Shares in Net1 UEPS Technologies fell R37.10 – more than 55% – in early trade on the JSE on\u00a0Wednesday (5 December), after the group said it was being investigated for tender corruption.<\/p>\n
Net1,\u00a0a provider of alternative payment systems,\u00a0has a\u00a0primary listing on the Nasdaq and a secondary listing on the JSE.<\/p>\n
The group said on Tuesday (4 December 2012) that it received letters from the US Department of Justice (DOJ) Criminal Division and the SEC regarding an investigation into possible acts of corruption in South Africa.<\/p>\n
Net1, through its subsidiary\u00a0CashPaymaster Services, manages and distributes social grants in the form of smart cards in South Africa, having been awarded a R10 million contract by the\u00a0SA Social Security Agency (Sassa) in January.<\/p>\n
In August,\u00a0the North Gauteng High Court ruled that the tender process was improper,\u00a0after rival bidder and Absa bank subsidiary,\u00a0AllPay, voiced its concerns about the process.<\/p>\n
The court however, ruled that the contract would\u00a0remain valid and would not be set aside so as not to disrupt the payment of social grants.<\/p>\n
Net1 said in a statement on Tuesday (4 November) that it had\u00a0received a letter informing the group that the DOJ and the FBI had begun an investigation into whether the group violated provisions of the Foreign Corrupt Practices Act and other US federal\u00a0criminal laws by engaging in a scheme to make corrupt payments to officials of the\u00a0Government of South Africa in connection with the Sassa contract.<\/p>\n
The letter \u00a0stated that an investigation would also be conducted into whether Net1\u00a0engaged in violations of the federal securities laws in connection with statements\u00a0made by the group in its SEC filings regarding this contract.<\/p>\n
In mid-morning trade on the JSE\u201a Net1, shaved off as much as 55.29%, or R37.10\u201a to trade at R30, giving the company a market cap of R1.751 billion.<\/p>\n
Related article<\/strong><\/p>\n Net1 under FBI investigation for corruption in SA<\/strong><\/a><\/p>\n Court grants leave to appeal in Sassa case<\/strong><\/a><\/p>\n Net1 reaches biometric cards milestone<\/strong><\/a><\/p>\n Net 1 sees 18% decrease in earnings for Q3<\/a><\/strong><\/p>\n Net1 concludes Sassa contract agreement<\/a><\/strong><\/p>\n