The supreme court of appeal has handed down a judgment in favour of Nasdaq- and JSE-listed payments specialist Net1 UEPS Technologies, dealing a blow to Absa and its AllPay unit, which had earlier won a high court battle over the R10bn government tender for the payment of social grants.
Absa claimed the tender process was riddled with irregularities and has now said it may take the matter on appeal to the constitutional court.
AllPay was a rival bidder to Net1’s Cash Paymaster Services (CPS) for the South African Social Security Agency (Sassa) tender.
Absa argued that Sassa’s tender process was flawed and that the terms of the tender were altered before the process closed to ensure CPS would win the lucrative deal.
Last year, the bank took exception to CPS’s winning the tender, filing papers at the high court in Pretoria. In October 2012, high court judge Elias Matojane found that the Sassa tender process was “illegal and invalid”, but didn’t set aside the awarding of the contract to CPS because he was concerned that doing so could disrupt the payment of social grants, on which millions of South Africans rely for an income.
At the time, Net1 CEO Serge Belamant said in a notice to shareholders he was “delighted” with the high court finding insofar as the court had ruled that the contract remained valid.
Net1 subsequently won the right to appeal the high court judgment and filed its own suit against AllPay at the high court in Johannesburg claiming its rival’s intention was to tarnish its reputation. AllPay is seeking R478m in damages.
The US Securities and Exchange Commission (SEC) and US department of justice have both launched investigations into Net1 following Absa’s intial victory at the high court. At the time, Net1 said in a statement to shareholders that it intended to cooperate fully with the investigations.
The supreme court of appeal dismissed Absa’s appeal with costs. The judgment is critical of Absa, saying that the affidavits submitted by AllPay “evoke suspicion of corruption and dishonesty by innuendo and suggestion but without ever making the accusation directly”.
“When all is said and done, there is no escape from the facts I referred to earlier: Sassa was entitled to have the solution it required if that solution was available. CPS was able to provide that solution. AllPay could not,” the judgment says.
In a statement, AllPay says it has “noted the judgment of the supreme court of appeal” but says its case before the high court and the supreme court of appeal has “constitently been that there were fundamental flaws in the tender process”.
“In terms of the constitution, procurement by Sassa, which is an organ of state, should be fair, equitable, transparent, cost effective and competitive,” AllPay says. “AllPay has been advised that there are good grounds for an appeal to the constitutional court. AllPay is currently considering its position.”
Net1 investor relations spokesman Dhruv Chopra says the company can’t comment until it has issued an official statement through the JSE’s Sens news services. — (c) 2013 NewsCentral Media
The supreme court of appeal judgment:
- [gview file=”https://techcentral.co.za/wp-content/uploads/2013/03/CPS-AllPay-judgment.pdf”]