US closes its inquiry into Net1
The criminal division of the US department of justice has closed its inquiry into Net1 UEPS, but has given notice that it could reopen the inquiry at any time.
The criminal division of the US department of justice has closed its inquiry into Net1 UEPS, but has given notice that it could reopen the inquiry at any time.
In a letter to the group’s US lawyer Daniel Kahn, deputy chief of the criminal division, said based upon the information known to the department, it had closed its inquiry into possible violations of the Foreign Corrupt Practices Act. However, he said, if the department received additional information, “it may reopen its inquiry”.
The probe was initiated in November 2012, when Barclays Africa subsidiary AllPay launched a legal challenge against the awarding of the social grant distribution contract to Net1 subsidiary Cash Paymaster Services by the South African Social Security Agency (Sassa).
On Thursday, Net1 said AllPay had referred unsubstantiated South African news articles to the department, alleging or implying that the Sassa tender process was tainted by corruption involving CPS.
“These actions resulted in the DOJ [department of justice] and the US Securities and Exchange Commission [SEC] announcing investigations into alleged Foreign Corrupt Practices Act and disclosure violations on November 2012.” As a result of the investigations in December 2013 Net1, its CEO Serge Belamant and its chief financial officer, Herman Kotze, were named as defendants in a class-action lawsuit filed in a New York court. The action was dismissed in September 2015.
In June 2015, the SEC told Net1 it had concluded its investigation and it “did not intend to recommend an enforcement action against the company”. In November 2015, the Hawks said after investigating the allegations, its prosecutors declined to prosecute the matter.
Kotze, who is now CEO, said on Thursday the US justice department’s letter concludes a lengthy, arduous and costly exercise involving government agencies in the US and SA, including the US department, SEC and the Hawks.
“This letter from the DOJ is the final step to clear our name and is consistent with the total absence of any findings of irregularities against us by any US or South African court or regulator,” he said.
Corruption Watch’s David Lewis said it was remarkable that the disturbing issues aired by the Constitutional Court had never been fully investigated by the police. Without this, it was difficult for foreign regulators to make much headway.