Sassa Crisis Capitalism and Corruption: Two Sides of the Same Bloody Coin!

by Weizmann Hamilton

The contract awarded to Cash Paymaster Services (CPS) to distribute social welfare grants to 17 million people reveals everything that is rotten in the capitalist system and the Zuma-led ANC government. It has exposed a web of corruption connecting CPS, its parent, the US-owned Net1 UEPS, BEE front men, the Minister of Social Development, Bathabile Dlamini and the presidency itself. We are not dealing here with mere incompetence but a premeditated act of criminal negligence by a minister whose track record includes pleading guilty to misappropriating R245,000 in the “travelgate” corruption scandal. Dlamini, with the full support of the Zuma faction of the ANC, aimed to create conditions that would keep alive an unlawful contract to be administered by a company facing corruption charges both in SA and by the Department of Justice in the USA.

For the financial year to June 2016 alone, CPS made pre-tax profits of R1.5bn from a contract the Constitutional Court had ruled should be set aside. CPS had lied about its BEE credentials and used willing accomplices in and outside government in fronting — a criminal act. But such eye-watering profits from a corruptly awarded contract were not enough. CPS is now claiming that, should it have to continue distributing grants when the contract expires on 31 March, 2017, the cost per beneficiary would have to increase from R16.40 to between R22 and R25. That will cost up to an extra R1.3bn!

In a breath-taking example of the greed that oils the machine of capitalism, CPS has exploited its position as grants distributor to make available confidential personal beneficiary information to its subsidiaries to exploit and further impoverish the poorest of the poor. Like vultures they descend on grant recipients, with various products including funeral policies at month end.

“Shareholders of Cash Paymaster Services, Net1 UEPS, have utilised the database of grant recipients to cross-sell a range of additional services to them through a network of subsidiary companies. These include MoneyLine, which provides microloans, EasyPay Everywhere, which sells smart cards, Manje Mobile, which sells utilities such as airtime and electricity, and SmartLife, which offers insurance. (Daily Maverick 07/07/17)

CPS and partners consciously exploit beneficiaries’ temptation to top up the pitifully low social grants to cope with the pressure of the high cost of basic commodities on which the poor spend a far greater proportion of their income than the middle class and the wealthy. Writing in the Daily Maverick, Rebecca Davies tells the story of Maria (not her real name) “a 63-year-old pensioner who receives a monthly “older persons” grant from Sassa. She uses it to pay for rates and taxes, food, and electricity. She receives the grant as a cash withdrawal from one of the Cash Paymaster Services (CPS) merchants – usually Pick n Pay. In March 2014 Maria started noticing that her grant amount was lower than usual. The problem persisted the next month. Her account statement revealed that 18 deductions of R5 each had been taken from her account for airtime in March. In April, ten deductions of R10 each happened. With the help of her son-in-law she managed to stop the deductions taking place, but never received her money back. Maria, says NGO the Black Sash, “does not know how or why this depletion of her grant occurred. She did not seek out or authorise this service”.

Reacting to Black Sash’s ongoing legal action to stop the practices of abusing beneficiaries’ private personal information Net1 CEO Serge Belamant told FIN24 that when it came to the case outcome, “I don’t really care what it means. It’s not going to make any difference to how much money we’re going to make.” (Daily Maverick 09/03/17)

Taking advantage of the vulnerability of the poor, they deceive grant recipients, trapping them into taking “micro loans” offered “interest free” but which cost a service fee that is the equivalent of interest ranging from 180% to 450% for loans from R150 to R1,250. Grindrod Bank shares the loot with CPS by providing bank accounts. By accepting a bank card, beneficiaries consent to the storing and processing of personal information, their use by third party service providers, subsidiaries and affiliates.

It is common to find that grant recipients have never knowingly accepted any of these products let alone authorized deductions from their grants to pay for them. Even if they are fortunate enough to stop unauthorized deductions, they never recover the money that has in effect been stolen from their accounts. For the financial year to June 2016, CPS’s partner in this criminal enterprise, Grindrod Bank, made a profit of R793m from microloans alone!

The criminals at work here are not armed robbers lying in wait at pay points to ambush old age pensioners on social grant payment days. These are men and women in suits, allegedly respectable members of society, shareholders in highly profitable businesses who collude with highly paid civil servants and ministers who enjoy the protection of the president. Their weapons of choice are not AK 47s, but electronic payment systems, social grant cards, the accounts of the poor and the patronage networks that the Zuma administration has spent its entire two-terms putting in place. They include Allan Gray, Africa’s biggest privately owned investment management company which is also the single largest shareholder in Net1, whose share price went up when news broke that CPS will likely get a new contract. It is an outrage that CPS, having benefitted so handsomely from a corrupt contract, now wants to increase its profits by up to 36% while citing inflation which sits at 6%!

The social grants scandal is a perfect illustration of why the government’s neo-liberal capitalist outsourcing policies are such a disaster and the private-public sector partnership concept is just a cover for looting. It will be difficult to find a better example of why private profit is incompatible with social need. When the ConCourt ruled the contract unlawful, they also stated that CPS should not benefit from it.

The social grants crisis is further confirmation that the ANC has been turned into a vehicle of a corrupt elite that will stop at nothing to enrich itself. This will hasten its decline and even produce a split in the not-too-distant future. Even if the calamity of non-payment is avoided on 1 April, what will be burnt into the consciousness of the most downtrodden in society for whom the social grant is the difference between destitution and survival, is that the ANC’s dominant elite is prepared to profiteer out of their poverty.

The ANC has reaffirmed that politically it has forfeited any right to lead society; the same applies to the capitalist economic elite the ANC is imitating and serving so slavishly.  The Zuma faction is not an ANC aberration; it is merely a more brazen version of its capitalist self.  The working class must prepare to kick out this corrupt capitalist government in 2019 and take over the rulership of society.

  • CPS must pay back the money! Confiscate all CPS profits! Distribute grants at cost
  • No retrenchment at CPS! End outsourcing of social security work. Permanent jobs for all CPS workers with a minimum wage of R10,000 p/m
  • Charge Net1 CEO Belament with corruption
  • Bathabile must go!
  • Expropriate CPS distribution technology and infrastructure for use by the Post Office under workers control and management
  • For a mass workers party on a socialist programme