Net1 can be reformed, new chair Mabuza says after board shakeup
Net1 UEPS’s new chair, Jabu Mabuza, says the company can be reformed, as the payment solutions group works on rebuilding trust after the welfare scandal tarnished its image,
The company, which has extensive operations in emerging markets, named Mabuza — one of SA’s best-known business leaders, who started out as taxi owner — as the chair in a board shake-up that included Antony Ball, a co-founder and chair of activist investor Value Capital Partners as a board member.
Value Capital is also a shareholder in the company with a nearly 13% stake.
“It’s no secret that Net1 has had some challenges in the past but there is more to Net1 than that. I would not be joining the board if I did not believe that the company can be successfully reformed,” Mabuza told Business Day.
“I believe that, with the right governance and reform, Net1 can be a successful business that plays a positive role in financial inclusion.”
The board reshuffle comes as
Net1 prepares to put its subsidiary Cash Paymaster Services (CPS), which has been ordered to repay hundreds of millions of rand to the social development department, into business rescue, a form of bankruptcy protection that allows a company to delay creditors’ claims against it or its assets while turnaround specialists work out if it can survive.
The company is also facing a legal challenge from human rights organisation Freedom Under Law, which alleges that it understated profits it earned from the contract to distribute welfare grants by at least R800m.
CPS, which for about five years distributed about R150bn in social grants annually on behalf of the SA Social Security Agency (Sassa), has liabilities that exceed its assets, Net1 said in its application to the high court to put CPS into business rescue.
Net1 CEO Herman Kotzé has dismissed talk that Mabuza was appointed just to boost its public relations credentials.
“The reason we think Jabu is a prime candidate is not because we believe he has some magic wand he can wave to resolve any remaining issues we have,” Kotzé told Business Day in an interview.
“Our last remaining issue is with Sassa specifically. Those are now all legal matters and the subject of specific court processes. So I don’t think anyone can have much influence over the legal and judiciary system in the country.
“Those matters will follow the natural course.”
Net1 also appointed Ali Mazanderani to the board. Mazanderani already serves on the boards of StoneCo in Brazil, Network International in Dubai and FiveStars Loyalty in the US.