The commission of inquiry into the Public Investment Corporation (PIC) has made scathing findings against former CEO Dan Matjila, questioning the decisions he made during his time at the helm of Africa’s biggest asset manager and the biggest investor on the JSE.
It found that Matjila, who left the PIC in November 2018, had overseen deals with individuals and their entities "even where no value has been proven from the first deals", and had breached his fiduciary duties when approving investments in insolvent companies.
It recommended that he be investigated for not meeting the legislative requirements of "honesty and integrity" that his role at the state-owned asset manager required.
President Cyril Ramaphosa appointed the commission, headed by Lex Mpati, the former judge president of the Supreme Court of Appeal, in 2018 to probe alleged governance failures at the institution, which manages about R2-trillion and has the Government Employees Pension Fund (GEPF) as its biggest client. Mpati was assisted by former deputy minister of finance and former Reserve Bank governor Gill Marcus and asset manager Emmanuel Lediga.
Some of the most high-profile deals that came under the spotlight included transactions with former union leader Jayendra Naidoo and Independent News & Media SA and Ayo Technology Solutions, among entities owned or controlled by Iqbal Survé.
The PIC’s acquisition of a 29% stake in Ayo for just over R4bn valued the company at almost R15bn. As of Monday, the company was valued at R819m.
The asset manager lent R9.35bn to Lancaster 101, controlled by Naidoo, a former chief government negotiator in the controversial arms deal of the 1990s, to buy a stake in furniture retailer Steinhoff. That loan, with accrued interest, has ballooned to more than R11bn as Lancaster has not been able to service it.
The GEPF has already written off billions in relation to it, in large part due to the collapse of Steinhoff shares.
Disregard for clients
The commission found that the reasons given by Matjila for the decision to invest in Steinhoff through Naidoo showed a disregard for the PIC’s clients "in pursuit of an ostensible ability to secure influence over a JSE-listed company".
Given that Naidoo was a politically exposed person, the PIC was obliged to ensure thorough due-diligence was done on the deal, the report said.
With regard to the Ayo transaction, the commission said it demonstrated "the impropriety of the process and practice of the PIC as well as the gross negligence of both the CEO and CFO".
It recommended that the Independent Regulatory Board for Auditors investigate the limited assurance work performed on the Ayo pre-listing statement "given that the extreme revenue forecasts were clearly very aggressive".
The commission said the PIC should look at whether Matjila should be held personally liable for any fruitless and wasteful expenditure "which, if found to be the case, would make Dr Matjila liable to make the loss to the PIC whole".
"Where money has been lost or investments made where the funds provided have not been used for the intended purpose, this must be identified, quantified and recovered," it said.
Matjila on Thursday said he had not read the report yet and could not comment.
The commission made detailed findings against some current and former members of the PIC, including allegations of corruption.
Ramaphosa released the report on Thursday afternoon and said it would be handed over to the National Prosecuting Authority and other authorities for further action.
"These practices have led to situations in which the PIC lost a lot of funds, which must be urgently recovered. Civil actions will be instituted in this regard," Ramaphosa said. The Treasury would track whether the PIC recovered any money.
The commission said in its report that at its hearings Matjila was "repeatedly economical with the truth, not disclosing material information, relationships or interactions with counter-parties which were relevant to the decisions taken, and justifying his actions even when the outcomes thereof were questionable".
The commission found that the "close relationship" between Survé and Matjila created pressure to get approval for deals. It recommended that the PIC conduct a forensic review of all the processes in deals with Survé’s Sekunjalo Group, which led a consortium that bought Independent News and Media in 2013 in a transaction partly funded by the PIC, and an investigation into the flow of money in and out of Sekunjalo. Steps also had to be taken to recover all money due to the PIC.
The PIC initially invested R1.3bn to enable Sekunjalo to buy the media company. By March 2018 the loans had been completely impaired in the books of the PIC and the GEPF.
Sekunjalo, Naidoo and Survé could not be immediately reached for comment.
With Warren Thompson
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