/ 4 March 2019

Fear and distrust ‘nothing new’ among PIC employees

Former board member Vuyo Jack told the Mpati commission about at least four processes of engagement
Former board member Vuyo Jack told the Mpati commission about at least four processes of engagement, with PIC employees between 2013 and 2014, that found evidence of a fearful, suspicious, rigid and fragmented working environment. (SABC)

The climate of fear and distrust in the corridors of the Public Investment Corporation (PIC) has a long and chequered history.

Expert witness and former board member Vuyo Jack told the Mpati commission about at least four processes of engagement, with PIC employees between 2013 and 2014, that found evidence of a fearful, suspicious, rigid and fragmented working environment. Jack also told the commission that Dan Matjila, who was the chief investments officer at the time, was resistant to engage in any of the processes.

Jack, who was appointed to the board of the PIC in 2012, was the sole witness on Monday at the PIC inquiry headed by Judge Lex Mpati.

He relayed how the PIC commissioned a Deloitte climate survey of the working conditions in an effort to deal with the “mounting tension” in the sub-committees and executive committees. About 134 staff members were interviewed in the survey.

Deloitte found that “there was a fearful culture and the PIC was not unified. There was a lack of strategic direction, management by fear and poor people management”, said Jack adding that employees felt that management did not have their interests at heart.

The board resolved to undertake a governance review process headed by KPMG. Jack said the PIC also conducted an internal intervention called the “PIC Innovation Lab” which worked as a proactive platform for employees to raise their concerns about the PIC directly to board members.

The Innovation Lab sessions, which were received well by employees, were short lived but terminated permanently as “some [executive committee] members were not happy with the energy that was unleashed” in these sessions.

Asked by evidence leader advocate Jannie Lubbe who the executives were who were unhappy with the sessions, Jack named Matjila and Matshepo More [now acting chief executive], who was the chief financial officer at the time.

When KPMG tabled its interim report on the PIC’s governance structures, Jack said he realised that not only was the report inadequate as it only focused on high-level processes, but it also did not encompass all the divisions of the PIC due to resistance.

“There was a scope restriction on the investments portion of the PIC because they were not able to set up meetings with the investments team, which was a problem for the exercise as Dr Dan Matjila did not meet with KPMG, not once,” Jack explained.

Even when Jack, in his capacity as chair of the audit and risk committee, initiated interview sessions with staff to cover the missing link between the Deloitte and KPMG reports, Matjila did not attend a single session.

“In contrast Elias Masilela, the [chief executive] at the time participated constructively in the engagements,” said Jack.

Interviews by the risk committee were not easy as employees were afraid of speaking out and felt they would be intimidated by senior managers seeking revenge, while executives believed that the sessions were a “witch hunt” and were apprehensive of engaging, Jack told the commission.

The governance review found that the PIC started to experience challenges with delegated authority, accountability, transparency and oversight when the scale and range of the assets that it was managing grew.

It also found that the PIC had adopted a “tightly controlled executive structure” rather than a more flexible and adaptive governance model in response to its expansion.

The PIC manages over R2-trillion in government employee pensions and other assets.