CAPE TOWN – The Public Investment Corporation (PIC) has cited errors in its own processes, in its summons served on AYO Technology Solutions aimed at claiming back the R4.3 billion invested in Africa’s largest transformed ICT company.
The PIC also stated that the move to recoup its investment was, “because the majority of the R4 290 654 165 remains in the possession and control of AYO”.
In an announcement on the Stock Exchange News Service (SENS), AYO said it received a summons on Friday issued by the PIC and Government Employees Pension Fund (GEPF).
The company said the summons sought a declaration that the subscription agreement entered into by the PIC with AYO, be declared unlawful and set aside, and that AYO be ordered to pay the PIC R4.3bn, together with interest of 10.25 percent per annum accrued from December 22, 2017, to date of final payment.
AYO said it had instructed its attorneys to oppose the action and was confident of its position.
In its papers, the PIC stated that no due diligence had been completed on the AYO transaction when the subscription applications were signed. It said, therefore, neither the then chief executive of the PIC, Dr Dan Matjila, nor the general manager of listed equities, Lebogang Molebatsi, had given the investment into AYO due consideration prior to signing the subscription applications.
The PIC was formally approached by AYO on November 16, 2017, to participate in the listing of AYO, due to take place on 15 December 2017.
The PIC also stated that to AYO’s knowledge it was not possible for the PIC to comply with mandated processes to consider and approve the transaction.
The asset manager laid the blame squarely on the then, chief executive, saying that Matjila had presented to AYO representatives that regardless of the PIC’s legal obligations and internal requirements, the PIC would participate in the AYO listing.
Matjila and Molebatsi signed the subscription applications on December 14, 2017.
“Upon signature of those applications, the PIC was purportedly bound to subscribe for the subscription shares. Neither Matjila nor Molebatsi had the authority under the (Delegation of Authority [DoA]) to sign the applications and to bind the PIC to the subscription prior to the approval from the (Portfolio Management Committee: Listed Investments [PMC-Li]).
“The PMC-Li had not approved the PIC subscribing for shares prior to the signature of the subscription applications. Under the DoA, the PMC-Li was required to approve the transaction following the agreement of the chief executive, chief financial officer and the executive head of listed investments,” said the PIC.
The DoA stipulates that the final approval of “strategic Investments (listed) for amounts more than R3bn, but less than R10bn” must be agreed to by the PIC’s chief executive, chief financial officer and executive head of listed investment before being approved by the PMC-Li.
The asset manager said neither the chief financial officer nor the executive head of listed investments, had agreed to the transaction prior to the signature of the subscription applications.
The PIC also claimed that AYO expressly or tacitly made misrepresentations when it entered into negotiations with the asset manager. “To the knowledge of AYO the … representations were false alternatively AYO ought reasonably to have known that the … representations were false.”
Refuting this, AYO’s PIC-appointed non-executive chairperson, Dr Wallace Mgoqi, in an earlier statement said that AYO had presented a sound investment case to the PIC and stood by this.
“There is absolutely no evidence to suggest that AYO has done anything wrong. On the contrary, the PIC chairperson and officials had in numerous public forums made remarks about AYO based on their own internal processes that have nothing to do with AYO. The conduct of the PIC and the conduct of its officials has resulted in damages to AYO and its businesses to the extent of billions of Rands.
“Key relationships with customers, partners, suppliers and other important stakeholders have all been prejudiced as a result of the conduct of the PIC and former executives of AYO that had been on a propaganda war against AYO in the media,” said Mgoqi.
As a result, AYO’s board has resolved to instruct its attorneys to institute a damages claim against the PIC and its former executives.
“AYO reiterates that if the PIC believes that AYO has done anything wrong then it should go the courts and use the due process of the court to put its case forward,” said Mgoqi.
He said AYO would, accordingly, welcome this opportunity to defend itself if such a process happens and AYO was confident of the outcome in its favour.
The PIC is purported to have lost billions of rand in several transactions, many of them highly questionable, as has been put forward at the current PIC Commission of Inquiry, into impropriety at the institution.
Given that the PIC in this summons, has admitted to wrong doing, is it also guilty of such with its investments into the likes of Steinhoff, EOH, Lancaster, Lebashe, Erin Energy and others and will they be issued summonses too, for the PIC to ask for its money back?