Public Investment Corporation acting CEO Matshepo More. Picture: SUPPLIED
Public Investment Corporation acting CEO Matshepo More. Picture: SUPPLIED

The Public Investment Corporation’s (PIC’s) acting CEO Matshepo More on Tuesday escaped censure for her role in the controversial investment in Ayo Technology Solutions, while two other employees were suspended by the board.

The Mpati commission established to look into affairs at the PIC was informed before proceedings began that the state-owned asset manager had suspended, with immediate effect, its head of listed investments Fidelis Madavo and portfolio manager Victor Seanie in relation to their handling and approval of the Ayo investment.

The PIC said its preliminary report into the transaction
had revealed "a blatant flouting of governance and approval processes".

The Ayo transaction is one of at least eight that the commission is likely to probe. Among other issues, the commission will also look at governance and decision-making at the PIC, where allegations of corruption have continued to be made..

Ayo Technologies is majority owned by Sekunjalo Investments, in turn owned by Iqbal Surve, who is the executive chair of Independent Media and chair of the Sekunjalo Group.

The PIC’s investment was controversial due to high valuation placed on the stock at its listing, in which the PIC made a R4.3bn private placement, picking up a 29% stake, valuing the shares at R43 a piece.

On Tuesday, Ayo stock was trading at R22.90, putting the PIC about R2bn out of pocket.

But no action has been taken against More, the PIC’s CFO, who was asked to fill the void left by Dan Matjila, who resigned and left the corporation in 2018.

Business Day has established that it was More who chaired the committee that signed off on the R4.3bn investment into Ayo in December 2017 and which condoned missing a step in the due diligence conducted on the company. As CFO at the time, she later released the funds.

"The portfolio management committee that ratified the PIC subscription in AYO was chaired by the CFO [More]. This transaction was within the delegated authority of the PMC [portfolio management committee]," Matjila said when asked in a text message on Tuesday.

The PIC referred questions to chairman of the board, deputy finance minister Mondli Gungubele. He could not be reached for comment.

Madavo, despite his suspension, testified under oath at the commission on Tuesday.

He said the deal had originated from Matjila’s office. He insisted, though, that while he had worked on the transaction, he had not signed any document approving the investment as he was overseas at the time it was executed in December 2017.

The board, in its deliberations, maintained that he had nonetheless delegated his authority to other employees.

The Government Employees Pension Fund (GEPF), which accounts for about 88% of the more than R2-trillion entrusted to the PIC, said it was "extremely perturbed".

"Of serious concern to the GEPF is that the PIC had assured the GEPF on numerous occasions and in correspondence that correct governance processes were followed with respect to the Ayo Technology Solutions transaction.

"The GEPF views this as a serious breach of trust."

The pension fund also complained that the PIC had deliberately handled the transaction as a listed investment when in fact it was a new listing.

The PMC has the delegated authority to take decisions on investments up until R10bn in listed companies. The delegated authority for executive decisions in unlisted companies is R2bn.

Had the investment been treated as an unlisted transaction, the PIC would have had to engage directly with the GEPF, so as to comply with "set governance processes", said the fund.

Correction: January 23 2019

The article has been updated to reflect that the PIC would have had to engage directly with the GEPF to comply with governance processes. An earlier version of this article incorrectly stated that the PIC would have had to engage with the GEPF to avoid governance processes.

thompsonw@businesslive.co.za