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South African Constitutional Court pronounces judgment on payment of social welfare grants after April 1, 2017
Net 1 UEPS Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: UEPS
JSE share code: NT1
ISIN: US64107N2062
(“Net1” or the “Company”)
South African Constitutional Court pronounces judgment on payment of social
welfare grants after April 1, 2017
Johannesburg, March 17, 2017 – Net1 (NasdaqGS: UEPS; JSE: NT1) today
announced that the South African Constitutional Court (“Constitutional Court”) has
given an order regarding the continued payment of social grants when the current
contract between the Company’s subsidiary Cash Paymaster Services (Pty) Ltd
(“CPS”) and SASSA expires on March 31, 2017. Essentially, the current contract
between CPS and SASSA has been extended for a further period of 12 months under
the current contract’s terms and conditions, augmented by certain additional terms
and conditions ordered by the Constitutional Court. The relevant extracts from the
order are provided below:
Order:
4. It is declared that the South African Social Security Agency (SASSA) and
Cash Paymaster Services (Pty) Limited (CPS) are under a constitutional obligation to
ensure payment of social grants to grant beneficiaries from 1 April 2017 until an
entity other than CPS is able to do so and that a failure to do so will infringe upon
grant beneficiaries' rights of access to social assistance under section 27(1)(c) of the
Constitution.
5. The declaration of invalidity of the contract is further suspended for the 12-
month period from 1 April 2017.
6. SASSA and CPS are directed to ensure payment of social grants to grant
beneficiaries from 1 April 2017, for a period of 12 months, on the same terms and
conditions as those in the current contract between them that will expire on 31 March
2017, subject to these further conditions:
6.1 The terms and conditions shall:
(a) contain adequate safeguards to ensure that personal data obtained
in the payment process remains private and may not be used for any purpose
other than payment of the grants or any other purpose sanctioned by the
Minister in terms of section 20(3) and (4) of the Social Assistance Act 13 of
2004; and
(b) preclude anyone from inviting beneficiaries to "opt-in" to the
sharing of confidential information for the marketing of goods and services.
6.2 CPS may in writing request National Treasury during the 12 month
period to investigate and make a recommendation regarding the price in the
contract.
6.3 National Treasury must file a report with this Court within 21 days
of receipt of the request setting out its recommendation.
6.4 Within 30 days of the completion of the period of the contract,
CPS must file with this Court an audited statement of the expenses incurred,
the income received and the net profit earned under the contract.
6.5 SASSA must thereafter obtain an independent audited verification
of the details provided by CPS under paragraph 6.4.
6.6 The audit verification must be approved by National Treasury and
the audited verification must be filed by SASSA with this Court within 60
days.
6.7 CPS must permit the auditors appointed by SASSA to have
unfettered access to its financial information for this purpose.
7. The Minister and SASSA must file reports on affidavit with this Court every
three months, commencing on the date of this order, setting out how they plan to
ensure the payment of social grants after the expiry of the 12-month period, what
steps they have taken in that regard, what further steps they will take, and when they
will take each future step, so as to ensure that the payment of all social grants is made
when they fall due after the expiry of the 12-month period.
8. The reports filed by the Minister and SASSA as contemplated in paragraph
7 must include, but is not limited to, the applicable time- frames for the various
deliverables which form part of the plan, whether the time-frames have been complied
with, and if not, why that is the case and what will be done to remedy the situation.
9. If any material change arises in relation to circumstances referred to in a
report referred to in paragraphs 7 or 8, the Minister and SASSA are required
immediately to report on affidavit to the Court and to explain the reason for and
consequences of the change.
10. It is declared that SASSAis under a duty to ensure that the payment method
it determines:
10.1 contains adequate safeguards to ensure that personal data obtained
in the payment process remains private and may not be used for any purpose
other than payment of the grants or any other purpose sanctioned by the
Minister in terms of section 20(3) and (4) of the Social Assistance Act; and
10.2 precludes a contracting party from inviting beneficiaries to "opt-
in" to the sharing of confidential information for the marketing of goods and
services.
11. The parties are, within 14 days from the date of this order, required to
submit the names of individuals, with their written consent, suitably qualified for
appointment as independent legal practitioners and technical experts for the purposes
referred to in paragraph 12 below.
12. The Auditor-General and any other person(s) or institution(s) appointed by
the Court after receipt of the names submitted under paragraph 11, shall jointly and
until otherwise directed by the Court:
12.1 evaluate the implementation of payment of social grants during the
12-month period;
12.2 evaluate the steps envisaged or taken by SASSA for any
competitive bidding process or processes aimed at the appointment by SASSA
in terms of section 4(2)(a) of the South African Social Security Agency Act 9
of 2004 of a new contractor or contractors for the payment of social grants;
12.3 evaluate the steps envisaged or taken by SASSA aimed at SASSA
itself administering and paying the grants in the future or SASSA itself
permitting any part or parts of the administration and payment processes in the
future; and
12.4 file reports on affidavit with this Court every three months,
commencing on a date three months after the date of this order, or any shorter
period as the legal practitioners and experts may deem necessary, setting out
the steps they have taken to evaluate the matters referred to in paragraphs 12.1
to 12.3, the results of their evaluations and any recommendations they
consider necessary.”
A full copy of the judgment is available on the Company’s website at www.net1.com.
The Company reiterates its commitment to ensure uninterrupted service delivery to all
grant recipients beyond March 31, 2017.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that leverage its Universal
Electronic Payment System (“UEPS”) or utilize its proprietary mobile technologies.
The Company operates market-leading payment processors in South Africa and the
Republic of Korea. Through Transact24, Net1 offers debit, credit and prepaid
processing and issuing services for Visa, MasterCard and ChinaUnionPay in China
and other territories across Asia-Pacific, Europe and Africa, and the United States.
Through Masterpayment, Net1 provides payment processing and enables working
capital financing in Europe.
UEPS permits the Company to facilitate biometrically secure, real-time electronic
transaction processing to unbanked and under-banked populations of developing
economies around the world in an online or offline environment. Net1’s UEPS/EMV
solution is interoperable with global EMV standards that seamlessly enable access to
all the UEPS functionality in a traditional EMV environment. In addition to
payments, UEPS can be used for banking, healthcare management, payroll,
remittances, voting and identification.
Net1’s mobile technologies include its proprietary mobile payments solution - MVC,
which offers secure mobile-based payments, as well as mobile banking and prepaid
value-added services in developed and emerging countries.
Net1 has a primary listing on the NASDAQ and a secondary listing on the
Johannesburg Stock Exchange.
Investor Relations Contact:
Dhruv Chopra
Head of Investor Relations
Phone: +1-917-767-6722
Email: dchopra@net1.com
Johannesburg
March 17, 2017
Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited
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