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ABSA defends fees for grants

FEE DISPUTE: Absa is involved in a legal battle with the SA Social Security Agency over the social grants contract awarded by the government. Photo: Jeremy Glyn
FEE DISPUTE: Absa is involved in a legal battle with the SA Social Security Agency over the social grants contract awarded by the government. Photo: Jeremy Glyn

QUESTIONS have arisen about Absa charging the poorest of the poor banking fees to utilise their social grant bank accounts.

Social grant recipients were charged banking fees despite the government having already paid Absa up to R30 a person to handle grant transactions.

The SA Social Security Agency (Sassa), which reports to the department of social development, awarded the social grants contract to Absa subsidiary AllPay SA.

The contract ran between 2004 and March this year.

Sassa paid AllPay to use the bank's infrastructure to disburse grant payments to more than one million children, people with disabilities and pensioners.

The grant recipients were mainly based in Eastern Cape, Western Cape and Gauteng.

Though it was not illegal for Absa to charge banking fees, ethical questions have arisen about the bank charging the poorest of the poor despite the government already paying to use the bank's infrastructure.

Bank documents seen by Sowetan show that grant recipients were charged "presentation" fees.

In certain instances AllPay charged R10.80 to withdraw R20, a "presentation" fee of R8, "transaction charge" of R2.65, and R1 for a balance enquiry.

Absa declined to address questions from Sowetan, save to say it acted within the parameters of the Sassa contract.

Lumka Oliphant, social development spokeswoman, has accused Absa of commercialising the social grants accounts.

"When the Sekulula accounts were converted into Sassa accounts during registration, we discovered that salaries were allowed to be paid into the accounts, stop orders and debit orders were loaded on to the accounts, beneficiaries were charged banking fees for different products and transactional costs, and stop orders for funeral and microloans," she said.

"The Sekulula account was commercialised and beneficiaries burdened with huge banking costs at the expense of the state since the money deposited into the account were meant for the beneficiary to receive their social grants for free."

The allegations against AllPay emerged when the company launched a court battle in a bid to win back the R10-billion contract.

The lucrative contract is now in the hands of Cash Paymaster Services (CPS).

"With respect to the contract, which AllPay ... had with Sassa to provide social security grant payments in Gauteng, Western Cape, Free State and Eastern Cape, AllPay conducted itself within the scope of its contractual obligations to Sassa," Absa said.

The company said it would only provide a detailed response once it had concluded its legal battle to challenge the awarding of the contract to CPS.

"AllPay's challenge was upheld by the North Gauteng High Court, which found, inter alia, that the decision 'is unlawful, taken for an ulterior purpose' and 'the procedurally unfair conduct of Sassa is inconsistent with the Constitution and is invalid'," Absa said in a e-mail response.

"The high court decision is currently subject to an appeal by AllPay and a cross appeal by each of CPS and Sassa.

"In these circumstances, AllPay does not believe it is appropriate to answer the detailed questions you have posed at this stage, but would be happy to do so once the legal processes have been completed," Absa said.

- This article was first published in the printed newspaper on 2 December 2012

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