Tantaswa Fubu. Picture: FREDDY MAVUNDA
Tantaswa Fubu. Picture: FREDDY MAVUNDA

The abrupt departure of Tantaswa Fubu from the board of the Public Investment Corp (PIC) compounds the asset manager’s governance problems, and lays bare boardroom squabbles over how to deal with the allegations of impropriety against CEO Daniel Matjila and CFO Matshepo More.

Fubu, chair of the audit & risk committee, resigned with immediate effect on Monday, leaving behind eight independent nonexecutive directors and the chair, deputy finance minister Mondli Gungubele, to decide the fate of the corporation.

Nonexecutive director Claudia Manning quit the board a week earlier. A source close to the PIC says the two resigned over differences with the deputy minister. "Gungubele has not made the transition. He thinks he is a politician chairing a company, instead of a director with a fiduciary duty to the institution," says the source.

In her resignation letter to finance minister Nhlanhla Nene, seen by the FM, Fubu seems to confirm this view. "The meetings are ineffectively run, in my view ... there is a serious trust deficit among the board and this plays itself out in the e-mails the members write ... to each other."

Fubu also says Gungubele is partisan in his handling of a court case in which UDM leader Bantu Holomisa seeks Matjila’s suspension.

He thinks he is a politician chairing a company, instead of a director with a fiduciary duty to the institution
Source close to the PIC

Her reasons for quitting include that the PIC "has been led by a divided board for some time now. That on its own is not a concern as long as members differ on matters of principle while exercising their duties with integrity and duty of care towards the institution." She is also concerned at the way in which the board is handling Nene’s instruction to restore "good order and reputation at the PIC".

The board is split over how to handle Nene’s directive that it institute an investigation into the affairs of the PIC, which manages almost R2 trillion in public servants’ pension assets. In September last year Matjila was accused of dishing out R21m in PIC funds to a company linked to an alleged lover, Pretty Louw. Matjila denies a romantic link.

The FM has also seen e-mail correspondence in which board members clash over the process of appointing a lead forensic investigator. Dudu Hlatshwayo and Xolani Mkhwanazi were tasked by the board to seek legal advice from advocate Wim Trengove on whether to suspend Matjila and More.

On obtaining Trengove’s phone number, Mkhwanazi stepped out the room in which other executives were meeting to call to him, according to Hlatshwayo. She then distanced herself from any opinion obtained in this way. Mhkwanazi — who is thought to be among those pushing for Matjila’s suspension, while Hlatshwayo is understood to be against it — denies any improper intention in calling from outside the meeting room. He says his two-minute call was to see when Trengove would be available to be briefed.

What it means

The leadership of the PIC is deeply divided over how to handle its governance problems

The PIC has also been under the spotlight for its handling of investment decisions involving VBS Mutual Bank, which was placed into curatorship earlier this year. Two PIC representatives on the 25%-owned VBS board are alleged to have benefited from the looting of the bank by its executives. Two years ago the PIC loaned VBS more than R350m.

Ernest Nesane, executive legal head of the PIC, resigned last month after forensic investigator Terry Motau notified the PIC of "serious allegations of impropriety" against him. In April, the PIC fired Paul Magula, executive head of risk management, for poor performance.

Fubu says the board ignored her request to pursue Nesane and Magula with delinquency charges over the VBS allegations. According to the Companies & Intellectual Property Commission (CIPC), entities linked to Nesane have benefited from R16m in loans and fictitious deposits from VBS. The CIPC data shows Magula received a R4.8m mortgage loan from VBS.

The PIC has also invested billions of rands in companies owned by Iqbal Survé, chair of the Sekunjalo Independent Media group and Ayo Technologies. Experts and some insiders have called these irrational transactions. A few years ago the PIC invested R4bn in politically connected Erin Energy, whose controlling shareholder Kase Lawal is alleged to have donated millions to former president Jacob Zuma’s "education trust". Erin’s shares have since May been delisted from both the JSE and the New York Stock Exchange.

The FM understands that Gungubele and two nonexecutive directors have been pushing for the suspension of Matjila and More ahead of the probe, but this could trigger regulatory issues that could prevent it trading as an asset manager.