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Dirty laundry is being aired as the commission of inquiries set up by President Cyril Ramaphosa start to bear witness. But it’s the contradictory nature of certain of the testimonies that will have lawmakers interested. Next up at the PIC enquiry is former CEO Dan Matjila, who according to the Bloomberg articles below, says his dismissal was politically motivated. His testimony is expected to revolve around the R2.7bn Edcon bailout, which supports 140,000 jobs. His assertion is the deal didn’t meet the investment criteria of the PIC’s clients, while the PIC chairman, its economic development minister and Edcon CEO Grant Pattison didn’t agree. The PIC recently said the Edcon investment was made on behalf of the UIF fund. The previous six months have seen around 70 witnesses, several of whom flagged Matjila as playing a key role in approving questionable deals. There’s always three sides to every story, yours, mine and the truth, this should be another step towards that elusive target. – Stuart Lowman
PIC’s Matjila to say he was ousted to facilitate Edcon rescue
By Janice Kew and Antony Sguazzin
(Bloomberg) – Daniel Matjila, the ousted chief executive officer of Africa’s biggest fund manager, is expected to say his opposition to funding the rescue of a clothing retailer ahead of national elections was one of the reasons he was dismissed.
Matjila is scheduled to begin testimony to a special commission of inquiry on Monday that will include his assertion that the rescue of Edcon Holdings Ltd., which supports 140,000 jobs through direct employment and its supply chains, didn’t meet the investment criteria of the Public Investment Corp.’s clients, according to his prepared statement.
On the day he was ousted, Nov. 23, he met the chairman of the PIC, the country’s economic development minister and the CEO of Edcon to put forward the conditions for supporting the deal, he is expected to say at the inquiry. Those weren’t viewed favourably, he said.
The ongoing inquiry has heard from about 70 witnesses – several of whom flagged Matjila as playing a key role in approving questionable deals. He has denied that. President Cyril Ramaphosa ordered the investigation in October last year, one of a handful he’s instituted to probe alleged graft since taking office 16 months ago after Jacob Zuma’s scandal-marred nine-year rule.
In February, a senior official of the Congress of South African Trade Unions emailed the chairman of the PIC, who was also deputy finance minister at the time. He wrote that unless the PIC supported the rescue, the labour federation wouldn’t be able to encourage its members to vote for the ruling African National Congress party in May elections.
The rescue was announced a week later, with the PIC leading the R2.7bn ($191m) rescue. It used R1.2bn of money from the Unemployment Insurance Fund, one of its clients.
Matjila is expected to say he was removed, at least partly, to ensure the Edcon rescue could take place. He cited the email, from Cosatu’s Parliamentary Coordinator, Matthew Parks, as evidence.
Matjila asserts that he and the PIC’s then head of private equity, Mervin Muller, maintained they would only back the rescue if Long4Life Ltd.’s proposal to invest R500m in the deal went ahead. Long4Life is led by Brian Joffe, a veteran South African businessman. The company didn’t invest.
While the bailout would have rescued jobs it was unlikely to generate adequate returns, according to Matjila.
The PIC on Thursday denied that the decision to invest the funds was politically influenced. Mondli Gungubele, the former deputy finance minister and chairman of the PIC, hasn’t responded to phone calls and text messages about the Edcon deal. Parks said in an interview that the mandate of Cosatu was to protect jobs and he would do the same again.
Matjila to say his ouster from $150bn fund was political
By Janice Kew
(Bloomberg) – The former head of Africa’s largest pension-fund manager says he was removed from his job so that politically connected people could influence the fund’s investment decisions.
Daniel Matjila is expected to tell a special commission of inquiry on Monday that he was pressured to make deals that didn’t fit with South Africa’s Public Investment Corp.’s strategies, according to his prepared statement. Speaking for the first time since his ouster in November, Matjila himself will assert that he was removed deliberately.
The inquiry is into whether the fund, which oversees about $150 billion in assets, deviated from its mission to best safeguard pensions for more than 1.2 million South African state workers.President Cyril Ramaphosa ordered the investigation in October last year, one of a handful he’s instituted to probe alleged graft since taking office 16 months ago after Jacob Zuma’s scandal-marred nine-year rule.
The ongoing inquiry has heard from about 70 witnesses – several of whom flagged Matjila himself as playing a key role in approving questionable deals. He’s expected to deny that. There’s been no conclusive evidence that PIC officials directly benefited from the fund’s actions.
Attempts by senior politicians and various business people to secure PIC funding go as far back as 2005, when Matjila, 57, became chief investment officer, according to the statement. He was named chief executive officer in 2014. During his time as CEO, the PIC had three changes of chairman based on the tradition that the deputy minister of finance heads the board.
Matjila is to say a deliberate plan to remove him became clear after an anonymous whistle-blower made allegations of financial wrongdoing at the fund manager about two years ago. While the PIC has largely delivered market-beating returns, its mandate also includes aiding broader social development to mitigate the effects of apartheid. This is often done through PIC’s unlisted investments — the category that witnesses have flagged as producing the most dubious deals.
Matjila will respond to accusations on deals including the PIC’s 4 billion-rand investment in Erin Energy; the acquisition of a stake in Total SA by Tosaco Energy; and transactions involving S&S Refinery in Mozambique, Steinhoff International Holdings N.V., VBS Mutual Bank and technology company Ayo Technology Solutions Ltd.
He will also talk about a R5bn bridging loan PIC advanced to state power company Eskom Holdings SOC Ltd. on behalf of the Government Employee Pension Fund for one month in February 2018, and he will say his ouster was rushed so that PIC could sign off on a rescue of South Africa’s second-biggest clothing retailer, Edcon Holdings Ltd.
Matjila also will tell the commission about deals he rejected: with Trillian Capital Partners Pty Ltd., a financial consultancy company linked to the politically connected Gupta family and Regiments Capital Pty Ltd.
In February, almost the entire board, including Mondli Gungubele, the PIC’s chairman and South Africa’s then-deputy finance minister, tendered their resignations after the money manager ordered a forensic probe into whether acting CEO Matshepo More and two non-executive directors had acted inappropriately. They’ve remained in their posts while Finance Minister Tito Mboweni decides on their replacements.
The commission is expected to make its recommendations to the president by the end of this month. Matjila is to say the PIC should be made independent of government influence and that deal origination must be properly controlled. He sees the political approaches partly as a result of a mistaken belief that he was solely responsible for whether deals happened.
Former board member Claudia Manning in January told the commission that the PIC would be better off without the country’s deputy finance minister chairing its board because it exposes the continent’s biggest money manager to the perception of political interference.
Matjila will suggest to the commission that the law governing the PIC act should be changed to ensure independence. The financial services regulator could take charge of the appointment of directors with no government involvement, for instance.
He is also expected to propose that directors should have minimum terms of five years to ensure stability and to oversee investment strategies.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.