If you wanted to see an organisation fit to manage the R2-trillion savings of state pensioners, then you would have done well to avoid the evidence led this week at the commission of inquiry investigating Public Investment Corporation (PIC) impropriety.
In the case of one of its transactions, that of Ayo Technologies, which is allied to media mogul Iqbal Survé, about R4.3-billion was invested — apparently without the most basic investment checks being made.
The public hearings, which started on Monday, covered the legislative, governance and some of the departmental structures of the PIC. This was meant to lay the foundation for later hearings, but the abrupt suspension of two senior employees on Tuesday morning, and the reasons given by the PIC, prompted the commission to start chipping away at some of the contentious issues that have appeared in media reports a lot sooner than anticipated.
In focus after Tuesday’s events is the controversial Ayo investment. At the time of the transaction in December 2017, the PIC paid R43 a share, despite concerns about the valuation being overpriced. Ayo was trading at R22.50 on Wednesday, meaning the PIC’s investment is about R2-billion under water at present.
Head of listed investments Fidelis Madavo and portfolio manager Victor Seanie were suspended for contravening governance and approval processes related to the transaction, according to the findings of a preliminary internal audit report given to the PIC board on Monday.
“I also just want to put it on record that this transaction took place when I was overseas,” Madavo told the commission. He denied any direct involvement in the transaction, other than being head of the division.
According to testimony given by the internal audit head, Lufuno Nemagovhani, his team found that due diligence was not properly done when the transaction was handled in December 2017. Binding agreements to invest in Ayo and payment documents were signed before the documentation was tabled and approved by the relevant committees.
“This is the first time that I have seen something like this within PIC,” Nemagovhani said.
Madavo said his suspension letter indicated that he should be suspended because he had signed documents on the Ayo transaction.
The preliminary report is under lock and key because of the ongoing investigations and sensitivity of the case and it’s not clear who signed what and how many people have been implicated. But Business Day reported on Wednesday that former chief executive Dan Matjila had singled out then chief financial officer and current acting chief executive Matshepo More as the one who sanctioned the transaction.
Head of human resources Chris Pholwane was asked to carry out the suspensions after a board meeting, which took place this week, from Monday afternoon until the early hours of Tuesday morning. He said he had not been presented with the report when he was given the instruction.
At the same board meeting, he was also asked for the first time to give his view on the merits of a settlement agreement that resulted in a 29-month salary payout to former information technology head Vuyokazi Menye, who left the institution in April last year. Media reports say it amounted to about R7.5-million.
The commission is also looking at whether mutual separation agreements entered into between 2017 and 2018 with senior PIC executives adhered to PIC policies and whether they were sound.
“Do I, as the head of HR, think that it’s excessive? Yes, I do. As I indicated, it was a precedent settlement; we have never had anything like that,” Pholwane said, although he added it was in line with PIC policies.
Also on the agenda is the question of whether there has been any improper conduct or the contravention of legislation in making PIC investment decisions and whether these resulted in undue benefits for employees or outsiders.
Nemagovhani was questioned about allegations that Matjila had used his position to channel corporate social investment to Maison Holdings (MST) owned by his alleged girlfriend. But based on the scope of the investigation decided on by the board, the internal audit team could not validate these allegations.
If the first week was meant just to lay out what the PIC does, the hearings are likely to be even more dramatic when the commission resumes its work on Monday.
Tebogo Tshwane is an Adamela Trust journalist at the M&G