Sassa and its former CEO slapped with legal costs in grants fiasco

The South African Social Security Agency (Sassa) and its former CEO Pearl Bhengu have been ordered by the Constitutional Court to pay legal costs in the agency’s urgent application earlier this year to extend the contract of Cash Paymaster Services (CPS) to distribute cash grants.

However, the apex court didn’t grant a personal cost order, meaning that Bhengu will not pay legal costs out of her own pocket.

In February 2018, Bhengu asked the court to lift the invalidity of the CPS contract to pay a portion of 10.7 million social grant beneficiaries until end September 2018.

Under the extended contract, CPS would be the paymaster for only 2.5 million elderly and disabled beneficiaries.

The court agreed to the request for an extension in March 2018, buying Sassa time to find another service provider to replace CPS’s invalid contact.

The question of legal costs in the CPS extension application – with respondents in the matter including civil rights group Black Sash, Post Office, Freedom Under Law, CPS and others – was left to be determined at a later stage.

Reading the judgement on Thursday, Justice Leona Theron said public officials, who are acting in a representative capacity, may be ordered “to pay costs out of their own pockets, under specific circumstances.” These circumstances, she said, arise where a public official is found guilty of acting in bad faith or gross negligence.

Sassa was found to have not approached the court earlier for an extension despite knowing that it wouldn’t be able to find another service provider to pay cash grants. “The urgency [of extension application] relied on was self-created and the explanation for the delay in approaching this court was not satisfactory,” said Theron. However, the unsatisfactory explanation doesn’t amount to “gross negligence or bad faith” by Sassa, which would warrant a personal cost order.

She added that if the court refused to lift the invalidity of CPS’s contract and extend its contract, this would have severely prejudiced vulnerable grant beneficiaries. “Consequently, the applicants must bear the cost of the application.”

The court judgement on Thursday comes a month before CPS’s contract expires. The South African Post Office will take over the role of administering social grant payments to more than 10 million beneficiaries from CPS.

However, in preparation of taking over social grant payments, the Post Office has faced technical glitches that have left some beneficiaries empty handed.

The court didn’t make an order on whether former social development minister Bathabile Dlamini should also be held personally liable for legal costs incurred in the social grants fiasco.

An inquiry, which was presided over by Judge Bernard Ngoepe to probe Dlamini’s role in the Sassa fiasco, is yet to make its recommendations on whether she should be held personally liable for legal costs.

Former top Sassa officials accused Dlamini of being opposed to the idea of the Post Office taking over social grants and deliberately sabotaging commercial banks from being awarded social grant contracts.

If a personal cost order was granted against Bhengu or Dlamini, it would be in line with personal cost order developments against recalcitrant public officials including former president Jacob Zuma and the public protector Busisiwe Mkhwebane.