Former Public Investment Corporation (PIC) chief executive Dan Matjila lied to the judicial commission about his role in the dismal R4.3 billion investment into Ayo, a technology company owned by businessman Dr Iqbal Survé.
In fact the commission, which was probing impropriety at the PIC, contends that Matjila “ran a parallel investment process for Ayo, which was probably kept secret from his colleagues”.
Much of the evidence given before the commission has focused on how Matjila used his power to expedite the conclusion of the investment, going as far as signing the irrevocable subscription agreement prior to the deal being formally approved by the requisite portfolio management committee (PMC).
The timeline as it is known is that Survé approached Matjila about a potential investment in October 2017. The PIC only formally started working on the transaction in November 2017, with a fixed, overinflated and non-negotiable share price of R43 and the intention of listing on the JSE by December 15.
After barely going through the rigour of the PIC’s due diligence processes, on December 14 Matjila signed the subscription form for a 29% stake in Ayo – all the shares that were on offer. At the time of signing, the PIC only had Ayo’s draft pre-listing statement (PLS), which would not have the limited assurance work of auditors.
The share price is now R2.39.
The final PLS only came in later that day, but Matjila told the commission that he had made his decision to unilaterally seal the deal based on the final document.
A PMC meeting to approve or ratify the deal was only held on December 20, but no one in the meeting who was aware the deal was already concluded, including Matjila, mentioned this information to the rest of the management team.
It has now come to light that as early as December 4, Matjila had sent the directors of Ayo’s parent company, African Equity Empowerment Investment (AEEI), a signed letter stating that the PIC was making an “irrevocable commitment and undertaking” to buy all of Ayo’s shares on offer for R4.3 billion.
“By signing the above letter to the Board of Directors of AEEI on 4 December 2017, prior to a PMC meeting to approve the transaction, Dr Matjila acted improperly and in breach of the PIC’s processes for transactions under listed investments,” states the commission.
“In approving this transaction, Dr Matjila also acted beyond the scope of his Delegation of Authority which does not provide for CEO discretion for a R4.3 billion ‘investment’.”
The letter in question was not given to the commission, nor was there any mention of its existence by Matjila.
“This is evidence of his broader unreliability as a witness, whose failure to mention crucial points fundamentally changes the narrative,” the commission charged.
“Throughout his testimony, Dr Matjila stated that he relied on the PIC deal team to do the work and is guided by their expertise and recommendations, yet he decided to make a significant investment prior to team input, for instance on valuation or results of due diligence, or the completion of PIC processes and not disclosing this letter to the deal team.”
The commission found that “the evidence and testimony submitted by Dr Matjila regarding the Ayo investment is untrue”.
The PIC commission – headed by Judge Lex Mpati, who was assisted by former SA Reserve Bank Governor Gill Marcus and asset manager Emmanuel Lediga – investigated issues at the R2-trillion organisation for close to 12 months in 2019. Between January and August, 77 witnesses gave oral testimony before the commission over the 63 days of hearings.
The final report had been sitting with President Cyril Ramaphosa since December until its release on Thursday afternoon.
In between all this, the PIC made two dismissals related to the Ayo transaction.
The first was in October, when assistant portfolio manager Victor Seanie was dismissed following an independent disciplinary hearing.
At the time, Seanie said that as the most junior person on the team, he was being scapegoated and was aggrieved by the PIC firing him prior to the commission’s report being made public. He often made reference to being pressured by Matjila to ensure that the deal was concluded quickly at the requested share price.
He attributed this to the “personal relationship” that Matjila had with Survé. The commission validated this, saying their “close relationship” created “top-down pressures that the deal teams experienced to get the requisite approvals”.
Under pressure to meet the listing deadline of December 15, Seanie had ordered that due diligence reports be conducted prior to the first PMC meeting during which the committee would have to authorise it. The commission found that he “acted improperly and thereby contravened the PIC’s policy on standard operating procedure”.
He and Matjila were also found to have been dishonest when they failed to inform PMC2, which approves transactions, that the subscription agreement had been signed. Seanie had received the signed document on December 14.
“With regard to Dr Matjila, the PIC must consider reporting the contravention of the provisions of the Fais [Financial Advisory and Intermediary Services] Act to the relevant authorities,” said the commission.
Head of listed investments Fidelis Madavo was dismissed in March, also following the conclusion of an independent disciplinary hearing.
Several parts of the report criticise Matjila’s integrity as a leader.
“There is scope to question his integrity when he stood by as two colleagues in his reporting line [Madavo and Seanie] were found to have flouted governance and approval processes with respect to the [Ayo] transaction, while he knew of the 4 December 2017 letter,” it notes.
The commission also demonstrates that Matjila was an evasive witness who did not take accountability for the decisions taken and their outcomes – despite occupying a role that combined the functions of a CEO and chief investment officer – arguably the most powerful position in the PIC.
Perhaps more damning, the commission states Matjila had “a tendency to ride roughshod over the established approval and decision-making processes, using a combination of process, influence, fear and dictatorial fiat”.
The commission has recommended that the PIC consider whether Matjila was liable for any losses the PIC sustained due to his conduct, “including with regard to any fruitless and wasteful expenditure which, if found to be the case, would make Dr Matjila liable for the loss to the PIC”.
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