Mpati commission queries PIC finder’s payment
The Public Investment Corporation (PIC) probably overpaid Amir Mirza, the businessperson who facilitated the asset manager’s investment in a Mozambican palm oil refinery.
Questions about the fee arose during the executive assistant to the PIC chief executive Wellington Masekesa’s testimony before the Mpati commission.
He said, although he was not part of the negotiations for the facilitation fee, he was aware that Mirza was paid a finder’s fee of $1.7-million, 1.5% of the total cost of the S&S Refineria LDA, a palm oil refinery in Mozambique with a project cost of R115-million.
The fee was paid despite the fact that the PIC had planned to buy a 50% stake in the refinery, meaning Mirza would only have been entitled to a finder’s fee on 50% of the transaction fee.
The refinery was owned by a Mozambican businessperson, Rassul Mohamed.
In February 2014, Mirza and his business partner, Siyabonga Nene, approached the PIC, proposing it partner with them in a black employment equity (BEE) deal to buy a 50% stake by investing $29.25-million in S&S.
After the PIC’s transaction team had visited the refinery and the proposal by Indiafrec Trade and Invest, the company run by Mirza and Nene, went through its approval processes, the state asset manager discovered that it could not make the investment because the “PIC did not have a policy for investing in transformation deals outside of the country”.
Indiafrec was out, Masekesa said, as was Nene, but Mirza negotiated to stay on as a facilitator on the project for a fee.
The PIC eventually invested $63-million in debt and equity between 2014 and 2016 and a $1.7-million referral fee was paid to Mirza’s company, Zaid International Trade Agreements, on the full sum of the transaction of $115-million.
“But isn’t it that you only get paid for the funds you are raising? You cannot be paid for the total project costs?” asked commission assistant Emmanual Lediga.
Masekesa said that was the norm, but this was an “exceptional” circumstance. Besides the S&S deal, Mirza also introduced the PIC to three other projects, for a hotel, a clinker plant and a cement plant, giving the PIC the first refusal on these projects.
Lediga said the agreement should have been structured differently, with the PIC paying Mirza a referral fee for its portion of the S&S deal and making a separate agreement for the three additional investment opportunities.
Assistant commissioner Gill Marcus said: “The problem for me is the activity has blurred between one company and another where one company comes with a proposal and one person from that company does other work and gets paid into a different account.
The essence of it is [Indiafrec] brought you the deal,” said Marcus.
“There something here that does not sit comfortably,” she added.
Siyabonga Nene is the son of Nhlanhla Nene, who was deputy finance minister and chair of the PIC board at the time. Nhlanhla Nene told the Mail & Guardian in October last year that he was only made aware of the deal in a casual conversation with his son. He added that there was no conflict of interest because the board was never involved in the deal.
Tebogo Tshwane is an Adamela Trust business journalist at the Mail & Guardian