Plan Z

The social grants crisis is a secret machination to get Nkosazana Zuma elected president.

Everyone in South Africa, from the judges of the Constitutional Court to the poorest of the poor in the rural hills of Zululand, wants to know why the Minister of Social Development Bathabile Dlamini and the entire Zuma government allowed the social grants crisis to be driven all the way to the Constitutional Court, with only days left before the entire system was at risk of collapsing.

The answer, Noseweek has found  with the help of a top government informer and the minutes of a meeting held by Cell C board members in the early months of 2016 (not long before Dlamini suddenly lost all interest in her officials’ alternative plans for taking in-house control of the distribution of social grants) is both unexpected and obvious. But first a recap:

DA shadow minister for Social Development Bridget Masango said in a press statement: “The DA believes that Dlamini manufactured the social grants crisis to force the extension of the invalid R139 billion contract [turnover per year] between Sassa and [the American-controlled company] Cash Paymaster Services.”

Masango went on to note: “The DA has continuously called on the President to remove Minister Dlamini, however, Zuma continues to protect her because she is a key member of his ‘Defence League’ that helps him remain in power.”

She was right on both scores.

Social development minister Bathabile Dlamini and President Jacob Zuma

“With due respect, it is simply incomprehensible. One seeks in vain [from] the minister… what she did‚ why she did it‚ what she knew and why she did what she did.” – Advocate Geoff Budlender SC‚ representing Black Sash commenting on Minister Dlamini’s affidavit supposedly explaining her role in the grants debacle to the Constitutional Court.

Something significant was missing; was being withheld, Budlender suggested – and he was absolutely right.

IFP MP Liezel van der Merwe said in Parliament after the minister suggested the crisis had been created by the opposition parties and the media: “You manufactured this crisis alone. The only thing we still need to figure out is: To what end did you manufacture this crisis? And whose interests are you serving?”

She, too, was spot-on.

All were right. All intuitively sensed that Bathabile Dlamini and President Zuma’s brazen determination and confidence suggested there was more to it than the (by now) routinely anticipated cash bribe or kickback.

It had to be something cleverer than that – and something much more significant and sinister. Something that Dlamini and President Zuma and Net1 and its subsidiary Cash Paymaster Services are confident will make them untouchable. Something they believed none of us would even have guessed at.

Noseweek believes it has the answer.

The IFP’s bombshell disclosure in Parliament that it was rumoured in the ANC's own caucus that CPS was funding Dr Nkosazana Dlamini-Zuma’s presidential campaign offered a significant clue.

Craig McKune at investigative unit amaBhungane took us a great leap forward, although his interpretation of events was still based on the supposition that they were was driven entirely by commercial greed.

AmaBhungane’s painstaking research revealed (in summary) that:

“The US-listed firm Net 1 uses its subsidiary Cash Paymaster Services’ (CPS) social grant contract as a secret back door to get grant beneficiaries’ information. This was always forbidden. Then Net 1 uses the information to make billions selling microloans [at outrageous interest rates], insurance, airtime and other financial products to beneficiaries.

“Net 1’s executive chairman Serge Belamant has repeatedly denied this under oath.

“The South African Social Security Agency (Sassa) contracted CPS in 2012 to pay social grants nationwide. CPS has since enrolled about 17 million [sic] people…

“The Sassa contract specifically forbade CPS and its subcontractors from using the beneficiaries’ information for anything but paying grants. But other companies in the Net 1 group are using the Sassa cards and beneficiary data to access the grant beneficiaries’ account history and their social grant details.

“The department of social development, the Black Sash and others have long complained that, since CPS took over, there has been a huge increase in debits from social grants for loans, electricity, airtime and insurance.

“They argue that paying for these products traps South Africa’s poorest in a cycle of debt, undermining the purpose of the grants, which is to pay for basic needs.

“Since CPS won its contract five years ago, Net 1’s financial services revenues have grown radically. Net 1 is responsible for most of the R550m that comes off beneficiaries’ bank accounts for financial services every month, court papers show.”

All extremely serious and worthy of the courts’ and the public’s attention and outrage.

But there is a still more serious dimension to that story that escaped their attention. It involves power and political leverage rather than money – the sort of incentive that sees Bathabile Dlamini careless of her duty to obey court orders, and “remiss” (as her counsel has proffered) in her (non)supervision of her department’s plans to administer and distribute social grants – behaviour that sensible people find “incomprehensible” – in order to promote the presidential ambitions of her sister, Nkosazana Dlamini- Zuma.

And thereby to secure the safety from prosecution of Jacob Zuma after he retires as President.

Until about May 2016, only weeks before Noseweek first warned of the impending social grants meltdown (nose201, July 2016) Minister Dlamini was apparently fairly rational and appropriately ministerial, in supporting officials in her department or at Sassa who were on track to turn the bitter lemon of CPS’s unlawful grant payment contract into lemonade for the poor. 

A task team of sensible civil servants from Social Services, Treasury and the Reserve Bank had worked their way through various plans to reach a consensus: they proposed a plan by which a number of institutions with the capacity or potential capacity to deliver social grants in different areas (including the Post Office and Post Bank) would be phased in over 12 to 24 months to assist the department to keep the vital social safety net in place. In this way recipients might even be offered a choice of service providers. With the Reserve Bank playing an impartial regulatory role, all rival service providers would be offered the same moderate rate of payment, and be encouraged rather to compete on quality of service.

The ugly face of capitalism would be given a facelift

With that vision in mind, the Director-General of Social Services was to approach the Constitutional Court in good time before the expiry date of CPS’s invalid contract and request the court’s permission to extend the CPS contract for a further 12-month period so as not to jeopardise grant payments while the new plan was rolled out.

Given its already entrenched position, CPS would be restricted to receiving only the budget allocated to Sassa for the period, provided it showed some public-spiritedness and ethical sensitivity to refrain from using the vulnerable and disadvantaged for commercial gain.

Of course, neither CPS nor any other potential service provider would be allowed to engage in those secondary and exploitative financial practices  which the Black Sash had shown up as shockingly widespread.

At that stage the minister showed no partiality to CPS or any other potential player, and things were looking good for an inclusive, pragmatic solution that had the potential to enable the most vulnerable and disadvantaged to experience “social justice and fundamental human rights” – values espoused in the preamble of the Constitution – each month when drawing their grant, as all service providers were locked into an impartially regulated system to make sure the grant recipients’ interests were paramount. 

All those involved thought it had every prospect of success.  If only self-serving political and/or commercial interests could be kept at bay.

Alas, they could not.

Minister Dlamini suddenly changed her tune. She stopped listening to her advisers.

Instead of letting her officials get on with devising a range of plans – some more, others less, promising – in accordance with the Constitutional Court’s directives, their plans and efforts were no longer of any interest to her; she had opted for keeping Cash Paymasters, no argument.

“She was not interested in plans A, B or C. She had opted for what became known amongst us as Plan Z,” Noseweek’s source revealed.

Why? Because it soon became clear that it had something to do with the Zumas – and Nkosazana Dlamini-Zuma in particular. That was where the minister’s attention was now exclusively focused.

Why particularly would the dominant faction of the ruling party with plummeting political fortunes risk alienating as many as 11 million grant recipients and voters by sabotaging a good plan for which they could have taken credit? (The 11m people receive  17 million grants – often confused in reports.) Like amaBhungane, the full import and potential of Net1’s “back door” access to the grant recipient database did not occur to the disheartened officials. In fact Bathabile Dlamini and the party had a secret scheme up their sleeve that would gain voters.

With some useful help from a Cell C friend, and by applying Occam’s razor (the simplest explanation is usually the most likely) to the known facts, consider that CPS (and its holding company Net1) has the mobile phone numbers, names, ID numbers and place of residence of all social grant recipients on its data base.

Net1, with its backdoor access to CPS’s database, now  together with associate Blue label Telecom also has control of cell phone service provider Cell C, and also access to the cell phone company’s database of more millions of (mostly black) subscribers with their names, ID numbers, cell phone numbers and addresses. Together, these give cell phone access to an estimated 20 million (overwhelmingly, black and largely illiterate) well-identified voters on their database.

Come December, when the ANC gathers to elect a new President (not to speak of election 2019), just imagine how useful that will be for selling not only funeral insurance, but professionally tailored propaganda promoting the ANCWL’s preferred candidate, Nkosazana Dlamini-Zuma to a computer-selected ANC branch voter audience. 

This is exclusive access since it is a audience that is effectively out of the reach of mainstream media and other political parties.

A one-year extension of CPS’s contract would see it through to the ANC’s national elective conference in December; a two-year extension would see it through to the 2019 General Election.

Access to the data base was the subject of a discussion by Cell C directors that took place at the time and was duly minuted. Net1 and Cell C had an incentive to offer Dlamini and the President that they were unlikely to resist.

Such cell phone-conveyed social media campaigns have seen revolutions launched and the likes of Donald Trump elected by working class voters responding to fake news and professionally designed propaganda messages. The ANC already employs one of the world’s masters of the game, the notorious UK-based PR company Bell Pottinger.

What will it cost the ANC? Nothing. Except having to stubbornly insist that CPS must get the social grant contract – at a price to the taxpayer that covers a few hidden extra services.

Perhaps the time has come for a shareholder activism campaign against Net 1 and Cell C’s directors and shareholders?  After all, as Cell C’s brand promises: “The Power is in Your Hands.”

Bathabile keeps it in the family

Bathabile Dlamini has been an ANC office bearer for the past 26 years – her entire adult life. Most of her influence derives from her long-standing close relationship with the Zuma family and the fact that she was Secretary General of the ANCWL from 1998 to 2008 and has been president of the Women’s league since August 2015.

She was born in Nkandla. President Jacob Zuma’s ex-wife, Nkosazana Dlamini-Zuma has recently been identified (by UDM President Bantu Holomisa) as her sister, making the President her ex-brother-in-law.

She was responsible for persuading the Women’s League to nominate Jacob Zuma for election as president of the ANC at Mangaung in 2007.  Now she has persuaded the League to nominate Dlamini-Zuma for election as his successor.

She became a MP in 2004 and hit the headlines in 2006 when, following the “Travelgate” revelations, she was convicted and fined after pleading guilty to fraud involving Parliamentary travel vouchers worth R254,000. Despite this, a year later President Jacob Zuma appointed her to his cabinet as Minister of Social Development. (She has a degree in Social Studies from the University of Zululand.) She remains one of his most ardent defenders.

When the Minister of Finance and the Treasury Pravin Gordhan questioned Bathabile Dlamini’s plan to simply ignore the law or any financial constraints when concluding a new social grant distribution contract with CPS, the Women’s League sprang to her defence by accusing Gordhan and the Treasury of pandering to “white monopoly capital” and “greedy commercial banks” who aspired to take on the function.

Ironically, CPS might legitimately be described as representing “white monopoly capital”. It is foreign, white-owned and has contrived to gain an effective monopoly.  (And its considerable profits flow offshore!) 

As for not pandering to “greedy” banks: CPS has subcontracted the actual payout function to two South African commercial banks: Grindrod Bank and Nedbank (for its network of ATMs). They earn massive amounts by charging a transaction fee on every one of the tens of millions of cash withdrawals and debit orders they process each month on behalf of social grant beneficiaries. ver R11.3 billion churns through the system each month.)

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