In gripping testimony before the inquiry into the Public Investment Corporation, recently suspended assistant portfolio manager Victor Seanie named former chief executive Dan Matjila as a key driver in pushing the controversial Ayo Technology Solutions transaction without following due processes.
Seanie appeared before the commission chaired by Justice Lex Mpati on Wednesday where he told the commissioner that he was being used as a scapegoat, expressing his shock over receiving a letter of suspension last week.
The PIC suspended Seanie and executive head of listed investments Fidelis Madavo last week Tuesday after an internal investigation found that they flouted governance and breached approval processes in handling the AYO transaction.
“This was very unexpected as I am a very small player in the bigger scheme of things at the PIC and in respect of the AYO transaction,” Seanie said.
Seanie’s responsibility included researching prospective investments of the PIC and providing equity research reports indicating whether they were good investment cases. However, he said he had no control over the conclusion and recommendation sections of these reports which include valuations.
The PIC invested R4.3-billion in the company linked to Independent Media owner Iqbal Surve when AYO initially listed on the JSES in December 2017. This is despite an internal view that the company was overvalued.
“The PIC listed equities team was never engaged to negotiate an IPO price for AYO. AYO approached us with a fixed R43 per share which we were not allowed to negotiate. When we questioned the R43 valuation we were told that the R43 could not be changed.”
“In conversations with my portfolio manager Sunil Varghese and listed equities general manager Lebogang Molebatsi, I expressed my view that the R43 per share valuation was excessive. They agreed with this view,” Seannie explained.
AYO’s share price on Wednesday was sitting at R20, over 50% below the price paid by the PIC.
Despite Seanie raising concerns around AYO’s valuation, on December 14 Matjila informed [him and Molebatsi] that he would be signing the irrevocable subscription agreement, which bound the PIC to buying shares in AYO at the asking price of R4.3-billion.
“I thought signing the subscription agreement was highly irregular because I had never seen it happen before and the [portfolio monitoring committee] had not yet approved the AYO transaction,” Seanie said.
He said when he cautioned against getting into the transaction without the necessary due diligence and processes being followed, Matjila “overruled” and said “I will use my authority as [chief executive] to sign the AYO subscription agreement and have the decision ratified at the next portfolio monitoring committee meeting]”.
In a later meeting in 2018 when Surve wanted the PIC to invest in another controversial entity, Sagarmatha, Seanie said he recalls Surve stating that “I consider Dan a good friend”.
“I believe this relationship was the genesis and primary driver of the PIC’s investment in AYO,” Seanie told the commission.
Seanie told the commission that AYO had also dictated the timeframe that the transaction would be completed, three weeks, which Seanie said was “strange and untoward”.
Normally it would be the PIC which has the power to dictate timeframes to companies seeking funding from it. This short time frame also made it difficult for the PIC to conduct its approval processes.
Seanie says he believes he is being used as a scapegoat because he expressed views that were opposite to those of so PIC executives.