<\/p>\n
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) \u2013 the profits from its social grant payment contract that was deemed unlawful in 2014.<\/p>\n
The matter has been before the apex court 12 times in as many years.<\/p>\n
Read:
Cash Paymaster Services to go into liquidation
CPS: Liquidation won\u2019t be opposed by parent company Net1
Sassa set on recovering Cash Paymaster Services debt
CPS hasn\u2019t revealed how much profit it made from social grants contract
CPS has still not revealed how much profit it made from social grants contract
Concourt hammers unlawful social grants company<\/p>\n
Justice Steven Majiedt, writing for the court in a ruling handed down on Wednesday, said: \u201cThis 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.\u201d<\/p>\n
The contract was declared unconstitutional by the court in 2014.<\/p>\n
But that declaration was suspended three times to ensure grants continued to be paid.<\/p>\n
The suspensions contained provisions for CPS\u2019s profits to be audited.<\/p>\n
The outstanding issue was a determination as to whether the company should repay those profits, as was sought by Freedom Under Law (FUL).<\/p>\n
CPS assets<\/p>\n
FUL wanted full disclosure of CPS\u2019s accounting records, including its assets and liabilities and whether the liquidators had investigated the prospects of recovering any amounts on the basis of irregularities.<\/p>\n
ADVERTISEMENT<\/p>\n
CONTINUE READING BELOW<\/p>\n
Justice Majiedt said the liquidator filed a report, dated May 2025, reflecting that the company\u2019s \u201cuncontroversial assets\u201d totalled almost R51 million.<\/p>\n
Its \u201ccontroversial assets\u201d consisted of R52 million owed to the company by a subsidiary, which was also in liquidation.<\/p>\n
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.<\/p>\n
CPS liabilities<\/p>\n
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 \u201cpayment of services not rendered\u201d.<\/p>\n
The South African Revenue Service (Sars) was also claiming R401 million from the company, which CPS was seeking to review.<\/p>\n
Majiedt said: \u201cIn conclusion, the liquidator pointed out in her report that given Sassa\u2019s 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.\u201d<\/p>\n
He said in light of the liquidators 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\u2019s proven claims.<\/p>\n
Read the judgment here.<\/p>\n
\u2018Complex, wide-ranging questions\u2019<\/p>\n
Further hearings were held, and further directions were issued dealing with \u201ccomplex, wide-ranging questions covering several difficult and different aspects\u201d.<\/p>\n
ADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n
In a \u201cbrief recap to give some perspective\u201d, Majiedt said the fatal shortcomings in the contract had been the fault of Sassa and not CPS.<\/p>\n
However, an order for repayment was justified in this matter because of the \u201cunique characteristics\u201d, 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.<\/p>\n
He said CPS was effectively an \u201corgan of state\u201d and it had become accountable to the people of South Africa in respect of public power and public function.<\/p>\n
Further, he said, CPS was not an active company where depriving it the right of profit might signal its demise.<\/p>\n
\u201cWe are concerned with an insolvent company whose main creditors are state entities, Sassa and potentially Sars.\u201d<\/p>\n
Determination of profit<\/p>\n
Majiedt said the parties had made various submissions on how the profit should be determined. The court had determined that it would use the \u201ccertified profit\u201d, verified by chartered accountants RAiN, with certain adjustments.<\/p>\n
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 \u201cself-evidently the game is not worth the candle\u201d.<\/p>\n
\u201cThere is, to my mind, only one practical, sensible solution. We need to draw a line in this never-ending saga. This is the twelfth time that a case involving this illegal tender has been in this court.<\/p>\n
\u201cIt 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.\u201d<\/p>\n
ADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n
Taking into account some upward and downward adjustments, Majiedt determined the profit to be R81 286 177, which must be paid to Sassa.<\/p>\n
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).<\/p>\n
Read:
Government starts review of social grants payment system
Social grants unpaid as beneficiaries struggle with Sassa\u2019s system
MPs not impressed with new Sassa verification process
Grant beneficiaries confused by funeral policy deductions
Sassa claims it has fixed most of its audit problems
Sassa extends Postbank\u2019s contract by three months
Sassa suspends 70 000 grant payments in crackdown<\/p>\n
Turning to CPS\u2019s pending action against Sassa for the upward price adjustment of R358 million, he said that should it succeed, it would increase the company\u2019s profit but Sassa should not be granted a concurrent claim to claw back that profit.<\/p>\n
He ordered that if the action succeeded in full or in part, Sassa can\u2019t claim any increased profits.<\/p>\n
On the issue of costs, he said it was clear that most, if not all, the protagonists had not covered themselves in glory.<\/p>\n
\u201cTwelve 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.\u201d<\/p>\n
Read: South Africans in financial distress are turning to gambling in their millions<\/p>\n
\u00a9 2026 GroundUp. This article was first published\u00a0here.<\/p>\n
#ConCourt #rules #CPS #pay #Sassa #R81m<\/p>\n","protected":false},"excerpt":{"rendered":"
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