ALLAN GREENBLO: PIC’s conduct in SA Home Loans deal needs scrutiny
Former CEO Dan Matjila's name crops up in case that raises questions of how the PIC selects BEE partners
It seems there has been an attempt by the Public Investment Corp (PIC) to play fast and loose with monies of the Government Employees Pension Fund (GEPF), its major client, and very few have noticed.
The particular matter, which concerns unlisted company SA Home Loans (SAHL), begs inquiry by the PIC commission led by retired judge Lex Mpati. The experience at SAHL invites examination into whether there were similarly curious elements in transactions that might have been avoided had the PIC been required to seek approval from the GEPF trustees.
It also raises broader questions of how the PIC selects BEE partners to co-invest with the GEPF; and, in this instance, the real motive for a PIC instruction to an investee company that it pay R45m to a third party that had added zero value to a BEE transaction.
That the claim for payment of R45m was eventually negated is to the credit of Standard Bank, not to the PIC. The intended beneficiary of the R45m was one Kholofelo Maponya.
For background, the Durban-based SAHL was founded 20 years ago. A specialist provider of mortgages, it’s considered a highly competent competitor in the SA home loans market, with national reach and a strong management team.
Until 2015, SAHL was jointly owned by banks JPMorgan Chase and Standard. JPMorgan Chase then agreed to sell its 50% stake to the PIC, representing the GEPF, for R300m.
Prior to closure of the sale, the PIC introduced a consortium assembled and controlled by Maponya for half of the PIC’s stake to be acquired; in other words, for 25% of SAHL. The PIC lent the Maponya consortium the money for its share of the purchase price.
At the insistence of Standard, which continues to own 50% of SAHL, the GEPF was bound to guarantee the discharge of all obligations assumed by the indebted Maponya consortium as a SAHL shareholder. Maponya, it’s understood, had told the bank that he and his consortium were selected as the BEE partner because of his personal relationship with then PIC CEO Dan Matjila.
On the transaction being concluded, the PIC nominated two directors to the SAHL board. Maponya nominated himself to represent his consortium.
The PIC’s stated investment purpose was to use SAHL as a vehicle for the channelling of home loans to GEPF members. Consequently, in 2016, the PIC agreed that the GEPF would make available to SAHL up to R9bn for onward lending that provided GEPF members with mortgages.
But before the ink had dried on this contract, Maponya demanded a R45m payment from SAHL, ostensibly because it was his relationship with the PIC that had brought about the loan agreement.
SAHL rejected Maponya’s demand on the grounds that he had no mandate to represent SAHL. Moreover, he had not been promised any such reward. Neither had he played any role in the initiation, negotiation and conclusion of the loan agreement.
To the surprise of SAHL, Maponya then delivered a letter from the PIC signed by Matjila. The letter informed SAHL that the GEPF had ceded to a private Maponya-owned company a claim that the GEPF had to receive R45m from SAHL under the loan agreement. Therefore, said the PIC letter, SAHL should pay the R45m to Maponya’s company and not to the GEPF.
The letter was referred by SAHL to Standard in its capacity as a 50% SAHL shareholder. The response of senior bank executives was to inform Matjila that, in all the circumstances, Standard regarded the transfer of a pension fund’s assets by cession to a third party – which had provided no value – as possibly irregular if not suspicious.
Accordingly, the bank would oppose any payment in terms of the cession unless and until the PIC had demonstrated that the cession had been approved by the GEPF board.
Shortly thereafter, SAHL received a response from the PIC. In this letter, also signed by Matjila, it was stated that the GEPF owed nothing to Maponya’s company. It further stated that the deed of cession should not have been signed (by Matjila). The deed of cession had thus been unilaterally cancelled and in future SAHL should ignore it.
In turn, Maponya informed SAHL that he challenged the lawfulness of the unilateral cancellation. However, he would not push SAHL for payment.
It’s believed that the PIC-nominated directors on the SAHL board were fully engaged in this sequence of events but have offered no explanations beyond the contents of the letters.
- Allan Greenblo is editorial director of Today’s Trustee (www.totrust.co.za), a quarterly magazine mainly for principal officers and trustees of retirement funds.