Net1’s CPS to challenge High Court’s order regarding SASSA implementation cost recovery
March 23 2018 - 9:45AM
Net 1 UEPS Technologies, Inc. (“Net1” or the “Company”)
(Nasdaq:UEPS) (JSE:NT1) today announced that the North Gauteng High
Court (“the Court”) has pronounced judgment in the application
brought in March 2015 by Corruption Watch, a South African
non-profit civil society organization. Corruption Watch sought an
order that the Court review and set aside the decision of SASSA’s
Chief Executive Officer to approve the payment to the Company’s
subsidiary, Cash Paymaster Services (Pty) Ltd (“CPS”), of ZAR 317
million (approximately ZAR 277 million, excluding VAT) and
directing CPS to repay the aforesaid amount with interest.
Corruption Watch claimed that there was no lawful basis for the
decision to make the payment to CPS, and that the decision was
unreasonable and irrational and did not comply with SASSA’s Supply
Chain Management Policy.
The Court today ordered that:
- The variation agreement between SASSA and CPS made on June 15,
2012, and the resultant payment made in the sum of ZAR 317 million
be reviewed and set aside;
- CPS is ordered to refund the said amount of ZAR 317 million to
SASSA with interest from June 2014 to date of payment;
- The respondents are, jointly and severally, ordered to pay the
costs of the application, including the cost of two counsel.
As previously disclosed by the Company in June
2014, CPS received approximately ZAR 277 million from SASSA related
to the recovery of additional implementation costs it incurred
during the beneficiary re-registration process in fiscal 2012 and
2013. After the award of the tender, SASSA requested that CPS
biometrically register all social grant beneficiaries (including
child grant beneficiaries) and collect additional information for
each child grant recipient. CPS agreed to SASSA’s request, and as a
result CPS performed approximately 11 million additional
registrations beyond those that it tendered to register for the
quoted service fee. Accordingly, CPS claimed a cost recovery from
SASSA, supported by a factual findings certificate from an
independent auditing firm. SASSA agreed to pay CPS the ZAR 277
million as full settlement of the additional costs incurred by
CPS.
“We are disappointed with the Court’s judgment
and will immediately seek leave to appeal,” said Herman Kotzé, CEO
of Net1. “The additional registrations we performed at SASSA’s
request, resulted in the identification and removal of a
significant number of ghost beneficiaries and duplicate grants, and
had the direct result of saving the South African government more
than R2 billion per year for the last five years. The cost incurred
for the additional registrations was recovered without any profit
component. CPS performed the work requested by SASSA on a bona-fide
basis and it is unfortunate that it once again finds itself being
prejudiced by apparent shortcomings in SASSA’s processes,” he
concluded.
About Net1
(www.net1.com)
Net1 is a leading provider of alternative
payment systems that leverage its Universal Electronic Payment
System (“UEPS”) or utilize its proprietary mobile technologies.
The Company operates market-leading payment processors
in South Africa and the Republic of Korea. Through
Transact24, Net1 offers debit, credit and prepaid processing and
issuing services for Visa, MasterCard and ChinaUnionPay in China
and other territories across Asia-Pacific, Europe and Africa, and
the United States. Through Masterpayment, Net1 provides payment
processing and enables working capital financing in Europe.
UEPS permits the Company to facilitate
biometrically secure, real-time electronic transaction processing
to unbanked and under-banked populations of developing economies
around the world in an online or offline environment. Net1’s
UEPS/EMV solution is interoperable with global EMV standards that
seamlessly enable access to all the UEPS functionality in a
traditional EMV environment. In addition to payments, UEPS can be
used for banking, healthcare management, payroll, remittances,
voting and identification.
Net1’s mobile technologies include its
proprietary mobile payments solution - MVC, which offers secure
mobile-based payments, as well as mobile banking and prepaid
value-added services in developed and emerging countries.
Net1 has a primary listing on the NASDAQ and a
secondary listing on the Johannesburg Stock Exchange.
Forward-Looking Statements
This announcement contains forward-looking
statements that involve known and unknown risks and uncertainties,
which include, without limitation, whether the company will be
granted leave to appeal the High Court judgment, and if so, whether
any appeal will ultimately be successful. A discussion of various
factors that may cause our actual results, levels of activity,
performance or achievements to differ materially from those
expressed in such forward-looking statements are included in our
filings with the Securities and Exchange Commission. We undertake
no obligation to revise any of these statements to reflect future
events.
Investor Relations Contact:
Dhruv ChopraHead of Investor RelationsPhone:
+1-917-767-6722Email: dchopra@net1.com
Media Relations Contact
Bridget von HoldtBusiness Director –
Burson-Marstellar South AfricaPhone: +27-82-610-0650Email:
bridget.vonholdt@bm-africa.com
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