Further PIC bloodletting in wake of VBS looting

Another senior Public Investment Corporation (PIC) executive who served as the state-owned entity’s representatives on the embattled VBS Mutual Bank board has resigned.

Ernest Nesane, the PIC’s executive head for legal counsel, governance and compliance, resigned today following allegations of impropriety against him.

Earlier today the Mail and Guardian revealed how another PIC executive charged with guarding over the state-owned entity’s 25% stake in VBS was paid hundreds of thousands of rands by the bank’s ‘largest’ shareholder, Vele Investments.

This is according to bank statements attached to court documents, which expose Vele Investments as being the vehicle that allowed for looting of more than R1.5-billion from the bank. An urgent application was filed last week to liquidate Vele.

In announcing Nesane’s resignation, the PIC said Nesane had testified before its forensic investigation earlier this week.


“Following his evidence, the PIC was made aware of the serious allegations of impropriety against mr Nesane,” said PIC spokesperson Deon Botha.

Nesane’s resignation follows the axing of his PIC colleague and fellow board member, Paul Magula.

“The PIC is concerned about the developments that have come to light since the commencement of the VBS enquiry and more so that two of its former employees have been implicated of impropriety in their personal capacity. The PIC is concerned about the evidence that has been put before VBS enquiry to date, which points to impropriety on the side of these two former PIC executives and has resolved to appoint a forensic investigation to probe all transactions in relation to its investment in VBS Mutual Bank,” said Deon Botha head of corporate affairs at PIC.

According to the PIC Nesane and Magula were entrusted with ensuring that the bank applied “highest standards of ethics and good corporate governance” on behalf of the investor.

Magula a former executive head of PIC’s risk and compliance, who was fired in April this year for poor performance, appears in the bank records of Vele Investments as one of the individuals and companies that received questionable payments from the company.

READ MORE: VBS: Widows and orphans may lose out

These details have emerged from the ongoing investigation into the bank’s collapse, contained in civil claims launched by VBS curator Anoosh Rooplal against VBS shareholder Vele Investments and former bank officials.

The bank records of Vele Investments, which Rooplal says formed part of the wide scale fraud at VBS, show that between December 2016 and July 2017 amounts ranging from R100 000 to 300 000 were paid to Magula.

On December 20 2016 Magula was paid R100 000, on March 30 2017 R150 000, on April 25 2017 R300 000 and another R300 000 on July 3 2017.

Magula was one of the two PIC executives that sat on VBS’s board as the state owned entity has a 25.26% stake in the bank as a shareholder.

“I have given my statement to the forensic investigators and would prefer that we allow investigations to complete. Issues relating to Vele- let them be dealt with by the forensic investigations. But I have never received any money from VBS,” said Magula when contacted for comment.

Rooplal’s affidavit also tells of how R5 million was flown by helicopter to pay off a senior PIC official in exchange for the state-owned entity extending a R350 million line of credit to VBS, which was also looted.

Botha did not divulge the nature of the charges that led to Magula being dismissed.

“Ordinarily, we do not discuss employee matters publicly. However, the public interest and prolonged reporting on issues relating to certain former PIC employees compel us to deviate from this norm. It is necessary to point out that Mr Magula has gone through a fair and transparent disciplinary hearing process chaired by an independent chairperson, who is an experienced advocate and senior counsel. Mr Magula was found guilty on all charges proffered to him and was summarily dismissed for poor performance,” said Botha.

The state owned entity has come under more fire recently when United Democratic Movement (UDM) brought an application in the Pretoria High Court to have its chief executive officer Dan Matjila removed.

This week, the Deputy Finance Minister Mondli Gungubele in his responding papers to the UDM, told the court he won’t be opposing the application against Matjila, which goes against the rest of the board’s stance. Gungubele questioned the board’s decision last year not to pursue an independent forensic investigation on the allegations leveled against Matjila.

Last year the PIC board cleared Matjila on the allegations that he had acted improperly when the entity financed a company linked to his alleged partner, Pretty Louw, with a R21-million loan and that he had approached a company that PIC invested in to pay her personal debt of R300 000.

The PIC crisis comes as the embattled VBS bank was placed under curatorship in March after the South African Reserve Bank discovered liquidity issues. 

READ MORE: ANC bash caught up in VBS web

This article has been amended to reflect updates from the PIC’s media statement

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Thanduxolo Jika
Thanduxolo Jika

Thanduxolo Jika is an investigative Journalist and Co-Author of We are going to kill each other today:The Marikana Story. The Messiah of Abantu.

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