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

Much like a bank robbery shootout in a darkened street, the unfolding drama at the Public Investment Corp (PIC) has left many observers not entirely sure of who the bad guys are — and equally uncertain over who has control of the loot.

The PIC manages almost R2 trillion in government employees’ pension and other funds, making it a powerful economic player. Finance minister Nhlanhla Nene knows that uncertainty over its leadership and governance — particularly after revelations of its shockingly ill-advised investment in VBS Mutual Bank — poses a significant risk to the fiscus. "I am deeply concerned about the alleged governance problems at the PIC and I am acutely aware that these require urgent attention and resolve," Nene states in court papers filed this month.

Nene is opposing a UDM court bid to force him to suspend and investigate PIC CEO Dan Matjila over historic claims that he used his position to financially benefit his alleged girlfriend.

But, as Nene’s 23-page affidavit makes clear, that opposition is by no means an endorsement of either the PIC or Matjila. Court documents also reveal that the minister asked the PIC board in May "to advise whether disciplinary steps, including precautionary suspension against [Matjila], and other executives, were warranted".

"I admit that there are allegations of misconduct against the CEO, in his position as CEO of the PIC. These allegations are receiving urgent attention and priority," Nene says in his response to the UDM.

He adds: "The UDM’s case is aimed at the CEO. The minister’s concern is the overall executive and strategic leadership of the organisation.

"There should be a delicate balance between ensuring the financial stability of the PIC and dealing with [its] prevailing governance issues, including the allegations against the CEO or members of the executive."

Matjila’s difficulties began in September last year, when someone known only as James Nogu sent an e-mail to PIC staff, in which he alleged that Matjila had used his position to financially benefit his lover.

In an affidavit filed earlier this month, Matjila denies any suggestion that Nogu is a whistleblower and describes him as "a thug who first made contact with me telephonically and threatened that he will send the e-mails prior to September 5 2017". He has denied that he was romantically involved with Pretty Louw, the woman described by Nogu as his girlfriend.

Just days after the PIC board held an emergency meeting over the Nogu allegations, Matjila gave an extraordinary interview to the Sunday Times, in which he claimed to be the victim of a "smear campaign".

The Sunday Times story stated that Matjila had been "hauled before the PIC board ... to answer allegations against him that were leaked mysteriously". The report says this was after Matjila turned down a request from SAA chair Dudu Myeni for "a R6bn loan to keep the bankrupt national carrier from going under". Myeni was reportedly "furious".

"I’ve got the keys. They’re looking for the keys to the big safe," Matjila was quoted as saying.

Matjila’s claims, made as SA reeled from growing evidence of the "capture" of state-owned enterprises, were explosive and panic-inducing. But they were quickly met with denials by then finance minister Malusi Gigaba and Matjila himself.

At a joint press conference two days after the story appeared, Matjila dismissed it as "distasteful, inaccurate and designed to drive a wedge between the minister, myself and the board".

While the Treasury admitted that SAA had asked the PIC for a R6bn loan in May last year, director-general Dondo Mogajane said the corporation had done due diligence on the airline, but the carrier fell short of the money manager’s investment criteria.

Matjila didn’t expand on how he claimed his comments were misconstrued by the Sunday Times, saying he would issue a statement to clarify the matter a few days later. He never did.

Business Times then released the transcript and recording of the Matjila interview, in which he is asked what he thinks the purpose of the "smear campaign" against him is.

"For me the motivation is clear. To try [to] remove me. Or frustrate me to the point where I resign."

He later adds: "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 [the ANC] has changed."

Matjila denies that he was romantically involved with Louw, whose Maison Holdings company acted as a sales agent for Mobile Specialised Technologies Group (MST), which reportedly provides preventative health care to children in far-flung, underserviced communities through mobile clinics.

The PIC gave MST a R21m loan as well as corporate social investment funding. Matjila has also admitted he referred Louw and her business partner to Lawrence Mulaudzi, a director of a PIC investee company, Ascendis Health, when they approached the PIC for financial assistance. Mulaudzi gave Louw R300,000 to settle her personal debt, but Matjila insists this was not as the result of an order from him.

The claims against Matjila are now the subject of a police investigation.

But it’s the PIC’s alleged failure to investigate these allegations properly that has provided the UDM with ammunition in its court battle to force Matjila’s suspension.

After originally resolving last September that the Nogu allegations needed to be the subject of an independent forensic probe, the PIC board was persuaded by Matjila to reverse that decision. Instead, it opted for an internal "verification" process.

The board made it clear this process would focus on determining the adequacy of Matjila’s response to the claims made against him, and not digging into whether there was any truth to the allegations themselves.

That process, led by the PIC’s internal audit head, found that Louw was not a shareholder of MST,but there was a "principal agent" agreement between her company and MST.

The board further found that Matjila had "acted in good faith" when he approached Mulaudzi to assist Louw and her business partner. It resolved that: "While the board trusted the bona fides of the CEO in his actions with regard to helping the distressed company, such actions could be misconstrued, and the board requested the CEO to not act on his own in taking such actions in the future.

"In order to avoid a situation where management can be accused of acting improperly, it would be advisable that management do not engage with clients alone."

In his response to the UDM’s bid to force Matjila’s suspension, Nene has described its case as "intended to serve a narrow political agenda". He does not specify what that agenda is. "The present case … does not warrant the attention of the court. The minister … is considering the documents and evidence pertaining to the allegations regarding governance issues at the PIC, including the allegations against the CEO," Nene says.

That stance has not been shared by his deputy, Mondli Gungubele, whom cabinet appointed as PIC chair in May. Just days before his first PIC meeting he was subpoenaed to give evidence at the Pretoria magistrate’s court in relation to the MST probe.

"This subpoena required me to appear before the prosecutor to testify about what I knew about allegations of corruption at the [PIC]," Gungubele states in court documents.

He was further required to hand over minutes of PIC board meetings held on September 15 and 29 and October 6 last year and on March 26 2018, as well as voice recordings of those meetings. These meetings largely dealt with the allegations of impropriety against Matjila and the PIC’s response to them.

After attempting to get answers about the Matjila saga from the PIC board, which he has described as "divided", Gungubele chose not to oppose the UDM’s court action, which rests on the view that the board’s investigation into Matjila was a sham.

Gungubele has questioned whether it was proper for the board to allow Matjila to "question the credibility of the whistleblower" (Nogu).

What it means

The PIC’s board has shown itself to be unsure and easily persuaded

Why, he asks, did the board persist in forcing the internal audit head, who reported to Matjila, to investigate him despite his expressed discomfort at this prospect?

Why was the scope of the "verification process" limited to exclude certain allegations, including the claim that Louw was Matjila’s lover?

Gungubele takes issue with exclusion, as well as what he describes as the board’s acceptance of Matjila’s responses to the allegations "as the gospel truth and not subjecting them to an independent investigation process". This conduct, he suggests, was why the board could legitimately be accused of covering up for Matjila.

And that’s the heart of the PIC’s problem. Whether there is truth to the claims against Matjila or not, the PIC’s board has shown itself to be unsure, easily persuaded and seemingly unwilling to respond to serious allegations with credible investigation.

This impression is only being intensified by the recent resignation and firing of two senior PIC officials who were designated to serve as directors at VBS Mutual Bank, until it was placed under curatorship by the Reserve Bank in March this year.

The PIC holds about 25% of VBS’s equity.

One of the men, former executive head for legal counsel, governance & compliance Ernest Nesane, testified before the forensic investigation into VBS earlier this month. Afterwards the PIC said it was made aware of "serious allegations of impropriety" against Nesane. He then resigned.

Nesane was involved in formulating the PIC board’s legal response to the Matjila allegations.

At best for the PIC, these revelations may compound an impression that it is incapable of exercising proper oversight over its investments and those mandated to safeguard them. And – as it is managing the futures of government employees – that should be bad enough to compel urgent intervention.