President Jacob Zuma's special adviser played a key role in ensuring that Cash Paymaster Services would keep the lucrative contract to deliver more than 17 million social grants to recipients
His intervention coincided with Social Development Minister Bathabile Dlamini flatly rejecting any payment option that did not involve CPS, raising questions about why the minister was so intent on retaining the company.
Secret meetings between top managers of the South African Social Services Agency and Michael Hulley, Zuma's special adviser, have raised questions about the Presidency's role in the fiasco.
Hulley has been named as the person who advised Dlamini to go against Advocate Wim Trengove SC and three other independent legal opinions that recommended that she should let the Constitutional Court decide the fate of the CPS contract.
This emerged as pressure to conclude the social grants contract landed two Sassa bosses in hospital.
Sassa CEO Thokozani Magwaza and acting CEO Thamo Mzobe were hospitalised within days of each other due to blood-pressure complications.
This, several sources said, was directly related to Dlamini pushing for the contract with CPS to be concluded.
Four independent sources told the Sunday Times this week that Hulley had two meetings with Dlamini and top Sassa officials in December last year, when he is said to have advised them to continue with the CPS contract.
"His participation was very skewed towards CPS and extending their contract and [finding] ways of dealing with the legalities around it. He was very dismissive of Trengove's opinion and that of three other senior counsel," said an official who attended the meeting.
Lawson Naidoo, executive secretary of the Council for the Advancement of the South African Constitution, said Dlamini needed to tell the Constitutional Court what Hulley's role was in the matter and who had sought his legal opinion.
"Hulley has a wide range of business interests. The minister must explain what was his role as we all know that the [Department of Social Development] has its own legal advisers, as does Sassa."
Advocate Paul Hoffman of the Institute for Accountability in Southern Africa said there was no way Hulley could give an objective opinion on the matter.
"Michael Hulley is wrong and Wim Trengove is right. It is mindboggling that the minister can use Hulley's opinion to overrule Trengove's legal opinion.
"Hulley is the last person to give an objective opinion on this matter as he is also the president's legal adviser."
Hulley failed to respond to specific questions sent to him yesterday. Zuma's spokesman, Bongani Ngqulunga, failed to respond to questions sent to him about Hulley's role, or whether he was representing the president or acting in his personal capacity.
Details have emerged of secret meetings Dlamini and her top officials held with Hulley on how to deal with the social grants crisis.
The Sunday Times has confirmed that Dlamini, Sassa CEO Magwaza, Dlamini's special adviser Sipho Shezi, social development deputy director-general Brenton van Vrede, Sassa's project leader Zodwa Mvulane, legal consultant Tim Sukazi, head of corporate services Dumisane Ndlovu and executive manager of strategy and business development Raphaahle Ramokgopa met Hulley at his Durban office on December 30, when the contract with CPS was discussed.
The Constitutional Court declared the CPS contract invalid in 2014.
"Sassa's controversial contract with CPS was top of the agenda and the minister was chairing the meeting," said an official who was present.
Sources also claim that social development director-general Zane Dangor refused to attend the meeting because he wasn't happy with Hulley meddling in the affairs of the department.
Prior to the Durban meeting, Hulley had had a meeting, on December 18, with Dlamini, Dangor, Magwaza, Mvulane and Ramokgopa at the Intercontinental Hotel at OR Tambo International Airport.
Sassa's controversial contract with CPS was top of the agenda and the minister was chairing the meeting
"The minister had summoned us to an urgent official meeting at the airport and out of the blue Hulley, obviously with a prior arrangement with the minister, arrived and told us that he was coming to see if he can offer his legal assistance about the Sassa and CPS matter," said another official.
The official said Magwaza and Dangor had a serious argument with Hulley as they did not agree with him on certain things. They were also not clear what his role in the matter was as Dlamini had not explained it.
The official added that when Magwaza called for a special Sassa executive meeting at Emperors Palace on February 20, Dlamini arrived uninvited and caused a scene, accusing the CEO of being a "traitor".
"The minister accused Magwaza and some of the officials of stabbing her in the back by having meetings with the Treasury. She added that people should stop questioning Hulley's role as there was nothing wrong with him as he is President Jacob Zuma's legal adviser.
"But Magwaza asked the minister to explain what was Hulley's role and mandate on the Sassa matter. She took her bags and left."
Late last year senior officials at the National Treasury, Sassa, the Department of Social Development and the Reserve Bank established a task team to explore feasible options to ensure grants were paid after April 1 without CPS.
The minister was given a comprehensive submission that a system paying grants via the banks could work, and was also given a report by Dangor in early January about the viability of an alternate system.
According to sources within the minister's office, after Dangor submitted the report he received a long, heated text message from Dlamini about how he was going over her head by meeting the Treasury and how he was trying to destroy her and the work of everyone else.
"She never wanted any other players and never wanted to hear how others could do this.
"She has never taken an objective approach even after she was told by a high-level government team that there was another approach. Now the drive is to get the whole country to think CPS/Net1 and nothing else. She wanted to get the country to think that if you don't have CPS/Net1 when April 1 comes there will be no payments," said a source.
Dangor has since resigned. Social development spokeswoman Lumka Oliphant refused to answer specific questions.
"If people believe that there was something fundamentally wrong with the process at Sassa, they should be bold to speak on the record and approach law enforcement agencies. At least give you some evidence that these meetings happened," she said.
Sassa has to respond to the Constitutional Court by tomorrow on who was responsible for deciding that Sassa would not be able to pay grants itself and whether a deal had been concluded with CPS.
Magwaza is due back at work tomorrow after being off sick for two weeks.
He and Mzobe, according to several sources, were pressured into signing the CPS deal.
A week into her new job, Mzobe fell ill. According to sources close to her, she had been asked to sign the CPS contract but she was unsure about doing so.
"She was frantic, saying she had no idea why she was brought in to head up Sassa and left on her own.
"She was scared that she was going to make a mistake by signing the contract and wanted it to wait for the return of the real accounting officer," said the source.
On Monday, when she was apparently on her way to sign the contract after being summoned, she suffered a mild stroke.
"She has been highly stressed since she arrived," said the second source.