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CAPE TOWN — As if more evidence were needed that the Sekunjalo media empire is premised on a “cash gifts-for-political allegiance” ANC/PIC deal, veteran journalist Ed Herbst brings together a convincing amalgam of recent reports and high-level findings to question why nobody’s yet been held to account. Perhaps the Lex Mpati Commission of Inquiry into the PIC will do just that – if it doesn’t, then somebody’s been smoking their shoes – highly unlikely given the records of Herbst and those of the stellar fellow journalists he cites in this analysis. The list of questionable investments by the PIC points not only towards its blatant ANC-support, but to extremely poor management. Former PIC CEO Dan Matjila’s failure to mention the billion-rand “investment” (make that political, not financial), in Independent Media is extremely telling says Herbst. But this analysis goes further than making a potent call for consequence – it spells out the societally destructive and divisive role an ANC-biased/supported Independent Media is playing, not to mention the harm it’s done and continues to do to the Fourth Estate. This existential battle for truth is being played out on every terrain imaginable. – Chris Bateman
By Ed Herbst*
The annual report also revealed that the pension fund had written off a total of R1.06bn in loans and investments in Surve’s company Sekunjalo and in Independent News and Media SA due to their failure to honour their payment obligations. The PIC provided finance to Sekunjalo for it to purchase Independent News and Media SA in 2013 and also acquired a direct 25% equity stake in the media group. – Linda Ensor Business Day 3/12/2018
Over the years the PIC’s unlisted portfolio has become an important source of funding for black entrepreneurs, fuelling allegations that deal-making is influenced by political connections and considerations. There has also been wide speculation that deal-making has been used to channel funds to the ANC. – Carol Paton Business Day 16/1/2019
President Cyril Ramaphosa has been criticised for ‘ruling by commission’ but those critics will have been silenced by the astonishing testimony before the Zondo Commission of Angelo Agrizzi, formerly a senior executive at Bosasa.
This morning, another commission of inquiry will begin proceedings.
At the heart of the Lex Mpati Commission of Inquiry into potentially untoward practices at the Public Investment Corporation (PIC) is the role of its former CEO, Dr Dan Matjila.
As the public debate around him grew and grew more contentious, Matjila issued a media statement in October last year. It took the form of an open letter in which he defended himself, his record at the PIC and questioned the merit of the concerns raised about him by his critics such as UDM leader, Bantu Holomisa.
What I found highly significant about this letter was not so much what he mentioned, but what he left out.
He mentions the PIC investment in Steinhoff and VBS Mutual Bank but makes no mention of the billion rand investment in the Independent Media company – the largest group of English and Zulu newspapers in the country – which caused immense reputational harm, both locally and abroad, to the Fourth Estate in this country.
One has to question why Matjila failed to mention this continuing and sordid scandal in his open letter defending himself because the R1bn PIC investment in Sekunjalo Independent Media was inexplicable and hugely contentious from the start and debate about the unethical stewardship of these newspapers has continued without respite for the past four years.
In his open letter Matjila eloquently and aptly defined his role – or what his role should have been – in the PIC:
The only masters I serve are the 1,273,125 active members of the GEPF and the 450,322 pensioners and beneficiaries who, after a lifetime of toil, deserve a secure, prosperous and dignified retirement for the rest of their lives.
The advent of the smart phone signalled the death knell of the printed newspaper and Google and Facebook further leeched the lifeblood out of newspapers, printed and digital, by taking the bulk of their advertising revenue.
There was, accordingly, utter bewilderment when it became known that the PIC was investing supposedly sacrosanct civil servant pension funds in an already financially-troubled newspaper company – but the investment made perfect sense in political terms as Anton Harber has pointed out.
Whereas the National Party tapped into a Defence Force slush fund to bankroll the founding of one English-language newspaper, The Citizen, based in Johannesburg, the ANC has benefited from the effective acquisition of more than a dozen in English and Zulu which are distributed in all the major cities and in small towns like Kimberley.
With an election looming, that investment is paying a substantial political dividend for the ANC, most specifically in Cape Town where the two newspapers produced at Newspaper House in the city’s CBD, the Cape Times and the Cape Argus, are manically focused on fake news attacks against the Democratic Alliance in general and Helen Zille in particular.
Newspaper House has, as a consequence, lost most of its senior staff and the standards of writing and sub-editing have dropped immeasurably.
In April an article appeared in the Business Report section of the Indy newspapers which is edited by Adri Senekal de Wet. It was headlined Independent’s PIC debt in check.
Given the lie
That headline was given the lie when Reserve Bank governor, Tito Mboweni told parliament on 7 September last year that Sekunjalo Independent Media was either unable or unwilling to repay its PIC debt by the contractual date.
The PIC would have us believe that, for the past year, it has been trying to extricate itself from an investment which has not yielded the required dividends, has been mired in scandal after scandal and has resulted in a significant setback for media freedom in Africa.
One can understand this concern because Sekunjalo has been losing money from the outset.
In April last year Dewald van Rensburg wrote in a Fin 24 article:
By December 2016, the company had accumulated losses of R617m. Despite being insolvent, the company’s financial statements treat it as a “going concern” only because Sekunjalo, which is Survé, “will provide financial support as and when required”. Sekunjalo was essentially covering the growing losses as they arose.
This perception was buttressed by Magda Wierzyca a few months later in a Business Day article:
The problem is that Independent Media needs cash. Its debt repayments were running at R151m for the six months to June 30 2017. Annualised, that is R300m per year. Debt worth R481m needs repaying in August 2018.
Given the failure of Sekunjalo Independent Media to honour its PIC loan repayment, a Business Day reader, Derek Pryce, asked what I felt was a perfectly reasonable question in the newspaper on 6 December last year. It was headlined ‘Why is state pension fund not suing?’:
I would have expected the PIC to apply for the liquidation of Independent since the total loan of over R1bn is at serious risk of being irrecoverable.
I see that the Government Employees Pension Fund (GEPF) has impaired more than R1bn owed by Iqbal Survé’s companies, in respect of equity and loan funding advanced to allow him to acquire Independent News and Media SA in 2013.
What I want to know is why the Public Investment Corporation (PIC), which invests on behalf of the GEPF, does not appear to have taken legal action to at least claim the portion that was due in August, but which apparently remains unpaid.
The PIC is, I presume, much closer than the general public to the financial aspects of the debtor, especially considering the material amount loaned in the first place. I also presume that there is some sort of security in place for the debt, and I would be interested to know what form this takes.
The debtor is still trading and producing the newspapers that existed at the time of change of ownership, and I would have expected the PIC to apply for the liquidation of Independent if the lender considers that the total loan of more than R1bn is at serious risk of being irrecoverable.
A response from the PIC to the above questions would be appreciated.
A few weeks after that, City Press published an article about the equally insolvent state broadcaster which contained the following sentence:
The financially decimated public broadcaster, SABC, has 20 business days to respond to a notice from the Companies and Intellectual Property Commission (CIPC), asking it to explain why it believes it is not trading recklessly under insolvent circumstances.
Why, I asked myself, has the CIPC put the insolvent SABC on terms and not the insolvent Sekunjalo Independent Media?
Matjila resigned in November last year as the prospects of him continuing his tenure as CEO started to diminish.
In terms of Chapter 16 of the Constitution, the 1.7m members of the Government Employees Pension Fund are fully entitled to know how and why the monthly stop order pension deductions from their salaries are being invested.
Matjila evaded this responsibility for years by citing ‘commercial confidentiality’, a defence which was stripped away from him in parliament in October 2016 through the interventions of David Maynier, DA shadow minister of finance who was supported in this regard by then deputy minister of finance, Mcebisi Jonas.
By the time he resigned, Matjila had lost the confidence of his staff and was facing uncomfortable questions about a R7.5m severance package paid to chief IT executive Vuyokazi Menye, even though the PIC acknowledged that she had done nothing wrong.
If Sekunjalo is technically insolvent and unable to repay a loan of less than a billion rand, what are the chances of the GEPF getting an adequate return on the R4.3bn invested in Ayo Technologies, another contentious PIC investment?
In his open letter, Matjila states:
PIC has established stringent investment management and approval processes, which involve several investment professionals and committees.
Leaked documents provided to City Press by PIC whistle-blowers indicate, however, that normal due diligence processes were ignored when it came to the R4.3bn investment in Ayo Technologies and that, while this investment proved valuable to Sekunjalo, it seems unlikely to provide satisfactory dividends to civil servants when they retire.
This, according to Dirk de Vos, is a crucial PIC question which needs to be answered.
My sense is that Matjila faced unbearable pressure to provide the funding which would effectively hand control of the largest group of English and Zulu newspapers in the country to the ANC – which is willing to go to extreme lengths to control and direct the media narrative in this country.
Had he not done so, his tenure as CEO of the PIC would have been abruptly terminated – ask the Weekend Special, he’ll tell you.
That Dan Matjila was vulnerable to political pressure has been made a matter of record by advocate Geoff Budlender, but while it may be possible to quantify the monetary losses which were a consequence of his decisions, the losses suffered by the victims of the fake news and ethnic animosity driven by the Sekunjalo Independent Media newspapers, will endure for the rest of their lives.
People like Chad de Matos who, innocent of any crime, ended up in one of the world’s most dangerous prisons, Pollsmoor, because he was a white UCT student and as a result of a venomous and lying campaign by the Cape Times.
Or Clive Muller, a policeman with an impeccable 22-year career record who was falsely accused of being drunk and disorderly on duty – an accusation utterly devoid of truth, something which is a matter of court record.
The most onerous burden will be borne by the bereaved family of UCT cardiologist Dr Bongani Myosi who was hounded to his death by the Fallists who were encouraged by the Cape Times throughout their immensely destructive and fascist campaign of criminality and attempted murder and assault and arson and damage to property and desecration of war memorials and torching of paintings and theft and relentless intimidation.
The 1.7m civil servants and civil service pensioners who are or will be dependent on the Government Employee Pension Fund will watch the deliberations of the Lex Mpati Commission of Inquiry with anxious interest.
So too will journalists, academics, politicians, students and business leaders like Alide Dasnois and Helen Zille and Max du Preez and Terry Bell and Peter Flack and Ricky Stoch and Sam Sole and Dewald van Rensburg and Ann Crotty and Tim Cohen and Ivo Vegter and Bantu Holomisa and Marianne Thamm and Anton Harber and James Myburgh and Rhoda Kadalie and Donwald Pressly and Craig McKune and Micah Reddy and David Benatar and Chris Whitfield and David Maynier and Michael Mpofu and Dr Julie Reid and Cosatu and noseweek and R2K and ODAC and Zapiro who have comprehensively and continuously exposed the unprecedented but routine fictions of Sekunjalo Independent Media.
There is no evidence that Dr Dan Matjila personally benefitted from the minority of his investment decisions which would seem to have benefitted the ANC or its supporters. At best he could be accused of succumbing to political pressure. He is hardly unique in that regard – ask the Industrial Development Corporation about alleged Gupta associate, Ben (‘Baby Mama’) Martins, they’ll tell you.
If you are not independently wealthy and have a family to support, it is easy to succumb to that line of reasoning.
A few days ago Jeff Radebe – a man who requested that a woman young enough to be his daughter send him photos of her genitals – became acting president of our country. In the ‘Me too’ era that tells you everything you need to know about the pervasive amorality of the governing party.
Dr Dan Matjila is highly qualified as an investment analyst and he might find that a move to the private sector will substantially improve his quality of life.
The personal harm that was caused as an apparent consequence of the political pressure he experienced will, however, never be forgotten by the innocent victims of some of his decisions.
- Ed Herbst is a veteran journalist who these days writes in his own capacity.