Postbank board axed over unlawful contracts

Over 600,000 beneficiaries were affected by last week’s system failure, Ministers confirm

By Daniel Steyn, Qaqamba Falithenjwa and Ella Morrison

14 September 2023

Grant beneficiaries sit in a long queue outside SASSA’s office in Bellville. Photo: Qaqamba Falithenjwa

Postbank’s Board of Directors has been axed after a forensic investigation found that Postbank maintained contracts with suppliers unlawfully. This comes days after the nationwide system failure which affected payments to 600,000 grant beneficiaries last week.

Mondli Gungubele, Minister of Communications and Digital Technologies, on Thursday held a media briefing to update the public on the social grants payment debacle.

He was joined by Social Development Minister Lindiwe Zulu, who apologised to grant beneficiaries.

“Postbank is very important. They must communicate to us every time there is a problem because we must always have a Plan B so that people do not suffer the way they have suffered, going back and forth,” said Zulu.

Meanwhile, in a statement on Thursday morning, Gungubele said that an administrator has been appointed, pending the appointment of a new board, Gungubele said.

Three of the board members, including the chairperson, resigned on Tuesday. They claimed in a letter that the Minister had been “hostile and oppressive” towards them.

Gungubele rejected this accusation. He said that governance issues at Postbank had been standing in the way of the government’s goal to build a functional state bank that would benefit poor people.

On Thursday, GroundUp reported that Postbank’s payment system has been riddled with issues. This included a court case related to a contract for the payment switch technology which enables Postbank to pay social grants through the Postbank/SASSA cards.

In August, Postbank had migrated to a new payment system which disrupted payments to 600,000 social grant recipients since Monday.

Postbank CEO apologises for system failure

During Thursday’s media briefing, Postbank CEO Ntomboxolo Nikki Mbengashe said that the vast majority of the 600,000 affected beneficiaries have received their grant money.

“Things like this do happen,” Mbengashe said. “I cannot stand here, with an understanding of technology, and say that 100% something like this will never happen again.”

She said that although relevant tests had been conducted on the new system prior to launching, the transition still “didn’t happen as planned”. The failed transactions were manually reversed, she said.

Mbengashe apologised for the inconvenience and said that she was raised by a grant beneficiary. “I know how it feels not to get your money in time,” she said.

Beneficiaries opt to get grants in personal bank accounts

Following this payment failure, many people were forced to take loans to buy basic essentials like food. On Thursday afternoon GroundUp spoke to beneficiaries who were seated in a snaking queue outside SASSA’s office in Bellville.

Most wanted to get rid of their SASSA gold cards. They said they were worried about further issues with Postbank. The Black Sash told GroundUp that many pensioners with SASSA cards are still waiting for their grant money.

Eleanor Adams, 69, said she got her pension money last Thursday and her husband is still waiting for his pension. She was at SASSA to link her grant payments to her new bank account.

“My husband hasn’t got his money yet, so we’re both depending on mine for now. They could have told us the truth and not let us wait like that.”

Nomalady Katshwa said she traveled to five different grant sites to try and withdraw her grant before she found out about the system “glitch”. She has been borrowing money to visit different post offices. “I’m making debts on money I don’t even have yet.”