Revolving door of finance ministers led to uncertainty in PIC executive roles

Political meddling hamstrung the Public Investment Corporation (PIC), with successive finance ministers changing their stances on roles and responsibilities of the state-owned asset manager’s executives, its suspended CFO said on Monday. 

Matshepo Moré was appointed CFO of the PIC in November 2011 and then as acting CEO following the departure of Dan Matjila in November 2018.

She was suspended in March following allegations that she was interfering in the PIC inquiry’s work. 

She told the inquiry on Monday that the PIC underwent a restructuring process in 2015 that resulted in the creation of a number of executive roles to better equip the investment manager to handle the amount of money it was entrusted with, as well as the wide array of asset classes it was investing in.

“We identified the PIC had large asset classes. We spread the role of chief investment officer (CIO) to executive heads in the various divisions,” Moré said. 

But this meant changes would have to be made to the PIC’s memorandum of incorporation (MOI), a document that formally sets out the roles and responsibilities of shareholders, directors and executives.

Moré says the restructuring was approved by the board and the required changes to the MOI were signed off by then finance minister Pravin Gordhan in his capacity as the representative of the PIC’s shareholder, the state.

“But the new minister, Malusi Gigaba, requested that we do not change the MOI,” Moré testified.

She did not elaborate why Gigaba did not want the changes made.

In response to questions from the commissioners, Moré confirmed that the restructuring had already gone ahead when Gigaba expressed his preference, which implies the PIC had fallen foul of the Companies Act which states a company’s structure must be in harmony with its MOI. 

“We had already changed the structure [when Gigaba reversed course], and we have continued despite the changes to the MOI not being signed off,” says Moré.

Moré also described how the role of the organisation’s only two executive directors — the CEO and CFO — had influence in the investment decision-making process.

Both were able to attend and vote on the corporation’s highest investment decision-making body, the portfolio management committees.

In addition, Matjila occupied the role of both CEO and CIO.

These two features of the PIC’s investment management and organisational structure appear to be in stark contrast to the practices of large asset managers in the private sector, where the role of CEO and CFO are confined to administrative responsibilities, while the CIO is responsible for overseeing investment decisions.

Another strange aspect of Moré’s role was the ability to sit as a director on investee companies.

Some of these directorships included serving on the boards of the Independent Regulatory Board of Auditors and the Industrial Development Corporation, but also to a relatively small JSE-listed real estate company, Grit Real Estate.

thompsonw@businesslive.co.za