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In the end, Public Investment Corporation (PIC) CEO Dan Matjila accidentally fired himself, and no-one was more surprised at the turn of events than he was.
It began with a letter, sent to the board two weeks ago, in which Matjila tried to negotiate the terms of his departure.
In that letter, Matjila made the claim that the investigations of himself and the PIC amounted to constructive dismissal. He said his relationship with the board had broken down irretrievably and that he would resign in five months time, after managing the induction of his successor. If the board did not accede to his demands, he would declare a labour dispute and haul it before the Commission for Conciliation, Mediation and Arbitration.
It was untrue that the board had lost faith in Matjila. On the contrary, the board supported him through thick and thin, last year going so far as to dismiss allegations made against him after a cursory investigation.
More recently, the board steadfastly refused to suspend Matjila while the imminent commission of inquiry sat, even though it would depend on members of staff to whom he reported to give evidence about his conduct and provide documents to assist the inquiry.
Only two board members ever spoke out against Matjila. A third, the new chairman, deputy finance minister Mondli Gungubele, made clear his doubts about Matjila, and the board’s unquestioning support for him. Yet, on Friday, the three swung the rest around to their point of view. They seized on the logical conclusion of Matjila’s letter: if the relationship had broken down, why would the board want him to serve even a minute more?
Matjila’s gamble backfired fatally.
It may have been events in the finance ministry that led to the change of heart. The terms of three directors expire at the end of this month. The new finance minister, Tito Mboweni, is the sole decision maker on extending their terms. Since becoming the minister, Mboweni says he has intentionally kept his distance from the PIC and had not met with Matjila. The talk, though, is widespread that Mboweni could not be counted on to support Matjila in the way previous finance ministers had done.
Organisational dynamics that allowed the CEO to centralise power, along with the CFO, are changed for the better
The two have a complicated past, with Mboweni unexpectedly leaving the Sacoil board after only three years in 2017 amid talk of a falling out with Matjila. The PIC is the largest shareholder in Sacoil, now known as Efora Energy. Mboweni also recounted at a recent talk at the Association of Black Securities and Investment Professionals (Absip) conference how he and his brother approached the PIC for funding for an empowerment deal involving a property company. The PIC refused the deal on the grounds that it was too risky, Mboweni said, but later itself bought a large shareholding in the company, which is listed on the JSE.
Mboweni told this story to make the point how difficult it can be for black entrepreneurs to get funding, and not necessarily to attack the PIC. But the three directors would have been very aware of these dynamics and may well have considered that it was time to abandon the Matjila ship, swinging the numbers in the debate on Matjila’s future.
What is important now is that the organisational dynamics that allowed the CEO to centralise power, along with only one other person — the CFO — and the dynamics that allowed the board to uncritically back its CEO, are changed for the better. The board now plans to appoint a chief investment officer (CIO) as well as a chief risk officer and COO. These positions are specified in the PIC’s memorandum of incorporation. It is also really important that the reforms under discussion in parliament that will give it a role in choosing the chair of the PIC and give trade unions representation on its board, are finalised.
As important as the governance changes is policy on the PIC’s unlisted portfolio, because that is where the rot lies. When it was first conceptualised, the Isibaya fund was intended to make socially valuable investments, such as in infrastructure. Somewhere along the line this morphed into a fund for black economic empowerment, which gave Matjila (who was both CEO and CIO) enormous power to determine which politically connected group got funds and which did not.
A decision on how, if at all, the PIC should invest in private equity is critical for the future.
• Paton is writer-at-large.
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