Net1 delays annual report after order to pay R317m to Sassa
Net1 CEO Herman Kotzé says the company ‘once again finds itself being prejudiced by apparent shortcomings in Sassa’s procurement process’
Net1 said on Tuesday it had delayed submitting its company filings in the US after the Supreme Court of Appeal ordered it to pay back R317m to the SA Social Security Agency (Sassa).
The JSE and Nasdaq listed technology group had gone to court to appeal against a 2018 judgment setting aside an agreement between its subsidiary, Cash Paymasters Services (CPS), and Sassa to biometrically re-register about 11-million grant recipients.
It lost that appeal on Monday.
Net1 CEO Herman Kotzé said on Tuesday that the company was considering its options, and that it “once again finds itself being prejudiced by apparent shortcomings in Sassa's procurement process”.
“We are disappointed with the SCA judgment and will study it to determine our next course of action,” Kotzé said.
The company has also delayed filing its Form 10-K for the year to end-June, scheduled for Tuesday, to assess the effects of the order.
A Form 10-K is an annual report required by the US Securities and Exchange Commission (SEC), which gives a comprehensive summary of a company's financial performance. Once the deadline passes, Net1 has an additional 15 days to file the report, or face financial penalties or even delisting from US markets.
Net1 says it incurred additional implementation costs during the beneficiary bulk re-registration costs in 2012 and 2013, after Sassa expanded the mandate of its project to collect additional information for each child grant recipient. Sassa had agreed to pay CPS R277m, as well as full settlement of the additional costs incurred by CPS.
Net1 had fought lengthy and costly battles in various courts over the grants system, with CPS ultimately losing its R1.3bn lawsuit against Sassa in July. The claims were based on the alleged deprivation of an opportunity for CPS to earn full service fees for the period April 2006 to June 2010.
CPS’s contract with Sassa ended in 2018 after a number of Constitutional Court judgments. In 2014, the court found that the contract Sassa had signed with CPS two years earlier was illegal and invalid, but it had been allowed to continue to allow Sassa to find another alternative for distributing social grants to 17-million recipients.