NEWS

CPS Made At Least R1 Billion From Social Grants Contract

It has now been revealed that CPS CEO Serge Belamant will continue making R651,000 a month from CPS' parent company, Net1.

31/05/2017 07:23 SAST | Updated 31/05/2017 07:23 SAST
Gian Gianluigi/AFP/Getty Images

Over the past five years, Cash Paymaster Services (CPS), the company which distributes social grants on behalf of government, has made a pre-tax profit of over R1 billion, according to the Mail & Guardian.

The Constitutional Court ordered CPS to provide it with details of its profits by Tuesday, which it reportedly did. CPS' contract with the South African Social Security Agency (Sassa) was declared unlawful by the court in 2014, but it was extended for a year, until 2018, by the Court in March.

The Mail & Guardian reported that after tax, the net profit of the company came to R705 billion, or R141 million per year.

While the Court did not order CPS to pay back the money in 2014, it said CPS was not allowed to benefit from an unlawful contract.

According to the Mail & Guardian, in a recent statement to shareholders, Net1, CPS' parent company, warned that it was "conceivable", that it could pay back the money.

"It is conceivable that one or more third parties may in the future institute litigation challenging our right to retain a portion of the amounts we will have received from Sassa under our contract. We cannot predict whether any such litigation will be instituted, or if it is, whether it would be successful," Net1 said.

Meanwhile, Net1 will pay CPS CEO Serge Belamant R263 million in cash as part of a separation agreement, as Belamant takes early retirement, the Mail & Guardian reported.

From this Wednesday, Net1 will pay Belamant R651,000 per month as part of a consulting agreement.

The terms of the separation agreement were reportedly filed with the American Securities and Exchange Commission on Tuesday evening.