Net1, through its subsidiary CashPaymaster Services, manages and distributes social grants in South Africa, having been awarded a R10 billion contract by the SA Social Security Agency (Sassa).
In August 2012 the North Gauteng High Court ruled that the tender process for the Sassa contract was improper, after rival bidder Absa’s AllPay, voiced its concerns about the process.
However, the contract was not invalidated, out of fear of throwing the entire social payments scheme into disarray.
On Wednesday (27 March 2013), Net1 said that a full bench of the South African Supreme Court of Appeal (SCA) unanimously ruled that the tender process followed by Sassa in awarding a contract to CPS was valid and legal.
Speaking on the ruling, the SCA said that there would be few cases where flaws in the public procurement processes couldn’t be found.
“A fair process does not demand perfection and not ever flaw is fatal,” The SCA said.
“It would be gravely prejudicial to the public interest if the law was to invalidate public contracts for inconsequential irregularities.”
Not over yet
According to a Sunday Times report, the stakes are high for Absa in the ongoing battle between the two companies as, under Net1, the social payment scheme accounts will be moved from Absa to Grindrod Bank.
While the SCA ruling is a victory for Net1, it’s not over yet, as an AllPay representative said that the company would now consider taking hte case to the Constitutional Court.
However, according to the report, Net1 is also hitting back at Absa, suing the bank for “injuring Net1’s reputation…and reducing Net1’s share price” to the tune of R1 billion.
AllPay’s claims “hurt our share price, jeopardised our [black empowerment] participation and caused investors to question out integrity,” the paper reported Net1 CEO Serge Belamant as saying.
Net1 is still currently being investigated by the US Department of Justice (DOJ) Criminal Division and the SEC, regarding possible acts of corruption in South Africa.