Yesterday, it was revealed that Cash Paymaster Solutions (CPS) made a pre-tax profit of R1.1 billion from paying social grants.
The revelation was made by the company’s statement of profit which it availed to the Constitutional Court.
While the statement disclosed a pre-tax profit of R1.1 billion from the social grant distribution, it didn’t reveal the profit it made from other services it provided.
It was in 2014 that the Constitutional Court ordered CPS to provide a statement of its profits under its contract with the South African Social Security Agency (Sassa) within 60 days before the expiration of the contract.
As the deadline was on Tuesday, CPS offered a profit statement which indicated it received an income of R8.9 billion from the contract.
With an operational cost of about R7 billion and an administrative cost of R889 million, the American-listed company specified that it earned R1, 091, 666, 503 as profit.
Reacting to the CPS R1 billion profit revelation, the Democratic Alliance (DA) party asserted that the extraordinary profiteering from public money is an insult to poor South Africans.
The party also indicated that the profit may have contradicted the Constitutional Court 2014 order which banned CPS from making further profits from the Sassa contract.
To DA, it’s uncool for CPS to be allowed to earn such a huge profit from the safety net provided to poor and vulnerable South Africans.
DA acknowledged that CPS is a profit-driven company. But then, argued thus: “Its contract was never valid and its work was only allowed to continue because of the sheer recklessness of Minister Bathabile Dlamini’s department and SASSA.
“Whether CPS has violated the Constitutional Court’s 2014 order preventing it from profiting will be up to the Court to decide.
“But we believe that the Chief Procurement Officer must investigate the terms under which this contract was concluded that allowed for such obscene profits to be made,” stated the party.
DA said it’s either CPS misled government at the time of contracting, or SASSA and the Department of Social Development agreed to this unacceptable profit margin.
As such, the party in a letter, asked the Finance Minister, Malusi Gigaba, to start an investigation within the Office of the Chief Procurement Officer into CPS R1 billion profit.
“We expect that the Chief Procurement Officer will unearth the truth. If CPS misled government, every cent it has milked from South Africa must be recovered.
“Alternatively, if the Social Development Department and SASSA allowed for this daylight robbery, albeit under an invalid contract, Minister Dlamini will have a R1 billion question to account to Parliament for,” added DA.