Hulley had 'no role' in R10bn Sassa social grant tender

Michael Hulley. (Oupa Nkosi, M&G)

Michael Hulley. (Oupa Nkosi, M&G)

Presidential legal adviser Michael Hulley played "no role" in the adjudication of a R10-billion social grant tender despite initially being appointed as a "strategic adviser" for the deal at a price of R21 000 per day, the Constitutional Court heard on Tuesday. 

The South African Social Security Agency (Sassa) awarded the tender to Cash Paymaster Services. The losing bidder, Allpay Consolidated Investment Holdings (Allpay) asked the Constitutional Court on Tuesday to hear evidence of alleged corruption in the deal, in which a whistleblower had singled out Hulley.

Allpay on Tuesday asked the Constitutional Court to overturn a prior decision by the Supreme Court of Appeal that saw the contract upheld in spite of irregularities in the tendering process.  

Representing Sassa, advocate Fanie Cilliers said Hulley's "salary" – R21 000 per day – was merely a "scale" for "a tentative program that [was to have been] developed ... "

Deputy Chief Justice Dikgang Moseneke asked if the court should look "beyond that", for an indication in the court record of what Hulley's role was.

Developed later
Ciller said that there had been an agreement between Sassa and Hulley, and that the verification "program" would have been developed at a later stage, detailing Hulley's role. But this later discussion did not take place, he said. 

"There is also no evidence that he earned any money or did any work at all," Cilliers insisted. 

"Is there no other reference as to his role [in the record]," asked Moseneke.

"I'm not omniscient but I can't find any," Cilliers said. 

Justice Edwin Cameron interjected, again asking Cilliers if this meant Hulley played no role at all. 

"It's just left … Nothing happened," Cilliers said. 

"So why was he appointed as an adviser?" Moseneke asked. 

'Provisional umbrella role'
Cilliers replied that Hulley's role was "a provisional umbrella role". Referring to what Sassa often claimed were "inventions" of Allpay's "imagination", Cilliers said:  "It's another skittle they [Allpay] put up, sir … " 

Moseneke asked why Sassa needed an external adviser, if that was the case.

"All we know is that he provided wide-ranging services to government so it wouldn't have been unusual for him to be co-opted on a contract such as this," Cilliers said. 

But in reply, advocate Gilber Marcus for Allpay pointed the court to an email, previously reported on by the Mail & Guardian, suggesting that Hulley's opinion was sought on a number of "vital" issues. 

The email was sent from Rapaahle Ramokgopa, Sassa's project manager, to Hulley. The email asked Hulley to give advice to the chairperson of the bid adjudication committee. 

Marcus said Hulley was asked to advise on the fact that Cash Paymaster Service did not submit separate bids for each province; the need for the final winner to provide biometric verification of grant recipients, the reduction of Allpay's scores and whether or not this was "procedural", as well as BEE participation in the deal.

"Hulley's role as the strategic adviser was integral," Marcus said. 

Moseneke asked if the email indicated that his advice was sought on issues of "vital" importance. 

"Yes. And it goes to the core of the regularity and legality of this tender," Marcus argued.

Judgment was reserved.

The case so far

Allpay and Cash Paymaster Service were two of several bidders for the R10-billion tender to administer the country's social grant system.

The winning bidder, in this case Cash Paymaster Service, would be responsible for ensuring that about 15-million indigent South Africans receive their monthly social grants for five years.

Cash Paymaster Service was awarded the tender – a decision Allpay challenged in the North Gauteng High Court in August 2012, on the basis of alleged irregularities in the tender process.

Allpay alleged that Cash Paymaster Service should not have been awarded the tender because it failed to meet several of Sassa's requirements: it did not submit separate provincial bids for all nine provinces, Sassa had not verified its BEE partners' capacity to perform their obligations. 

Allpay also claimed the bid evaluation committee had a problematic composition.

'Illegal and invalid'
The company wanted to interdict Sassa from implementing the tender and for the court to review the contract. 

That court found that the tender process was "illegal and invalid" but did not set aside the tender because doing so would interrupt the distribution of social grants. 

But Sassa made an application to the Supreme Court of Appeal. At this point, Allpay tried to introduce "new" evidence of corruption – a recording of a conversation with a whistleblower who was a secretary for the bid committee. The official called the tender process "farcical" and alleged that Hulley was being paid by Cash Paymaster Service to swing the tender in their favour.

But the Constitutional Court heard on Tuesday that the whistleblower backtracked slightly, telling Sassa that he did not intend to imply that the process was corrupt, and that he merely meant that "shortcuts" were taken.

Cash Paymaster Service also told the court that it did not pay Hulley. 

The appeal court refused to hear this "new" evidence, calling it "hearsay", and it upheld Sassa's appeal. It found that although the tender had been peppered with irregularities, this was not grounds for it to be cancelled, as these irregularities were "inconsequential". 

'Just another tender case'
This is the ruling that Allpay wants the Constitutional Court to review.

Marcus argued on Tuesday that this was "not just another tender case", as suggested by the appeal court.

"The magnitude of the tender aside, the appeal court failed to engage with the substantive requirements of section 217 of the Constitution and the Public Finance Management Act [PFMA]."

He said the irregularities were not inconsequential but go to the "core" of fair tendering and the spending of public funds. He said the appeal court had "closed its eyes" to these issues.

Section 217 requires procurement to be "in accordance with a system which is fair, equitable, transparent, competitive and cost-effective", while the PFMA gives effect to this section.

The constitutional issues to be decided by the court, according to Allpay, were threefold: firstly, what types of administrative irregularities might cause a tender to be declared invalid? Allpay said the court wanted the court to clarify what the constitutional standard for invalidity was.

Secondly, the court needed to decide what type of remedy was just upon a finding of illegality. The third constitutional issue was how the courts should deal with evidence of serious irregularity.

But Cash Paymaster Service and Sassa said the order should not be reviewed because Cash Paymaster Service remained the rightful winner of the award, and the "hearsay" allegations of corruption could not be introduced during review proceedings.

Cilliers added that while the "administrative action" may have been "less than perfect", this did not constitute sufficient grounds to scrap the entire tender.

Both respondents also said there were no constitutional matters for the court to decide.

Sassa said Allpay had merely "dressed up" the "issues" as constitutional matters. "In substance the issues fall to be decided on the facts, as was done by the appeal court," Cilliers said.

Sarah Evans

Sarah Evans

Sarah Evans is a Mail & Guardian news reporter.She's a recovering musician who became a journalist while interning for the Diamond Fields Advertiser in Kimberley.She spent three years reporting there before completing an internship at the Mail & Guardian Centre for Investigative Journalism (amaBhungane).Her areas of interest include crime, law, governance, and the nexus between business and politics.Her areas of disinterest include skyscrapers. Read more from Sarah Evans


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