Net1 UEPS Technologies says accusations levelled against its subsidiaries with regards to the distribution of social grants have no merit.
Net1, which has a primary listing on the Nasdaq in the US and a secondary listing on the Johannesburg Stock Exchange, distributes social grants through its subsidiary, Cash Paymaster Services (CPS).
Over the last few months, CPS, as well as other Net1 subsidiaries, faced a slew of allegations that it authorised deductions on beneficiaries' accounts before their social grants were paid out.
There have also been reports of a not above board business relationship between CPS and social development minister Bathabile Dlamini. The Department of Social Development described these reports as malicious.
Media reports also claimed Net1's SA businesses make donations to South African political parties, which the company refutes.
In a SENS statement issued late on Friday, Net1 declared CPS does not share any personal beneficiary data with its other subsidiaries, or sell financial services and products to recipients through CPS, among other issues.
Net1 says it has relied on a report by KPMG, a supplier letter and legal opinion to shed light on its business practices and put to rest some of the accusations made against it.
According to the alternative payment systems provider, its subsidiary has followed the rules that ensure personal data obtained in the payment process remains private and is not used for any purpose other than the payment of grants.
"CPS complies fully with the order and does not share any SASSA beneficiary data with other Net1 subsidiaries. Net1's subsidiaries that provide financial services have no access to this data."
The statement also clarifies that Net1 subsidiaries do not sell financial services and products through CPS, or use CPS personnel or operate inside the perimeter of any social grant pay-points.
"Net1's Moneyline and Smart Life sales teams do not market or sell products inside the secured area of pay-points and are treated no differently from the many other service providers present near pay-points," it states.
With regards to unauthorised deductions, it says: "Net1 subsidiaries make no recurring or unauthorised monthly deductions or debits for prepaid airtime or electricity. Customers, including grant recipients, buy airtime or electricity on demand and cannot subscribe for a recurring service. The costs of such purchases are settled as sales or purchase transactions against their bank accounts in the same manner as done by all other South African banks and similar service providers and merchants."
To download the complete KPMG report and relevant Net1 documents, click here.
Social grants headache
Net1 and its subsidiary CPS was brought into the spotlight as fears increased that SA's most vulnerable citizens will be left stranded when it was time for the payments cycle beginning in April.
The SA Social Security Agency, which is the entity in charge of social grants, was expected to take over payments when the current invalid contract expired on 31 March.
The agency, however, failed to get its affairs in order to do so.
CPS has been the sole distributor of social grants since it was awarded the contract in 2012. In 2013, the contract was declared invalid by the Constitutional Court (ConCourt) after it emerged irregular tendering processes were followed in the awarding of the tender.
Last month, the ConCourt was required to intervene once more in the matter of social grant payments. The court extended the invalid CPS contract for another year to avert a social grants disaster that would affect more than 17 million citizens.
Meanwhile, Net1 recently announced it is splitting the role of CEO and chairman, appointing Christopher Seabrooke as chairman of the group's board while Serge Belamant stays on as CEO.
Belamant resigned as chairman but remains a director and CEO.
The technology company said the move 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 former chairman drew some unwanted attention for his comments as the social grants debacle unfolded. At one point, he reportedly said that unless government used pigeons to deliver social grants, it was only CPS that had the capacity to fulfil payments on 1 April.
Social grant recipients were successfully paid at the beginning of the month, with the payments process running until 21 April.
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