South Africa - Pretoria - 19 March 2019 - Wellington Mtombwe Masekesa at the PIC Commission of Inquiry. Picture: Jacques Naude/African News Agency(ANA)

PRETORIA – Wellington Masekesa, executive assistant to the chief executive of the Public Investment Corporation (PIC), said on Tuesday that the S&S Refinery Plant was state-of-the-art, well-designed and well-built by qualified engineers and best equipment.

The executive assistant, during his submission to the PIC Commission of Inquiry, dispelled media reports that Africa’s largest asset manager invested in a dilapidated Plant in Mozambique as untrue and unfounded. 

He then submitted to the commission an independent valuation of the S&S Refinery from KPMG.

“To my knowledge, the investment followed the PIC‘s investment process and was approved in accordance to the approved process and delegation of authority at that time,” he said.

Masekesa told the commission that investing outside South Africa and the rest of Africa was tough and recommended that the PIC set a stand-alone division to looks at investments outside South Africa. 

“I believe like any investment, risks and challenges are inherent. Anything can go wrong. In this case some unforeseen challenges manifested and the projections were missed. l am still convinced, with the right operator in place now, the PIC will recoup its investment in the long-term period,” he said.

The PIC invested $63 million (about R910m at the current exchange rate) into S&S Refinery, $28 million (equity) and $35 million (senior debt).

Masekesa downplayed the involvement of Siyabonga Nene, son of former Deputy Finance Minister Nhlanhla Nene, who was in office at the time this transaction was brought to the PIC.

He made an example of a presentation by Amir Mirza on an investment opportunity, where he said Nene did not contribute much to the presentation. “He was quiet throughout the meeting, saying nothing, except a greeting.”

“My recollection is that … Nene was not actively involved in facilitating this transaction and he did not play any meaningful role in the transaction although he did travel to Mozambique on occasions. Nene was not then paid any fee from the PIC,” said Masekesa. 

Mirza and Nene jointly own Indiafrec, the company that brought the S&S investment idea to the PIC. 

While Masekesa vehemently defended the S&S transaction he denied involvement in a number of subsequent transactions, save for being part of the transaction investment team that worked on the S&S transaction.

“My role initially in relation to the transaction was limited to attending meetings with sponsors, due diligence, providing input in structuring, valuation negotiation, review of reports by external due diligence providers and negotiations with senior debt lenders, negotiation with promoters and sponsors and advisors. 

“I was not involved in any subsequent additional follow-on investment of $10 million in S&S Refineria. I was, however, aware of the transaction as the non-executive director of S&S Refineria,” he said. 

Masekesa also denied involvement in a facilitation fee negotiation with Mirza. “However, I am aware that during these transaction (S&S) negotiations PIC became aware of other projects (Hotel, Clinker plant and Cement Plant) being promoted by Rassul with the assistance of Mirza. 

“Mirza indicated that he could facilitate first right of refusal and co-investments rights to these projects provided he could be compensated for this and for facilitating PIC’s investment in the palm oil project,” he said. 

Mirza's company, Zaid International Trade and Investments, was paid a fee of about $1.7 million for facilitating the transaction. 

Masekesa also told the commission that at the time the PIC considered the investment, the Mozambican economy was flourishing. “In fact, the country was regarded as one of the fastest growing African economies. Mozambican GDP was around 8 percent, interest rates were stable, the inflation rate was very stable, the domestic currency was stable and there was a strong influx of foreign direct investments (FDI) into the country.”

After disbursement, both Mozambican economic and operating environment drastically changed. He said Mozambique’s economy and market conditions deteriorated worse than expected since the inception of the PIC investments.

BUSINESS REPORT