BELAMANT: BREAKING BAD

New rules are needed to give shareholders the right to reject a golden handshake that has been granted by a weak board

What kind of a board of directors lavishes R90m on a CEO as a quid pro quo for a “co-operative resignation” just to get him to leave the building?

That of Net1, of course: the odious company that scored a government tender under murky circumstances in 2012 to handle the payments to 17m indigent South Africans — and promptly saw this as an opportunity to flog them airtime and microloans.

Last week, it emerged that Net1’s investors had finally had enough of Serge Belamant, the brash Frenchman who founded the firm 27 years ago. Contributing factors: a perpetual cloud over the company, criminal investigations, an empowerment deal of smoke and mirrors and allegations of ripping off the country’s most vulnerable. So by mutual agreement, the 63-year-old Belamant took early retirement.

Shareholders, led by the World Bank’s Infrastructure Finance Company (IFC) and Allan Gray, must have lit up a metaphorical cigar and slapped each other on the back for outmanoeuvring Belamant.

But while he might have lost the overall war with Net1’s shareholders, he came out just dandy in the final skirmish. Net1’s board has announced that he will walk away with nearly R260m ($20.47m) as part of this “separation agreement”.

This includes $7m just for his “co-operative resignation”, $1m as recognition for his 27 years at Net1, $1.2m for a two-year deal for him to “consult” with the company, $10.98m for buying back just more than 1m of his shares and $475,266 for his share options.

It’s a golden handshake of Versailles-like proportions, especially since Belamant was paid almost

R50m last year. So it’s not as if he’s been sweating away, performing a benevolent act of philanthropy.

The worst part is, nobody can do anything about it — except for the board, and they’re the ones who put the deal together in the first place.

This fact has Allan Gray hot under the collar. The asset manager said it was “outraged” by the payout and was “very surprised that Mr Belamant was able to negotiate such an extravagant deal after such broad public censure and believe that it is unjustified”.

Allan Gray says, rightly, that these “material severance packages” should be put to a binding vote.

Allan Gray has even lobbied the King Committee to make this part of King 4. Predictably, the committee demurred.

The IFC struck a far more hand-wringing approach, saying it was “frustrated with the situation”, arguing that this is why you need an “expanded, more independent board”.

That’s a swaggering understatement.

Belamant has dominated that board for years, to the extent that none of Net1’s directors would be deemed “independent” under either the King code or any modern governance code. (Until last week, when they finally appointed a truly independent director, Alfred Mockett.)

This is largely because Chris Seabrooke, Paul Edwards and Alasdair Pein have all been on the board for 12 years. Last year, these directors earned between R2.3m and R3.8m each in cash and shares — handy income for part-time nonexecutives.

So in this context, it’s no wonder Net1’s board bent over backwards to lavish cash on Belamant.

Last week, Seabrooke gushed about how Belamant was a “visionary technologist” who’d be deeply missed. No mention of the microlending, or airtime sales to grant recipients.

Belamant will now earn a small fortune “consulting” to Net1. But when you consider that the new CEO is Herman Kotzé, a man who has been Belamant’s underling at Net1 for 13 years, you’d be justified in wondering who’ll really be calling the shots.

Belamant will be paid R600,000 a month, and the contract specifies he won’t work for more than 20 hours in any week. Also, Net1 “shall have no right to, and shall not control the manner or determine the method of performing the services”.

That’s a sweet deal for someone leaving a company after a year in which its share price fell 26% on the

JSE. If you’re a CEO under fire looking for an overly cosy retirement deal, this is the board you want.

For those who are rightly infuriated that the Guptaleaks have sparked exactly zero accountability at the Union Buildings, it’s a reminder that there are some pretty egregious goings-on in boardrooms around the country. And in some cases, there’s scant accountability there either.

Belamant will get R600,000 a month and the contract specifies he won’t work for more than 20 hours in any week