Net1 UEPS Technologies Inc.’s founder and chief executive officer, Serge Belamant, will retire early after a storm of controversy over a contract it holds in South Africa to distribute billions of dollars of welfare payments to 17 million people.
Belamant, who founded the company 27 years ago, will quit at the end of the month rather than retiring next year to allow changes at the company and partly due “to the views expressed by certain of the company’s shareholders,” Net1 said in a statement. He will be replaced by Chief Financial Officer Herman Kotze. Johannesburg-based Net1’s biggest shareholders are the World Bank’s International Finance Corp. and Cape Town’s Allan Gray Ltd. Both have been critical of Belamant and the company.
“This will make it easier to move forward with the corporate governance issues that have been highlighted,” Andrew Lapping, chief investment officer of Allan Gray, said by phone. “It’s definitely a step in the right direction.”
Net1 won a contract in 2012 to distribute welfare in South Africa. Two years later the country’s Constitutional Court ruled the contract invalid and instructed the South African Social Security Agency to find a new provider. When it failed to do so by March this year, the court allowed the contract to be extended until 2018 under stringent conditions.
Net1 has been accused by human-rights organizations of selling goods and services to South Africa’s poorest and least educated ranging from loans to mobile-phone airtime without explaining the terms and costs adequately and by improperly using information gleaned from its grant distribution activity. It has denied the allegations.
“It’s up to the new leadership to look carefully at the company’s processes and procedures” when granting loans and selling products, Lapping said.
Belamant attracted criticism for his conduct and public comments.
In August last year he said on a conference call about a court case over deductions from grants that “between you and me and a bar of soap, I don’t really care what it means. It’s not going to make any difference to how much money we’re going to make.”
He will provide consultant services to Net1 for two years, according to the statement.
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