Exiting Sassa CEO moves to thwart grants minister

Bruised and bloodied from his protracted battle with Social Development Minister Bathabile Dlamini, the man tasked with ensuring that South Africa's 10 million grant beneficiaries receive their payments each month cleared out his desk this week.

But Thokozani Magwaza left with a wry smile, confident that his final act as CEO of the South African Social Security Agency would ensure that grant payments come under government control after the contract with the current payment agency expires in April.

Last week he wrote to South African Post Office CEO Mark Barnes to formalise collaboration between the two state entities.

Insiders said this was what Dlamini had been fighting against, although the minister, who favours a public tender, has not said she will oppose the proposed collaboration.

Magwaza's letter to Barnes was "as good as a contract", said sources close to the negotiations.

"He ensured everything was legal - even getting support from Treasury to deviate from a tender. The only thing that is missing is for [the Post Office] to provide costing and time frames of when work starts," one source said.

Magwaza declined to comment, but insiders said he had been in a race against time to secure the deal before being pushed to resign. He and his executive believe that using a government entity to distribute payments will save taxpayers millions of rands and enable greater accountability.

The Post Office is also seen as having established pay channels and experience in working as a bank. It would also be the first move towards Sassa taking over the payment system itself in about five years.

Magwaza's letter, which the Sunday Times has seen, is another blow for the embattled minister, who will face an inquiry in September - ordered by the Constitutional Court - to determine if she lied to the court about Sassa's contract with Cash Paymaster Services, which was declared illegal.

The inquiry will also determine if she should be held personally liable for putting grant payouts in jeopardy earlier this year by not securing an alternative payout plan by the deadline given by the high court.

This week it also emerged that Pearl Bhengu, who was named the new acting Sassa CEO on Tuesday, was in a business venture with Dlamini's daughter, raising concerns about possible conflict of interest.

Over the past several months, Magwaza has held many meetings with Dlamini and head of legal services Nkosinathi Dladla to determine when he will leave.

"He made sure everything was in place before he signed his termination letter on Monday," said the source. "For him the most important thing was to ensure Sassa would not find another Cash Paymaster Services to take over grants."

It took him 10 days to request and receive a deviation from a competitive bidding process from the Treasury, clearing the way for the Post Office to take over payments.

He also fired Dlamini's "work streams", a parallel structure in the department that the Treasury found had been appointed irregularly.

It is believed they were working on specifications for a public tender process.

Dlamini's spokeswoman, Lumka Oliphant, said Dlamini was on record as saying it was the position of the ANC that the Post Office must be part of social grant payments, and that as a deployee of the ANC she was tasked with implementing its policies.

Oliphant said the agreement between Sassa and the Post Office must be subjected to supply-chain management procedures and regulations, and that the letter could not "be equated to an 'agreement' as Sapo is still expected to officially respond to Sassa's [request for proposal] process, which will be evaluated in line with government's procurement protocols".

She said Magwaza's resignation had been by "mutual agreement".

Sources said Dlamini and Finance Minister Malusi Gigaba discussed grant payments when they met last month. Oliphant denied this.

After the meeting, Dlamini wrote to Magwaza "suggesting an open tender would be the best option", sources said.

He told her that Sassa executives favoured the Post Office and he would take this route unless she instructed him not to. She did not reply.

In his letter to Barnes, Magwaza requests co-operation between the two entities over a period of about five years.

He writes: "It must, however, be understood that the appointment of the South African Post Office ... does not mean that Sapo is taking over the payment function permanently.

"The intent is for [the Post Office] to build the payment system with the involvement of Sassa from inception to completion and operate it, and then transfer the whole payment process back to Sassa once it has built capacity to take over."

Treasury spokeswoman Yolisa Tyantsi said her department's role had been to provide legally sound options, not to make determinations: "At the time Magwaza had the last say because he is the accounting officer. We provided guidance in terms of [the relevant legislation]. We agreed to the deviation with conditions which Sapo must still fulfil."

Barnes told Business Day this week Magwaza's letter "was essentially an agreement to collaborate towards a solution. We have not signed a contract ... but it was a firm intention supported by National Treasury."

sabaa@sundaytimes.co.za