Dan Matjila. Picture: SUNDAY TIMES
Dan Matjila. Picture: SUNDAY TIMES

Public Investment Corporation CEO Dan Matjila claims his comments in an interview with the Business Times’s Chris Barron were taken out of context. Here is a partial transcript of that interview, which was the basis for the article published on September 24.

Listen to the interview here: 

BT: Any idea who leaked these allegations about you?

DM: "I have no idea, quite frankly …"

BT: They’ve been linked to a fake news website linked to Kenny Kunene, the so-called new Guptas. Does that raise questions for you?

DM: "Look, it does. They started with this smear campaign a while back."

BT: What do you think the motivation is?

DM: "For me the motivation is clear. To try and remove me. Or frustrate me to the point where I resign."

BT: You’re known to be a person of unassailable integrity. Is this why there are people who might want you out of the way? Does this make you inconvenient for certain people?

DM: "Of course, that’s what it is. We deal with investments here, and there are lots of times where we reject transactions because they don’t meet our investment criteria. Some of them have got political connections and so it becomes very frustrating when we are unable to help them.

"Sometimes they try to use political pressure, and it does’t work.

"We try as far as possible, to the best of our ability, to make sure that we take decisions that are not influenced by politics."

BT: Is having someone like you there inconvenient for politically connected people who might want access to the funds that the PIC manages?

DM: "What is being said out there is that every day that I am around here is an opportunity lost for those who want these funds. And the potential changes in December — some of them are saying — if we don’t deal with him we don’t know what changes are going to happen.

"It may be almost impossible for them to have this opportunity when the political leadership of the party has changed."

BT: So there’s an air of desperation?

DM: "There is a lot of desperation and there is urgency to deal with this quickly."

BT: Because they’re running out of time?

DM: "That's right."

BT: And you’re the person who stands in their way?

DM: "I’ve got the keys, you know. They’re looking for the keys to the big safe."

BT: Do you see the allegations against you that the board investigated last week as part of all this?

DM: "To me they’re related. Because we have given a comprehensive response to the questions we have been asked, and we just didn’t understand why the board was unable to take a decision on it. Because we’ve responded quite comprehensively."

BT: Instead the board now wants a review of your representations?

DM: "Yes, they want to now audit, to check the completeness and correctness of our submissions.

"We have shown complete records of where the money went that they claim went to my so-called girlfriend ...."

BT: Do you think the board is really interested in a fair and credible fact-finding process to get to the bottom of these allegations, or not?

DM: "I think the majority of directors (on the PIC board) accept the responses that we’ve given to them."

BT: What about the two who don’t?

DM: "Hence this review, I guess. We’re still trying to understand what the scope is and so on. But my understanding is that they want an internal audit to check the completeness and accuracy of the document that we have provided."

BT: So, basically, the board has given you a vote of no-confidence? This is not exactly a vote of confidence, is it?

DM: "They expressed confidence in me according to the statement. But they still wanted this verification process to happen."

BT: How destabilising will this be for you?

DM: "It’s going to be very destabilising. There will be a disruption from our duties. We work with sensitive information that requires a lot of focus on the work, people with clear minds. If there is a disruption it may hurt our performance one way or the other. For me the biggest challenge is how uncomfortable our clients are going to be who have entrusted us with these billions to look after, when the PIC is not functioning well.

"The fact that their assets may be at risk in this kind of situation. When an asset manger that is not functioning well is looking after their assets.

"And most importantly, the man in the street, the teacher out there, if they hear about these things, could say, ‘If the PIC is headed towards a Transnet or Eskom type situation then we might as well cash our money in now to protect our wealth.’ Then there could be a run on the fund."

BT: The PIC has been linked to moves to recapitalise South African Airways by getting you to buy the government’s stake in Telkom to plug that R10bn hole. How would you feel about that, and is it something that might happen?

DM: "If we were approached to buy Telkom shares it would be an investment decision and it would have to fit into the parameters that the client (Government Employees Pension Fund/GEPF, UIF and compensation fund, among them) has given us."

BT: Would it be a responsible use of pensioners’ money to plug this hole in SAA?

DM: "We wouldn’t do that. We have been quite clear about that. It does not meet our minimum investment standards. Our clients themselves have made that pronouncement that they wouldn’t allow us to put money in an asset that is below investment grade.

"If we buy Telkom we’ll be buying an asset that we believe in. If we were told to put money into an SAA type of asset we would not do that.

"It would not be appropriate to finance SAA if they have not, and this is something we have said quite a number of times to government as well, sorted out the governance issues there, and if they don’t execute an appropriate turnaround plan. Unfortunately (for SAA) this means they have to build a number of data points to show that they are succeeding.

"Without this we would not be able to finance SAA. If government is able to support it (SAA) to a point where they turn it around and it becomes investment grade, we will consider it at that point.

"The challenge is how do they make it an investment- grade asset. There will have to be an intervention from government and unfortunately that will require money."

BT: Where would it come from?

DM: "The money will have to be raised somewhere."

BT: But not from you?

DM: "Not from us ..."

BT: Until there is clear evidence of a turnaround?

DM: "Absolutely, absolutely."

BT: Would this involve a new SAA chairman?

DM: "Leadership is critical. The governance needs to be sorted out. We expect the right governance approach to be taken at SAA."

BT: Does that include getting rid of the current chairman?

DM: "If her term is up then we expect it."

BT: Ratings agencies have said that until she goes SAA will not get an investment grade rating.

DM: "That condition has been made by other funders as well."

BT: And you are saying you will not give SAA money until they have an investment-grade rating?

DM: "Absolutely, absolutely. And that will involve the right governance."

BT: Have you communicated this to the finance minister?

DM: "We have, but not officially."

BT: But he still said to Cosatu recently he cannot guarantee the government will not use PIC funds to recapitalise SOEs including SAA?

DM: "PIC invests on behalf of its clients. They’ve set the mandate and the criteria and minimum requirements for any investment. Unfortunately, SAA does not meet those requirements. We will not be able to invest, otherwise we will be in breach of the client mandate."

BT: Does the same go for Eskom?

DM: "The same goes for Eskom. If it is below investment grade we would not be able to do it."

BT: Gigaba says he cannot guarantee that government won’t use PIC funds (to bail out SOEs). You say you won’t allow it to use PIC funds?

DM: "We invest on behalf of our clients. The minister cannot instruct the PIC to invest in a particular way."

BT: Would he have to get rid of you first?

DM: "He would have to change the mandate of the client (the GEPF). If we were to breach the mandate the client would have to give us permission to do so in writing."

BT: Might the client agree to change the mandate if they were under political pressure?

DM: "I don’t know. The way they determine their investment policy is quite an intense process.

"It’s long-term planning. It can’t be changed abruptly because there is a need somewhere. The trustees as custodians of the members would also have to account for why they are changing the mandate and putting the contributors, as well as pensioners, at risk."

(Matjila said neither the minister nor the chairman of the PIC has the power to instruct the PIC on how to invest. There is an investment committee where most investment decisions are taken, but they have to be within the mandate of the client.) — This bracketed reponse is paraphrased due to the long and technical nature of the answer on how the investment committee operates, but was included for clarity.

BT: So without the permission of the client it would not be your call as CEO to decide to use assets in the way the minister might want?

"My call is about recommending what we believe is a good investment. We put proposals to the investment committee to decide whether to invest or not. I don’t have power to say, ‘We shall do this investment’."

BT: Why would people who understand how this works want you out of the way?

"Our role as management is that we filter every request that comes to the PIC … that is our job."

BT: So that goes through you?

"Yes. In a way I’m in control or in charge. I have been given that responsibility to perform this function as a key individual in the organisation."

BT: That’s why it is critical for those who believe in good governance and that pensioners’ money should be well invested, that you remain where you are?

"Absolutely, absolutely."

BT: Because you have a key role to play in deciding what is or is not compliant with the rules?


BT: If you were replaced by someone without your integrity would it make capture of the PIC easier?

"Yes. Because then you could approve stuff that is not compliant with the mandate, or you can start fiddling with the processes and criteria to make it easier for some transactions to go through.

"And probably in compliance with the mandate now but not looking at the long-term aspects you can dress it up in such a way that it is a good deal quite easily, and get it approved."

BT: And whoever is in your position would be well placed to do that?

"Yes, he would be very well placed to do that."

BT: Is this why some people might want you out of the way?

"Yes, that is correct."

BT: In this context is it significant that the two appointments made by Finance Minister Malusi Gigaba to the board are the ones who have insisted that the investigation into you should continue? Does that concern you?

"Without mentioning individuals, the fact that the board is referring this matter to an internal audit concerns me because in my view there is no issue. We have adequately responded to the matter."

BT: And as you’ve said, by allowing this matter to drag on it destabilises the PIC?

"Absolutely, it does."

BT: And makes your job more difficult?


BT: Do you feel your job is on the line? That your position is vulnerable?

"I would be naive to think that I’m safe, quite frankly. I feel this is only round one. There are still lots of rounds of boxing before December.

"If you look at the past three or four months there has been lots of mud thrown at me, and so far nothing is sticking."

BT: This fits a familiar pattern, doesn’t it?

"Yes, yes, yes. So they will continue to throw mud at me."

BT: When you say "they", who do you mean?

(Laughs uneasily.)

"Okay, mud will be thrown at me."

BT: Are you concerned that this new investigation, this audit, is going to contrive to come up with something that will be used to justify your removal?

"I think that is what they’re trying to do. Because when we’ve presented adequate evidence and they continue with this it tells you that there’s a plan on the table. To say: ‘what else can we put on the table?’"

BT: If one joins the dots there’s a clear connection between efforts to discredit you and pressure being put on the PIC to allocate funds to various SOEs, isn’t there?

"Yes, yes, you’re right. At the same time we have criteria, and unfortunately a lot of them wouldn’t work."

BT: A lot of your criteria would not be met by doing what the minister wants you to do?


BT: You have spelt this out to the minister, so why is he still saying he can’t guarantee that the government will not use PIC funds to recapitalise SOEs?

"I don’t know the angle ..."

BT: If government does not get the money it needs to bail out SAA and Eskom from the PIC, where else would they get it?

"I have no idea."

BT: Are you expecting to come under more pressure?

"Look, I am. I am expecting to come under more pressure, you know. If the current situation is anything to read into it means that this is just the first round. We still have a long way to go."

BT: Do you think the reason certain people are so desperate to get their hands on the PIC money is not necessarily to bail out SOEs but to further loot the state? Is that ultimately what it’s about?

"Look, we see all kinds of transactions, we see all kinds of people. A large amount of transactions we reject because they don’t meet the criteria, and most of the time people don’t like our answers."

BT: Powerful people?

"Yes. And if they don’t like our answers they will always try to find ways of getting rid of us."

BT: Do you think this is why these allegations were leaked to the board, and why the board is insisting on investigating and digging up as much as they can?

"Yes. Yes. I can tell you right now they will leak something again before the end of this week to try to ensure that the board continues with this process."

BT: What do you make of reports that the chairman of the board, Mr Buthelezi, and deputy chairman Mr Mkhwanazi, want to replace you with Brian Molefe?

"l don’t know how they’d do it, because it is not something you can do immediately. There are processes of replacing someone at this level, you know. It may be an intention, I don’t know. I have seen it in the media. But it cannot happen without a process."

BT: If push came to shove and you were ordered by the minister to release certain funds, would you refuse?

"We’d do an analysis and if it didn’t meet our minimum criteria we would let him know."

BT: Even if your job was on the line would you stand firm?

"I would stand firm. Definitely."

BT: Are you comfortable about the size of your exposure to Eskom?

"I’m not comfortable, but the structure of the portfolio can accommodate an exposure of this size. Whether we can continue to have this exposure with the current issues there, I would say no, because that is not sustainable."

BT: What will you do?

"We are engaging through Treasury in terms of the minimum requirements that we need for governance. We haven’t bought any additional bonds. If things don’t change for the better we will not increase our exposure and we will allow natural maturity to happen to reduce our exposure."

BT: Given the size of its exposure to Eskom should the PIC have done more to ensure good governance?

"Yes. But as we speak our team is putting together a governance report on Eskom so we can understand what are the issues that need sorting out, in order for us to roll any bonds that are going to mature."

BT: Should you have done this a long time ago?

"I guess hindsight is perfect sight. It is something we should have done.

"The problem is that we are spoilt by these government guarantees, that are again a problem in the sense that you’re depriving the nation of access to money because the balance sheet of the nation is guaranteeing some of the SOEs. It is money that is trapped, that is supposed to be going into service delivery and other things.

"We’ve relied too much on buying bonds that have underlying guarantees of government. That has made us a bit too relaxed to drive the right kind of governance."

BT: The incentive has not been there?


BT: If the GEPF changed its mandate to allow the PIC to put funds into SAA and Eskom, would you agree to do so?

"No. I wouldn’t advise them to do that in the current situation. There would have to be drastic changes in governance and all the other things that are necessary for sustainability."

BT: If, as your client, they ordered you to, what would be your response?

"That the investment is not meeting the minimum criteria. There are governance issues that are going to threaten the sustainability of the investment in the long term, which may hurt potential returns and therefore their ability to meet the liabilities of their clients when they are due."

BT: What about the government guarantee?

"The government guarantee kicks in for those who are pensioners, obviously. But the annual cost of living adjustment for pensioners depends on how well funded the fund is, how well the liabilities are covered by the assets. So if the minimum criteria are not met the pensioners are not going to get a cost of living adjustment."

BT: Is there a danger that, as in Greece, the government does not have enough money to honour its guarantees?

"It is highly possible."

BT: Did Treasury ask you to give funds to SAA?

"No. We were approached by SAA themselves."

BT: When you talk about politically powerful people trying to get you to agree to certain transactions, did these include bailing out SAA?

"If you classify the chairman of SAA as politically exposed, then yes. She was in the meeting that made this request."

BT: This was the loan you turned down?

"Yes. For about R6bn."

BT: Do you think this is related to what has happened to you?

"It’s hard to know. It may be part of it."

BT: How long ago did you turn it down?

"Three to four weeks."

BT: The fact that these allegations were leaked against you — do you see that in the context of your refusing to lend SAA R6bn?

"Yes. Yes."

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