The process of appointing a new finance chief at the Public Investment Corporation (PIC) is at an advanced stage despite a ruling by the Commission for Conciliation, Mediation and Arbitration (CCMA) that Matshepo More be reinstated as CFO.
The process for appointing More’s replacement began earlier this year as part of the PIC’s drive to overhaul governance in line with the Mpati commission’s recommendations to ensure effective governance.
The CCMA in September nullified the fund manager’s decision to terminate More’s contract labelling it “inordinate and unfair”, throwing a spanner in the works of the PIC’s move to strengthen governance and management processes.
The PIC has not suspended the appointment of a CFO, saying in its 2021/2022 annual report that the “recruitment of a permanent CFO is at an advanced stage”.
Brian Mavuka has been acting CFO since the PIC terminated More’s contract in October 2021 after a disciplinary hearing found her guilty of neglecting her duties.
The PIC previously said that it was studying the CCMA arbitration award. It had not responded to queries at the time of publication.
The Mpati commission, which in 2019 concluded its probe of allegations of governance lapses at the PIC, recommended sweeping changes to the state-owned fund manager that oversees R2.548-trillion in assets on behalf of the Government Employees Pension Fund (GEPF), the Unemployment Insurance Fund and the Compensation Fund.
Separating role
More is part of a cohort of former PIC executives who have undergone disciplinary hearings after being implicated in the commission’s report as having played a role in flouting the fund manager’s investment policies.
The fund manager has implemented 70% of the commission’s recommendations, including separating the role of the chief information officer and CEO that was merged into one under former CEO Dan Matjila. This caused an overconcentration of power in the CEO’s office, leading to questionable investment decisions including the PIC’s grossly overvalued R4.3bn investment in Ayo Technology Solutions.
The PIC, Africa’s largest fund manager, is now headed by former GEPF CEO Abel Sithole and has recently appointed Kabelo Rikhotso as chief investment officer (CIO).
“Investment processes are now overseen and implemented by the CIO, while investment operations are overseen and implemented by the COO. Commercial operations are overseen and implemented by the CEO,” the PIC says in its latest annual report.
The PIC has listed its various reforms as one of the reasons behind its 8.9%, or R208bn, growth in assets under management from the previous financial year.
The growth has been achieved despite external challenges in the operating environment, with listed equities, the PIC’s major asset class by percentage, delivering positive returns and contributing R1.227bn to the entire portfolio,” Sithole said in a statement.
Unlisted equities
The PIC made fewer investments in unlisted equities within the period under review compared with the previous year due to a change in mandate with the GEPF. The new mandate with the GEPF, which is the asset manager client with 89.43% assets under management, was agreed in March. It allows the PIC to invest in companies on behalf of the GEPF in SA and the rest of Africa.
Unlisted equities comprise 4.57% of the PIC’s assets under management and is made up of private equity, impact investing and unlisted properties.
“The portfolio value decreased 7.79% to R75.15bn due to impairments raised during the financial year. Disbursements for the year decreased 60.52% to R2.25bn compared with the previous year,” the PIC said.
Offshore and Africa investment make up 8.69% of assets under management.
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