Simmering animosity between Net 1 UEPS Technologies and AllPay Consolidated Investment Holdings reached fever pitch yesterday when Net 1 announced it had approached the South Gauteng High Court seeking R478 million in damages in a defamation claim against AllPay.

Net 1 said it was seeking interest and costs in addition to the damages which was calculated on the rand-dollar exchange rate on Tuesday, when the court papers were filed.

AllPay, a subsidiary of Absa, will challenge the litigation and has denied Net 1’s allegations.

Anthony Norton, the attorney for AllPay, said: “In the summons, Net 1 has made a number of unfounded claims against AllPay. AllPay is of the view that the claims made by Net 1 are both factually and legally flawed and intends opposing the relief sought by Net 1. AllPay will respond to the detail of the summons in due course in the high court.”

The rivalry between the parties turned bitter when Net 1’s Cash Paymaster Services (CPS) subsidiary was awarded a R10 billion contract in January to distribute social grants to more than 10 million beneficiaries over the next five years.

The contract was awarded by the SA Social Security Agency (Sassa) but in May, the North Gauteng High Court found that the agreement was invalid and illegal. The court did not set aside the contract as it wished to avoid disrupting the payment of social grants.

The litigation was instigated by AllPay, which had bid for the work and lost, and which claimed irregularities in the award of the contract.

Last week AllPay publicly acknowledged that it was behind the instigation of an inquiry by US authorities, including the FBI, into the contract between CPS and Sassa.

Over the contract period, CPS will upgrade the payments process to a state-of-the-art system that is card-based and biometrically enabled.

Net 1 rose 14.44 percent to close at R51.50 on the JSE yesterday, in contrast with a slide of more than 50 percent on December 4, when the company announced the investigation.

US authorities informed Net 1 on November 30 that it intended to probe whether any official or affiliate of the company had bribed government officials to secure the contract and if it had violated provisions of the US’s Foreign Corrupt Practices Act and other federal criminal laws.

Net 1 said yesterday that it had alleged in its lawsuit that AllPay had “wrongfully and unlawfully and with the intention of injuring Net 1’s reputation, infringing Net 1’s and its subsidiaries’ goodwill and reducing Net 1’s share price, competed unlawfully with Net 1” by directly or indirectly making false reports and providing false information to the media, which AllPay “orchestrated and created the basis for”.

The summons says these “false” media reports alleged or implied that the Sassa tender process was tainted by corruption through bribes made by or on behalf of CPS.

Net 1’s summons also targets AllPay’s introduction of the media reports and allegations of corruption into court proceedings and alleges that AllPay caused “an unfounded report to be made to the [JSE] regarding disclosure that Net 1 made in relation to the Sassa contract”.

The firm also said AllPay falsely sought to create the impression in media reports and radio interviews that the court had found the tender process was tainted by corruption.

In response, Norton said: “There have been various investigations relating to the awarding of tenders in relation to social grant payments and a number of investigations by members of the press over an extended period of time.”

He added that reports which appeared to have upset Net 1, were written by investigative journalists “who presumably used their own sources for the purposes of writing the relevant articles. They were not ‘orchestrated’ by AllPay.”