The Sassa office in Eersterivier. (Archive photo: Ashraf Hendricks/GroundUp)
The Constitutional Court delivered a unanimous verdict on Thursday, finally settling years of litigation over the illegal contract for the payment of social grants.
The court ruled that Cash Paymaster Services (CPS) must repay R81.3 million to Sassa after profits from a contract that was already declared unconstitutional in 2014.
The court found that, although CPS did not initially act unlawfully itself, any benefit from an illegal contract remains subject to public scrutiny and repayment is justified in the public interest.
The ruling says that CPS performed a public function by distributing social grants and therefore bore constitutional obligations. The court made it clear that CPS does not have to suffer losses, but is also not entitled to make a profit from an illegal contract, especially where public funds and vulnerable beneficiaries are involved.
The amount of R81.3 million was determined after various adjustments, including previous court orders, outstanding claims and inaccurate cost calculations.
CPS was already finally liquidated in 2020, which means that Sassa must claim as a creditor in the liquidation process.
(Photo: Marecia Damons/ GroundUp)
According to the liquidator, ordinary creditors may receive a pro rata payout, but this may expire if the South African Revenue Service (SARS) successfully proves its claim.
Freedom Under Law (FUL), which acted as the second applicant, says the ruling “ensures the liability of a private body exercising a public function” and confirms that “companies may not profit from illegal contracts”.
According to FUL, the ruling also serves as a deterrent to future irregular contracts with the state and is an important step in maintaining the rule of law, despite the fact that it took more than a decade to come to an end.