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SEC declination for South Africa’s Net1

Net 1 UEPS Technologies said in a securities filing Monday that the SEC isn’t recommending an enforcement action after investigating possible violations of the Foreign Corrupt Practices Act.

South Africa-based Net1 said in December 2012 that the SEC, DOJ, and FBI were investigating payments to South African government officials to win a contract with the Social Security Agency.

The company provides payment processing services. It does business in South Africa, Korea, and Europe, among others.

It said the DOJ investigation is apparently ongoing.

The U.S. investigation was considered unusual because it involved Net1’s payments in South Africa, to South Africans, working for the South African government.

But Net1 is an “issuer” under the Foreign Corrupt Practices Act. It trades on the Nasdaq Global Select Market under the symbol UEPS.

Here’s the company’s full disclosure from its Form 8-K filed with the SEC on June 8, 2015:

*     *     *

Net 1 UEPS Technologies, Inc. (“Net1” or the “Company”) (NasdaqGS: UEPS; JSE: NT1) today announced that it has received a letter from the Foreign Corrupt Practices Act unit of the Division of Enforcement of the U.S. Securities and Exchange Commission (“SEC”), advising the Company as follows:

We have concluded the investigation as to Net 1 UEPS Technologies, Inc. Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Net 1 UEPS Technologies, Inc. We are providing this notice under the guidelines set out in the final paragraph of Securities Act Release No. 5310, which states in part that the notice “must in no way be construed that the party has been exonerated or that no action may ultimately result from the staff’s investigation” (The full text of Release No. 5310 can be found at: http://www.sec.gov/divisions/enforce/wells-release.pdf).”

The investigation commenced in December 2012 following the award of the SASSA national contract to us in January 2012,” said Dr. Serge Belamant, Chairman and CEO of Net1.

“It commenced largely as a result of one of the losing bidders for the contract, Barclays Africa’s subsidiary AllPay, referring unsubstantiated South African press articles alleging irregularities in the tender process to the U.S. Department of Justice. We believe that AllPay was responsible for instigating those media allegations. This resulted in the DOJ and SEC initiating investigations into alleged FCPA and disclosures violations. This letter from the SEC is an important step in the Company clearing its name and is in line with the total absence of any findings of irregularities against Net1 by any South African Court or Regulator resulting from actions pursued by AllPay over the past three years,” he concluded.

The separate investigation into these matters initiated by Net1 itself with the South African Police’s Commercial Crimes unit is expected to be concluded shortly.

It is the Company’s understanding that the DOJ investigation remains open at this time.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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1 Comment

  1. I wonder if Net1 can sue AllPay in South Africa for damages.


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