Deputy Minister of Finance Mondli Gungubele testifying at PIC Commission of Enquiry. Picture: Oupa Mokoena/African News Agency (ANA)

Explosive and shocking details have emerged of alleged collusion between the Public Investment Corporation and the Companies and Intellectual Property Commission (CIPC) to underhandedly recover the R4.3 billion the PIC invested in the AYO Group.

A source who was present at the meeting disclosed late last night that the compliance notice was issued against AYO a day after a meeting between the PIC and CIPC on February 20.

The meeting took place at the PIC offices in Pretoria and included four of its members and two CIPC members.

The source alleged that the instruction to recover the investment from AYO came from the PIC chairperson and Deputy Finance Minister Mondli Gungubele.

He was apparently supported by board member Sibusisiwe Zulu, who was recently implicated in corruption at the PIC.

This, according to the source, was part of the ongoing dirty tricks to destroy AYO.

Gungubele allegedly instructed the CIPC to write a letter to the PIC asking it to reverse the AYO transaction. The issuing of the compliance notice would have been the easiest and quickest way to reverse the transaction and block AYO’s funds, according to the source.

The AYO board was not privy to the compliance notice and read about it in a front-page splash in Business Day yesterday.

The source alleged that the PIC had leaked the document to the paper.

Another source at the PIC said he was baffled by the compliance order as AYO had met all the requirements for the investment and could not be legally challenged.

The source said that at the February 20 meeting, senior PIC officials deliberately withheld crucial information from CIPC, including AYO’s financial records, which showed the company had a turnover of R639 million and profitability before tax of R195m.

The PIC officials allegedly misled the CIPC into believing that the AYO company filing, and not the group filing, represented the true reflection of the technology company’s revenue, profitability and good standing.

When questioned about the underhanded manner in which the compliance order was issued, a CIPC official, who asked not to be named, was stunned that the PIC did not disclose the full financials of  AYO.

The source said they were left with the impression that AYO had a turnover of less than R12m, which was the official company filing, and not that of the group, and was therefore unprofitable.  

What the PIC deliberately withheld is that AYO’s turnover was almost R600m. “They did not disclose that AYO had profitability of R130m to R190m for each year preceding the CIPC/PIC meeting on February 20,” the source added.

An independent analyst has indicated that AYO would more than likely have profitability of more than R500m in 2019 and R1.1bn in 2020, as AYO still needed to deploy the cash it had raised with the PIC. 

It was this material non-disclosure by the PIC which led to the CIPC issuing the compliance notice, the source said.

AYO chairperson advocate Wallace Mgoqi has called on the PIC commission of inquiry to investigate the PIC officials implicated in the alleged collusion, including Gungubele. 

“It’s clear that the media campaign to discredit AYO over the last few weeks has as its main objective to create negative public perception to allow the PIC chairman to achieve his objective of deflecting from real corruption at the PIC which involves directors,” he said.

He also questioned the sinister motive by the PIC for allegedly leaking the CIPC letter to Business Day, which it used to further tarnish the reputation of AYO.  

“PIC officials were aware of the testimony of PIC director Dudu Hlatshwayo yesterday. This should show that the investment of AYO was above board and followed correct delegation of authority process.

Mgoqi called on Finance Minister Tito Mboweni and President Cyril Ramaphosa to look into the conduct of Gungubele. “Gungubele lied under oath about being fired by the finance minister and is also behind the attempt to undermine AYO, a black ICT business,” he said.

AYO chief executive Howard Plaatjes said that following this explosive revelation, AYO intended to seek legal advice. “AYO reserves all of its rights with this latest information. We are confident of our position and will defend any litigation,” said Plaatjes.

He added they were perturbed to learn through a newspaper article that the CIPC had directed the PIC to recoup its investment in AYO. 

“It is concerning that a newspaper has been informed of such a letter prior to AYO having been appraised of it.  We believe that such an action on the part of the CIPC is highly regrettable, if not irresponsible,” he said.

He added while they were mindful of the administrative functions of the CIPC, they believed it acted contrary to the provisions of the Promotion of Administrative Justice Act, 3 of 2000.

“It also appears from the Business Day report that the CIPC relies on a set of data which is factually incorrect. Should the CIPC, however, have engaged with AYO, the company would have provided the relevant facts, which in any event are available in the pre-listing statement of AYO, published in April 2017.”

Attempts to get comment from Gungubele were unsuccessful. An SMS and email were sent to PIC spokesperson Sekgoela Sekgoela, who said he would forward the query to the relevant people and respond. No response was received by publication time. 

CIPC spokesperson Tshiamo Zebediela received the query. She responded with a message meant for a Mr Chetty, which read: “Hi, Mr Chetty. I already have 22 missed calls from newspapers. Do we have feedback or should I wait for tomorrow?”

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