CPS releases KPMG review report into business malpractices

After intense media scrutiny and the recent Constitutional Court extension of Net1/Cash Paymaster Services (CPS) tender with South African Social Security Agency (Sassa), the company has decided to institute a review of its business practices.

The review is also a result of pressure from two of Net1’s largest shareholders, including Allan Gray, going on record as saying Net1 must “procure an external review to determine the truth or falsity of the accusations made against us”, says Bridget von Holdt of Burston-Marsteller South Africa, Net1’s recently appointed publicist.

In a convoluted press statement, Von Holdt also discloses that ConCourt only instructed CPS to “provide an audited account of income, expenses and profits for the five-year contract and the one-year extension. CPS has not been ordered to repay costs”.

An addendum to the contract between CPS and Sassa contains provisions to ensure that personal data obtained in the payment process remains private.

See the full KPMG report by The Citizen Newspaper on Scribd.

Some of the key findings from the review conducted by KPMG for the period March 2016 to April 2017 include 144 users that have access to Stratus, the mainframe used by Net1 to process and authorise transactions. Fifty-three of them were assigned a call-centre role, with the rest assigned different roles but with access to the system.

On the question of funeral policy deductions, KPMG relied on minutes of a meeting held between Sassa and CPS in August 2012 reflecting that “Sassa advised that the status quo will remain as of June 2012. Funeral policies – 10%”. This apparently refers to processing of more than one regulation 26A deductions against a grant as long as the total deduction does not exceed 10% of  grant value.

The internal auditor seem to have exonerated Net1 on the question of whether Sassa-branded Grindrod bank account holders effected excessive bank charges. KPMG states that no undue charges were found to be deducted during the period under investigation.

KPMG report confirmed that contractual service charged to Sassa was R14.42 (excluding VAT) and R16.44 (including VAT).

The one area of inquiry where KPMG found Net1 to be wanting was training and Financial Advisory and Intermediary Services (FAIS) Act registration. The investigation found 375 active agents and operators in Net1 employ. Twenty-four agents signed training attendance declarations, but training registers could not be retrieved. There were questions with their registration with Financial Services Board (FSB).

The Citizen provided a list of comprehensive questions, as requested by Von Holdt, ranging from the timeframe of the investigation to corrective measures with regards to adverse findings. Citizen also asked Von Holdt whether it is morally and ethically acceptable to extend loans and other value-added services (VAS) to grants recipients whose monthly income is less than R1 500.

Von Holdt promised to speak to the Citizen again at a later stage.

Serge Belamant’s PA said: “Mr Belamant is no longer allowed to answer media queries. That’s why we appointed a PR company for the media.”

Belamant had earlier told media that CPS is the only company that can manage Sassa grants unless government wanted to use pigeons to distribute grants.