Net1 UEPS, the company responsible for paying social grants through its subsidiary Cash Paymaster Services in SA, said it has terminated its consulting agreement with former CEO Serge Belamant.
In a statement on Monday, the Nasdaq-listed Net1 said its board issued Belamant a 90-day written notice to terminate his two-year consulting agreement.
In May Belamant retired early, despite the company saying he was only due to retire at the age of 65 in 2018.
After retiring, Belamant would remain with Net1 for a period of two years to provide consulting services and offer technical expertise for the development of Net1’s international operations.
Belamant is widely credited for building Net1 into one of the biggest payment systems and mobile technologies company over the past 27 years.
Net1 said it would not be making any termination payments to Belamant beyond the 90-day notice period. “We have managed a smooth transition and thus believe there is limited value to continuing with such agreement for a lengthy period of time,” said Christopher Seabrooke, the chairman of Net1.
“We discussed our decision with Mr Belamant, who concurred with our conclusion. Our parting is cordial.”
Under the initial agreement, Net1 would pay Belamant $50 000 (R659 000 at the time of writing) a month for consulting services for two years. This would equate to $1.2 million (R15.8 million) over 24 months. The termination means that Belamant would be paid R1.9 million for three months of service.
Net1’s two largest shareholders, the International Finance Corporation (IFC) and Allan Gray, expressed shock at the whopping R265 million golden handshake that Belamant would be paid after retiring.
Belamant received an $8 million (R105 million) severance payment, R142 million from Net1’s repurchase of his more than one million shares at $10.80 and the R15.8 million in consulting work for two years.
Allan Gray and IFC said they were both surprised at how Belamant was able to negotiate an “extravagant deal” and believed the payout was unjustified.
Belamant’s retirement comes in the wake of widespread criticism of Net1’s role in the controversial handling of social grant payments to 10.6 million beneficiaries by the South African Social Service Agency (Sassa).
He came under fire after the continuation of a contract (concluded five years ago) to distribute social grants between CPS and Sassa despite it being declared invalid by the Constitutional Court as the tender process was flawed.