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Allan Gray responds to ConCourt ruling

‘We would be happy if Net1 foregoes all profits on contract extension.’

Read: Sassa and CPS contract extended for another year

Net1: Do the right thing

We are very concerned about the situation surrounding Net1 – both the immediate need to ensure that 17 million beneficiaries receive their payments on time and to get to the bottom of the allegations that data is being used improperly and deductions taken illegally. 

We welcome the tighter supervision of the company and enhanced safeguarding of beneficiaries’ personal information that we expect to result from the Constitutional Court order. We call on Net1 to comply with the spirit of the order. 

As more information around Net1 has become public, we have stepped up pressure on management and our efforts to uncover the truth. We have engaged a third party to help us investigate and have also extended an invitation to civic society and reporters to meet with us and to provide us with any new information that they may have. 

Our engagements with Net1

We asked Net1 in writing to make every effort possible to find an interim solution to ensure that grants are paid by 1 April. As shareholders, we would be happy if this means Net1 foregoes all profits on the contract extension. Allan Gray’s investment in Net1 is not based on the renewal of the SASSA contract. It is based on the company’s track record of successfully implementing reliable and robust payment technologies, which comfortably handle millions of transactions, both on- and offline, across various different businesses and countries. 

We have also asked in writing for Net1 to consider cancelling all recurring monthly deductions to Net1 subsidiaries for airtime. And we have recommended other improvements, such as sending three SMS messages per month for the next three months to all Smart Life policyholders, in their home language, offering a simple and easy way for the policyholders to cancel their policy. 

We have urged Net1 to publish a comprehensive statement clearly explaining their response to the allegations of illegal and improper behaviour. 

We are working to fully understand issues around the integrity of management. We view these allegations in an extremely serious light. If they are not resolved to our satisfaction we will not hesitate to call a general meeting and attempt to remove the board. 

Allan Gray clients represent the second-largest shareholding in Net1 with 15.58%. As a shareholder we have some influence to hold Net1 accountable and this is what we remain committed to doing. We would be very interested to hear the views of those holding the 84% of shares that we don’t own on these issues.

Andrew Lapping is Chief Investment Officer at Allan Gray.


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Third party should investigate and where there is fraud involved then a refund must be given. My maid got back a refund of R7550 by spending tree days sorting out the matter.

Nice spin.

But in reality Allan Gray knows that Net1 will give them the middle finger as they do with everyone else.

The CEO is particularly arrogant and vindictive (not to mention of question ethics – remember how he bought his doctorate to put the Dr in front of this name?)

Net-1 isn’t going to change what it is doing. (that’s a given)
The minister wont replace them in 12 months time because then she will lose her backpocket revenue (that’s a given).
Zuma wont fire Dlamini because then he will lose his backpocket revnue (that’s a given)

I wonder whether Allan Gray has strong enough ethical and moral standing to drop Net-1 as an investment.

Or are the egos too big and the lure of shady profits too large?

Have you considered that the ethical position might be to stay invested in order to try to improve things and fix the company? The world would be much worse off if all shareholders sell out and nobody sticks around to put pressure on the company to do the right thing.

Haven’t you noticed that the ANC doesn’t respond to pressure to do the right thing?

By far and away, the Net-1 business is built on the ANC government and its tenders in South Africa and the ANC wants them in the circle as much as they want to be there because the kickbacks are massive. I called that weeks ago but I don’t need to tell you that anyway because the court pretty much said it and the truth is self-evident in this case – also note Belamant’s attitude.

Try as you might, there is no way in hell that you are going to put enough pressure on either Net-1 or the ANC for them to change their ways.

Unfortunately the ConCourt is toothless in this. Zuma’s ANC controls the police and NPA now and there is no way that they are going to arrest someone like Dlamini for contempt of court and the court knows this. Ordering it would put egg on the court’s face. I believe the judgement by the court today was soft for that reason and I truly feel sorry for those judges.

The notion of staying invested to sway the leadership of this company is idealistic and might work in a society where morals trump greed but those days passed about 10 years ago in sunny South Africa.

Zuma and his tribe are pissing all over South Africa in every way possible.

I honestly don’t have an ounce of sympathy for the voters propping up the ANC in what is coming their way in the not-too-distant future.

Allan Gray staying invested despite knowing all this and it being in the public domain is not much different to Barclays profiting off the wrong that was done during apartheid.

I dare you to hold your breath until that happens

OK so

One of the biggest investor houses in this country pays millions for shares in a company that they do not want to earn a profit from their business?????

How crazy is that???????

This is very refreshing. Well done for taking a stand. Respect

Actually, no. From the article:

“Allan Gray’s investment in Net1 is not based on the renewal of the SASSA contract. It is based on the company’s track record of successfully implementing reliable and robust payment technologies, which comfortably handle millions of transactions, both on- and offline, across various different businesses and countries. “

Gut-less Allan Gray. Storm in a teaspoon.

Hope I read it right somewhere that there are no unit trust investments in Net 1? Somebody confirm?

I want an asset manager that is looking after MY interests as an investor. Speak for yourself AG if you are happy to get no profit. WTF?

I want a profit on my 50 years of earning, saving, investing and generally denying myself.

If CSP/NET 1 has done something provably illegal for heaven sakes demonstrate this, otherwise shut up…forever

How dare you AG?

Allan Gray is likely to have a member on the Board of Net1. It should hence be well aware and informed of the doings of Net1, including the deductions made (illegal!). Allan Gray should hence explain how it is possible for it not to know about these deductions seeing that a Boards duties includes ensuring the company’s products comply with all law. Not good enough to give the profits away. Sounds a bit like a bribe or ransom payment. What happened to corporate governance here?? SA needs to know.

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