Net1 challenges new grant tender requirements


Johannesburg -  Payment systems company Net 1 UEPS Technologies says it has approached South Africa’s Constitutional Court to halt a new tender process for a five-year social grants contract.

In April this year, the constitutional court ordered that the South African Social Security Agency (Sassa) re-issue the country’s R10bn grants tender, which was awarded to Net1 division Cash Paymaster Services (CPS) in 2012.

The Constitutional Court’s Justice Johan Froneman criticised Sassa for its “irregular” conduct regarding the Net1 deal.

This ruling came as Net1 faced allegations of bribing officials to win the contract.

Meanwhile, Net1 has also been under fire for selling prepaid airtime and loans to social grant recipients and the company has even previously been the subject of probes by SA special investigating unit the ‘Hawks’ and the US Department of Justice and the Securities Exchange Commission. US investigations were conducted into Net1 owing to the company being listed on both the New York’s Nasdaq and the Johannesburg Stock Exchange (JSE).

Subsequently, Sassa issued a request for proposals (RFP) on 22 October 2014 regarding additional tender requirements.

Sassa then tightened up the requirements by, for instance, prohibiting the future tender winner from selling airtime and loans to social grant recipients.

Bidders for the contract are also required to submit proposals by 12 December 2014.

But Net1 is hitting back as it is challenging Sassa’s updated specifications for the contract.

“Following a detailed analysis of the tender specifications, the company (Net1) concluded that the tender specifications were not sufficiently clear regarding a number of critical points and failed to comply with the RFP requirements specified in the court’s order,” Net1 said in a trading statement on Wednesday.

“The company (Net1) wrote a letter to Sassa, requesting that the RFP be withdrawn, corrected and reissued. Sassa declined the company's request and, in order to avoid further delays and prejudice, the company applied to the Constitutional Court on November 6, 2014 for an order setting aside the RFP and directing Sassa to issue a corrected RFP,” Net1 added.

Net1 further said that Sassa and Absa unit AllPay - which previously bid on the social grants tender and which also launched court action against Net1 - are opposing Net1’s latest constitutional court application.

Responding to questions that Sassa received from Fin24 earlier this month, a spokesperson for the social grants organisation said it “respects and abides by the Constitutional Court's judgement and is implementing it to ensure adequate safeguards to the beneficiaries.”

Meanwhile, in an interview with Fin24 earlier this month, Net1 chairman and CEO Dr Serge Belamant explained in more detail about why his company is opposing the new tender contract's specifications.

Specifications that Net1 is challenging include, for example, having to pay incapacitated beneficiaries in their homes, which Belamant says could be financially unsustainable.

Belamant told Fin24 that his company is also intending on applying again for the tender, but only under certain conditions.

“We want it to be clear upfront,” Belamant told Fin24.

“And when everybody knows what the rules are, what Sassa can or cannot do legally, and of course how the pricing is going to work...then everybody can do a RFP,” he said.

* Follow @GarethvanZyl on Twitter. For more tech news, follow Fin24tech @Fin24_Tech.

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