Dan Matjila. Picture: Warren Thompson
Dan Matjila. Picture: Warren Thompson

In his second week of testimony before the inquiry into the Public Investment Corp (PIC), former CEO Dan Matjila has offered his account of some of the questionable goings-on at the state-owned asset manager — events that prompted President Cyril Ramaphosa to establish the judicial commission of inquiry.

But good luck to anyone trying to get a firm grasp on the veracity of Matjila’s testimony, In some instances, the accounts provided by Matjila and other witnesses are widely disparate. In others, he’s been light on detail, despite being expected to know much more — given his responsibilities as CEO — about the particular subjects he has opted to share.

So while Matjila has completed testimony in relation to three controversial deals — investments in Total SA, SA Home Loans (SAHL) and VBS Mutual Bank — the specifics surrounding potential wrongdoing are still unclear.

Consortium controversy

The PIC’s funding of a stake in Tosaco Energy, Total SA’s BEE partner, in 2015 raised eyebrows after Matjila was accused of forcing two consortiums to combine. This was according to Lawrence Mulaudzi, a principal of the Kilimanjaro Capital consortium, who appeared before the commission in March.

In his testimony, Mulaudzi said the PIC had initially provided exclusive support for Kilimanjaro’s bid for the stake in Tosaco. But following a meeting with Matjila, he was told in no uncertain terms to combine with another consortium competing for the deal: Sakhumnotho, led by Sipho Mseleku, who had previously enjoyed support from the PIC.

Matjila allegedly informed Mulaudzi that if he failed to do so, the PIC would withdraw funding for Kilimanjaro in the transaction — which would mean it would probably lose the deal.

Despite being "devastated" by this news, Mulaudzi ultimately agreed to combine with Mseleku, splitting the R1.7bn deal equally.

But the accounts of Mulaudzi, Matjila and Mseleku vary over how the deal played out.

Matjila said he met Mseleku at the PIC’s offices to inform him that the PIC would not be providing a binding letter of support for Sakhumnotho’s bid.

"The most important thing was that I was transparent to both of them. They both wanted a binding letter of expression," Matjila said in recounting the back-to-back meetings with the two businessmen in July 2015.

According to Matjila, Mseleku then followed him down the corridor to the room where he was meeting Mulaudzi to inform him of the same. "Mseleku followed me. I didn’t tell him to come. I didn’t invite him," Matjila said.

In Mseleku’s telling, he followed Matjila down the corridor to see who the other consortium was. After introducing Mseleku to Mulaudzi, Matjila then left the room. According to Mseleku, the two parties agreed in that meeting to share the deal, despite never having met previously.

In a contradiction of Mulaudzi’s testimony, Matjila maintained that he had not imposed Sakhumnotho on Mulaudzi. Instead, he said, he was "uncomfortable" that a company with no prior dealings with the PIC was trying to get funding for a R1.7bn transaction. But while he admitted that having a broader consortium in the transaction was generally more favourable for the PIC, he rejected any notion that he had expressed this to Mulaudzi.

The R45m facilitation fee

Also in the spotlight in Matjila’s second week of testimony was the contentious letter he signed to placate Kholofelo Maponya. This was after Maponya’s "aggressive" attempts to recover a fee he believed he was owed after becoming a 25% shareholder in SAHL.

Maponya’s Bolatja Hlogo consortium, a subsidiary of Matome Maponya Investments (MMI), acquired its stake in the mortgage finance company with PIC funds after SAHL introduced new shareholders, following the departure of JPMorgan in 2014.

Standard Bank retained its 50% stake in the business.

Soon after Maponya became a shareholder, the PIC arranged a R9bn credit facility to SAHL — for home loan origination for government employees — using money provided by the Government Employees Pension Fund (GEPF). Maponya believed he was entitled to a 0.5% fee for the R9bn facility, amounting to R45m.

Maponya has not testified at the commission, and it is unclear if he will do so. But SAHL executives testified that there was no documentation to suggest he was entitled to the fee.

Matjila, for his part, said he was under the impression that Maponya’s fee would be paid by SAHL.

"I was later told by [Wellington] Masekesa [the PIC nominee director on the SAHL board and Matjila’s chief of staff] that SAHL had, in principle, agreed to settle MMI’s claim of R45m directly," he stated.

But after SAHL dismissed this, Maponya became "a serious thorn in the flesh" of the PIC and Matjila. To appease him, the PIC’s legal team drafted a letter that ceded the fee owed to the GEPF in favour of Maponya. It was signed by Matjila in April 2016.

In response to questions, Matjila said he didn’t altogether agree with the contents of the letter.

But, he said, he had deferred to the advice of his legal team and that of executive head for impact investing, Roy Rajdhar, who advised him the letter was lawful. He did, however, admit that he had not consulted the GEPF to seek its approval on the matter.

"In essence, the intention was to cede [the fee], with an understanding that we would be repaid," said Matjila.

The matter led to a confrontation between Matjila and Standard Bank SA CEO Sim Tshabalala, according to the bank’s legal counsel, Ian Sinton.

Tshabalala, acting in his capacity as the shareholder representative of Standard Bank — SAHL’s 50% shareholder — threatened to report Matjila to regulators over the letter, which the bank thought was unlawful and irregular.

Matjila chose to play this down in his testimony, saying Sinton and Tshabalala "explained to me that it would be wrong for SAHL to pay MMI any fee, as there was no contract in place between SAHL and MMI for the payment of any fee".

The VBS affair

One of the more curious aspects of the PIC’s relatively small investment in VBS Mutual Bank is that the asset manager nominated two directors to the board of the bank.

Despite only investing R108m for its 26% stake in VBS, and complementing this with a R350m credit facility, the PIC appointed two senior executives to the VBS board in 2012. Those executives would go on to become executive head of legal at the PIC (Ernest Nesane) and executive head of risk (Paul Magula).

Both left the organisation under a cloud last year in the fallout of the VBS scandal.

"At the time, we saw them as the most suitable, and they were there to protect the interests of the PIC," Matjila said in his testimony. "We felt we should deploy our best [executives] to drive the strategy to grow [the investment] into something significant."

Matjila said he had been "extremely disappointed" to hear Magula and Nesane had received unlawful payments totalling R30m from VBS.

But, as Matjila began his testimony, excerpts of another forensic report into the PIC emerged. Commissioned by the state-owned asset manager’s board in December, the report alleges Matjila received a R2.45m loan from VBS. This is based on a spreadsheet sent to the PIC by officials at VBS.

Matjila strenuously denied he had ever received a loan from VBS; and forensic investigators looking into the failure of the bank have not confirmed such a loan was ever made.

With an account at times so at variance with those of other witnesses, Matjila’s testimony has done little to further any real sense of understanding what may have gone wrong at the PIC.

Much of the evidence — in the form of annexures attached to prepared statements — has not been made available to the media, and questioning from the commission’s evidence leaders has given little away in terms of the ongoing forensic investigation.

So, for now, there is no smoking gun. And while Matjila has yet to testify on the Ayo transaction, it will probably be the final report submitted to the president that will provide a verdict as to what exactly happened at the PIC. And who, if anyone, is to blame.