National

More questions over Hulley's role in R10b social grant tender

Craig McKune

Officials differ on whether Michael Hulley, responded to critical questions about a grants tender. Craig McKune reports.

People queue to collect social grants in Jo’burg. Allegations of corruption over a R10-billion social grant tender are being investigated. (Madelene Cronjé, M&G)

The mystery surrounding the role of the presidential legal adviser, Michael Hulley, in a controversial R10-billion social grant contract award – under investigation in both South Africa and the United States – is deepening.

Previously secret information, which was brought into the open by a court battle over the process, shows that pivotal problems were pointed out to Hulley before the tender was awarded. They ultimately formed the basis of a damning high court judgment made against the state.

The South African Social Security Agency (Sassa) appointed Hulley, President Jacob Zuma's personal lawyer, as the "overall strategic adviser" on the bid at a daily rate of R21 000. But the agency's own paperwork and court affidavits conflict over how he responded when the problems were raised by Willie Mathebula, a bid committee member and treasury official.

The documents also expose the intervention of the social development minister, Bathabile Dlamini, who appears to have put pressure on the committee to hold a key meeting despite Mathebula's absence.

Allegations of corruption over the tender are being investigated by the FBI and the Securities and Exchange Commission in the US, South Africa's Hawks and public protector Thuli Madonsela.

The agency awarded the contract for the payment of social grants to Cash Paymaster Services in January. But the North Gauteng High Court in Pretoria ruled in August that the tender process was "illegal and invalid", without setting the contract aside. Cash Paymaster, the agency and a losing bidder – the Absa subsidiary AllPay – have appealed against the ruling.

Cash Paymaster's US-listed parent company, Net1 UEPS, announced this week that it was countersuing AllPay for R478-million in damages after its share price crashed on news of the US investigation. It accused AllPay of peddling "false reports".

Bid evaluation
The Mail & Guardian exposed Hulley's role in March this year. It also revealed links between Net1's empowerment partner, Mosomo Invest­ments – the partnership was announced within days of the tender award – and Human Settle­ments Minister Tokyo Sexwale's Mvelaphanda Holdings. Hulley is also close to Mvelaphanda, which has denied links to Net1.

The tender record reveals little input from Hulley, but it does reflect a rush to finalise proceedings late last year. After the adjudication committee chairperson, Tom Moyane, announced dates for a final meeting, Mathebula said he had other commitments, although he would try to shift them. The record shows that Mathebula met Moyane three days before the meeting and outlined several problems with the process, principally the concern that Cash Paymaster did not have an adequate black empowerment component.

He was also concerned about how members of the bid evaluation committee had changed bidders' scores after a presentation, asking: "Is it procedural to do so?"

But the following day a treasury official emailed the agency and said Mathebula would not be available for the final bid adjudication sitting.

The record shows that Moyane told the committee that "the minister" – presumably Dlamini – then intervened. "I got a call from the minister, really unhappy: 'Is this [adjudication] meeting going to be postponed?' And I said: 'Minister, this meeting is taking place.'"

He also told committee members that he had deemed Mathebula's issues "really not serious questions that could have led us to postpone the discussions".

But Moyane asked for a legal opinion and that night the agency's project manager, Rapaahle Ramokgopa, emailed Hulley: "Please check the attached document and advise. Focus on topic three. The chairperson requests a formal opinion on Willie's non-attendance."

Legal opinion
The record contains no response from Hulley and Ramokgopa submitted an affidavit to court, saying: "I cannot recall receiving any response from Mr Hulley regarding this request." This appears to be contradicted by Moyane, who, in a transcription of the adjudication committee meeting two days later, referred to Mathe­bula's absence and their decision to continue without him: "We have legal opinion here."

The committee concluded that Mathe­bula's concerns had been addressed and recommended that Cash Pay­master be appointed.

But the frailty of the process and Hulley's advice – or lack of it – was highlighted nine months later in AllPay's court challenge. Mathebula's concerns were mirrored in three of the four grounds given by high court Judge Elias Matojane for ruling the tender "illegal and invalid".

Another aspect of Hulley's advice is central to what the M&G understands is a key aspect of the FBI's investigation of Net1. Early this year the newspaper revealed that in an earlier and ultimately abandoned version of the tender the adjudication committee chairperson, Nor­man Arendse, claimed he was approached with a bribe, allegedly from Cash Paymaster. The company denied it. Arendse, his committee and social develop­ment director general Vusi Madon­sela – to whom Arendse reported the overture – failed to report the matter to the police.

When the M&G asked the department why this was never investigated, Hulley wrote to Ramokgopa: "I point out that Arendse was the complainant and not any of the Sassa officials or the minister. None of them could have added to the content of veracity of the allegation."

Hulley did not respond to questions. The agency, the social development department, Lumka Oliphant, Dlamini's spokesperson, and Mathe­bula declined to comment.

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.

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