Subsidiary of South African bank Absa, AllPay, says it plans to defend a R478 million lawsuit filed by payment solutions provider Net1 UEPS Technologies.

Net1 on Wednesday filed a damages lawsuit in a Gauteng court accusing AllPay of making false reports to media about alleged bribery to secure the tender.

Earlier this year, Net1 won a lucrative R10 billion contract with government to carry out social grants payments to over 12 million people in the country.

However, the contract has been shrouded in controversy as AllPay subsequently accused Net1 of bribing officials to win the deal. AllPay went as far as to take Net1 to court over the matter.

A judge then ruled that the tender process was invalid and illegal. However, the judge did not rule against the contract because of its magnitude and importance in terms of the South African social grant distribution.

And the issue has failed to go away, as Net1 announced earlier this month that the US Department of Justice (DoJ) and Federal Bureau of Investigations (FBI) is investigating whether the company made corrupt payments to SA government officials to secure the social grants contract.

Net1 is being investigated by US authorities because the firm is listed on the Nasdaq as well as the Johannesburg Stock Exchange (JSE).

Net1’s latest court salvo against AllPay claims that the ABSA unit has ‘injured its reputation, infringed its goodwill and reduced Net1’s share price’.

But AllPay plans to hit back.

"AllPay is of the view that the claims made by Net1 are both factually and legally flawed and intends opposing the relief sought by Net1," Anthony Norton, a partner at Nortons Incorporated, which is representing AllPay, was quoted in South Africa’s Business Day.

Norton went on to say that Net1 has made "a number of unfounded claims" against AllPay in its summons.

He further denied that AllPay orchestrated any media reports.