Net1 UEPS Technologies’ largest shareholders, International Finance Corp (IFC) and Allan Gray, have welcomed the company’s decision to terminate the consulting contract of former CEO Serge Belamant, which would have seen him pocket R16m over two years.

On Monday, Net1 terminated a two-year consulting agreement with the controversial Belamant – a job he scored after the US Nasdaq-listed company forced him to take early retirement at the end of May.

Under the initial agreement, Belamant would charge Net1 $50 000 /month (R662 000 at the time of writing) over two years for consulting services – equivalent to R16m.

Andi Dervishi, IFC’s global head for FinTech Investments, said it supports the termination of Belamant’s consulting contract. IFC, a member of the World Bank Group, holds a 17% stake in Net1.

Allan Gray’s head of investment, Andrew Lapping, said the move to remove Belamant was “positive” as costs can be saved in the company, which no longer requires his services to develop Net1’s international operations. Allan Gray owns a 15.6% stake in Net1.

Belamant took early retirement as he was only due to retire at the age of 65 in 2018 — a sign that market watchers read as him being pushed out of for his controversial handling of social grant payments contract with the South African Social Service Agency.

Net1 pays social grants to more than 10m beneficiaries via its subsidiary Cash Paymaster Services.

Constitutional court

Net1’s contract, which was declared invalid by the constitutional court as its tender process was flawed, was extended by the same court for another year up until March 2018.

Allan Gray and IFC called for a shake-up in Net1’s board, which saw Belamant relinquish his dual role at Net1 as chairman and CEO, paving the way for the appointment of Christopher Seabrooke as chairman and Herman Kotze as the new CEO. Alfred Mockett was appointed as Net1’s independent nonexecutive director following the IFC’s nomination.

“We believe the recent changes to the management team and the board of Net1 can help the company to improve its governance,” said Dervishi.

Belamant said he can’t speak about the circumstances leading to the cancellation of the consulting contract. He has effectively been gagged by Net1’s board from talking about company matters.

Seabrooke said Net1 has managed a “smooth transition” and believes that there is “limited value to continuing” with Belamant’s contract for two years.

Although Belamant’s contract was terminated, Net1 offered him a generous parting gift.

In May, Belamant received an US$8m (R105m) severance payment, R142m from Net1’s repurchase of his more than a million shares at $10.80. If Net1 continued with the consulting contract for two years, Belamant would score a whopping R265m golden handshake.

At the time, Allan Gray and IFC said they were both surprised at how Belamant could negotiate an “extravagant deal” and believed the payout was unjustified. Allan Gray said it recommended to the JSE that severance payments to executives should be subject to a vote by shareholders.