As a rabid reader of criminal fiction and having grown up devouring episodes of Law & Order I am — at least in my own eyes — an expert at watching and analysing live court proceedings. So, the real disclaimer is I am no expert.
I have been fascinated by the commission of inquiry into the Public Investment Corporation (PIC) as it veers between the evidence of dodgy deals and lost billions to maltreatment of staff by the two “centres of power” — the offices of the CEO and CFO — and the evidence presented by the PIC staff themselves. Some are very credible, others young and gullible, and yet others blatantly lying.
However, nothing has been as fascinating as watching former CEO Dan Matjila testify. He has been named as the mastermind behind many of the deals that are now the subject of the investigation by the commission.
He is incredibly knowledgeable about all the affairs of an asset management company, from the back-office administration systems to the legal framework, governance and investments. There are few CEOs of asset management companies who can boast that level of in-depth knowledge. They typically rely on people they employ to advise them.
Listening to Matjila taking about SMACSoft and HighPort (old administration systems), the incorporation of the PIC, and the need for mandates to be approved by the Financial Sector Conduct Authority brought back many memories of running the operations of asset management companies since the mid-1990s, when many new systems were introduced and regulations promulgated. In fact, I was a guest at the huge function thrown to celebrate the incorporation of the PIC in 2004, where Brian Molefe strutted around like a peacock.
The relationship between the board of GEPF and the PIC was ‘strained’, to put it mildly. According to Matjila, despite best endeavours regular meetings were not held
Incorporation was important for many reasons. No longer a department of the Treasury, the PIC suddenly became a stand-alone asset manager with individual packages and bonuses, titles, power and little accountability.
Its largest client, the Government Employees Pension Fund (GEPF), was supervised by probably the most ineffectual board of trustees I have ever encountered. Perhaps they felt that since they could not technically fire the PIC, what was the point? However, despite the fact that the PIC was foisted on them, they seemed to have done little to hold it to account.
In the private sector when an asset manager is appointed by a board of trustees of a retirement fund the trustees demand monthly administration and performance reports, they hold quarterly meetings, they hold asset managers responsible for nonperformance and nonsensical transactions, they fire them if dissatisfied. From all I have heard, the relationship between the board of the GEPF and the PIC was “strained”, to put it mildly. According to Matjila, despite best endeavours regular meetings were not held.
The most egregious fact to emerge to date is that Matjila was allowed to be both the CEO and the chief investment officer of the PIC, an unheard of pairing. How do you manage an operation the size and complexity of the PIC and have time to get involved in investment decisions and research?
What comes across the strongest from his testimony is that he is relying on asset management jargon to confuse and stymie questions. Investment jargon is a language all of its own. I have always found that asset managers who use jargon are typically trying to hide underperformance. It is a red rag to a bull.
The biggest disappointment has been that despite everything it appears Matjila still has many supporters within the PIC. The latest saga around reports of a loan from the doomed VBS Bank demonstrates that.
I would consider a lie-detector test for all senior employees of the PIC. It is not an unusual tool to use in the financial services industry when internal fraud is suspected. The best part is you don’t need to apply it. Just the threat means that those guilty tend to resign immediately, like rats abandoning a sinking ship.
• Wierzycka (@Magda_Wierzycka) is Sygnia Group CEO.
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