Postbank Cybersecurity Overhaul Battling Multimillion-Rand Grant Payment Fraud

Postbank Cybersecurity Overhaul Battling Multimillion-Rand Grant Payment Fraud. A spree of looting amounting to R90 million over two months in social grant funds has prompted Postbank to bolster its cybersecurity measures. This proactive action aims to safeguard their systems against fraudulent activities that have plagued the organization. Postbank CEO Ntomboxolo Mbengashe shared insights during a briefing in Tshwane, expanding on her parliamentary briefing delivered a day earlier.

Challenges and System Changes

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During her appearance before the portfolio committee on social development, Mbengashe discussed the “technical glitches” that resulted in over 600,000 old-age grant beneficiaries experiencing delays in receiving their monthly R2,080 payments. These glitches were attributed to system modifications recommended by financial firm KPMG. KPMG’s investigation revealed that nearly R90 million had been misappropriated through fraudulent means in October and November 2021.

Postbank Role and Response

Postbank, a state-owned entity falling under the communications and digital technologies department, is responsible for distributing social grants to more than 18.2 million beneficiaries on behalf of the South African Social Security Agency (Sassa). To counter fraud, Postbank not only had to revamp its technical systems but also took disciplinary action against several implicated officials. According to Mbengashe, individuals involved in facilitating the illicit transfer of funds were suspended and disciplined.

Government Preparedness

Communications and Digital Technologies Minister Mondli Gungubele, speaking at the same briefing, stated that two weeks ahead of the new grant payment cycle, the government had initiated preparations to ensure a smooth process, mitigating the challenges faced by beneficiaries in the previous month.

Governance Concerns and Board Dismissal

In response to the payments crisis, Gungubele took the drastic step of dismissing the entire Postbank board, citing concerns over poor governance. This decision was partly driven by the revelation of an allegedly illegal R140 million contract awarded by the ousted officials to a software company. While Gungubele refrained from disclosing detailed information about the R140 million transaction, he emphasized that his department would consult legal counsel and provide a comprehensive briefing that respects the legal constraints in South Africa.

Board Involvement and Accountability

Gungubele acknowledged that some board members were relatively new, having commenced their tenure in October the previous year—after the contentious R140 million contract had been approved. However, he expressed concern that these members had been aware of the contract for a year while it remained unaddressed, emphasizing the complexities of navigating such issues in South Africa legal landscape.

This multifaceted approach reflects the government’s commitment to rectifying the issues within Postbank and ensuring the secure and efficient distribution of social grants to millions of beneficiaries.

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