South Africa - Pretoria - 15 April 2019 - Director of Harith General Partners Tshepo Mahloele testifies at the Public Investment Corporation(PIC) Commission of Inquiry in Old Council Chambers, Sammy Marks Building, Pretoria. Picture: Karen Sandison/African News Agency(ANA)

PRETORIA – Harith Fund Managers (HFM), was established to exclusively manage the Pan-African Infrastructure Development Fund (PAIDF), its director Tshepo Mahloele said on Tuesday.

Mahloele was testifying before the Commission of Inquiry into alleged improprieties at the Public Investment Corporation (PIC), where he said PAIDF was never intended to be a public-sector led initiative.

“On the contrary, the investors agreed to invest in the PAlDF expressly on the basis that they would not be subject to a fund governed by the strictures of the Public Finance Management Act (PFMA), and that they themselves would have an equity stake in the management company, and therefore the right as shareholders to appoint directors to its board. 

“The whole idea was that the investors themselves would be able to determine the progress of the management company and the manner in which, their own funds were to be dealt with,” he said. 

Mahloele told the commission that during early 2008, there were indications that, despite what investors had been led to believe, the PIC intended to remain the sole shareholder of the management company. 

“This went to the very root of the envisaged investments and threatened to derail the entire project. On May 29, 2008, a letter threatening to cancel the Fund Management Agreement, from the PAIDF Board of Trustees, chaired by Martin Kuscus – who was also the chairperson of the Government Employees Pension Fund (the GEPF) at the time – was served on the PIC. 

“The threatened cancellation sought to compel the PIC to adhere to its original agreement that HFM would not be controlled by any government-related institution,” he said. 

Mahloele told the commission that a compromise was reached and the HFM shareholding was restructured with the approval of the then Minister of Finance, Pravin Gordhan, and the PIC Board.

Mahloele was employed as the chief executive of HFM with effect from September 1, 2007, after his services agreement with the PAIDF Facilitation Trust ended, the commission was told. “My employment was for an initial period of seven years, terminating on 31 August 2014.” 

HFM, initially a shelf company secured by Mahloele, was originally owned by the PIC as a matter of convenience and as the nominal shareholder. He said the intention was always that both the PAIDF and HFM would be private-sector led.