Following the testimony of the Public Investment Corporation’s (PIC) previous executive head of risk Paul Magula at the Mpati commission on Monday, a number of irregularities surrounding the granting of a R9.3bn loan to a consortium (Lancaster 101) led by Jayendra Naidoo have been highlighted. The loan was initially advanced to buy shares in international furniture retailer Steinhoff, long before revelations of accounting irregularities under its previous CEO, Markus Jooste, came to light. The loan was later restructured to allow Lancaster to buy shares in Steinhoff Africa Retail, which has since been re-named Pepkor Holdings. To do this, the hedge the PIC had put in place against the value of the Steinhoff shares, which protected them, to a degree, from any downside move, was ceded to Citibank. This meant that when the Steinhoff shares collapsed in the wake of the accounting revelations, the PIC was forced to write down the value of the loan by R4.2bn last year. Magula has his own ...

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