Cape Town – The PIC Commission of Inquiry into impropriety at the Public Investment Corporation (PIC) is running out of time to probe some of the major transactions where the asset manager has lost billions of rand in value in JSE-listed stocks.
The commission, which is led by retired Judge Lex Mpati assisted by former Governor of the South African Reserve Bank Gill Marcus along with investment expert Emanuel Lediga, has seen its fair share of explosive, controversial, underwhelming as well as fumbling testimonies. Here’s what has transpired to date and, in my opinion, some of the questions that we still need answers to … before it is too late.
Fit for purpose?
Some of the witness testimonies have not only given its evidence leader, Advocate Jannie Lubbe, sleepless nights but have visibly irritated those conducting the inquiry, to the point where Marcus, for one, has had a number of emotional outbursts, which have even led to widespread backlash on social media. Lubbe is also facing his fair share of controversy, including allegations of attempting to improperly source information from potential witnesses through the use of editable Microsoft word documents and offering fatherly advice to a witness prior to testimony.
Advocate Lubbe’s legal team was reported to the PIC board for acting improperly with regard to the taking of statements from potential witnesses.
The PIC’s suspended acting chief financial officer, Matshepo More, submitted that Advocate Lubbe had purported his team had experienced a marked reluctance by witnesses to assist the commission. This was due to a report she (More), and acting executive head of legal Lindiwe Dlamini had submitted to the PIC board.
Further, Independent Media is in possession of a letter in which Lubbe lays out a specific list of companies he wanted information on.
These are concerning and damning revelations, especially given that a commission of inquiry is a forum in which evidence is gathered and tested to determine whether any criminal intent or liability is apparent and therefore prosecutable. The integrity of the commission and its team is therefore of paramount importance.
Tunnel Vision
It is then highly unfortunate that commissions of inquiry in South Africa seem to have descended into being used to settle political and personal scores, with a number of them more closely resembling kangaroo courts than fact-finding missions.
This is evident in the witness selection and the inordinate amount of time devoted to particular companies or individuals. A case in point is the PIC Commission’s almost unhealthy interest in Ayo Technology Solutions (AYO), which is strange given the fact that the PIC has actually not lost any real value in its investment and the company operates – with a profit.
Organisations mentioned to date also include: the consortium Lancaster 101 led by businessman Jayendra Naidoo – R9.4 billion loan to buy shares in Steinhoff International, which were later restructured for shares in Steinhoff Africa Retail resulting in the PIC writing down the loan by R4.2 billion; Mobile Satellite Technologies (MST) – cleared by the Budlender report in October 2018; Lebashe Investment Group and Harith General Partners (Harith) both of whom have received several rounds of PIC funds and who have been alleged to be PIC favourites, according to Bantu Holomisa, the leader of the UDM, whose letter to President Cyril Ramaphosa started the ball rolling for the Inquiry.
Others that get an honourable mention:
One shocking revelation that emerged and which to my mind, still needs to be addressed, is that of how within a year of the PIC’s participation in Jayendra Naidoo’s acquisition of 2.75 percent of Steinhoff through his empowerment group Lancaster – dubbed Project Sierra – the Steinhoff share price began to decline. This impacted on the PlC’s security package.
This was the submission of PIC executive, Botsang Morobe, to the inquiry, who said as a result of this, Lancaster Group approached the PIC with a proposal for the PIC to consider facilitating Project Blue Buck, a transaction that would result in a change in the PlC’s security package to a much more enhanced position.
What is of concern is that Lancaster 101 appears to be a one-man show, with Naidoo being the sole beneficiary in a R9.4 billion transaction. Naidoo is yet to testify before the commission to explain his role and it is unclear if he will even appear, as the commission is scheduled to wrap up soon.
According to the PIC's former executive head of risk Paul Magula, Lancaster was completely reliant on dividends received on its Steinhoff shares to service the loan, which made it a very reckless investment from the get-go.
All in all, one could ask if the Mpati Commission should have gone as far back in its investigations as when the PIC initially extended its mandate to support economic transformation, and not focus on a select few transactions. This would have opened up an opportunity to ensure that all companies and individuals that benefited from its investment would have been interrogated or investigated, and therefore present the opportunity to redress any wrongdoing.
In choosing to select a very narrow view, the commission has failed to uphold its own remit and values of fairness and objectivity. In many instances, it has even allowed emotion to cloud judgement. The behaviour displayed by Marcus towards individuals that she patently does not like is of particular example and pertinence here. Marcus’s posturing, emotional grandstanding and selective questioning often show bias, which is hardly objective or impartial (necessary attributes for any commission).
The PIC characters
Let us not forget that the PIC is currently operating without a board, who resigned en masse earlier this year. Remember too, how now out of favour former minister of finance and chairman of the PIC board, Mondli Gungubele misrepresented the truth under oath at the Mpati-led commission.
This resulted in widespread condemnation from organised business, analysts, workers and union leaders who called for his head to roll – which it subsequently did, having not been re-appointed by President Ramaphosa. Some have even suggested that Gungubele needs to be declared delinquent for his role in the demise of the PIC board, which has placed the entire institution in a dangerous limbo.
It was also revealed during proceedings, that Gungubele and Sibusisiwe Zulu, another board member who has been implicated in corruption and nepotism scandals at the institution, were the masterminds of this resignation. Zulu herself, was revealed to be the one who crafted the letter by another PIC board member Dudu Hlatshwayo.
As things stand, the PIC is possibly in danger of losing its FAIS licence – hardly a tenable position for the Government Employee Pension Fund (GEPF) whose assets the PIC manages.
There have also been serious assertations that Gungubele has a personal agenda in bringing several specific companies into disrepute during this Commission. Certainly, his last act of defiance before vacating the hot seat at the PIC seems to corroborate that, with the issuing of a poorly drafted summons demanding AYO return the funds it had invested – a case of buyer’s remorse some 18 months down the line…
Zulu herself also deserves some additional scrutiny here. While I cannot presume to dictate where she may address her personal emotions, it does seem somewhat convenient that her live-in-lover, Lawrence Mulaudzi, has received several influxes of funds from the PIC, has been fingered in the whistle-blower emails as being a facilitator in which he, Zulu and others financially benefited and more.
The PIC Commission of Inquiry has all the intrigue of a Hollywood whodunnit with a healthy dose of reality TV thrown in for good measure. With time running out before Mpati and his cohorts need to submit their report, all eyes will be on whether the PIC’s former CEO Dr Dan Matjila will testify and bring this all to a head.
Perhaps the Mpati Commission’s terms of reference time period should have been broadened to examine all deals the PIC has been involved in to support economic transformation, and not just focus on a few select transactions?
All eyes will be on Mpati this week as he ponders his next move – extend the commission to include other investments or, dare I say, start re-thinking its terms of reference.