This was according to Dr Dan Matjila, the former chief executive of the Public Investment Corporation (PIC) who was testifying at the Mpati-led commission of inquiry into impropriety at Africa’s largest asset manager.
Answering questions before the commission, Matjila relayed how although there were no problems found in the management structures of the big four media houses in SA, the lack of government ad spend that was reserved for the Guptas killed the right kind of cash flow to drive the digital strategy of the print media industry.
“The aim was to transform Independent Media into a black-owned and transformed company so that they can get government business. However, the new one got formed and all business was taken away. Our view was that Independent Media would get government business because it was the most transformed media company in SA at the time. It was about getting a black player that was transformed in the media to make a difference in the economy,” said Matjila.
Explaining the PIC’s rationale in investing in Independent Media, Matjila said: “Today we may look like we would have known that things weren’t going to work out, but based on probabilities and value proposition, based on the digital strategy at the time, to mitigate, we bought into that strategy which the board approved on that basis. What’s important is that we are taking transactions to committees to approve, I don’t decide to do the transaction on my own, the committee takes the responsibility because it’s a decision of the board.”
Explaining why the PIC invested in Independent News and Media (INMSA) despite Government Employees Pension Fund’s concern, Matjila said the application started with the investment committee and made it all the way through to the board. He suggested that INMSA was upfront that the asset might not perform too well but would carry the mandate in terms of transformation.
“This transaction attracted significant media attention. The Gupta family had previously failed in their bid and it was common cause that the family continued to want a stake in the investment. After completing the transaction I later learned that they had an option to buy 27.5% of INMSA from Sekunjalo, which was agreed at the time when Sekunjalo was looking for investment partners.
“I was concerned with the idea of possibly assisting or allowing the Guptas to boost their propaganda machinery by taking up a shareholding in INMSA. Had they obtained any shareholding in INMSA it would have narrowed participation in the media space and seriously increased the risk of both diminishing competition and the risk of breach of competition law by the PIC.
“So I was totally against the idea and refused their participation. Subsequently, we observed that most media houses experienced a drop in government business with INMSA being the hardest hit,” he said.
According to Matjila, Caxton, Independent Media and Tiso-Blackstar had performed poorly in line with print media industry trends. However, from a social returns perspective, Matjila believed the investment into Independent Media would facilitate transformation and localisation of one of the oldest and largest newspaper groups in the country.
“It is contributing to democracy by keeping the citizenry informed as expected from a media company. This has a direct impact on the economy,” said Matjila.