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.
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.