PIC bosses accused of using employee as scapegoat for Ayo investment
Victor Seanie, who performed due diligence on the company, had concluded that it was a poor investment but his decision was overridden by CEO Matjila and other bosses
The employee who compiled the valuation report that led to the Public Investment Corporation (PIC) investing in Ayo Technology Solutions told the Mpati commission that he was put under pressure by his superiors to issue a favourable assessment of Iqbal Survé’s company.
Victor Seanie, a chartered accountant and chartered financial analyst employed as an assistant portfolio manager by the PIC since 2016, performed due diligence on the company ahead of the investment by the PIC, which manages about R2-trillion on behalf of the Government Employees Pension Fund (GEPF), paying R4.3bn for a 29% stake in the company’s initial public offering.
Seanie said he initially concluded that the transaction presented a poor investment, but his superiors “dictated that the conclusion and recommendation sections of the equity report reflect a favourable investment recommendation for Ayo”. He perceived that this was in line with the wishes of Dan Matjila, the PIC’s CEO at the time.
It was standard practice for his superiors, which included his line manager, Sunil Varghese, Lebogang Molebatsi, the GM for listed equities, and Fidelis Madavo, head of listed investments, to edit his reports as they saw fit, particularly the conclusions and recommendations.
Seanie and Madavo were suspended with immediate effect last week for what the board termed “blatant flouting of governance and approval processes in relation to the Ayo transaction”.
Seanie said he was “very shocked” to be informed of his suspension as he considered himself “a very small player” in the bigger scheme of things at the PIC, and specifically in respect of the Ayo transaction.
On Wednesday, he denied flouting governance procedures in his testimony before the commission, which was set up by President Cyril Ramaphosa to investigate governance failings at the PIC. The Ayo transaction was among the most controversial during Matjila’s reign as the price paid was seen to be too high.
“The PIC’s work culture is also one of intimidation, ostracism, fear, coercion and undermining the independent, researched views of investment professionals,” he told the commission.
Seanie said the timeline for concluding the Ayo deal had been rushed.
In the three initial public offerings (IPOs) Seanie worked on, the average time from receipt of documents to date of final transaction was 11 weeks. With Ayo, it was just three, he said. Despite the PIC being the only investment manager participating in the listing and taking up the entire offering, there was absolutely no scope for the PIC to negotiate the price, he said.
“Ayo approached us with a fixed R43 per share which we were not allowed to negotiate,” he said. When he and his colleagues questioned the valuation, “we were told that the R43 cannot be changed”.
Seanie further described the friendship between Survé and Matjila as the driving force behind the transaction. “I believe this relationship was the genesis and primary driver of the PIC’s investment in Ayo,” he stated.
He was unequivocal in stating that the Ayo investment was approved by Matjila and the payment authorised by Matshepo More, then CFO and now acting as CEO, long before it arrived for ratification at the portfolio management committee that was mandated to approve it. Both Matjila and More were present at the meeting.