Net1 hits back at critics

WON’T ANSWER DISTRESSED CLIENTS’ CALLS Net1 has stoutly defended its corporate practices, insisting they’re closely watched by regulators, but the small matter of how it treats the poor and desperate won’t lie down.

Net1 UEPS Technologies has hit out at its detractors, insisting it is not exploiting or abusing welfare recipients and reminding critics that it is under no regulatory investigation.

But the niggling matter of its staff failing to answer the phone when called by its mostly indigent client base won’t go away.

Allan Gray, one of South Africa’s biggest money managers, said last week it was “increasingly concerned” about the running of Net1 UEPS Technologies. Its concerns follow activist criticisms of Net1’s lending practices to welfare recipients.

Bloomberg reports that Allan Gray – the second-biggest shareholder in Net1, with a 15.6% stake – said last week its research showed the business did not always answer its phones when called by welfare clients.

Net1 has the contract to distribute welfare payments to more than 17 million South Africans and has been accused of illegally using information it gleans to help its subsidiaries sell those people services, such as cellphone airtime and loans. Net1 has hotly denied this. But the phone issue lingers stubbornly.

“It’s not illegal not to answer your phone, but it’s not good business practice,” said Andrew Lapping, Allan Gray’s chief investment officer. “We’ve been trying to find out exactly how beneficiaries are treated. If you have a problem, how easy is it to get hold of them? How easy is it to cancel debit orders?

“We are increasingly concerned. Our concerns have not been alleviated,” he said.

Allan Gray is compiling research into how Net1 treats its customers and areas for improvement, which it will present to the Net1 board. Bridget von Holdt, an executive at Burson-Marsteller, a public relations company employed by Net1, has issued a lengthy press release. It goes into great detail about the regulatory checks and balances that are in place following the recent Constitutional Court decision to extend its contract – one the court had ruled invalid in 2014. The contract extension ensured the welfare payment system didn’t collapse overnight after the government had failed to

We’ve had introspection and looked at our processes.

implement the 2014 order to find another contractor.

It said on Friday “in accordance with the Constitutional Court’s order, the addendum to the contract between CPS and [the social security agency] Sassa contains provisions to ensure that personal data obtained in the payment process remains private and may not be used for any purpose other than the payment of grants and to preclude a contracting party from inviting beneficiaries to ‘opt-in’ to the sharing of confidential information for the marketing of goods and services”. Allan Gray will also make changes to the way it makes its investments and has hired someone to investigate companies’ social and economic impact.

“We’ve had introspection and looked at our processes extremely carefully and we’ve made a few changes in our investment process in terms of oversight,” Lapping said.

“There’s stuff we should have known and we didn’t know it. We need to be on the ground getting the facts.” – additional reporting Bloomberg