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Social Development Minister Bathabile Dlamini is facing a legal suit of up to R248 million if a 15-year-old dispute over South Africa’s social grant system is not resolved.
She could also be interdicted from appointing a new service provider for the distribution of social grants when the current Cash Paymaster Services contract expires in March. With concerns rising about the readiness of the department for the expiry date, an interdict would add another major headache to the handover process.
Lawyers for information technology consortium IT Lynx say former president Thabo Mbeki, former public protector Lawrence Mushwana and former social development minister Zola Skweyiya could be called as witnesses.
The dispute relates to the 2002 awarding and then suspension of the replacement of SOCPEN, the backbone of the social grant distribution system, to information technology consortium IT Lynx.
The system was meant to be replaced with a friendlier and more modern system.
IT Lynx was linked to the late Sandi Majali, the controversial businessman and ANC benefactor who died in 2010 under mysterious circumstances.
The tender was put on hold after Treasury intervened to halt the deal because it was too expensive and ordered it to be restarted.
The DA also later complained to the Public Protector that Majali had given Skweyiya’s wife Thuthukile an interest-free loan, putting the minister in a conflict-of-interest situation.
In his 2006 ruling, Mushwana cleared Skweyiya of conflict of interest and that the adjuration had not been compromised by the loan to his wife.
But he found that he had breached the executive code of ethics by failing to disclose the loan to his wife to the Cabinet secretary.
He then directed that the replacement of the SOCPEN system be expedited in the “least costly and effective manner”.
Mbeki instructed Skweyiya and then finance minister Trevor Manuel to give him a report in this regard.
It is not clear what became of it. The company wants the report to be given to Mbeki’s successor, President Jacob Zuma, so that implementation can go ahead.
Since 2005, IT Lynx has waged a court battle to force government to implement the system, to no avail.
Now the firm says it cannot extend, renew or appoint a new contract for social grants service providers before implementing IT Lynx. The current contract expires in March.
Letters written to Dlamini in November on behalf of IT Lynx by Johannesburg-based Langa Attorneys say the 2002 contract is still valid as Mushwana had dismissed the conflict-of-interest allegations.
The lawyers say in the letter that “future implementation of any strategy to distribute the payment of social pensions and grants cannot be held or concluded without [its] involvement”.
They say that IT Lynx has an “exclusive and clear legal right to implement the replacement of the SOCPEN system” and “cannot be kept languishing any longer”.
The company, jointly owned by Kokeletso Investment and Net1, said the fact that Dlamini was already in talks with service providers prejudiced its rights.
It also believes its case has been strengthened by the Constitutional Court ruling last March that the Public Protector’s remedial actions were binding unless withdrawn by a court, meaning Dlamini is obliged to implement Mushwana’s directive for the urgent implementation of a new system.
An assessment by a firm of consulting actuaries of IT Lynx’s financial losses as a result of the alleged breach puts the figure at more than R248.3 million as at August last year.
In a somewhat frustrated tone, one of the letters says despite the State Attorney advising that the matter be settled, Dlamini and her director-general have “with aplomb, intentionally omitted and ignored every attempt to engage in discussions for settlement.”
The company says it has “intentionally and strenuously avoided issuing papers against Zuma” but its hand might now be forced by Dlamini’s actions.
It says if Dlamini presses ahead with appointing a new service provider, it would be a violation of its rights and it “will be left with no option but to interdict and seek a declaratory order to bring the matter to a head”.
Believing that “there is no hope left that it would ever be settled” the company is pushing for a court date “for sometime in February or any time before the end of April” for the hearing of the matter.
