The term of the Public Investment Corporation (PIC) interim board ends on Saturday with no indication when finance minister Enoch Godongwana will appoint a new board.
The finance minister is empowered by the PIC Act to appoint the asset manager’s board but fell ill shortly after his appointment to the position, according to interim board chair Reuel Khoza. Godongwana succeeded Tito Mboweni in August.
More recently, Khoza said the minister had been engaged in campaigning for the ANC ahead of the November municipal elections, but would appoint a new board “in due course”.
The interim PIC board held its final meeting on Thursday to mark the end of its term. It was appointed by Mboweni in July 2019 after the previous board resigned during the Mpati commission’s inquiry into allegations of impropriety at the state- owned asset manager.
Khoza said at a briefing on Thursday though the board has not completed implementing all the recommendations of the Mpati commission, it has made significant progress. The interim board has compiled a report on the progress made, which it would hand over to the new board, he said.
The interim board did take a significant step by implementing the recommended separation of the roles of the CEO and the chief investment officer, which were previously held by Dan Matjila. The board ensured the appointment of a chief technology officer and introduced the position of head of ethics to inculcate ethical behaviour within the PIC.
“Investment processes are now overseen and implemented by the [acting] chief investment officer whilst investment operations are overseen and implemented by the COO. Overall operations are overseen and implemented by the CEO,” Khoza said.
The Mpati commission found that at the heart of malfeasance and governance failures at the PIC was its unlisted portfolio, which comprises companies not listed on the JSE. Because they are not traded on the bourse, they are harder to value and fall short on disclosure.
Some of the PIC’s controversial investments in unlisted entities included a 25% stake in the VBS Mutual Bank, and the funding of Lancaster, an empowerment entity that bought shares in Steinhoff. Both these companies have been embroiled in wide-ranging scandals and have been sources of several court cases, with especially VBS Bank having wide political repercussions.
To ensure that the unlisted portfolio does not succumb to the same failures of governance in the future, Khoza said it will
be subjected to greater scrutiny before investment decisions are made.
“The annual valuations of unlisted investments, which were previously submitted by external evaluators to management are now presented by external evaluators directly to the audit committee to ensure independent review outside of management. The audit committee then recommends external valuations to the PIC’s clients,” he said.
Fired
The asset manager has also fired its previous CEO, Mmathapelo More two years after her suspension. More was suspended after she was found guilty of irregularities related to the PIC’s investment in Ayo Technology Solutions. The Ayo transaction was one of several that were flagged for investigation by the Mpati commission.
Khoza said a report into her conduct found her guilty of neglect of her duties.
“The board, upon very serious reflection and review, felt that in fact, the misconduct and the dereliction of duty were severe enough to warrant her being requested to leave the position,” Khoza said.
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