Carol Paton Writer at Large
Nhlanhla Nene. Picture: SUPPLIED
Nhlanhla Nene. Picture: SUPPLIED

Finance minister Nhlanhla Nene has given a first indication of the shape the independent investigation into the Public Investment Corporation (PIC) will take, saying that it will look into its governance arrangements and founding legislation.

His announcement indicates that the terms of reference will be narrowly defined and the investigation will not probe specific transactions.

Nene announced in July that he would ask President Cyril Ramaphosa to establish an independent inquiry into the PIC following allegations that CEO Dan Matjila had misused PIC funds and that the board did not properly investigate before it cleared Matjila.

Nene also asked the PIC board to conduct a forensic inquiry into the specific allegations made against Matjila, that he had provided corporate social responsibility funds to a project in which an alleged girlfriend acted as an agent.

Matjila is also accused of soliciting a financial favour for the woman from a company the PIC had funded. The forensic inquiry is a separate process to the independent investigation.

"The commission’s terms of reference will include a review of the PIC’s governance and operating model, possible changes to the PIC’s founding legislation and its memorandum of incorporation and investment decision-making framework," Nene said.

"The names of the chair of the commission and the supporting team, as well as the detailed terms of reference of the commission, will be announced in due course."

Nene faces a court application brought by UDM president Bantu Holomisa to force him to suspend Matjila while an inquiry is conducted.

Amendments to the founding legislation of the PIC are already a focus of attention in parliament. Two bills are before the portfolio committee on finance, one initiated by the committee and another by DA MP David Maynier. Both seek to compel greater transparency of the PIC and want, for example, to disclose its unlisted investments.

Apart from the allegations over the "girlfriend", made by an anonymous whistle-blower, several PIC transactions have been heavily criticised for being commercially ill-advised. The most recent of these is the PIC’s R4.3bn private placement into Iqbal Surve’s Ayo, at an extraordinarily high valuation.

Eight months after the listing, with the share price in the doldrums, the PIC is almost R2bn out of pocket on its investment.

The announcement by Nene seems to imply that the investigation will not probe Ayo. It will also not probe, as Holomisa has requested, the formation of Harith, an infrastructure financing company established with PIC capital a decade ago.