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Working for change with Net1 board

Companies
Johannesburg - Allan Gray, the second-biggest shareholder in Net1 UEPS Technologies, said it will work with the company’s board after it highlighted concerns about its communication with its investors about deductions it makes from the welfare checks of clients in South Africa.

On March 17 South Africa’s Constitutional Court ordered the nation’s welfare agency to extend Net1’s contract, which it had previously ruled invalid, to distribute monthly grants to more than 17 million people for a year to avoid an interruption to the disbursement of more than R150 billion in payments annually.

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Serge Belamant

Net1, which won the payment contract in 2012, has been accused by human rights groups of making illegal deductions from the checks for goods and services its subsidiaries sell. It has denied the allegations.

“Allan Gray has written two letters to Net1’s board,” Andrew Lapping, the fund manager’s chief investment officer, said in an interview. “Allan Gray wants to drive change from inside rather than a hostile way from outside.”

Read also: Net 1 chief under grants pressure

In its ruling, the court said that Net1 is barred from using data gathered on welfare beneficiaries to market products its subsidiaries sell such as mobile-phone airtime and loans. The expansion of welfare payments is a signature program of the country’s ruling African National Congress.

While Allan Gray holds about 16 percent of Net1, its biggest shareholder is the International Finance Corporation with 18 percent.

The IFC has asked Net1 to hire consultants assess its practices as a responsible lender, it said in an emailed response to questions.

Serge Belamant, Net1’s chief executive officer, declined to comment.

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