Net1 cleared by US in Sassa grants probe

Sassa card.

Sassa card.

The American probe was initiated after CPS was awarded grants contract by Sassa in 2012.

Net1, the parent company of Cash Paymasters Services (CPS), has been cleared of any wrongdoing by the US Department of Justice (DOJ) pertaining to suspected corruption in the government’s multimillion-rand tender contract for social security grants awarded to CPS in South Africa.

This week, Net1 received a letter from DOJ advising it that the department has closed its investigation concerning the possible violation of the country’s Foreign Corrupt Practices Act (FCPA).

The American probe was initiated after CPS was awarded grants contract by the SA Social Security Agency (Sassa) in January 2012.

This after AllPay, which lost the tender bid to CPS, complained that the tender process, from which CPS benefitted, was tainted by corruption and a case was lodged in an American court.

The complaint resulted in the DOJ and United States Securities and Exchange Commission (SEC) in November 2012 initiating separate investigations into possible corruption committed in a foreign country.

The class action lawsuit was filed in the United States District Court for the Southern District of New York alleging violations of the federal securities laws.

Net1 said the lawsuit was brought on behalf of what it termed a “purported” shareholder of Net1 and all other similarly situated shareholders who purchased the companies securities between August 27, 2009 and November 27, 2013.

American companies suspected of being involved in foreign corruption are charged under the America’s FCPA and foreign exchange stipulations.

Early this year, Net1 CEO Serge Belamant resigned, allegedly due to pressure from Allan Gray, a Net1 shareholder.

Some attributed it to his involvement in the crisis over Sassa’s delay in securing a service provider for grants when the CPS contract expired.

Net1 won the first round in its legal battle when it was cleared of wrongdoing in June 2015 when SEC concluded its investigation, saying it did not intend to recommend an enforcement action against the firm.

Subsequently, the US District Court dismissed this class action litigation in September 2015. The decision of the Justice Department this week concluded the United States government’s investigation into this matter and cleared Net1.

“We cooperated with all government agencies and other regulatory bodies regarding these allegations as well as the extensive investigations that followed over the last four-and-a-half years,” said Herman G Kotzé, chief executive officer of Net1.

“The closure of the DOJ investigation concludes a lengthy, arduous and costly exercise involving government agencies in the United States and South Africa, including the DOJ, SEC and the Hawks,”

Kotzé said He said the DOJ letter was the final step to clear his company’s name and was consistent with the absence of any findings of irregularities.


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