After years of fighting against a campaign that attacked its reputation, Serge Belamant’s Net1 is slowly winning the war. Allegations of corruption against Net1 started surfacing in the media soon after the disruptive fintech company landed the SA Social Security Agency (SASSA) tender to deliver social welfare and benefits to 10m South Africans. As the company’s primary listing in on NASDAQ in New York, the reports were used to trigger an investigation by the American Securities Exchange Commission (SEC) and that country’s Federal Bureau of Investigation (FBI). The US has heavy anti-corruption laws that apply worldwide, with perpetrators facing double digit jail terms as the minimum. After a lengthy struggle, which Belamant says cost Net1 $15m in legal fees alone, the SEC and South Africa’s Hawks have cleared the company of any wrongdoing. Now comes news that SA’s Competitions Commission has thrown out what appears to have been an opportunistic complaint lodged by SA’s number two political party, the Democratic Alliance. As a direct result of financial and other costs to defend itself against what it says were baseless allegations, Net1 refused to bid for the renewed SASSA tender. The company now focuses its efforts outside of South Africa. After a detailed and lengthy due diligence into all aspects of the business, Net1recently received a $107m cash injection from the IFC, the World Bank’s investment arm, in return for 20% of its equity. – Alec Hogg
From Net1
Johannesburg, August 10, 2016 – Net 1 UEPS Technologies, Inc. (“Net1” or the “Company”) (NasdaqGS: UEPS; JSE: NT1) today announced that the Competition Commission of South Africa (the “Commission”) has declined to refer a complaint lodged against the Company and Grindrod Bank Limited (“Grindrod Bank”) by the Hon. Elza van Lingen, a Member of Parliament, to the Competition Tribunal (the “Tribunal”) for consideration.
The complaint alleged that Cash Paymaster Services Proprietary Limited (“CPS”), a subsidiary of the Company, provided other associates of the Company as well as Grindrod Bank with access to the database of social grant beneficiaries that CPS maintains as part of CPS’s contract with the South African Social Security Agency. The complaint further alleged that access to this database had the effect of placing Grindrod Bank and Net1 at an advantage over other banks for the provision of insurance policies, loans and prepaid airtime and electricity.
Following an investigation of the complaint, the Commission decided not to refer the matter to the Tribunal for consideration and advised the Hon. Van Lingen that she had the option of referring the matter directly to the Tribunal if she disagreed with the Commission’s decision. The Hon. Van Lingen has not referred the matter within the prescribed time and the matter has accordingly been closed.
