PRETORIA – Dr Dan Matjila on Monday defended the state-owned asset manager's investments in unlisted portfolios through its development fund Isibaya, telling the Public Investment Corporation (PIC) commission of Inquiry that there was nothing in the law untoward about this.
United Democratic Movement (UDM) leader Bantu Holomisa has called for the inquiry to scrutinise the state-owned asset manager's unlisted portfolio "more closely", as well as its links to former directors, alleging that there was a case of a conflict of interest.
In his submission to the commission, Holomisa fingered three companies that are directly or indirectly linked to the PIC - Lebashe Investment Group, Harith General Partners, and Harith Fund Managers.
Testifying at the PIC inquiry led by retired Judge Lex Mpati on Monday, former PIC chief executive Matjila said that Isibaya had a mandate to finance black economic empowerment transactions.
Isibaya Fund is a developmental investment fund managed by the PIC to invest in projects that will have a positive social impact on ordinary people. Isibaya's portfolio accounts for investments valued at nearly R45 billion.
Matjila said commissioners had full discretion, derived from the PIC Act, on the asset allocation of the monies deposited into the state owned entity with about R2 trillion of assets under management - including from the fund manager's biggest client, the Government Employees pension Fund (GEPF).
He said that Isibaya portfolio was established in 1995 following the amendment of the PIC Act in 1992, allowing the commissioners to allocate 3.5% of GEPF assets under its management to socially responsible investments.
"This is important to bear in mind when considering the allegations that the PIC's investment in unlisted portfolios amounted to a conflict of interest and doing business with friends and colleagues and the assertion that the investment in unlisted portfolios should have been suspended with immediate effect," Matjila said.
"The point is, the amendment to the PIC Act specifically authorised investment into socially responsible investments which are black economic empowerment transactions."
Matjila also said that the PIC's chairperson - who at all material times is the deputy minister of finance - was not a member of any board committee, including the investment committee, and thus had limited involvement in investment decisions of the PIC.
"This is important to remember when considering the allegations against Mr [Nhlanhla] Nene in the S&S Refinery matter, and more recently, deputy [Finance] Minister Mondli Gungubele's involvement in the Edcon transaction," Matjila said.
"The rationale for the chairperson's limited involvement in investment is because the PIC is the major investor in the bonds of state-owned companies and hence there would be a conflict of interest in the chairperson being involved in decisions to invest in the very enterprises that fall under the purview of the finance ministry."
While he was PIC chairperson, Nene was implicated in a deal in which his son Siyabonga Nene, and his business partner Amir Mirza wanted the PIC to fund their 50 percent stake in the S&S Refinery in Mozambique despite the PIC not undertaking funding of BEE transactions outside South Africa.
Gungubele, while he was chairperson, is alleged to have brought pressure to bear for the PIC to provide a R2.7 billion bailout for retailer Edcon, a decision that allegedly ran counter to the recommendations of the entity's investment professionals.
The inquiry, which is expected to wrap up this month, has heard evidence from about 70 witnesses, some of whom are former and current PIC directors.
Several witnesses have implicated Matjila as having played a central role in approving questionable investment deals by the PIC, which manages about R2.2 trillion of government employees pension funds.
When he resigned in November 2018, Matjila was the subject of an internal investigation into allegations that business and kickbacks were inappropriately ring-fenced around some of his associates.
The inquiry adjourned after 1pm. Matjila will continue testifying on Tuesday.