The private equity firm the Public Investment Corporation (PIC) successfully applied to liquidate after it failed to repay a disastrous loan of almost R1bn says it never defaulted.
The PIC, which oversees R2-trillion and has the Government Employees Pension Fund (GEPF) as its biggest client, lent R950m to the Musa Group in August 2015, a company founded by two Americans, Will Jimerson and Antoine Johnson, in 1995.
Among its core subsidiaries was Musa Capital, which administered private equity funds in SA and Namibia, investing in agribusiness, low- and middle-income housing, retail and financial services.
The PIC, which was subject of a commission of an inquiry into alleged governance failures, successfully applied to liquidate the company earlier in 2019, saying it was owed R1.4bn.
In an e-mailed response to questions, Jimerson, the group’s CEO, denied that the company had failed to serviced its loan and explained that part of the problem the group finds itself in is due to the failure of the PIC to provide more funds, as was intended when the initial loan was made.
He said the company had beaten targets set as part of the agreement.
When asked if the amount being sought by the PIC, which is larger than the value of the initial loan, was due to poor investment returns, Jimerson said this was simply not true.
The plan, he said, was that the PIC would continue supporting the businesses with further funding. “To date, the PIC has not done so, this has put the business in a less than ideal state.”
The liquidation order also referred to the fact that Musa Group — the parent holding company — did not produce audited financials for 2018, one of the issues that led to the PIC applying for the liquidation.
Jimerson said the financial numbers were presented to the board and shareholders but were “not signed by the board or the auditors of the parent group.” He did not say why this was the case, but stated the underlying subsidiaries “where all of the expansion funding provided by PIC was deployed” have been submitted, approved and signed off for 2018 and 2019.
The judge who heard the matter said that there was “merit” in the PIC’s intention to launch an investigation into how the proceeds of the loan were invested.
The commission of inquiry into the PIC, which was led by retired supreme court judge Lex Mpati, completed its report and submitted it to President Cyril Ramaphosa in December. Ramaphosa undertook at his state of the nation address in February to release the report “within days”.
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