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Allan Gray signals Net1 shareholder revolt over grants debacle

ConCourt to rule on Friday on grant payments issue.

JOHANNESBURG – Investment company Allan Gray said on Friday its 16% stake in Net1 allowed it to call a shareholders’ meeting over the payment technology provider’s handling of the scandal over a South African welfare contract.

South Africa’s Constitutional Court was set to rule on Friday in a case concerning the unlawful tender of a contract to Net1 unit Cash Paymaster Services (CPS) to manage welfare benefits to 17 million people.

The stakes are high as the welfare system is a lifeline for South Africa’s most vulnerable and includes more than 11 million child support grants, many of whom would go hungry without the monthly payment.

Allan Gray could push for the removal of the Net1 board, chief investment officer Andrew Lapping was quoted in the Business Day newspaper. 

“Sixteen percent allows us to call a shareholders’ meeting,” Allan Gray chief operating officer Rob Dower told Talk Radio 702.

Friday’s looming judgment by the country’s top court stems from a case brought by applicants who want it to take oversight of a new contract.

South African President Jacob Zuma said in parliament on Thursday there was no “crisis”. Earlier this week the country’s chief justice placed the blame for the debacle squarely on the shoulders of Social Development Minister Bathabile Dlamini, calling her inaction incomprehensible.

The creation of a welfare safety net which supports one in three South Africans has been one of the signature achievements of the ruling African National Congress (ANC), in power since the end of white apartheid rule in 1994.

The chaos in South Africa’s social security agency comes three years after the Constitutional Court ruled that the tender won by CPS was illegal.

The government was given time until April 1 to take responsibility for social service payments or find a new provider, but it has so far failed to do so, raising concerns that grants may not be paid on time next month. 

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@Allen Gray
My maid who works for me in Johannesburg, whose grand son is in Bloemfontein receives a child grant. For the last 3 years there were unlawful deductions for air time and electricity being applied to the grant. Her complaints were not entertained until I told her to go to Bloemfontein and sort out the problem. It took her three days to finally sort out the problem and got a refund for R7550. That is a lot of money being deducted from a child’s grant which is meant for the provision of food. Now, how many more poor soul’s are out there who is being take for a ride and can we not get these rogues to account for causing such grief to these poor people.

“…Her complaints were not entertained until I told her to go to Bloemfontein and sort out the problem…”
While congratulating her in solving her problem, why should she have had to go to Bloem, thus involving her in more unnecessary expense? I trust you paid for her taxi / bus fare.

Have you been to a pay-point. There are lots of loan sharks there and they wait for the grant money to be payed out so that they can take what is owed to them (sometimes all they get). Then they off new loans. CPS was interest free.

Net1 was deducting airtime and electricity from a child grant. The child is only 5 years old! My maid, who is the grandmother, was receiving the grant and is the card holder. She bought her own electricity vouchers and airtime by paying cash. She did not request net1 for the airtime and the electricity vouchers. It took her three days to sort the matter and received a R7,550 refund. can you imagine how many other poor people are being taken for a ride?????

Not good that erroneous deductions made but 3 days to sort out is very good and shows that problems can be resolved with a bit of effort.

Try dealing with Investec or Nedbank and get that sort of rapid response.

Give me CPS/NET1 problem solving ability anytime.

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