or calls were just not answered. SASSA officials were unable to deal with EPE queries as they had no control over this system. In desperation, some beneficiaries visited a Net1 office in an attempt to obtain a statement or close their bank account. This often involved travelling long distances, as at the time there were only 120 Net1 offices in the country. Beneficiaries were not allowed to bring anyone with them into the offices, not even a family member, and they soon learned that recourse was a national function.
The battle for a ring-fenced bank account
Initially the Minister, SASSA, CPS and Net1 agents blamed other household members for debit and electronic deductions from the Grindrod bank accounts into which social grants were paid. Expensive advertisements were placed to correct ‘behavioural’ deficiencies.
In launching the Hands off our Grants campaign, the Black Sash sent an open letter, with five key demands, to various agencies including the Public Protector and National Treasury. In response, a Ministerial Task Team (MTT) consisting of Black Sash, civil society partners, SASSA and DSD senior officials was formed following a meeting in February 2014 with the Minister of Social Development and government officials. In its first report to the Minister, the team summarised the problem as — “The big shark(s) in suits are now in the bank … and the little sharks are relegated a distance away from the pay points… In essence, the big shark(s) have effectively eliminated the competition – but are not held liable.” Minister Dlamini agreed to the team’s plan of action with civil society monitoring and ensuring its implementation.
In our efforts to better understand the root causes of the unauthorised debit deductions we found some companies, including Lion of Africa and Moneyline, using children’s grants as collateral for loans. The National Credit Regulator warned that the use of the Child Support Grant and the Foster Care Grant as income – for the purposes of conducting affordability assessments on credit applications – was totally unacceptable. These deductions deprived children of money meant to provide for their daily needs.
In May 2016 the Department of Social Development published regulations which prohibited debit deductions from the children’s and temporary disability grants, prompted by civil society advocacy actions. Immediately, Net1, its subsidiaries and allies launched four separate court cases challenging the interpretation of the regulations. Government’s interpretation of the regulations caused SASSA to instruct CPS and Grindrod Bank to stop all debits, stop orders and EFTs from beneficiary accounts held at Grindrod Bank with immediate effect.
The Net1 matter was concluded at the Supreme Court of Appeal in 2018, after SASSA concluded a new agreement with the Post Office for a special ring-fenced bank account with no debit, stop order, EFT or USSD platform deductions to stop predatory behavior by financial service companies. However, despite the gains in 2018, the Post Office ring-fenced bank account is currently under threat. SASSA is directing new beneficiaries to open commercial bank accounts and seems not to cover the cost of bank charges. In addition, the Post Office seems to be struggling financially with a growing number of branches closing.
The protection of confidential data
During the Hands off our Grants campaign it appeared that the re-registration of grant beneficiaries in 2012, using biometric processes, gave CPS and Net1 access to personal information collected on behalf of SASSA. SASSA officials could not access the personal beneficiary information to effect refunds stored on the CPS- Net1’s proprietary technological database. SASSA and CPS were ordered several times by the Constitutional Court to put mechanisms in place to protect the personal data of grant beneficiaries. The newly created Information Regulator took these judgments as its mandate. SASSA’s new payment system no longer relies on biometric capabilities as personal information is verified via the Home Affairs database.
The task team focused several meetings on the Beneficiary Payment Dispute Resolution Mechanism. Most beneficiaries expressed frustration at being sent from pillar to post (at their own expense) in fruitless efforts to fix problems. The Black Sash and partners soon realised that as long as the CPS contract remained in place, unauthorised deductions would continue. Recourse only started to be effective from 2018 with the new SASSA-Post Office bank account .
In remedying the unlawful CPS contract, the Constitutional Court, in 2014, declared that SASSA was to initiate a new tender process for the payment of social grants nationally. Some members of the task team believed this would stop unauthorized and unlawful deductions. However, two years into the process, SASSA was no closer to appointing a new service provider. The Black Sash intervened in court, as amicus curiae (friend of the court), and the court ruled that a new service provider must be appointed by the end of October 2015. As SASSA could not find a suitable replacement, CPS continued its five-year contract.
By September 2016, it was clear that SASSA (and the Minister) did not have a plan in place for when the CPS contract – ruled unlawful by the Constitutional Court – came to an end in 2017. The Minister declined to respond to a letter from the Black Sash about SASSA’s readiness to take over social grant payments by 1 April 2017. The task team disbanded abruptly in February 2017 when the Black Sash felt compelled to approach the Constitutional Court, on an urgent basis, to ensure that beneficiaries would be paid their social grants from 1 April. Documents obtained through the court case revealed a draft agreement between the parties to extend the CPS contract by another 18 months as well as a price increase. It seemed that SASSA and the Minister were trying to force an extension of the unlawful CPS contract.
To avert the impending crisis the Court ruled that the unlawful CPS contract be extended by 12 months. The order reinstated the court’s supervisory role over SASSA, this time with the support of a ten-person Panel of Experts including the Auditor-General to ensure that grant payments would not be disrupted after the suspension period. SASSA was to formulate a new regime for social grants before 1 April 2018. Furthermore, the Court found that Minister Dlamini had caused the 2017 social grant crisis and awarded costs against her personally. This year Dlamini was found guilty of perjury with the option of a fine or jail time.
The Constitutional Court had ruled that CPS must not profit from the unlawful contract and that audited statements of profits must be provided and checked. In 2021 following an application by Freedom under Law, the Court ruled that the CPS-SASSA social grant contract must be audited and verified afresh. SASSA’s auditors estimated that CPS may have understated its profits by approximately R800 million, bringing its total profit to well over R1 billion.
CPS is currently under liquidation with SARS claiming more than R1 billion in tax.
Maart, Richardson and Bukasa are from the Black Sash. GroundUp deputy editor Barbara October contributed to the book based on her reporting for GroundUp.