‘Culture of fear rules PIC’
On the morning of November 16 2017, the assistant portfolio manager of the Public Investment Corporation (PIC), Victor Seanie, was asked to attend an introductory meeting with Ayo Technology Solutions. He could not foresee that it would trigger a chain of events that would lead to him being suspended little more than a year later.
Despite the short notice, it was not an unusual meeting; the PIC meets companies that want its support when they plan to list on the JSE.
Seanie and the head of listed investments, Fidelis Madavo, were suspended by the corporation last week, during the first week of the commission of inquiry into impropriety at the PIC.
An internal investigation instituted by the PIC in December found that the pair had “clearly” flouted the governance and approval processes of the state asset manager in the Ayo transaction.
On Tuesday, Seanie denied these allegations and told the inquiry that it was his last hope to salvage his name and professional integrity.
His testimony provided a timeline of how the PIC had put R4.3-billion into Ayo without due process being followed.
The commission, headed by Justice Lex Mpati, a former Supreme Court of Appeal president, heard that former chief executive Dan Matjila had been instrumental in approving the transaction.
One of Seanie’s main functions is to compile equity reports, which make recommendations on whether the PIC should invest. He worked closely on the Ayo transaction and said he had been vocal about his views that Ayo’s share price was “excessive”.
The PIC paid R43 a share for a 29% stake in Ayo. On Thursday, Ayo’s share price was R20.
“I learnt that the PIC’s work culture is also one of intimidation — you don’t question, you comply — ostracism, fear, coercion and undermining the independent researched views of investment professionals,” said Seanie.
Ayo is essentially controlled by Independent Media owner, Iqbal Survé. Seanie gave a breakdown of Survé’s links to Ayo. Africa Equity Empowerment Investments holds a 49% stake in Ayo, and AEEI is 61% owned by Sekunjalo Holdings, which is wholly owned by the Haraas Trust, the trustee of which is Survé, and his two children are beneficiaries.
Sekunjalo also owns 96% of Sagamartha, Survé’s “unicorn”. Plans to list Sagamartha on the JSE were halted in April last year, at the same time that the PIC announced that it would not participate in the private placement.
Seanie said he was given a mere three weeks to process Ayo’s transaction whereas, when he had been a primary equity analyst for other transactions, approval had taken between nine to 11 weeks. Based on that, the Ayo approval period was at least 70% shorter than usual.
Independent Media boss Iqbal Survé (Lerato Maduna/Gallo Images)
He said his attempts, early in December 2017, to get Ayo to move the listing dates to the end of January so that the PIC would have time to complete its processes were dismissed by Ayo’s representatives, who stated a day before the listing that it would “definitely proceed” in that month.
“The Ayo process was unusual in that it seemed to me that Ayo was dictating timeframes to the PIC. I found this strange and untoward,” Seanie said.
It was clear to him that, notwithstanding his opinion on the investment merits of the transaction, “individuals with decision-making authority at the PIC had already decided that they would ensure that the PIC invest in Ayo. The Ayo transaction was a foregone conclusion,” he said.
Seanie said, on December 14 that year, Matjila reportedly told Seanie and his general manager Lebogang Molebatsi that he would be signing the irrevocable subscription agreement, which would seal the deal for the PIC to invest in Ayo. This was without the due diligence being completed or the deal being approved by the portfolio monitoring committee (PMC), which was to meet on December 20.
Matjila also told Molebatsi, who was acting as the executive head for listed investments for Madavo, to sign the agreement. Protests by Seanie and his team about entering into the deal were overruled by Matjila, who invoked his “authority [as chief executive]” to sign the agreement.
“This is the first time that I have ever been in that situation in the PIC because the process says PMC has to approve the transaction. As I understand it, the [delegation of authority] does not allow him to make that decision unilaterally,” Seanie said.
The payment was authorised on December 19 by the then chief financial officer, Matshepo More, who has been acting as the PIC chief executive since Matjila stepped down in November last year.
More and Matjila were among five members present at the December 20 committee meeting that was meant to ratify the agreement.
Seanie was also suspended for not notifying the meeting that the agreement had been signed.
He said he believed he was being made a scapegoat because he would not be co-opted into covering up “the irregular decision made by [Matjila] to invest in Ayo”.
At the same meeting, More recommended that the PIC should enter into a put-option contract with Ayo, which would protect the PIC’s clients from a decline in the share price. Seanie said it was “very strange, if not disingenuous and irregular”, to introduce this at that stage because More was aware that the Ayo deal had already been done.
“In my view, the downside protection condition precedent was proposed to justify the unjustifiable,” he said, adding that downward protection suggested that the PIC had little confidence in the prospects of the investment.
Seanie said he believed that, at the heart of Matjila’s drive to have the Ayo deal and others pushed through, was because of friendship between Matjila and Survé.
“It seems to be that there’s that relationship between Dr Iqbal Survé and Dr Daniel Matjila, whereby Dr Dan always takes a favourable view and is willing to help Iqbal Survé from the PIC in order to do deals, in order to raise money,” he said.
Seanie recalled how, at a meeting dealing with the Sagamartha transaction, Survé had said: “I consider Dr Dan a good friend.”
“One version, which is a plausible version, is that Iqbal Survé has this big loan, I think in excess of R1-billion that he owes to the PIC, and he’s struggling to pay it because it’s underpinned by a loss-making business and he is trying to find ways to get money out of the PIC and inventing and coming up with different business ideas in order to do that.”
Matjila and Survé were contacted for comment but had not responded by the time of going to print.
Tebogo Tshwane is an Adamela Trust journalist at the M&G