The Constitutional Court has ordered the Cash Paymaster Services to repay the South African Social Security Agency (Sassa) an amount of more than R81 million secured through an unlawful contract.
Image: Ian Landsberg/Independent Newspapers
The Constitutional Court (ConCourt) has ordered the Cash Paymaster Services (CPS) to pay the South African Social Security Agency (Sassa) more than R81 million in profit gained from the contract that was declared unlawful.
The ruling came after 12 years of legal battles, following the ConCourt's 2014 declaration that the contract was unlawful.
The declaration was suspended three times to ensure grants continued to be paid, as Sassa repeatedly failed to find an alternative or take payments in-house, leading to several court-approved extensions until 2018.
Sassa, under the political leadership of former Social Development minister Bathabile Dlamini, awarded a R10 billion contract to CPS for the national distribution of social grants in 2012.
The losing bidder, AllPay Consolidated Investment, challenged the award in court, citing serious irregularities in the procurement process.
The ConCourt officially declared the contract unlawful in 2014.
The ConCourt also held Dlamini personally liable for 20% of the legal costs incurred by the Black Sash Trust and Freedom Under Law.
The decision followed an inquiry into her role in the Sassa social grants crisis, specifically regarding the extension of an invalid contract with CPS.
The ConCourt found that she misled the court regarding the existence and role of “work streams” she established that bypassed Sassa's formal structures.
The order, which was granted on April 8, 2026, arose from an application by Freedom Under Law seeking to compel CPS to furnish information required by the National Treasury to determine whether and in what amount the service provider (now liquidated) had made a profit from an unlawful contract.
The application also sought consequential relief relating to information held by Lesaka Technologies (Pty) Limited and an order requiring the Treasury to determine CPS’s profit.
This development became central to the proceedings, as it bore directly on the practical utility of determining CPS’s profits and the nature of any relief that might follow.
The court noted that CPS’s liquidation gave rise to a concursus creditorum, with the effect that the rights of creditors were fixed and had to be pursued within the insolvency process, as read the court papers that added that this had implications for the structuring of relief, including set-off between claims arising before and after liquidation was generally not permissible.
Delivering his judgment, Justice Steven Arnold Majiedt said CPS had performed a public function of constitutional importance and had been held to be an organ of state for purposes of the contract.
He added that the continuation of the contract had been ordered to ensure the uninterrupted payment of social grants, not to preserve the company’s private rights.
Majiedt said in that context, the court held that any benefit derived from the unlawful contract had to be subject to public scrutiny, adding that it was just and equitable to consider repayment in profit.
Majiedt said the court also noted that audited reports by KPMG and Mazars reflected a combined certified profit of approximately R252m. He said a further verification exercise conducted by RAIN raised concerns regarding the accuracy of that figure and identified areas requiring further investigation.
The Treasury indicated that it was unable to determine a final profit without additional information.
Majiedt said in light of these disputes, and given CPS’s liquidation, the court considered whether to adopt the certified profit as a baseline, adding that this was a sensible and practical approach, as a full factual enquiry would be lengthy, complex, and of doubtful utility in circumstances where the company was insolvent.
He said the court also considered necessary adjustments to the certified profit. Majiedt said this was first addressed in a High Court judgment in terms of which CPS had been ordered to repay approximately R316m to Sassa, together with interest.
However, the Concourt found that this amount had not been taken into account in the certified profit and held that the certified profit had to be reduced by the capital amount together with interest.
The court also considered retrenchment costs and found that the provision had not been incurred and had to be reserved, resulting in an upward adjustment.
“Thirdly, the court considered Broad-Based Black Empowerment expenditure. It accepted the concessions made by CPS’s liquidator and held that the certified profit had to be increased by amounts that were unsupported or improperly allocated,” said Majiedt, adding that the court also considered Sassa’s claim for payment of services not rendered and held that this amount had to be deducted from the certified profit.
The Concourt also considered pending litigation in which CPS sought an upward price adjustment from Sassa and held that if it succeeded, the additional amount would increase the company’s profit, but it would not be required to repay that additional amount as profit to Sassa.
“Having regard to all relevant adjustments, the court concluded that the appropriate adjusted certified profit was R81,286,177. As to costs, the court held that the conduct of parties did not warrant a costs order in favour of any party and ordered that each party bear its own costs,” he said, adding that CPS was ordered to refund certified profit of R81,286,177 to Sassa.
Welcoming the court order, Sassa CEO, Themba Matlou, said the judgment serves as a powerful affirmation of the South African legal system.
"We are satisfied with the order handed down by the justices of the Constitutional Court. We believe this is a vital precursor to addressing other outstanding issues concerning CPS and finally close the chapter,” he said.
manyane.manyane@inl.co.za