Net1 to Approach Constitutional Court in Response to Supreme Court Ruling
25 March 2011 - 11:59PM
Marketwired
Net1 UEPS Technologies Inc. ("Net1" or "the Company") (NASDAQ:
UEPS)(JSE: NT1) today announced that its wholly owned subsidiary,
Cash Paymaster Services (Proprietary) Limited ("CPS"), intends to
apply for leave to appeal the South African Supreme Court of
Appeal's recent judgment on March 11, 2011, which overturned a
lower court judgment delivered on December 10, 2009, prohibiting
the South African Social Security Agency ("SASSA") from contracting
the South African Post Office ("SAPO") to render banking or payment
services relating to social grant beneficiaries. The lower court,
the North Gauteng High Court, had ruled in a suit commenced against
SASSA by CPS that SASSA had not followed a proper procurement
process to comply with the South African Constitution and the
Public Finance Management Act ("PFMA") when the previous executive
management team at SASSA contracted with SAPO for the payment of
grants in 2009.
Net1 believes that the final outcome of the case could have a
significant impact on broader interpretation of government
procurement laws in South Africa and in particular the application
of section 217 of the South African Constitution and section
51(1)(a)(iii) of the PFMA which prescribes a fair, equitable,
transparent, competitive and cost effective procurement
process.
During 2010, CPS filed a similar suit against SASSA, with regard
to contracts SASSA entered into with certain commercial banks. In
this instance the North Gauteng High Court also ruled in favour of
CPS by finding that the procurement process followed by SASSA was
not adequate. SASSA did not appeal this judgment and it remains
effective.
On March 13, 2011, the South African newspaper, The City Press
reported that CPS and other contractors charge SASSA an average of
R32.11 per transaction, which the article stated is more than twice
that charged by the South African Post Office. Despite the
inaccuracies of the reported prices, at least in regard to CPS'
prices, the article failed to mention that the price charged by
SAPO is for the delivery of welfare grants through magnetic stripe
based bank accounts opened at SAPO branches, predominantly located
in urban areas of the country. In contrast, CPS delivers social
welfare grants in all areas, but primarily in deep rural areas,
using secure biometric-based smart card technology, guarded mobile
payment vehicles and equipment, and through biometric point of sale
devices installed at medium, small and micro merchant enterprises.
SASSA issued a tender for the payment services in 2007, but decided
to cancel the tender after a long and drawn out process, which
decision is currently also the subject of a review application
launched by CPS. Notwithstanding the aforementioned, CPS's average
rate per recipient on a national basis quoted in its tender
submission in the now cancelled tender, was more competitive than
the contract price agreed between SASSA and SAPO.
CPS remains one of the incumbent service providers to SASSA and
our existing Service Level Agreements with them remain in effect.
CPS continues to deliver a high quality service to SASSA and
provide the most suitable solution tailored to the various
challenging environments where the most vulnerable South African
citizens reside. Until the finalization of the appeal process, the
judgement granted by the North Gauteng High Court on December 10,
2009 remains in full force and effect and prohibits SASSA from
contracting with SAPO to render banking or payment services
relating to grant beneficiaries, until SASSA follows a proper
procurement process which complies with the Constitution and the
PFMA.
SASSA is, however, not prevented from issuing a new tender in
the interim in which SAPO could participate, and which would allow
SASSA to select the most cost effective and efficient system
available.
Forward-Looking Statements
This announcement contains forward-looking statements that
involve known and unknown risks and uncertainties. A discussion of
various factors that cause the Company's actual results, levels of
activity, performance or achievements to differ materially from
those expressed in such forward-looking statements are included in
the Company's filings with the Securities and Exchange Commission.
The Company undertakes no obligation to revise any of these
statements to reflect future circumstances or the occurrence of
unanticipated events.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that
leverage its Universal Electronic Payment System, or UEPS, 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. In
addition to payments, UEPS can be used for banking, healthcare
management, payroll, remittances, voting and identification.
Net1 operates market-leading payment processors in South Africa,
Republic of Korea, Ghana and Iraq. In addition, Net1's proprietary
Mobile Virtual Card technology offers secure mobile payments and
banking services in developed and emerging countries.
Net1 has a primary listing on the Nasdaq and a secondary listing
on the JSE Limited.
Contacts: Net1 UEPS Technologies Inc. Dhruv Chopra Vice
President of Investor Relations +1-212-626-6675 dchopra@net1.com
www.net1.com
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