PIC inquiry witness suspended by the board just before testimony

The board of the Public Investment Corporation (PIC) has suspended its executive head of listed investments, Fidelis Madavo with immediate effect, following an internal audit into its controversial deal involving Ayo Technology Solutions.

Shortly before Madavo began his testimony on Tuesday, evidence leader advocate Jannie Lubbe said Madavo — the first witness scheduled to appear — had been handed a letter this morning informing him of his suspension.

The commission is headed by former Supreme Court of Appeal President Justice Lex Mpati, assisted by former Reserve Bank Governor Gill Marcus and investments and asset management expert Emmanuel Lediga.

“I was at no stage informed by the PIC or the internal audit team of this investigation. I put it on record that I found it strange and alarming that the PIC board was running a parallel investigation into matters [that overlap] with the terms of reference of this commission in particular,” Lubbe said.

He said: “It is very necessary to at this stage consider calling the chairperson of the board to come and explain to the commission why this all happened.”

In a statement released on Tuesday morning, the PIC said that it decided to launch an investigation into the AYO Technology transaction, particularly looking at the employees involved in the deal following an appearance at parliament in December.

READ MORE: PIC inquiry gets underway with nuts and bolts of investment decisions

The PIC, which is chaired by deputy finance minister Mondli Gungubele, had been called by the parliament’s standing committee on public Accounts to address media reports that suggested that there were problems at the PIC.

According to minutes of the parliamentary meeting, Madavo was asked by parliamentary members whether due diligence was done on the Ayo Technologies transaction, which was found to have had major deficiencies by the head of internal audit. These included the allegation that the R4.3-billion was paid out by the PIC before the transaction had been approved and signed.

At the meeting, the Democratic Alliance’s shadow minister of finance David Maynier said he expected that people would be fired for the oversight.

Madavo told MPs that there was due diligence done, however, there was a Johannesburg Stock Exchange form that had not been completed before the PIC’s Public Management Committee’s form was completed.

When MPs asked who had not completed the form Madavo said it was the chief executive and the general manager of equities, Lebogang Molebatsi, who had been acting in Madavo’s position at the time as he was out of the country.

In its statement on Tuesday the PIC said: “A preliminary investigation report was submitted to the board on January 21 2019. The preliminary report clearly reflects a blatant flouting of governance and approval processes of the PIC. Employees of the PIC have been implicated in these irregularities.”

“It is for this reason that the board has resolved to suspend the executive head of listed investments, Fidelis Madavo and assistant portfolio manager Victor Seanie with immediate effect.”

The PIC made a R4.3-billion cash injection into Ayo Technologies Solutions, which is allied to Independent media owner Iqbal Surve, before the company was listed in December 2017, despite concerns that the company was overvalued.

READ MORE: Struggling investments sting PIC

The asset manager, which controls over R2-trillion in state workers’ pensions and other state assets, paid R43 a share for a 29% stake in Ayo, which valued the company at R14.8-billion although its assets were estimated to be worth R292-million, according to media reports at the time.

The commission has been established to probe if there has been any impropriety regarding the investment decision of the PIC and if employees or directors and those close to them abused their positions for personal gain.

Madavo told the commission he had received a letter this morning from the board informing him of his suspension. “The reason given is that there was an internal audit investigation into the Ayo Technology transaction and the head of the division found it proper to suspend me with immediate effect [while] further investigations will be ongoing,” he said.

“[I was told that I] must not talk to PIC employees at this stage. The letter refers to documents I signed in the Ayo transaction and this indicates that I should be suspended.

“I would also like to put it on record that this transaction took place when I was overseas … and I was not directly involved in this transaction at all but obviously as head of the division I carry this responsibility,” Madavo added.

The commission continues, and Madavo has taken the stand to deliver his testimony. 

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Tebogo Tshwane
Tebogo Tshwane

Tebogo Tshwane is an Adamela Trust financial journalism trainee at the Mail & Guardian. She was previously a general news intern at Eyewitness News and a current affairs show presenter at the Voice of Wits FM. Tshwane is passionate about socioeconomic issues and understanding how macroeconomic activities affect ordinary people. She holds a journalism honours degree from Wits University. 

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