Deputy Finance Minister Sfiso Buthelezi during a media conference on April 04, 2017 in Pretoria, South Africa. Gigaba revealed that Standard and Poor took him into its confidence before announcing South Africa’s ratings downgrade to junk status on Monday night. (Photo by Gallo Images / Beeld / Felix Dlangamandla)
South Africa’s finance minister, deputy and board of the Public Investment Corporation (PIC) all expressed their confidence in PIC CEO Dr Dan Matjila at a lengthy press conference on Tuesday afternoon.
They also took the opportunity to pour cold water on explosive claims made by the Sunday Times and Bloomberg News that National Treasury had approached the PIC for a cheque of as much as R100 billion to recapitalise a slew of financially defunct state-owned companies. Owing to his resistance, Matjila himself stated that he had become a target of looting.
“I called the meeting [with the board of the PIC today] following reports that had surfaced in the media. There are a number of issues that need to be clarified and we wanted to allay the fears and damage these articles have caused,” said Finance Minister Malusi Gigaba in his opening remarks.
While Gigaba did admit National Treasury had been evaluating a number of proposals to recapitalise South African Airways, which had resulted in numerous consultations with the PIC, the focus of discussions had been around the PIC acquiring government’s stake in Telkom, in effect swapping out ownership so that the asset remained “in the hands of the people”. But he stringently denied Treasury had ever discussed requiring R100 billion.
This was supported by Dr Matjila: “We have not been approached about funding R100 billion. The article that appeared in the Sunday Times is distasteful and inaccurate and designed to drive a wedge between myself and the minister, and myself and the board. We are evaluating our legal options [in response to the publication of this]. I enjoy good support from the board of the PIC and the minister.”
Matjila said the PIC would issue a comprehensive statement on the matter on Wednesday.
But it remains to be seen just what occurred at two lengthy meetings of the PIC board. The first, in which it was rumoured Matjila was fighting for his job, occurred on September 15. Tuesday’s meeting went on for over three hours. Deputy Minister of Finance Sifiso Buthelezi, who is also the chairperson of the board of the PIC, said that allegations were made against Matjila and the board of the PIC was duty-bound to investigate them.
When Moneyweb pressed him on the issue as to where the allegations came from (a board member, an employee, or someone else?), what they involved, and whether legal action would be pursued against the individual(s) responsible for the allegations were they to be found baseless, he did not directly answer the questions.
So what do we know?
Allegations were made by an unknown individual against Dr Matjila. The board of the PIC met on September 15 to evaluate the allegations and listen to Matjila’s representations. It seems the board was satisfied with Matjila’s oral representations but instructed the internal audit team to verify what he said and report back at a meeting to be held this Friday.
But ahead of this report, Gigaba, Buthelezi and the board itself have expressed confidence in Matjila. So, events appear to have occurred the wrong way around. Perhaps Buthelezi is so confident Matjila will be cleared of any wrongdoing he is prepared to endorse him ahead of the findings (which he promised to make public). But what will happen if the findings in the report do not correspond with the CEO’s explanation? At the very least, Matjila continuing in his role appears to be conditional on the findings of a third party, meaning he is not out of the woods by a long shot.