PIC board 'expresses full confidence' in CEO, then contradicts itself
PIC says it is conducting an investigation into CEO Dan Matjila
After a day of high drama in which CEO Daniel Matjila fought to retain both his reputation and job, the Public Investment Corporation (PIC) expressed full confidence in Matjila. But the asset manager also contradicted itself, saying in the same statement that it is conducting an investigation into Matjila.
“Following the deliberation by the board on the allegations and representations, the board accepted the representations of the CEO. Following the meeting, the board expressed its confidence in the ability and integrity of the CEO, Dr Daniel Matjila, management and staff of the PIC,” said the PIC in a statement on Friday evening.
The board accepted Matjila’s explanations after the long-serving executive “provided detailed documentary evidence of the decisions made by the PIC and that the process followed was in accordance with all policies, procedures and delegation of authority of the PIC”. He joined the PIC in 2003 as chief investment officer, before being promoted to his current position in 2014.
But the PIC then went on to contradict itself, saying in the same statement: “For completeness of the process and for its final assurance, the board mandated the internal audit division of the PIC to independently review the representations made by the CEO.”
Asked what the review is designed to achieve if the board has already expressed “full confidence” in Matjila’s integrity, PIC spokesman Deon Botha said “the message was that the board had full confidence in the CEO”. He asked for time to get a board member to explain the anomaly and contradiction.
Matjila had been hauled before a special board meeting called to deal with allegations of financial impropriety against him. This week The Star newspaper published an article in which it said Matjila had been accused of abusing millions of rand and irregularly favouring a person it said was his girlfriend. He had also been accused of irregularly increasing the salaries of the PIC’s senior executives.The newspaper claimed some elements on the board wanted Matjila out of the PIC, which manages more than R1-trillion in assets, in order to hand the job to someone who would be more symphathetic to the Gupta family, which has been accused of illegally hijacking key elements of the state.
Matjila strenuously denied the charges, saying those were designed to hound him out of the management of the pensions of state employees.
“The board wishes to reiterate that it rejects these allegations with the contempt they deserve,”said the PIC in the statement. The PIC is under the political control of the finance minister, and his deputy is the chairman of the fund manager. The incumbent minister, Malusi Gigaba, has a history of appointing people who turned out to shamelessly and irregularly favour the Gupta family’s businesses in the companies that fell under his portfolio. Gigaba has himself been directly linked to the Gupta family, although he denies illegally favouring them.
As soon as Gigaba became public enterprises minister in 2009, former Eskom CEO Brian Dames was hounded out of the utility. Gigaba then appointed Colin Matjila as acting chief executive officer. No sooner had Matjila arrived than he irregularly awarded a R43m contract to the Gupta family’s New Age newspaper, which incurred the utility a reportable transgression in the 2015 financial year.Other board appointments, including chairman Zola Tsotsi and director Ben Ngubane, handed more lucrative contracts to the controversial family, in defiance of the utility’s procurement processes.
This year Eskom incurred an irregular and wasteful expenditure bill of R3bn, which broke some of the utility’s debt covenants as the auditors qualified the accounts. More than half the expenditure was irregularly paid to companies linked to the Gupta family.This threatened a systemic collapse of the financial system as the government would have to immediately find more than R350bn in cash if any of the lenders to Eskom demanded a repayment of their debt. The government has already had to find R2.2bn to settle with Standard Chartered Bank, which recalled the debt from South African Airways.
While the PIC sits on top of R1.9-trillion in assets, Gigaba needs to find billions more to bailout numerous state-owned companies, including the R10bn he has already promised to SAA.