The Constitutional Court has ordered Cash Paymaster Services to repay more than R81 million in profits earned through its contract to pay social grants.
Archive photo: Barbara Maregele/GroundUp
- The Constitutional Court has directed Cash Payment Services to repay more than R81 million to the SA Social Security Agency.
- This represents the profits the company earned through its contract to pay social grants.
- The contract was declared unlawful in 2014. Since then, the issue has been in court 12 times.
- For more financial news, visit News24 Business.
Cash Payment Services (CPS), now in liquidation, has been directed by the Constitutional Court to repay more than R81 million to the South African Social Security Agency (Sassa) – the profits from its social grant payment contract that was deemed unlawful in 2014.
The matter has been before the apex court 12 times in as many years.
Justice Steven Majiedt, writing for the court in a ruling handed down on Wednesday, said: “This is the latest episode in the long-running saga involving the unlawful award of a tender for the country-wide payment of social grants to beneficiaries.”
The contract was declared unconstitutional by the court in 2014. But that declaration was suspended three times to ensure grants continued to be paid. The suspensions contained provisions for CPS’s profits to be audited.
The outstanding issue was a determination as to whether the company should repay those profits, as was sought by Freedom Under Law (FUL).
FUL wanted full disclosure of the CPS’s accounting records, including its assets and liabilities and whether the liquidators had investigated the prospects of recovering any amounts on the basis of irregularities.
Majiedt said the liquidator had filed a report, dated May 2025, reflecting that the company’s “uncontroversial assets” totalled almost R51 million.
Its “controversial assets” consisted of R52 million owed to the company by a subsidiary, which was also in liquidation. Further, CPS was claiming R358 million from Sassa for an upward price adjustment for its services (during the suspension periods), and there was a further contested claim by CPS against Sassa for a contribution to the costs of the liquidation.
As to its liabilities, the liquidator reported that claims of R778 million had been proved at a meeting of creditors, the bulk of which was a claim by Sassa of more than R632 million, and a further claim by Sassa for more than R74 million as “payment of services not rendered”.
The SA Revenue Service (SARS) was also claiming R401 million from the company which CPS was seeking to review.
Majiedt said: “In conclusion, the liquidator pointed out in her report that given Sassa’s proven claims, creditors will receive payment of a pro rata dividend, but if SARS is successful in proving a claim against CPS, then concurrent creditors, including Sassa, may receive no dividend at all.”
He said in light of the liquidator’s report, the Chief Justice had issued further urgent directions to address its implications, particularly the conclusion that CPS did not even have sufficient funds to pay Sassa’s proven claims.
Further hearings were held, and further directions were issued dealing with “complex, wide-ranging questions covering several difficult and different aspects”, Majiedt said.
In a “brief recap to give some perspective”, he said the fatal shortcomings in the contract had been the fault of Sassa and not CPS.
However, an order for repayment was justified in this matter because of the “unique characteristics” which distinguished it from the usual scenario of an innocent contractor seeking to claim a profit in an invalid contract executed in good faith and without culpability.
He said CPS was effectively an “organ of state” and it had become accountable to the people of South Africa in respect of public power and public function.
Further, he said, CPS was not an active company where depriving it the right of profit might signal its demise.
“We are concerned with an insolvent company whose main creditors are state entities, Sassa and potentially SARS,” Justice Majiedt said.
He said the parties had made various submissions on how the profit should be determined. The court had determined that it would use the “certified profit”, verified by chartered accountants RAiN, with certain adjustments.
The bottom line, he said, was that there was agreement that CPS did make a profit but a full assessment would involve a lengthy inquiry and “self-evidently the game is not worth the candle”.
There is, to my mind, only one practical, sensible solution. We need to draw a line in this never-ending saga.
Justice Steven Majiedt
“This is the twelfth time that a case involving this illegal tender has been in this court. It would serve no purpose at all to get bogged down in a laborious exercise of fact-finding, weighing up probabilities, assessing heavily disputed financial evidence and calculating income.”
Taking into account some upward and downward adjustments, Majiedt determined the profit to be R81 286 177 which must be paid to Sassa.
He said, crucially, that Sassa was already getting a substantial refund of profit of R632 894 722 (through its proven claims) and a further R74 786 892 (in respect of work not done).
Turning to CPS’s pending action against Sassa for the upward price adjustment of R358 million, he said that should it succeed, it would increase the company’s profit but Sassa should not be granted a concurrent claim to claw back that profit. He ordered that if the action succeeded in full or in part, Sassa can’t claim any increased profits.
On the issue of costs, he said it was clear that most, if not all, the protagonists had not covered themselves in glory. “Twelve years and twelve court cases later, attitudes have plainly hardened. The fairest and most balanced order would be one that each party bears their own costs.”