The head of South Africa’s welfare agency defended his decision to initiate talks with the Post Office as a contingency plan in case a contract to distribute grants with Cash Paymaster Services, a unit of Net1 UEPS Technologies, couldn’t be extended by the deadline next month.

“In terms of the law, I am allowed to negotiate with other government agencies. I have not done anything wrong,” Thokozani Magwaza, the CEO of the South African Social Security Agency (Sassa), said by phone on Tuesday. “As a CEO, I have to have a back-up plan in case something were to go wrong with the CPS contract.”

While the constitutional court ruled four years ago that the Net1 contract was invalid because of the way it was awarded, the company has continued paying the grants after Sassa failed to appoint a replacement.

The agency intends to conclude a new contract with Net1 because no one else is capable of stepping in at short notice, Zodwa Mvulane, an official at the welfare agency, told lawmakers. Negotiations on the terms will begin Wednesday, she said.

Magwaza said he was on sick leave, refuting a report by the Johannesburg-based Star newspaper that cited the department of social development spokesman Lumka Oliphant as saying he had been suspended pending an investigation into allegations he sought to get the Post Office to distribute grants when the Net1 contract expires. That would have been in conflict with the department’s plans.

“I am aware of no investigation,” Magwaza said. “The minister has not said anything to me on this issue. If I’m being investigated I should be told and if I’m suspended in terms of the labor act I should be told about that and nothing like that has happened. I’m just seeing it in the newspapers.”