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Double standards of PIC in lending to big business

Ayanda Mdluli is a senior journalist at Independent Media.

Ayanda Mdluli is a senior journalist at Independent Media.

Published Dec 6, 2019


There appears to be a campaign by the new leadership of the Public Investment Corporation (PIC) to rewrite history and distort facts. The new leadership has always been supported by and received benefits from the establishment.

This agenda is also being served up to the citizens of South Africa, via a media operation that has little to do with fact. A case in point was this week’s portfolio committee on finance in Parliament at which the PIC delivered the highlights of its annual report.

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In this report the GEPF/PIC indicated that they had written off more than R5.7billion. The bulk of that was in Steinhoff through the investment the PIC had made in Lancaster 101, a one-man company with Jayendra Naidoo at the helm.

The PIC also casually dropped into the conversation that a billion rand had been written off in companies controlled by Dr Iqbal Survé/ Sekunjalo, with whom it is in litigation. This number is overinflated.

Sekunjalo and Survé have disproportionately taken the brunt of questioning at the recent PIC Commission of Inquiry. In any other country, a professional like Dr Daniel Matjila, the former chief executive of the PIC, would be given the highest recognition for having steered the assets of the Government Employees Pension Fund (GEPF) from R400bn to over R2 trillion in his tenure.

However, in South Africa, Matjila is made out to be incompetent because while he was head of the investment committee at the PIC and its chief executive, he chose to back a dark horse, Independent Media, Sekunjalo Independent Media (SIM), and AYO Technology Solutions (AYO).

Matjila’s testimony at the PIC’s Commission of Inquiry into alleged wrongdoing at the country’s largest asset manager severely damaged the attempts of those trying to present him as the corrupt, incompetent executive of a state-owned enterprise (SOE).

Matjila was able to demonstrate the valuable role that he played at the PIC in growing the investment portfolio and in supporting the transformation of a predominantly white-owned and managed business.

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The PIC has lost more than R30bn in three JSE-listed companies, all of which have admitted to acting fraudulently. In Steinhoff alone, the PIC has lost R23bn. The other two companies are Tongaat Hulett and EOH. Yet the PIC has not applied for the liquidation of Steinhoff, EOH or Tongaat Hulett, nor has it appeared to have taken legal action against these three companies to recover the more than R30bn lost.

The PIC is also one of the largest lenders to state-owned enterprises such as Eskom and Transnet.

Large companies such as ABB, Mckinsey, Bain, Stefanutti and others have acted fraudulently, with SOEs losing tens of billions. Yet the PIC has not acted against any of these companies.

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Then there is the curious case of Old Mutual. The media has reported on how Trevor Manuel, Old Mutual’s chairman, tried to remove CEO Peter Moyo from his post. Moyo had objected to Old Mutual paying Manuel’s personal legal fees.

Moyo had also pointed out that Manuel had given an advisory mandate to his good friend, Martin Kingston, CEO of Rothschild & Co. This was at a cost of almost R5bn to Old Mutual shareholders.

The PIC decided to bail out Edcon at the insistence of minister Ebrahim Patel. The bailout was presented as an attempt to save thousands of jobs. However, according to informed sources, there are fees that Rothschild & Co collected from the money the PIC invested in Edcon.

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Others, like Aspen, Coronation, construction firms and other property companies such as Redefine, Resilient, retail companies, food companies - the PIC has had to mark down these investments by more than R120bn. However, it remains silent on these matters. Yet the PIC has gone public about its dealings with Independent Media, in which the PIC took a direct stake, and Sekunjalo Independent Media (SIM), in which the PIC invested a small amount to ensure that minority groups had an opportunity to own a share.

According to financial statements presented by the PIC itself, Sekunjalo Independent Media had received R580m from the PIC to pay for the purchase of Independent Media. Sekunjalo repaid R380m.

The outstanding R250m was for the other BEE partners in the SIM consortium, which were converted to shares.

What the PIC fails to mention is that in 2013 it had acquired 25% of Independent Media, as well as the shareholder loan from the former Irish owners. This had nothing to do with Sekunjalo Independent Media (or any other Sekunjalo-led company).

Sources at the PIC indicate that Maria Ramos, chairperson of the audit and risk committee at the PIC (and former CEO of Absa), has driven an agenda along with the new chairperson of the PIC, Reuel Khoza, to destroy Independent Media and Sekunjalo.

The PIC is at the centre of a political battle to control the narrative to benefit an elite who have zero interest in transformation and an open media.

* Mdluli is a senior journalist at Independent Media.

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