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Net1 UEPS Technology in trouble for allegedly understating its profit by R800 million

Article by Emma Clayfield

Net1 UEPS Technology is in legal trouble again, as the human rights organization Freedom Under Law alleges that the company has understated its profit by at least R800 million.  

Not only has Net1 found itself in trouble for misusing government funds, the company wants to place one of its subsidiaries, Cash Paymaster Services – that’s been ordered to repay hundreds of million rands to Sassa – into business rescue. 

Cash Paymaster Services has distributed around R150 billion annually in social grant payments for the South African government for about 5 years. Net1 states in an application to South Africa’s High Court that CPS has more liabilities than assets, hence its placing the subsidiary into business rescue. 

Net1’s CEO, Herman Kotze, said CPS was financially distressed, and it was unlikely that it would be able pay off all of its debts. 

Back in 2014, the Constitutional Court ruled that the contract awarded to CPS was invalid as the proper tender procedures weren’t followed. This ensuing turmoil threatened to disrupt the payments in 2018  and cast doubt on the government’s integrity amid a series of corruption scandals.

In 2018, the Constitutional Court ordered SASSA to find a new service provider or make the payments itself. However, SASSA failed to find a replacement and CPS was allowed to continue making payments. 

The court also ordered CPS to repay SASSA R316m plus interest for payments it said the company wasn’t entitled to claim. In the documents submitted by SASSA, it opposes the plan to place CPS into business rescue – but instead wants it liquidated. 

The Freedom Under Law demands CPS to repay the allegedly unreported profit because the contract was invalid, therefore the profit should be deemed illicit. They also asked that auditors appointed by the welfare department to be given full access to CPS’s financial information.

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