Former PIC CEO Dan Matjila testifies at the PIC Commission of Inquiry. Picture: Oupa Mokoena/African News Agency (ANA)
Former PIC CEO Dan Matjila testifies at the PIC Commission of Inquiry. Picture: Oupa Mokoena/African News Agency (ANA)

PIC Inquiry: R4.6 billion was lost in bad Erin deal, says Dan Matjila

By Kabelo Khumalo Time of article published Jul 23, 2019

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Former Public Investments Corporation (PIC) chief executive Daniel Matjila yesterday admitted that the multibillion-rand outlay in Erin Energy was a bad investment.

Matjila told Judge Lex Mpati’s inquiry into allegations of malfeasance at the asset manager that a decline in oil prices led to Erin falling into bankruptcy.

He said the PIC lost around $333 million (R4.6bn) in the process.

Matjila said one of the conditions was that six months after disbursement, Erin would increase oil production.

“Unfortunately they ran into technical problems in September/October of 2014,” he said. “The rig experienced technical problems to the point the contract had to be cancelled.”

Matjila testified that the new rig was brought in May 2015 but that at that time the oil price had fallen sharply.

“There was just a downward slippery slope on the oil price.”

The Erin deal dates back to 2013 when Matjila was the R2 trillion asset manager's chief investment officer.

The PIC’s investment was $270m via the listing of Camac (which later became Erin Energy) on the Johannesburg Stock Exchange.

According to the deal, the PIC would assume a 30 percent shareholding in Camac and a seat on the board.

The PIC was also to have presence on the audit and risk committee.

Matjila said the PIC had later learned that there were many things that were not disclosed to it in the transaction.

Matjila took exception to technical questions about the contract and said that detail could be provided by those who worked under him and had “technical expertise and know-how” to advise him.

“Can you imagine running a R2trln fund where I have to look at each detail of every little correspondence or contract that comes through the PIC? That is humanly impossible.”

The commissioners then took Matjila to task over the PIC’s investment into Togo-headquartered Ecobank. He testified that the PIC invested in Ecobank in 2012 and that an amount of $250m was invested.

Matjila said despite its current troubles, he believed that the bank would recover and that the asset manager had not lost money on the investment.

“As a long-term investor we had seen an improvement in the balance sheet. We are not alone. We are with very reputable shareholders,” Matjila said.

South African lender Nedbank in 2014 bought a 20 percent strategic stake in the pan-African lender for $500m. Ecobank has the biggest banking network on the continent with 2000 branches in 36 countries.

Matjila said when he joined the Ecobank board as a PIC representative, he found a lot of “friends” occupied board positions and that this did not bode well for good governance.

“There was a lot of things that were not kosher, which were discovered after I joined the board. That was the start of the fight to fix the governance, and to get a board with lots of independent directors.”


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