PIC interim board accused of flouting processes in search for new CEO

Published Jan 15, 2020


JOHANNESBURG – The interim board of the Public Investment Corporation (PIC), which has been tasked with restoring proper corporate governance at the asset manager, has been accused of flouting processes in the recruitment of a new chief executive.

According to claims made by a source close to the matter, the PIC board tasked executive search firm Heidrick & Struggles to assist with the recruitment of the new chief executive, yet the company was allegedly not on the PIC’s supplier list.

The source alleges this move was irregular, and revealed that when the matter was raised with the board, PIC director Maria Ramos threw a tantrum and went ahead with the process.

This was after Africa’s largest asset manager had been subjected to a lengthy probe into impropriety by a commission of inquiry led by retired Judge Lex Mpati. The Mpati Commission completed and submitted its final report to the Office of the Presidency on December 15.

Although the report has not been made public, the PIC confirmed going ahead with the recruitment of a new chief executive. This raises questions of whether the commission’s recommendations would be implemented, such as the role of chief investment officer (CIO) being separated from that of the chief executive.

Deon Botha, the PIC’s head of corporate affairs, confirmed that the PIC had contracted Heidrick & Struggles to assist with finding a chief executive, adding that the company was listed on the National Treasury central supplier data list and the PIC had conducted an open bid process.

Botha said a request for proposal was published and all eligible suppliers that met the requirements were invited to participate in the process at a compulsory pre-bid briefing.

“The company was appointed based on its performance and total scores allocated in a competitive bidding process. The interim PIC board is on record as stating that the roles of chief executive and CIO will be separated.”

Botha said the board was unanimous in taking this route and that the board had not yet seen the report by the PIC Commission of Inquiry.

“The advertisement inviting applications for the position of PIC chief executive was advertised publicly and in the media in November 2019 and the closing date was December 8, 2019. The Commission of Inquiry handed its report to President Ramaphosa by mid-December 2019.

“The new interim PIC board is on record as stating that the appointment of a new chief executive is an urgent priority for the board and must be expedited. There is no disagreement between the board and the Commission of Inquiry on this approach.”

The deputy general manager of members’ affairs at the Public Servants' Association(PSA), Tahir Maepa, said the PSA had worked hard to steer the PIC away from this alleged behaviour.

“We will review any decision taken by this board through the courts if these allegations are true. This matter was never brought to our attention and we will engage the PIC for facts.”

The SA Democratic Teachers' Union’s spokesperson, Nomusa Cembi, said the dictates of good corporate governance were not ignored, but were observed.

“This board was given only 12 months to turn the PIC around, they are already halfway into the 12 months, so some things have got to be sped up in order to turn things around.”

According to the source, one of the highly recommended candidates for the top executive position was Nomkhita Nqweni, former Absa chief executive of wealth, investment management and insurance.

Maepa said any disregard of policies by the board would render their action unlawful.

“We are not aware of any preferred candidate and if this is so then the whole recruitment process will be flawed board members who are conflicted should neither sit in the shortlisting nor interviews.”

Cembi said: “How is it possible for the board to allow one individual to make decisions on its behalf? Unless your paper has evidence that the board has abdicated its fiduciary duties.”

The accusations, which put Ramos - former Absa chief executive - in the middle of the alleged misdoing, are contained in an email, seen by Business Report, sent by a source who preferred to remain anonymous for fear of victimisation.

The source said the PIC top brass were looking for scapegoats to cover up an unethical bid for control of the state’s key financial asset, adding that a key example was the appointment process of the new chief executive.

“Big personalities on the PIC interim board are trying to get their preferred candidate without following the correct procedures. Many employees, suppliers, and potential candidates have felt hard done by this process but are silent in fear of exclusion.”

Ramos ended her 10-year tenure at the helm of Absa in 2019, but not without attracting controversy that saw some senior black executives leaving the group.