16/02/2017 08:17 SAST | Updated 16/02/2017 08:26 SAST

Finance Minister Gordhan Says Extending Grants Tender "Unlawful", But Denies War With Social Development Minister Dlamini

National Treasury says Sassa has the ultimate say over the contract.

REUTERS/Ruben Sprich
Minister of Finance Pravin Gordhan

Finance Minister Pravin Gordhan warned Social Development Minister Bathabile Dlamini that plans to extend the contract of social grants service provider Cash Paymaster Services (CPS) would be unlawful, a report says.

Bloomberg reportedly saw a letter from Gordhan to Dlamini, sent on February 1, which said: "Sassa's proposed interim agreement with Cash Paymaster Services will not be lawful. The options proposed by the Sassa team cannot be supported unless the Constitutional Court were to approve such an option."

The contract was declared unlawful by the Concourt in 2013 but it was not cancelled so as to not interrupt the provision of grants. But the court gave Sassa until March 31 this year to come up with a new solution.

Sassa told Parliament on February 1 that it planned to extend the CPS contract. But the Concourt has to approve of any further plans.

According to the report, carried in Business Day, Gordhan warned Dlamini that if Sassa were to extend the CPS contract it could open itself up to "legal challenges".

He also reportedly pointed out that Sassa has asked for National Treasury approval for its proposal (to extend the contract) to be waived.

Meanwhile, reported that a report in The Star, warning of a "war" between Gordhan and Dlamini, was misleading.

Treasury said Sassa has the ultimate say over what will happen to the contract, and that Treasury assisted in the process at the behest of Sassa.

The report said Treasury had been consulting with Sassa for some months.

Treasury was due to brief the portfolio committee on social development on the Sassa matter on Wednesday but the briefing was postponed.