President Cyril Ramaphosa on Wednesday published the terms of reference for a judicial commission of inquiry into the Public Investment Corporation (PIC) that goes beyond the corruption allegations that have dogged the money manager and its CEO Dr Dan Matjila for more than a year.
The inquiry will examine broader governance, corruption and mismanagement issues going as far back as 2015. The PIC manages investments worth R2 trillion on behalf of the Government Employees Pension Fund and other government funds. It’s also the first decisive action taken by Ramaphosa and former finance minister Nhlanhla Nene, who announced the inquiry aimed at fixing governance issues at the continent’s largest asset manager in July 2018.
The terms of reference determine the scope of the inquiry and focus predominantly on whether the investment decisions made by the PIC flouted any policy or law, or benefited a select few.
Arguably, this will be a key focus given the PIC’s questionable investments, such as its more than 25% shareholding in VBS Mutual Bank, which is on the brink of collapse, and paying R4.3 billion to secure a 29% stake in Iqbal Surve’s Ayo Technologies in December 2017 – which market watchers said was exceptionally overvalued.
The PIC’s trail of dubious transactions is long: it backtracked on its enthusiastic plans to invest in Surve’s tech start-up Sagarmatha, which appears largely to be made up of loss-making businesses, and its investment in Mozambique-based S&S Oil Refinery, in which Nene’s son was involved, according to a Mail & Guardian and amaBhungane exposé.
The inquiry will be headed by former Supreme Court of Appeal judge Lex Mpati, who will be assisted by former Reserve Bank governor Gill Marcus and highly skilled asset manager Emmanuel Lediga. It is set to produce a final report with recommendations by April 2019.
It would appear, from a reading of the terms of reference, that the injury might prominently feature the PIC’s management and board, which has been divided on how to deal with corruption allegations surrounding Matjila.
The inquiry will examine whether there was any impropriety regarding investment decisions by the PIC that contravened any legislation and policy which resulted in “any undue benefit for any PIC director, or employee or any associate or family member of any PIC director.”
Other terms of reference leave the door open for the inquiry to probe the role of directors at the PIC.
“The Commission must enquire into, make findings, report on and make recommendations on whether any PIC director or employee used his or her position or privileges, or confidential information for personal gain or to improperly benefit another person,” the terms of reference document reads.
Given the sheer size of its investments and its apparent appetite for BEE investments, the PIC has found itself at the centre of allegations of funding a coterie of politically connected individuals.
United Democratic Movement president Bantu Holomisa has been vocal about businessmen who peddled their influence and use their proximity to Matjila to secure millions in funding from the PIC. In his letter to Ramaphosa, Holomisa accused Matjila of personally releasing funding worth R2 billion without approval from the PIC’s board, over an unspecified period, to businessmen with strong ties to the PIC itself and government.
Matjila and the PIC have vehemently denied allegations of wrongdoing.
Considering the various political influence allegations levelled against Matjila, the inquiry will also probe whether the PIC has adequate measures in place to ensure that investments do not unduly “favour or discriminate against” prominent influential persons, their immediate family members or known associates.
Beyond the role of the board and management, internal issues such as the treatment and protection of whistle-blowers, and whether confidential information of the PIC was disclosed to third parties will be aired.
This aspect of the inquiry arguably relates to a number of PIC staff members who were fired or resigned in 2017 after being personally investigated by Matjila for leaking information about his alleged misconduct to the media.
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