Net1 sues AllPay for R500m in damages

The commercial rivalry between Absa subsidiary AllPay and technology firm Net1 UEPS Technologies continued as the latter firm said yesterday that it was pursuing a legal suit of R500 million against its competitor for “unscrupulous behaviour”. Net1 also gloated over the JSE’s rejection of AllPay’s complaints against its rival. It said in a statement that AllPay had attacked Net1 subsidiary Cash Paymaster Services (CPS) by complaining to the JSE that CPS had not accurately reported a high court finding that allowed the unit to continue with its contract to distribute social grants. AllPay also made a second complaint to the JSE over the phrasing of an announcement about an investigation set off when AllPay approached US authorities to investigate Net1, which is listed on the US-based Nasdaq stock exchange as well as the JSE. The JSE has rejected both complaints.

Net1 chief executive Serge Belamant said: “We are delighted that the JSE would have no part of the Absa/AllPay campaign against us. We are a small company that has been bullied and harassed by a giant banking group for no other reason than commercial jealousy.” Neither Absa, which may have run out of options to have its case heard, nor the JSE replied to requests for comment by the time of going to print. For Net1 it is payback time for what it perceives to be undue suffering caused by AllPay, which instigated a probe by the FBI into a R10 billion contract to manage South Africa’s social grant distribution system for five years. The tender was awarded to CPS in January last year.

AllPay, which was among several losing bidders for the contract that would assist 10 million children, elderly and disabled people, approached the North Gauteng High Court to declare the tender illegal and invalid after claiming the contract had been obtained via corrupt methods. The court ruled that CPS could continue with rolling out the contract. Last month a full bench of the Supreme Court of Appeal found against AllPay, ruling the contract with the SA Social Security Agency was legitimate. David Barritt, a spokesman for Net1, said the company was not aware of when the FBI investigation would come to fruition. However, he said the company’s senior executives had complied with the US authority’s request for financial statements.

He also said South Africa’s Hawks investigative unit and the public protector had never contacted Net1 to further investigations that AllPay had promised would take place. Belamant said CPS won the tender to deliver social grants and pensions because it had a better, cheaper product. “Absa/AllPay refused to accept this and resorted to guerilla welfare to denigrate and break us. What Allpay attempted to do has no place in a fair and just society,” he said. Net1 shares were untraded at R65 on the JSE yesterday. Absa shares declined by 0.89 percent to close the day at R150.45.