The Public Investment Corporation (PIC) decided to invest in the Independent Media SA (INMSA) despite risks highlighted in its due diligence report and discomfort communicated to it by its largest client, the Government Employees Pension Fund (GEPF). This is according to the testimony of Thipana Mongalo, the credit risk analyst at the PIC, who did the due diligence on the deal in December 2012. Mongalo described how the transaction was considered to be high risk. “This can be evidenced from the recommendation [in the risk report that was compiled] that the services of a turnaround specialist be sought,” Mongalo told the PIC inquiry on Monday. The proposed transaction involved the PIC committing to a bridge funding package amounting to R2bn which would allow the Sekunjalo Consortium led by Iqbal Survé to acquire Independent Media.

The original plan envisaged a commercial bank stepping in to refinance R750m of the PIC’s loan. The risks raised in the PIC’s due-diligence process r...

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