South African NGOs question IFC’s investment into Net1

Dear Editors, News editors and Journalist

Earlier this week Corruption Watch, Black Sash and Equal Education filed a complaint with the Compliance Advisor / Ombudsman (CAO) of the International Finance Corporation (IFC) regarding the circumstances under which the IFC made a combined equity investment of $107-million in Net1 UEPS Technologies Inc. (Net1) and its subsidiary, Cash Paymaster Services (Pty) Ltd (CPS).

The complainants filed this complaint as interested and affected parties and in the public interest.

The three NGOs requested that the CAO conduct a compliance appraisal and investigation in respect of the investment, stating that this was made despite the existence of overwhelming evidence of unlawful and unethical practices involving Net1 and its subsidiaries. These include other CPS and Net1 subsidiaries that offer and provide financial services and financial products to those living in South Africa.

In this regard, the following issues have arisen in respect of the conduct of Net1 subsidiaries, including CPS:

  • Unauthorised and fraudulent deductions from the social grants of beneficiaries to the benefit of Net1 subsidiaries as well as unlawful and unethical use of social grant beneficiary data and information;
  • Persistent allegations of corruption and other unethical business practices concerning CPS and other Net1 beneficiaries;
  • Findings by the Constitutional Court of South Africa implicating Net1 subsidiaries in unethical business practices; and
  • A legal challenge by Corruption Watch to a decision taken by a state entity in relation to and involving CPS, a Net1 subsidiary.

It is clear that evidence of unethical and potentially unlawful conduct by CPS existed at the time at which the IFC, a member of the World Bank Group, made its investment and that the lack of due diligence in respect of the investment is in breach of several provisions of the IFC Policy on Environment and Social Sustainability. We have also submitted that the IFC has not taken sufficient steps to supervise and monitor the conduct of Net1 and its subsidiaries or to put measures in place to address and rectify impugned conduct.

The CAO is empowered to investigate and monitor the IFC regarding a lack of compliance, and publicise the outcome of all investigations. The CAO investigation into the IFC’s compliance and due diligence is designed to ensure transparency and accountability in respect of investments and we have received a letter from the CAO indicating that we will be informed of the eligibility of our complaint by 21 September 2017.


Contact: 

Phemelo Khaas:                               
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083 763 3472