Plot to ‘hijack’ R2bn Sassa tender

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By: The Sunday Independent

JOHANNESBURG- Communications Minister Stella Ndabeni-Abrahams has apparently turned a blind eye to an alleged plan by some South African Post Office (Sapo) and Postbank board members to hijack about R2 billion social grants payment contract for their personal benefit.

According to Postbank insiders, three days after Ndabeni-Abrahams appointed the new Sapo board on November 1 last year, new chairperson Colleen Makhubele sent chief financial officer Jabu Dlamuka a WhatsApp message demanding information about the Post Office’s R1 billion saved for infrastructure investment, as well as “strategic contracts yet to be awarded and contracts still to be advertised”.

Sunday Independent has also established that two senior Postbank officials wrote to Ndabeni-Abrahams in February last year asking her to intervene against “reckless” Postbank board chairperson Phumzo Noxaka, whose interference in operational matters threatened a projected R350 million profit from the bank’s contract with the SA Social Security Agency (Sassa), as well as its banking licence application.

In their four-page joint letter obtained by the Sunday Independent last week, Postbank acting chief executive Shaheem Adam and then acting chief financial officer Zama Chonco accused Noxaka of endangering the smooth running of the bank by imposing unrealistic targets in the bank’s annual performance plan, which posed a risk to the banking licence application submitted to the South African Reserve Bank.

Sources said in their first meeting, and without going through the master agreement with the Department of Social Development, the new Sapo board demanded a 300% increase in the number of Sassa pay points – from 1500 outlets to 5000 – at R26000 per point.

They allegedly demanded the replacement of Fidelity Guard with a handpicked and politically connected security company as a cash dispensary service provider for R60m per month.

The board under Noxaka has also been trying to terminate the five-year Integrated Grant Payment Solution (IGPS) deal the Postbank signed with Financial Software and Systems (FSS) in February 2018, which is valued at R45m, and move the contract to an American company without going to tender, the insiders added.

The Postbank reportedly makes a profit of between R100m and R144m every month from the Sassa deal using FSS technologies.

However, in an internal memorandum written to Makhubele dated January 29 this year, Noxaka ordered the decommissioning of the IGPS solution and migration of the Sassa account to the Postbank’s core banking solution, a software owned by the American company.

“The Postbank board is prepared to enter into a R150m deal with this country for the same services that they get from FSS at R15m per annum and R45m in five years. “You don’t need to be a rocket scientist to see that their intention isn’t to save money but to loot,” added the official.

When Sapo acting chief executive Lindiwe Kwele and head of supply chain Mothusi Motjale objected to the board’s interference, they were both suspended on allegedly trumped-up charges.

“Lindiwe and Mothusi were suspended because they didn’t want to go to the kitchen and cook some deals for the new board and they were also seen as stumbling blocks in their quest to loot,” said one senior Sapo official.

Kwele and Mothusi have launched separate legal bids to challenge their suspensions, which they deem to be unlawful.

Ndabeni-Abrahams failed to respond to specific questions sent to her more than a week ago.

Through her spokesperson, Nthabeleng Mokitimi-Dlamini, Ndabeni-Abrahams last week requested a four-day extension until Tuesday this week, which was granted.

Her offices on Friday issued a statement claiming they had “noted with grave concern” the “unprofessional and malicious tactics employed by certain members of the media”.

The statement added that the “tactics were designed with the sole purpose to tarnish the reputation of the person of Minister Stella Ndabeni-Abrahams and ultimately distract her from carrying out the department’s mandate”.

“The minister constantly finds herself fielding media queries formulated around malicious rumours, lies and allegations.”

Mokitimi-Dlamini added that the department had decided not to respond to certain inquiries.

“The ministry has taken a stand to not respond to media queries based on leaked information and rumours.

“We have regrettably observed of late a trend that is becoming disturbingly common; the leaking of official correspondence between and within the department and/or its entities, to the media. The latest being around Sapo and the Postbank,” she said.

A senior Sapo official accused Nadabeni-Abrahams of turning a blind eye to the board’s alleged plot to hijack the Sassa contract.

“The minister is fully aware of what some of the board members are doing or plotting to do, but she has never reprimanded them. Instead some of them get maximum protection from her.

“When Adam and Zama sent a letter to the minister complaining about the board chair interference in their duties, they were suspended and nothing was done against implicated board members.”

In their letter, Adam and Chonco added that the Postbank executives were “not comfortable” with the inclusion in the Postbank SOC Ltd corporate plan for the 2020 financial year of corporate targets for a lending portfolio of R262m as at March 2010, growing to R1bn in 2021 and R2bn in 2022. “The SA Post Office executives were not comfortable to include this target because it would have been in contravention of condition B14 of the SA Reserve Bank’s section 13 approval granted to the Postbank to establish a commercial bank.

“This condition clearly specifies that Postbank will have to apply to the Sa Reserve Bank for approval prior to the extension of any credit activities,” Adam and Chonco said in the letter.

Despite protestations by the executive, they added, Noxaka insisted that the targets be included in the Postbank’s annual performance plan.

“As senior executives within the bank who are also chartered accountants, we want to place on record that we do not support the inclusion of this metric nor the targets specified.

“We view this as a reckless action that will endanger Postbank’s banking licence application. This is not the first time the chairperson’s undesirable behaviour has adversely impacted the smooth running of the bank.”

The pair told Ndabeni-Abrahams they were forced to act to ensure the long-term sustainability of Postbank.

“Postbank has been operating as the only profitable division of Sapo for a number of years and despite the substantial investment made and costs incurred in implementing the Sassa offering with Sapo successfully, we are projecting a pre-tax profit of R350m for the current financial year ending 31 March 2019.”

Adam, who advised the bank against cancelling the deal with FSS but rather wait for the contract to expire and advertise it, confirmed that he was suspended in August last year.

“The investigation terms of reference used as the basis for my suspension are unknown.

“The entire basis of the charges appear to relate to a report that was published in June last year.

“This report doesn’t even mention me. I have lodged an unfair labour practice dispute,” said Adam.

“Right now someone who does not even have proper qualifications is sitting over R9bn assets. “This clearly shows a lack of due diligence,” said the source.