Finance Minister Nhlanhla Nene will set up an independent inquiry into the affairs of the Public Investment Corporation and has instructed its board to conduct a forensic investigation into CEO Dan Matjila and chief financial officer Matshepo More.
Nene’s announcement on Wednesday follows almost a year of instability at the PIC, during which its board has been at odds over how to deal with corruption allegations against Matjila. The announcement is the first decisive action taken by government to stabilise the PIC, which acts as asset manager for nearly R2-trillion in government pension and other funds.
It came after a lengthy meeting between Nene and the PIC board earlier in the day. Nene said more details on the inquiry, including the name of its head and terms of reference, would be announced “in due course”.
While the inquiry will report to Nene, it is the board that on the basis of a directive from Nene must run the forensic investigation into Matjila and More, who was possibly complicit with Matjila.
One or two other executives could also be probed.
The terms of these investigations, as well as the matter of whether Matjila and others should be suspended for their duration, are to be discussed at a board meeting on Friday. With tension running high between directors and no unanimity on the matter, there is no indication yet whether Matjila will be suspended or not.
While one view is that there is no evidence yet on which to suspend him and that he faces only allegations, others argue it is normal practice for an individual subject to a forensic investigation to be suspended or placed on special leave.
UDM leader Bantu Holomisa, who has gone to court to request an order forcing Nene to institute an inquiry and suspend Matjila, said he was “surprised the CEO has not been suspended. This smacks of favouritism and protection of a person that might be on the wrong side of the law once the commission gets to work.” He said he would consult with his lawyers on the next steps to take.
Nene’s inquiry will look into broad governance issues at the PIC, as well as certain questionable transactions, such as its participation in VBS Mutual Bank, in which it has 27% shareholding. VBS is under curatorship, with evidence emerging that executives and directors defrauded the bank.
There is also evidence that the two PIC employees — Ernest Nesane and Paul Magula, who served on the board of VBS — received cash payments from VBS’s major shareholder, Vele Investments, to guarantee further support to the bank.
The forensic inquiry into Matjila will centre on allegations made in September 2017 by an anonymous whistle-blower who claimed that Matjila had used PIC corporate responsibility funds to fund a project for which his alleged girlfriend, a woman named Pretty Louw, acted as an agent.
He was also accused of calling in a favour for Louw from a company the PIC had recently funded, when he asked businessman and director of Kefolile Health Lawrence Mulaudzi to settle debts of R300,000 incurred by her spa and beauty treatments business.
Matjila has denied a relationship with Louw.
In a detailed response to the board on the allegations, Matjila argued that the first transaction was legitimate. On the second matter, he said he contacted Mulaudzi to inquire whether he could help the woman by making her a supplier.
On the basis of a verification report by the head of the internal audit, Lufuno Nemagovhani, the board, which doubted the integrity of the whistle-blower, cleared Matjila of the allegations. It later emerged that it had done this on incomplete evidence.
Although Nemagovhani had recommended a forensic audit at the time, the board had decided it was not necessary.
In his report to the board, Nemagovhani made it clear that he did not have the capacity to establish whether there was a relationship between Matjila and Louw.
He also said that he could not establish the exact nature of Matjila’s request to Mulaudzi.
The forensic investigations will probe the allegations in full.
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