Andy Duffy
A senior academic at the University of the Witwatersrand is poised to resign over his involvement in a publicly listed technology company.
Professor Hanoch Neishlos, chair of the computer science department at Wits, and his wife own shares in the company that are currently worth more than R100-million.
The company’s main product is strikingly similar to technology Neishlos is developing at Wits, in a research project partly funded by the taxpayer and run with the help of his postgraduate students.
Neishlos has also been an executive director at the company, Net 1 Applied Technology (Aplitec), for more than six months. He still draws a salary from Wits.
Neishlos, who has been on sabbatical since last year, denies any link between his Wits research work and his involvement in Aplitec.
But he says he will resign and take the project with him, unless the university’s vice- chancellor, Colin Bundy, agrees to release him from all duties bar research. “I don’t have time to meet the other requirements,” he says. “I have no time to do other things.”
He adds that other academics in the department have tried to derail the initiative and claim there is a conflict of interest. The university has set up an internal inquiry, headed by deputy vice-chancellor in charge of finance Alan Kemp, following complaints from other academics about Neishlos.
Bundy declines to comment on the inquiry, or on his negotiations with Neishlos. But, he adds: “It’s not clear to me that an individual can take away any project based on a research grant to an institution.”
Neishlos joined Wits in 1988, but has spent much of his time in recent years consulting for local and international banks. He was consulting for First National Bank in 1996, and persuaded the bank to get involved in research into a smart card for money transfers. The research was to be done in the computer science department at Wits.
The group approached the Foundation for Research and Development, an autonomous organisation which provides grants to promote science, engineering and technology in higher education. The foundation provided R480E000 from the Technology and Human Resources for Industry Programme – a government-funded initiative to promote research and development.
The foundation is committed in principle to providing another R10-million over the next five years, but the programme’s manager, Rocky Skeef, says he is still awaiting Neishlos’s application for this year’s disbursement. Skeef adds the grant was provided to Neishlos in his capacity as an academic employed by Wits.
First National Bank pulled out of the project early last year, but Neishlos quickly found a replacement -Net 1 Investment Holdings, a private company run by Serge Belamant, chief executive of Aplitec and a long-time associate of Neishlos.
Net 1 put R900 000 into the research last year, securing its place as the chief benefactor and beneficiary of the project.
Belamant says his company benefits from the university’s efforts because “I get reasonably good resources and the latest brains at a reasonable rate”. The benefits, he adds, are not all one way. Net 1 has also offered to contribute toward the cost of Wits creating a new research position for Neishlos. Parallel to establishing the Wits programme, Belamant and Neishlos were busy setting up Aplitec.
The company listed in December in the high- risk venture capital sector of the Johannesburg Stock Exchange. It has enjoyed a meteoric rise since, drafting shareholders including the Congress of South African Trade Unions’s investment arm, Kopano Ke Matla.
Its listing prospectus says Aplitec’s main business revolves around smart-card technology for financial services. Aplitec says the smart card’s main selling points are that it can operate independently of credit checks, and with no need for banking networks, “nor expensive and sophisticated infrastructure”. Both are the central components of the card technology Neishlos is developing at Wits.
The prospectus also notes that Neishlos “will be active in the development, refinement, enhancement and implementation of the technologies to be exploited by Aplitec”.
Neishlos says there is no link between his work at Wits and his involvement at Aplitec. Belamant adds, however, that the Wits research project is looking at an operating system for the smart- card technology which, if successful, Aplitec could use.
Aplitec started last year with seed capital of R115 000 – mainly from shares sold to the directors, their families and their advisers at 0,1c each. Neishlos and his wife together own more than 20-million shares – 12,5% of the shares in issue.
Initially, Aplitec listed by placing 30- million shares at 100c each in December, which has now grown to 160-million. They were trading at 500c this week.
Neishlos refused to be drawn on his investment, but Belamant says all the directors are in for the long term.
Bundy says Wits allows staff to pursue outside work and hold shares in companies and directorships, provided they follow university guidelines. He does not know whether Neishlos has followed university rules.
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