A class action lawsuit has been filed by a US lawyer against dula-listed Net1, the City Press reports this morning.
"The class action is on behalf of investors who bought Net1 shares between 27 August 2009 and November 2013," says the paper. It adds the suit is seeking damages for alleged violations of US federal securities laws, it says.
City Press reports the core issue is the R10 billion contract Net1 has to handle payments for some 15 million social security beneficiaries. The complaint alleges Net1 made misleading claims and/or failed to disclose its "practices to secure contracts in South Africa were in violation of the Foreign Corrupt Practices Act," says the paper.
Net1 spokesman Dhruv Chopra said the company would respond to any actions as necessary, said City Press.
The paper also alleges Net1's financial statements were materially false and misleading. Net1 has been challenged several times, in the US and South Africa, over the validity of the contract.
The US Securities and Exchange Commission and Department of Justice's Criminal Division is involved in an ongoing investigating whether there was bribery involved in the R10 billion contract with the South African Social Security Agency (SASSA).
Last year, the Constitutional Court ruled the contract was invalid, although it "suspended its declaration of invalidity pending determination of a just and equitable remedy", said Net 1 in a statement.
Losing bidder AllPay, a unit of big four bank Absa, turned to the Constitutional Court in yet another attempt to have the multibillion-rand tender process declared invalid. The tender was awarded to Net 1 unit Cash Paymaster Services (CPS). Both CPS and SASSA opposed AllPay's application.
AllPay argued the five-year deal, to service around 15 million grant recipients, was not awarded lawfully. AllPay's action followed its loss in the Supreme Court of Appeal, which is where the matter was heard after the North Gauteng High Court ruled that, while the deal was illegal and invalid, it would remain in place so that payments could continue.
There will be a hearing on 11 February to arrive at a solution. Net 1 and SASSA have been ordered to pay AllPay's costs.
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