Net1: Belamant's R104m severance pay is justified

Former CEO of Net1 UEPS Technologies, Serge Belamant. (Supplied)
Former CEO of Net1 UEPS Technologies, Serge Belamant. (Supplied)

Johannesburg - Net1 UEPS Technologies’ new CEO Herman Kotze said a severance payment to the company’s founder and former CEO who was criticised by the company’s biggest shareholders was justified because they forced him into early retirement.

Net1 agreed to pay Belamant R104m and about a 14% premium on more than 1 million shares that he owned after he agreed to step down amid a controversy over a contract it holds in South Africa to distribute billions of dollars of welfare payments to 17 million people.

Belamant will also be paid R645 000 a month to consult for the company after his early retirement. Net1’s second-biggest shareholder Allan Gray said it was outraged and the biggest investor, the International Finance Corp, said it was frustrated.

“We have to take cognisance of what they say, but on the other hand it’s as a result of the initial steps taken by them that we’ve ended up in a position where we’ve agreed with Serge that he must take this early retirement package,” Kotze told reporters in Kokstad on Thursday.

Belamant’s three decades of service was taken into account, as was his income that was forfeited due to his early retirement, Kotze said. Belamant, who was paid R46.44m in the 2016 financial year, was due to retire in 2018.

Outraged investor

“There are accelerated stock options that had to be taken into account, restraint of trade, as well as the ownership of intellectual property issues,” Kotze said.

Net1 won a contract in 2012 to distribute welfare payments in South Africa. Two years later, the country’s Constitutional Court ruled the contract invalid and instructed the South African Social Security Agency (Sassa) to find a new provider. When it failed to do so by March this year, the court allowed the contract to be extended for 12 months under conditions.

The company has been accused by human rights groups of selling services ranging from loans to mobile phone airtime to South Africa’s poorest and least educated people without fully explaining how financial deductions from their social grants would work. It has denied the allegations.

“Allan Gray notes with outrage the financial settlement claimed by Serge Belamant upon his retirement as CEO of Net1,” the Cape Town-based asset manager said in a statement this week. “We are very surprised that Belamant was able to negotiate such an extravagant deal after such broad public censure, and believe that it is unjustified given current circumstances.”

Net1’s share price has slumped more than 40% in New York over the past two years. The company this week canceled a plan to buy 15% of Blue Label Telecoms because it would have had to issue shares to raise funds and its stock price has fallen.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
15.45
(-1.47)
ZAR/GBP
20.61
(-1.49)
ZAR/EUR
18.44
(-1.16)
ZAR/AUD
11.35
(-0.74)
ZAR/JPY
0.15
(-1.20)
Gold
1776.65
(-0.54)
Silver
22.60
(-0.10)
Platinum
962.50
(+0.06)
Brent Crude
47.90
(0.00)
Palladium
2364.69
(-1.94)
All Share
57091.89
(-1.26)
Top 40
52375.50
(-1.22)
Financial 15
11158.56
(-3.62)
Industrial 25
78965.65
(-1.16)
Resource 10
52703.42
(-0.19)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 362 votes
No, I did not.
51% - 867 votes
My landlord refused
28% - 470 votes
Vote