Net1 UEPS Technologies is terminating a consulting agreement with former CEO Serge Belamant, according to a statement to shareholders via the Johannesburg Stock Exchange (JSE) news service.
The Nasdaq- and JSE-listed company's board of directors yesterday issued Belamant a 90-day written notice to terminate his two-year consulting agreement with the company, which would have earned him $50 000 (R660 730) per month.
Net1 says it will not make any termination payments to Belamant beyond the 90-day notice period.
"We have managed a smooth transition and thus believe there is limited value to continuing with such agreement for a lengthy period of time," says Net1 chairman Christopher Seabrooke.
"We discussed our decision with Mr Belamant, who concurred with our conclusion. Our parting is cordial and we wish him success in his future endeavours after the remaining period of the consulting agreement with us," Seabrooke added.
Belamant retired as CEO of Net1 on 31 May 2017 ? and was replaced by then CFO Herman Kotz'e on 1 June ? although he was only due to retire at age 65 in 2018.
At the time, the company stirred controversy when it revealed Belamant would be paid $8 million (R105 million) for leaving the company. This included a severance payment of $1 million (R13 million) "representing compensation for 27 years of service with the company, less applicable withholdings and deductions" as well as another payment of $7 million (R92 million) for his "cooperative resignation".
Before he left, Belamant also entered into a consulting agreement with Net1 to work as an independent contractor providing consulting services, for a period of up to two years following his departure, and Net1 said he would be paid $50 000 per month for this.
At the time, Net1's second largest shareholder, Allan Gray, came out against Belamant's severance package, saying it was outraged by the sum and calling it an "extravagant deal".
"We are very surprised that Mr Belamant was able to negotiate such an extravagant deal after such broad public censure and believe that it is unjustified given current circumstances," Allan Gray chief investment officer Andrew Lapping said in a statement at the time.
Grant payments debacle
With Belamant at the helm, Net1 dominated news headlines for the first few months of 2017 due to its controversial connection to the payment of social grants in SA.
In March, the Constitutional Court decided to extend an invalid contract with Net1 subsidiary Cash Paymaster Services (CPS) for another 12 months to avert a potential social grants payments disaster. This after the South African Social Security Agency failed to timeously find a suitable services provider and successfully facilitate the switch of payments in-house. The agency admitted it underestimated the mammoth task of taking control of social grant payments, which resulted in it coming up short with working solutions to pay social grants.
The original tender contract was declared invalid in November 2013 after it emerged irregular tendering processes were followed in awarding it.
In June, Kotz'e revealed CPS had made R700 million over the five-year period as the distributor of social grants on behalf of government.
Net1 has a primary listing on the Nasdaq in the US and a secondary listing on the JSE. Year-to-date, the stock price is down almost 20% on the JSE and has dropped over 15% on the Nasdaq since the year began.
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