April 17, 2014 / 3:15 PM / 4 years ago

S.African court orders new $900 mln welfare payments tender

JOHANNESBURG, April 17 (Reuters) - South Africa’s highest court has ordered the government to open a new tender for the distribution of social welfare grants, four months after nullifying a 10 billion rand ($947 million) contract won by Net 1 UEPS Technologies.

Net1 said in statement on Thursday the Constitutional Court had allowed it to continue providing grants to millions of pensioners on behalf of the state until a new five-year tender has been issued.

The South African Social Security Agency (SASSA) would have to come up with a new tender within 30 days, Net 1 said.

The ruling follows a legal battle between NET 1 and Barclay’s Africa unit AllPay, which lost out on the initial welfare payments contract and launched a lawsuit against SASSA and its rival.

AllPay alleged irregularities in the bidding process that led to NET 1 being investigated by the U.S. Department of Justice and the FBI into whether it made “corrupt payments” to South African government officials to win the contract.

The court invalidated the contract in November, saying SASSA had failed to give due regard to post-apartheid affirmative action policies known in South Africa as “black economic empowerment”.

Shares in Net1, which also trade in New York, plunged 11.2 percent to 87 rand, albeit on low volumes. ($1 = 10.5643 South African Rand) (Reporting By Nomatter Ndebele; Editing by Ed Cropley)

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