UIF pays out R3bn; Net1 company in bankruptcy fight; Pepkor ‘fleeces poor’ – court; Land Bank hits StanChart

By Jackie Cameron

  • The Unemployment Insurance Fund (UIF) has paid out just over R3.3 billion to people whose work and income have been affected by the coronavirus pandemic. The fund has processed more than half the 103,000 applications that it has received from employers on behalf of about 1.75 million employees. About 10,000 applications could not be processed due to errors and the affected companies have been notified to correct their applications and resubmit, reports Bloomberg.
  • Net1, listed on the Johannesburg and Nasdaq markets, is seeking bankruptcy protection in court for its subsidiary Cash Paymaster Services Ltd., a company that for about five years distributed R150 billion in welfare payments annually on behalf of the South African government Cash Paymaster Services was at the centre of a corruption scandal in 2014. The South African Post Office took over distributing welfare payments in 2018, but Cash Paymaster Services allegedly owes R600m to the South African in connection with undistributed welfare payments government. Whatā€™s more, in a separate court action, details have emerged that indicate Cash Paymaster Services may have under-declared profits by a staggering R800m. Human rights organisation Freedom Under Law, wants Cash Paymaster Services to repay this as well, reports Bloomberg. Cash Paymaster Services Ltd has liabilities that exceed its assets, Net1 said in an application to South Africaā€™s High Court to take it into so-called business rescue. The South African Social Security Agency opposes the plan to place CPS in business rescue and instead wants it liquidated, says the news agency.
  • Pepkor, one of South Africaā€™s largest retail groups, is at the centre of a scandal in which one of its units, JDG Trading, is accused of fleecing poor, illiterate people. The National Credit Regulator accuses it of selling unemployment and disability insurance to pensioners on welfare who would never be able to claim those benefits, says Bloomberg. In 2015, the regulator initially took JDG to the National Credit Tribunal over the practice in a case that was unsuccessful, it continues. JDG ā€œis selling insurance that certain consumers, pensioners and disabled persons do not need, cannot claim benefits for, and yet pay for,ā€ the National Credit Regulator said in court documents. More than 17 million people in South Africa get welfare payments, which total about R150 billion ($7.9 billion) a year. Those payments will be temporarily increased because of the impact of the coronavirus outbreak.
  • Problems at the Land Bank have hammered London-listed Standard Chartered bank. The Land and Agricultural Development Bank of South Africa, a state-owned provider of finance to the farming sector, recently missed a loan repayment. That, says Bloomberg, triggered a default event, and the nationā€™s government is considering a bailout. Standard Chartered co-led a loan to the company, and $247m remains outstanding, according to Bloomberg data. The development bank has said itā€™s suffering a liquidity shortfall and may need to postpone future financial obligations. StanChart has problematic loans of about $600m, with some of its other clients elsewhere in the world facing fraud scandals.
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