Emails from anonymous whistleblower James Noko threw a spanner in the works at the PIC. Photo: Pixabay
Emails from anonymous whistleblower James Noko threw a spanner in the works at the PIC. Photo: Pixabay

#PICInquiry: How James Noko plunged PIC operations into crisis

By Ayanda Mdluli Time of article published Mar 11, 2019

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PRETORIA – Court cases, perjury, maladministration, collusion, irregular payments, general distrust and a practical state of dysfunction, are some of the defining characteristics of the Public Investment Corporation (PIC) that have been revealed so far at the PIC Commission of Inquiry in the week leading up to 11 March.

Testimonies from a number of PIC directors have outlined an institution that was plunged into crisis and into a state of dysfunction when the first emails from whistleblower James Noko first appeared.

The biggest revelation to date has been the PIC launching an Interdict against the Companies Intellectual Property Commission (CIPC) at the North Gauteng High Court in Pretoria in order to have a Compliance notice set aside, as the PIC believed that it would be virtually impossible to recoup R4.3 Billion from Ayo Technologies Limited (AYO) within the time frame stipulated as set out by compliance.

AYO has also launched its own court action challenging the compliance notice. In an in-depth affidavit to the court, AYO CEO Howard Plaatjes, made some startling revelations of how the PIC and the CIPC appear to have deliberately withheld the fact that a compliance notice was issued to the PIC compelling it to recoup the monies it had invested in AYO.

On Sunday evening, operating on what looked like panic mode, the PIC released a statement disputing that it is working with AYO to interdict the CIPC. Stranger still is the article to which the PIC referred to in their hasty statement, which had not made any assertions that AYO was working with the PIC to interdict the CIPC.

Nor did it use words such as, “collaboration” to report on the facts contained in both the PIC and AYO’s court papers. Moreover, the court papers in their entirety were uploaded on the online version to give our readers an opportunity to think and make a decision for themselves.

The fact of the matter is that the PIC has launched an Interdict as it will fail to comply with the CIPC’s Compliance Notice, regardless of whether they are working in unison with AYO to recoup any monies or not. Secondly, the PIC did infer that the Compliance Notice was irrational, and some legal experts have contended that is widely unconstitutional and infringes on the rights of Ayo Technologies.

Plaatjes, in his affidavit, relays how, through correspondence, the PIC and the CIPC did not act in good faith in keeping AYO abreast of developments leading up to the announcement that a compliance notice was in place. 

According to Plaatjes, following a series of meetings and exchange of letters around the 21st of February, the PIC had deliberately hidden the fact that it had received a compliance notice from the CIPC.

It all started back in December  2017, on the day AYO publicly listed its shares on the Johannesburg Stock Exchange (JSE) after having sought a private placement.

In terms of the Pre-Listing-Statement (PLS), Plaatjes confirmed AYO issued just over 99.7 million new shares to a range of invited investors at an issue price of R43 a share.

The PIC subsequently took up the entire 99.7 million shares at R43 per share, to the value of R4.3 billion in AYO after a rigorous JSE listing process.

“However, subsequent to the listing, various media reports have been circulated, assailing the integrity of the Private Placement and the listing itself. AYO was requested by the PIC and the JSE to respond to allegations reported on in various media. AYO had no hesitation in responding openly and honestly to all questions put to it and provided comprehensive responses to both,” explained Plaatjes.

He added that AYO instructed its lawyers Abrahams Kiewitz Incorporated to write to the PIC, inviting the institution to a meeting to discuss allegations that had surfaced in the media.

According to Plaatjes, the meeting would also seek to affirm that the PIC investment in AYO had in fact followed due process and was commercially sound.

AYO also requested an assurance from the PIC and the GEPF that it would not act on the unconfirmed rumour that it was contemplating launching an urgent anti-dissipation application in the High Court to freeze AYO’s bank accounts.

According to the affidavit, the PIC responded through its lawyers requesting for AYO to consent to a due diligence. The PIC also requested that AYO answer a set of questions about the current status of the PIC investment in the technology group and to provide certain documentation regarding the PIC investment.

Plaatjes revealed that: “The PIC letter of 21 February 2019 did not disclose the fact that it had received the CIPC Notice, and that it had been directed to act in terms thereof, within 15 business days and nor did it disclose that there had been any engagement with it and the CIPC in respect of the recovery of the PIC investment. Rather, it requested AYO to provide detailed information about the PIC investment.”

AYO then addressed several of the concerns raised by the PIC, commenting that “there can be no question that AYO has made every effort to cooperate fully and openly with the PIC.”

However, just a day after that, Plaatjes alleges that Business Day published an article alleging that the CIPC had issued a Compliance Notice to the PIC in terms of the Companies Act.

“The Business Day article was the first time that AYO became aware of the actual existence of a compliance notice issued by CIPC. Surprisingly, neither CIPC nor the PIC considered it appropriate or necessary to inform AYO of the notice, notwithstanding its material bearing on AYO’s rights and interests,” he stated.

Following this series of events, AYO’s lawyers then wrote to the PIC, saying that AYO was deeply dismayed that the CIPC sought to take such an extraordinary step without first notifying their client of its intended action or, even affording them an opportunity to respond to the ‘facts’ that the CIPC was relying on to issue the compliance notice.

According to AYO’s lawyers: “Even without seeing the compliance notice, purportedly issued by CIPC, we are of the view that it is irregular and as such falls to be impugned for at least two reasons.”

The first was that AYO had not contravened the companies act no 71 of 2008 and there were no reasonable grounds for the CIPC to hold such a belief. Secondly, the process with which the notice was issued, is procedurally unfair and, they never made any representations to AYO prior to the issuing of the notice.

Following this, both the PIC and CIPC responded to AYO’s letters on 27 February. According to Plaatjes, the PIC declined to comment on the irregularities identified in AYO’s urgent letter.

He claims that the PIC said it was under no obligation to inform Ayo of its intended approach with the regards to the CIPC notice and AYO should contact the CIPC directly if it had any questions about the notice.

“AYO was perplexed by this response given the fact that it was in the process of compiling a detailed response to the PIC’s 21 February 2019 request for data and information relating to the PIC investment. Furthermore, the response is both obtuse and non-committal in that it does not address the question of how the PIC intended to comply with the notice. If it does intend doing so, without at least informing AYO of how it intends to proceed.”

Additionally, the CIPC also responded in a similar manner where it was allegedly dismissive and non-committal. According to Plaatjes, this confirms that the PIC’s board was given 15 days to recover a R4.3 billion capital investment made to AYO and that it was under no obligation to notify AYO about the notice.

“The CIPC’s conduct is unprecedented…Neither the PIC nor the CIPC have provided any insight into the process by which AYO is to allegedly return R4.3 billion of invested monies by 14 March 2019. AYO has been kept in the dark about the enforcement of this statutory process….given the fact that it is under a CIPC directive to recoup R4.3 billion in a number of days, the PIC’s unwillingness to co-operate is astounding,” explains Plaatjes.

AYO Technologies and its subsidiaries employ about 7000 people (directly and indirectly), many of whom are highly skilled ICT professionals in a country where unemployment levels are heading towards anarchic proportions.

According to data from AYO, the company as of August 2017, had a strong balance sheet, with positive cash flows, a consolidated group turnover of R470 million and a pre-tax profit of R130 million. This is in stark contrast to the CIPC’s notice that AYO never had a turnover of more than R12 million, said Plaatjes in court papers. 


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