EDITORIAL: PIC must come out of hiding
The state-owned asset manager must take the public into its confidence and show it is rebuilding itself from the ground up
The Public Investment Corporation (PIC) seems to have receded into its shell when it comes to providing an update on the numerous developments it has undertaken to improve its image and restore faith in the organisation.
To be sure, there is a lot going on at the state-owned asset manager. Besides the small task of overseeing nearly R2-trillion of state workers’ pensions through a global pandemic, the investment manager also has a lengthy “to-do” list provided to it through the nearly 1,000 page report produced by the Mpati commission of inquiry into governance failures during former CEO Dan Matjila’s reign.
The report opined on everything from the organisation’s structure and internal processes to a forensic review of a raft of questionable transactions. On the more benign aspects, the commission was asked to evaluate the organisational structure of the investment manager.
Work began reviewing the structure while the commission was still busy with hearings in 2019. Very little is known about whether changes have been made to overhaul and modernise the structure that would enable the PIC to become a more effective custodian of the vast resources it manages.
A topic of disharmony revealed in the inquiry was regarding the remuneration of employees, both across base salaries as well as the determination of performance bonuses. The commission tasked the PIC with drafting a clear policy on how employees should be compensated, and we see this as an essential ingredient in being able to attract and retain the right calibre of individuals.
Heading the list of issues in which there is obvious public interest is an update on the litigation the PIC has initiated to recover money it believes was wrongfully owed, most notably in the case of the R4.3bn investment for a 29% stake in Ayo Technology Solutions, which hugely inflated the valuation of the company. Almost all of that has been lost, with the whole company now valued at just R1.9bn.
There are other instances, such as with loans that have gone unpaid, where the public ought to be updated on progress the company is making to recover what is essentially public money.
This includes the hundreds of millions of rand the PIC is owed by Sekunjalo Independent Media (SIM), another company controlled by Iqbal Survé, for whose liquidation it applied as far back as November 2019. Has this been successful?
But these were by no means the only questionable and controversial loans.
The other legacy concerns people. A number of people named directly at the commission in relation to the mismanagement at the investment manager have not been accounted for. This includes the CFO, Matshepo More, who was suspended on full pay two years ago. What is the status of her employment? What, if any, charges is she facing?
The fates of a number of executives at the PIC who were not directly implicated in wrongdoing but seemed to oversee divisions and units in which numerous questionable transactions were entered into, also are yet to be determined. This includes the PIC’s head of impact investing, Roy Rajdhar, whose team oversaw a number of highly questionable loans.
If these executives were coerced or overruled by Matjila or others to advance or approve questionable transactions, then it should be publicly stated — primarily for the benefit of their reputations.
Other serious investigations were to be undertaken, including to assess whether employees’ conduct had transgressed the fit and proper guidelines established by the Financial Advisory and Intermediary Services (FAIS) Act, including for Matjila. A transaction that never even made it to the Mpati commission involved how the company got to blow about R1bn funding Musa Group, a private equity company founded by two Americans.
When it emerged that an inquiry into the 2015 transaction had been quietly dropped, the PIC showed no inclination to be open with the public. It’s the opposite of what the company needs as it seeks to restore its reputation.
Without greater transparency, it’ll be hard to convince the public that the era of Abel Sithole, who was appointed CEO just less than a year ago, marked a genuine step forward for Africa’s largest asset manager.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.