The commission of inquiry into the Public Investment Corporation (PIC), which held its first meeting last week, has asked for detailed reports on nine recent investments involving politically connected individuals that the government asset manager made in private companies.
Of surprise is the inclusion of the PIC’s R9bn loan in August 2016 to Lancaster 101, which enabled it to acquire a 2.75% black economic empowerment (BEE) stake in Steinhoff International. While the transaction raised eyebrows because of its sheer size and the large holding by former trade unionist Jayendra Naidoo, it was not clear that it would be included.
Last week, the Government Employees Pension Fund (GEPF), which is the PIC’s biggest client, disclosed that it had impaired the loan to Lancaster 101 by about R4bn after the collapse in Steinhoff’s share price amid one of the country’s biggest cases of corporate fraud. The GEPF said, however, that the terms and conditions of the loan remained, and Lancaster 101 was still expected to repay it.
Naidoo owns 25% of Lancaster 101, with 50% owned by the PIC and another 25% owned by a broad-based trust.
The inquiry into the PIC, which manages R2-trillion in government pension and other funds, was appointed by President Cyril Ramaphosa in October, following a year of instability and allegations of impropriety in the organisation.
It was asked to look into transactions that featured in media reports in 2017 and 2018 as well as a range of issues relating to internal governance and procedures. Of particular concern has been the basis on which the PIC selects the unlisted companies it invests in, how these are valued and the role of political influence.
In a memo to the board last week, which Business Day has seen, the PIC’s acting CEO Matshepo More provided an update on the commission’s work so far, which includes a request for a wide range of documents to allow members to familiarise themselves with the PIC.
Other transactions include three involving companies linked to Iqbal Surve, the controlling shareholder of Sekunjalo. Another transaction that will come under scrutiny is the deal which the son of former finance minister Nhlanhla Nene was associated with — a R1bn investment in S&S Refineries.
The PIC’s R4bn investment in Erin Energy, a company owned by a Nigerian businessman with close ties to the ANC, is also on the list.
The PIC also funded the acquisition of an empowerment stake in Total by Tosaco Energy.
The last two companies are MST and VBS Mutual Bank. MST came to the media’s attention when an anonymous whistle-blower claimed that the
company, which provides mobile clinics and classrooms, received PIC corporate social responsibility funds on the basis of a deal brokered by an agent, close to then PIC CEO Dan Matjila.
It was alleged the agent, a woman called Pretty Louw, was Matjila’s girlfriend. This claim was found to have no substance by an inquiry by advocate Geoff Budlender earlier in 2018.
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