| Fri 25 Mar 2011, 15:30 | | NT1 - Net1 - Net1 to Approach Constitutional Court in Response to Supreme Court |
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NT1
NT1
NT1 - Net1 - Net1 to Approach Constitutional Court in Response to Supreme Court
Ruling
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")
Net1 to Approach Constitutional Court in Response to Supreme Court Ruling
JOHANNESBURG, March 25, 2011 - 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.
Investor Relations Contact:
Dhruv Chopra
Vice President of Investor Relations
Phone: +1-212-626-6675
Email: dchopra@net1.com
Johannesburg
25 March 2011
Sponsor to Net1
Deutsche Securities (SA) (Proprietary) Limited
Date: 25/03/2011 15:30:02 Produced by the JSE SENS Department.
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