The US Securities and Exchange Commission (SEC) has decided to not to prosecute Johannesburg- and New York-listed electronic payments specialist Net1 UEPS Technologies over allegations that the company improperly won a multibillion-rand social grants contract in South Africa.
However, the company, which in 2012 won the contested project to roll out a system for the payment of social grants, is still being investigated by the US department of justice (DOJ).
In late 2012, Net1 received a letter from the DOJ’s criminal division informing it that both the department and the Federal Bureau of Investigation had begun a probe into whether the company, or any of its subsidiaries, including its officers, directors, employees or agents, violated the Foreign Corrupt Practices Act or other US federal criminal laws.
The investigation is probing whether corrupt payments were made to officials of the South African government in connection with securing a contract from the South African Social Security Agency (Sassa) to provide social welfare and benefits payments.
The SEC was probing whether Net1 violated federal security laws in connection with statements it made to the commission. The probe was in the form of a “non-public, fact-finding inquiry”.
On Monday, Net1 said it had received a letter from the Foreign Corrupt Practices Act unit of the division of enforcement of the SEC advising that it does not intend to recommend an enforcement action.
“We are providing this notice under the guidelines set out in the final paragraph of Securities Act … which states in part that the notice … must in no way be construed that the party has been exonerated or that no action may ultimately result from the staff’s investigation”.
“The investigation commenced in December 2012 following the award of the Sassa national contract to us in January 2012,” said Net1 CEO Serge Belamant in a statement. “It commenced largely as a result of one of the losing bidders for the contract, Barclays Africa’s subsidiary AllPay, referring unsubstantiated South African press articles alleging irregularities in the tender process to the US department of justice. We believe that AllPay was responsible for instigating those media allegations.”
Belament said in the statement: “This letter from the SEC is an important step in the company clearing its name and is in line with the total absence of any findings of irregularities against Net1 by any South African court or regulator resulting from actions pursued by AllPay over the past three years.” — © 2015 NewsCentral Media
