Former social grants distributor CPS taken to Concourt for under-reporting millions in profits

Freedom Under Law has, in court papers, accused CPS of failing to comply with the Constitutional Court's previous order.
Freedom Under Law has, in court papers, accused CPS of failing to comply with the Constitutional Court's previous order.
Image: File

Former social grants distributor Cash Paymaster Services (CPS) has been hauled before the Constitutional Court for under-reporting its profits by as much as R800m and denying independent auditors full access to financial records.

This is according to court papers filed in the latest court challenge by non-governmental organisation (NGO) Freedom Under Law which accuses CPS of failing to comply with the apex court's previous order.

The NGO has asked the court to intervene as it had previously ordered that CPS's audited profits from the illegal social grants distribution contract be verified by Sassa and approved by Treasury.

Freedom Under Law argued in court papers that there has not been proper compliance with the court's order as Sassa's independent auditors were apparently denied full access to CPS's financial records and Treasury had also refused to approve the auditor's report.

CPS refused to comment on the latest court challenge.

Rain Chartered Accountants Inc's (Rain), which was appointed by Sassa to verify CPS's profits, had identified an amount of approximately R800m of unreported profit which was allegedly not reflected by CPS's auditors.

Freedom Under Law's CEO Nicole Fritz argued that "there has not been proper compliance with the orders [of the Constitutional Court]".

"The court and the parties are not in a position to know the true extent of the net profit CPS made pursuant to the unlawful social grants contract. This net profit must be repaid to prevent the perpetuation of unlawfulness... nevertheless, the verification report indicates that CPS's true profit may in fact be in the region of R800-million more than that which was reported to the Constitutional Court by CPS's auditors," argued Fritz.

She said the court's intervention in this "matter is rendered all the more necessary by the fact that the work that Rain did complete, notwithstanding it being prevented from fulfilling its mandate, indicates great cause for concern and highlights the necessity for a comprehensive and accurate verification of CPS's financial statements that were filed with this court".

In 2014, the ConCourt found CPS's contract with Sassa to be invalid. The invalidity of the agreement was twice suspended by the court to allow payment of social grants to continue before the SA Post Office took over mid-2018.

Would you like to comment on this article or view other readers' comments? Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.