The Public Investment Corporation (PIC), the state-owned company that is Africa’s biggest asset manager, has fired the manager of the division that ultimately oversaw its R4.3bn investment into Iqbal Survé’s Ayo Technology Solutions.
The company, which oversees more than R2-trillion, mainly on behalf of government workers, said it was terminating Fidelis Madavo’s employment for "gross misconduct" after a disciplinary proceeding adjudicated by senior counsel, and which involved representations by itself and Madavo.
Madavo was suspended in January 2019 after a preliminary report into the PIC’s investment into Ayo when it listed on the JSE in December 2017 at a valuation that was largely seen to be inflated, and a transaction in which the PIC was the only investment manager acquiring shares.
The deal was controversial for a number of reasons, including the manner in which it was assessed and approved by the asset manager, the role played in approving it by former CEO Dan Matjila and the price it paid for the shares. It was scrutinised at the commission of inquiry into alleged failures at the PIC.
The commission, chaired by retired judge Lex Mpati, handed its final report to President Cyril Ramaphosa in December, who said in his state of the nation address in February that he would release it within days.
Survé, who also controls the Independent Media group that publishes newspapers including The Star and the Cape Times, has consistently denied there were underhand dealings.
He also denied that his relationship with Matjila had anything to do with the fund manager’s acquisition of a 29% stake in the company, which valued Ayo at almost R15bn.
As of Monday, the company was valued at R688m.
Madavo told Business Day that he had sent a letter of resignation last week but the PIC came back to him with the dismissal. The fund manager’s statement was misleading, he said. "I was not dismissed for the conclusion of the Ayo transaction but [was] said to have been negligent in not checking the details of the memos submitted by the team in the aftermath of the transaction months later," he said.
As he testified at the commission, Madavo was not present when the PIC supported the listing. "I was on leave from December 2 to December 22, when the transaction was done, and the chair of the disciplinary proceeding cleared me in relation to that."
As the controversy became public nearly six months after the transaction, the listed investments team was asked to make written submissions to the PIC’s investment committee and its largest client, the Government Employees Pension Fund, explaining the process leading to the investment.
"The gross negligence was in relation to my accountability as head of the team by not questioning the details of the memos, as well as not disciplining the team including the CEO, that they were working with on the transaction. The memos omitted crucial information, like the date the subscription agreement was signed," he said.
"The injustice is that the team who did approve and execute the transaction are still there," Madavo said.
In testimony before the commission in 2019, Victor Seanie, an analyst who evaluated Ayo for the PIC and was dismissed that year, said he had been made a scapegoat.
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