EDITORIAL: How politicians turned the PIC toxic
It seems that each new incoming head of state has felt the need to appoint his own leadership at the PIC
The departure of Public Investment Corp CEO Daniel Matjila in murky circumstances is cause for concern. More so because Matjila, who resigned last week, is not the first to leave under unexplained circumstances. Nor is he the first to leave his post before his contracted term of office expired.
It was the same story with Matjila’s immediate predecessor, Elias Masilela, who resigned and left with immediate effect in June 2014. Masilela had been in the position just over three years, cutting short his five-year contract. As with Matjila, no reasons were given for his abrupt departure. And yet both of those executives should have given six months’ notice.
In fact, look back further and you’ll see that not a single CEO of the PIC in SA’s democratic era has served out the contracted term. Disturbingly, it seems that each new incoming head of state has felt the need to appoint his own leadership at the PIC. Brian Molefe, for example, served under Thabo Mbeki and Trevor Manuel; Masilela and Matjila served under Jacob Zuma and Pravin Gordhan. President Cyril Ramaphosa will now get his own CEO at the PIC. Whether this is all mere coincidence is not clear.
The issue is important for many reasons, not least because the PIC is the single largest investor on the JSE and the continent. It also manages more than R2-trillion in public servants’ pensions. Any ructions in its leadership will be worrying for the market, the civil service and the country as a whole.
Matjila’s contract would have expired in November next year, and he initially offered to leave six months early. But Matjila had been at loggerheads with influential members of the PIC board for nearly two years, so it was no surprise that the board didn’t want to wait.
Tensions began simmering in May last year when former finance minister Malusi Gigaba appointed his deputy, Sfiso Buthelezi, chair of the PIC. Three months later Gigaba appointed Xolani Mkhwanazi and Mathukana Mokoka to the board, Mkhwanazi as deputy chair.
Within weeks Matjila was fighting to hold onto his job after being accused of leaning on a company that had borrowed money from the PIC to help a woman alleged to be his lover, Pretty Louw. She also allegedly benefited to the tune of R23m from Matjila’s intervention.
In September last year, the board apparently cleared Matjila of these charges. Yet soon afterwards, advocate Geoff Budlender convened a new inquiry. The Budlender inquiry ended several months ago, but the PIC has yet to release its findings. That is an alarming case of double standards for an entity that is meant to act as an example of good governance and transparency for the companies in which it invests.
Still, one part of the Budlender report leaked — a finding that while Matjila did not have a romantic relationship with Louw, he did intervene inappropriately to help her, and that she was introduced to Matjila by former intelligence minister David Mahlobo.
So, in some sense, we can trace the instability at the PIC to the enormous power that politicians wield over office-bearers who should be independent. As it stands, the finance minister has the sole power to appoint the board, as well as the CEO and the CFO.
It’s clear that politicians have far too much influence over the PIC, yet with no accountability. This influence has been abused in the past, and probably will be again. So now is the perfect time to fix this. Perhaps for a start, we could allow the beneficiaries and investors to appoint their own representatives to the board.