Net1 board reduces Belamant’s power after Sassa saga

2017-04-07 07:57 - Matthew le Cordeur, with Bloomberg
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Serge Belamant

CEO of Net1 UEPS Technoologies Serge Belamant. (Supplied)

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Cape Town – The Net1 UEPS Technologies board on Friday announced a decision to split the chairperson and chief executive roles, with Serge Belamant resigning from his role as chairperson while remaining CEO.

Net1 said the split is in “recognition of the growing practice of US public companies, as well as the customary practice of South African public companies, to have the chairman be an independent director”.

“The board has come to believe that separating the roles of chairman and chief executive officer is the appropriate corporate governance model for the company at this time, especially given its secondary listing on the JSE and its significant South African institutional shareholder base.”

Sabvest CEO Christopher Seabrooke, who has been a director of Net1 since 2005, was appointed chairperson. He currently chairs its audit committee, as well as its nominating and corporate governance committee.

Net1 said its board also intends to review the company's business strategy and management structure following the outcome of its proposed investments in Blue Label Telecom, Cell C  and DNI-4PL Contracts (as announced on March 1 2017).

Net1’s subsidiary Cash Paymaster Services (CPS) and South Africa Social Security Agency (Sassa) were ordered by the Constitutional Court to continue paying social grants until another entity which can do so is found.

The declaration of the invalidity of the previous contract between the Sassa and CPS would be suspended for 12 months.

Allan Gray, which has a 16% stake in Net1, had demanded certain change. “We have exerted considerable pressure on the board since investing in 2012 on issues of corporate governance and sustainability,” it said in a statement recently.

“We wield some influence over management and the board, but we are not in control of the company, nor are we the largest shareholder (this is the International Finance Corporation).”

This week, the World Bank’s International Finance Corporation (IFC) said it’s pressing Net1 to complete an assessment of its lending practices this year as human rights organisations allege that the company’s subsidiaries are improperly marketing goods and services to the more than 17 million South Africans on welfare.

The IFC last year bought a 17% stake in Net1 for $107m, its biggest-ever investment in the financial technology industry, making it the largest shareholder in the company that distributes welfare payments to the poorest third of South Africans on behalf of the government.

Net1 is moving to improve its communication strategy following criticism from Allan Gray, which said it is concerned about the company’s communications with shareholders about loan charges and deductions.

Net1 said it has appointed Burson-Marsteller as its media relations agency to manage all of the company’s external communications.

Read more about: sassa  |  cps  |  net1  |  social grant crisis  |  social grants