PIC up from R461bn to R2.1trln under Dr Matjila's watchful eye
Companies / 25 September 2018, 07:30am / georginah.crouth
Dr Daniel Matjila has weathered a few storms over the past 15 years. But he’s most proud of growing the corporation into a R2trillion asset manager.
WHEN you’re looking after assets under management worth more than R2trillion there’s little time to relax, says Dr Daniel Matjila, the chief executive of the Public Investment Corporation (PIC). And even less time to let your guard down.
Matjila should know - he has been in the sites of political parties and Gupta-alighted interests gunning for access to the trillions in pension money he manages for the state.
The former maths lecturer shut down his detractors last September by reasoning: “I’ve got the keys. They’re looking for the keys to the big safe,” after he was pulled before the corporation’s board a year ago to answer allegations against him that were leaked “mysteriously” - apparently because he declined former SAA chairperson Dudu Myeni’s request for a loan for the national carrier.
“I suspected them (the Guptas) as that was the way they operate, to create stories and allegations. But they failed - we fought, protected our organisation.”
The Government Employees Pension Fund (GEPF) comprises 88percent of the funds managed by the corporation - the rest comprises Unemployment Insurance Fund and the Compensation Fund assets. It’s a job Matjila takes to heart.
Matjila was an academic for nearly a decade before leaving for the private sector. He’s been at the helm of the corporation since 2014, joining in 2003 as risk manager. He’s an experienced finance and investments specialist who’s worked for Stanlib Asset Management Limited and at Anglo American.
He was brought on board the PIC in 2003. At the time, it was the Public Investment Commission: the state investment arm that was run by commissioners. Brian Molefe was the secretary, seconded by the National Treasury. “He asked me to come to set up the risk management platform. I became the first chief investment officer of the PIC.”
Hailing from the private sector, Matjila soon identified key inefficiencies: critically, there was a lack of competence and independence.
“Staff belonged to the Treasury too,” Majila explains. “We were brought on board to corporatise it.
“We couldn’t attract the right talent at the time. We managed to convert the PIC into a modern asset manager, attract talented staff, with our own assets and employees.”
The PIC’s history is rooted in the establishment of the Public Debt Commissioner in 1911, which was formed to manage trust funds placed in state hands. Its initial clients were the South African Railways and Harbours, but in 1924, they included provincial administrators’ funds.
By 1961, its total managed assets totalled R1.6billion, and since corporatisation, assets under management grew from R461bn in 2005 to R2.1trillion today.
The corporation now also boasts 350 members of staff - 45percent of whom are investment professionals, the rest support staff. Matjila says a significant proportion of those include graduates from marginalised black universities, who have gone through their internships and nurturing at the PIC.
“I can see the challenges in the curriculum. We are very happy with the recruits - we have kept at least 75percent of them over the past 10 years, and they’ve contributed significantly.” After 15 years at the PIC, Matjila has learnt some tough lessons. “The biggest lesson for me, over the years, are the unexpected surprises: Steinhoff and VBS, where my colleagues did what they did.”
Two PIC employees left in disgrace over the VBS fiasco, which cost the PIC almost half a billion rand. “It shows we really need to up the game. What else can we do to ensure we instil a culture of highest ethical standards? We need to comply with the highest standards.
“There have been gaps,” he admits. “The employees were supposed to report to us, they owe a fiduciary responsibility to the company. If you look at the auditors - two from PwC and KPMG - if the same auditors are conniving with the directors, it’s hard to get to the bottom of it.
“In the VBS forensic investigation, two executives who sat on our behalf were found to have benefited unduly. One we fired, one resigned.”
Their biggest disappointment was in the employees: “Both of them are from Venda; we asked them to help their communities grow. We invested R150million general and a line of credit of R350m that they were using for fuel contracts - we discovered instead of ring-fencing it they put it in the bank. We lost R400m in total.”
The PIC performs an important function in society; that of investing and managing the assets on behalf of the GEPF, as well as various other funds of huge societal importance, including the Unemployment Insurance Fund and the Compensation Fund, he says.
“Collectively, these funds have grown over the years to just over R2.1 trillion, which is equivalent to approximately 40percent of South Africa’s gross domestic product. These are responsibilities the PIC not only feels privileged to perform, but ones that it takes very seriously.”