The Treasury has washed its hands of the controversial negotiations under way with Cash Paymaster Services (CPS) aimed at doing a deal that will enable the company to continue distributing social grants when its contract expires at the end of the month.
In a statement on Friday, the Treasury said: "National Treasury wishes to clarify that it is not part of this process." It said that the Department of Social Development had requested the Treasury's participation, but it had advised the department that "such a request cannot be favourably considered".
The government and the country are facing a crisis. At the end of March, the existing contract held by CPS to disburse social grants to 17million people - including child support, foster and disability grants - will expire.
Despite having had years to remedy the situation after the Constitutional Court declared the contract with CPS invalid, the Department of Social Development has failed to do anything about it.
Explaining its decision not to participate in negotiations with CPS, the Treasury said the government's procurement legislation gave the responsibility for negotiating a deal on social grant payments to the department's accounting officer.
"In light of [this] the participation of National Treasury at this stage will amount to a conflict of interest."
The South Africa Social Security Agency (Sassa) and the Department of Social Development had said they would approach the Treasury to regularise the process under way.
Despite the Treasury deferring the negotiations to the department, it said it was committed to helping to find solutions "within the confines of the institution and the procurement regulatory framework when required to do so", to ensure that grant beneficiaries did not suffer.
Sassa CEO Thokozani Magwaza declined to comment, saying he was on sick leave.
Political analyst Ebrahim Fakir said the Treasury did not want to fall foul of the law, because the Constitutional Court had already made a ruling on this matter.
"What I would've hoped is that the Treasury would've worked with social development in order to refine the criteria, develop new criteria or say we can source the specifications from elsewhere.
"But the real culprit here is the portfolio committee," Fakir said.
The parliamentary portfolio committee, which has oversight over the department, ought to have been asking questions all along, especially after the judgment by the Constitutional Court. "Yet we can't see any evidence of the portfolio committee trying to intervene, either to ask questions about fixing the process or finding a new service provider or developing new criteria of what a service provider should do," he said.
"It's basically a breakdown of effective democratic government. If we can't trust these guys to run an ordinary department why should we trust them with radical economic transformation? They'll just mess it up," Fakir said.
The Treasury's move on Friday came after a week of bungling by Sassa.
BusinessLive reported that the application lodged by Magwaza regarding the payment of social grants was not authorised by the acting CEO or the social development minister, leading to it being withdrawn, according to fresh papers filed by the agency at the Constitutional Court on Thursday.
Magwaza had filed the urgent application earlier this week, asking the court to allow Sassa to enter into another year-long contract with CPS so that it could continue to pay social grants come April 1.
However, less than 24 hours afterwards, the application was withdrawn. Social Development Minister Bathabile Dlamini and acting Sassa CEO Thamo Mzobe have not lodged a new application with the court, but have sent a "follow-up report".
In the report, Dlamini and Mzobe said they were not consulted before Magwaza lodged the application.
Also this week, Sassa officials admitted in parliament that it had no alternative but to extend Net1 subsidiary CPS's contract.
- Additional reporting by BusinessLive