Al­lan Gray on the war path over $8m Be­la­mant sev­er­ance

Share­hold­ers kept in the dark over Net1 boss’s multi-mil­lion-dol­lar golden hand­shake

The Star Early Edition - - COMPANIES - Ka­belo Khu­malo

EM­BAT­TLED Net1 UEPS Tech­nolo­gies’ sec­ond big­gest share­holder, Al­lan Gray, yes­ter­day de­manded de­tails of out­go­ing chief ex­ec­u­tive Serge Be­la­mant’s sev­er­ance pack­age.

The con­ti­nent’s largest pri­vately owned in­vest­ment man­age­ment com­pany said share­hold­ers had been kept in the dark about the multi-mil­lion-dol­lar pack­age that Net1 had agreed to pay Be­la­mant.

Be­la­mant, a Net1 founder and un­til re­cently its main­stay chief ex­ec­u­tive, man­aged to se­cure him­self a hand­some $8 mil­lion (R104.51m) cheque and $50 000 monthly con­sul­tancy fee from the com­pany for a two-year pe­riod.

Al­lan Gray chief in­vest­ment of­fi­cer An­drew Lap­ping said the com­pany wanted to know how Be­la­mant ne­go­ti­ated the pack­age.

“Al­lan Gray notes with out­rage the fi­nan­cial set­tle­ment claimed by Serge Be­la­mant upon his re­tire­ment as chief ex­ec­u­tive of Net1,” Lap­ping said.

“We are very sur­prised that Be­la­mant was able to ne­go­ti­ate such an ex­trav­a­gant deal af­ter such broad pub­lic cen­sure and be­lieve that it is un­jus­ti­fied, given cur­rent cir­cum­stances.”

Al­lan Gray, which had as­sets un­der man­age­ment of R460 bil­lion at the end of June 2016, holds a nearly 16-per­cent stake in Net1. Net1 won the ten­der to dis­trib­ute wel­fare in South Africa in 2012.

How­ever, the Con­sti­tu­tional Court ruled the con­tract as in­valid two years later and in­structed the South African So­cial Se­cu­rity Agency (Sassa) to find a new provider.

But Sassa failed to ad­here to the di­rec­tive and the court in March al­lowed the ex­ten­sion of the con­tract un­der strin­gent con­di­tions un­til next year.

Net1’s big­gest share­holder is the In­ter­na­tional Fi­nance Cor­po­ra­tion (IFC), which bough an 18 per­cent stake for $107m last year. The IFC is a branch of the World Bank.

Yes­ter­day, Net1 de­fended its de­ci­sion, ar­gu­ing that the pack­age was ar­rived at af­ter ex­ten­sive ne­go­ti­a­tions with Be­la­mant.

The com­pany said the pack­age took into con­sid­er­a­tion fac­tors such as in­come for­feited due to early re­tire­ment, early can­cel­la­tion of cer­tain re­stricted stock awards, length of ser­vice, re­straint of trade con­di­tions and own­er­ship of in­tel­lec­tual prop­erty.

It said the board there­fore did not re­gard the pack­age as ex­trav­a­gant or un­jus­ti­fied.

“The re­mu­ner­a­tion com­mit­tee met on May 3, 2017, to dis­cuss the early re­tire­ment of Mr Be­la­mant,” Net1 said. “The re­mu­ner­a­tion com­mit­tee agreed that de­tailed sev­er­ance terms would need to be agreed and ne­go­ti­ated with Be­la­mant and pro­posed that, in re­la­tion to any shares of the com­pany’s com­mon stock that would be re­pur­chased from Be­la­mant, the com­pany would pay $10.80 per share, which was 6 cents lower than the clos­ing price on May 2, 2017.”

Al­lan Gray has in re­cent months led a share­holder re­volt at Net1 af­ter the com­pany was em­broiled in the multi-bil­lion saga around the con­tract to pay so­cial grants to 17 mil­lion ben­e­fi­cia­ries on be­half of the govern­ment.

In March, Lap­ping said that Net1 should pub­lish a com­pre­hen­sive state­ment clearly ex­plain­ing its re­sponse to the al­le­ga­tions of il­le­gal and im­proper be­hav­iour by its man­age­ment with re­gards to the so­cial grants saga.

The as­set man­age­ment firm also warned that if the al­le­ga­tions were not re­solved to its sat­is­fac­tion, it would not hes­i­tate to call a gen­eral meet­ing and at­tempt to re­move the board.

Last week, the board fi­nally re­lented to share­holder pres­sure, an­nounc­ing that Be­la­mant would be step­ping down from his chief ex­ec­u­tive role two years ear­lier than it was ini­tially ex­pected but would con­tinue to pro­vide con­sul­tancy work for the com­pany for the next two years.

Lap­ping said the firm had been con­cerned about mul­ti­mil­lion-rand ex-gra­tia sev­er­ance pay­ments made to ex­ec­u­tives that share­hold­ers were un­able to block.

The IFC yes­ter­day said it was frus­trated with way in which the board han­dled the de­ba­cle. The group said while the re­spon­si­bil­ity for ne­go­ti­at­ing pack­ages rested with the board, it was con­cerned with the gov­er­nance is­sues at Net1.

Net1 orig­i­nally won the ten­der to dis­trib­ute South African So­cial Se­cu­rity Agency wel­fare in South Africa in 2012. PHOTO: DAVID RITCHIE

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