Sekunjalo Independent Media liquidation move a witch-hunt
So is the relationship between the state and the media. While politics and business are generally regarded as inseparable, and their relationship a bit complicated, the Public Investment Corporation (PIC) took the meaning of that relationship to another level last week.
In a bizarre move, devoid of both logic and intellect, the government asset manager stunned the country when it filed a notice to liquidate Sekunjalo Independent Media (SIM).
This, ostensibly, because SIM failed to service the loan (since 2018) it took from the PIC in 2013 to buy a controlling stake in the media company from its previous Irish owners.
The notice by the PIC to file for the liquidation of SIM at the Western Cape High Court was based on a 2013 agreement. Subsequent agreements have been entered into since the original agreement and these need to be taken into account.
One can assume that the heat is on the PIC executive team and legal team to put pressure on Sekunjalo. If anything, the PIC decision only confirmed what has long been suspected, that it has morphed into a tool to fight political and corporate battles for the new political elite that took power at the ANC Nasrec Conference in December 2017.
It is understood that the faction that’s pushing for the liquidation of SIM, is doing so for two reasons: to shut down different narratives and prepare the ground to buy SIM’s media assets at a fraction of its R2 billion value.
Given that the report from the Commission of Inquiry into the PIC is due in less than a month, this desperation and urgency is questionable.
In September 2018, Sekunjalo presented alternate options to the PIC which would have seen the PIC receive some form of cash and unwind previous agreements.
Sekunjalo’s understanding is that the offer was accepted by the Investment Committee as the PIC’s Private Equity team and lawyers started working with SIM to formalise a new structure that would have seen PIC get some cash back.
The PIC stopped corresponding with Sekunjalo, from late November/December. SIM followed up formally as recently as February. It took the PIC, via its attorneys, a year to get back to Sekunjalo and decline an offer that would have seen PIC exit with a sizeable amount of money, given that capital injected would have been preserved.
The decision to decline a year later does not seem to have been driven by commercial considerations, rather by other sinister motives.
When Finance Minister Tito Mboweni announced the changes to the interim board, it emerged that Adrian Lackay, the right-hand man of Public Enterprises Minister Pravin Gordhan is an employee of the PIC.
It also emerged that the spouse of Trevor Manuel, Maria Ramos, who had paid R1 million into the CR17 campaign fund was also appointed as a board member.
Gordhan was instrumental in generating donations to the CR17 campaign fund which has been marred by allegations of money laundering and is the subject of an investigation by the office of the public protector.
“It is important to note that the PIC inquiry was supposed to look at impropriety at the PIC but ended up being an inquiry and investigation into the Sekunjalo Group,” says SIM.
Last month, the PIC’s acting head of governance, compliance and legal, Lindiwe Dlamini, told Parliament’s finance committee that the PIC was looking at potentially liquidating “Sekunjalo Investment Holdings” to recover the loan.
This was then repeated by acting PIC chairperson, Reuel Khoza, during an interview on eNCA.
“A letter was immediately sent to the PIC indicating that Sekunjalo was not indebted to the PIC and the information shared to members of
Parliament was incorrect. To date, no response has been received.
“On November 12, we were informed that the PIC had applied to the Western Cape High Court to liquidate SIM. They are referring to the August 2013 agreement which has been superceded,” said the company.
SIM (a special purpose vehicle) and Independent Media are two separate entities.
The SIM consortium consists of Sekunjalo and 30 other organisations representing unions, community forums and various women’s groupings, and was set up for the sole purpose of acquiring Independent Media on behalf of the SIM Consortium. All of these entities were approved by the PIC.
A 55% stake of Independent Media was acquired by SIM in 2013.
Interacom (China International Television Corporation and China-Africa Development Fund both acquired a 20%; and the PIC on behalf of the Government Employees’ Pension Fund (GEPF) acquired 25%.
SIM then explains that GEPF made available to SIM a loan facility of R579.6m in August 2013 of which R325.7m was repaid by SIM.
The original capital amount outstanding to the PIC is R253m plus interest which accumulated thereafter (this is contrary to the billions purported to be outstanding), explained the company.
“Since acquisition, Sekunjalo has been the only shareholder funding Independent Media. Nearly R300m was invested in equipment, infrastructure, training and development, printing presses, business expansion and working capital requirements of the business.”
Dr Iqbal Survé, the chairperson of Sekunjalo and Independent Media, continues to be singled out and attacked by those who want to control the narrative, kill media diversity and transformation of the media.
The liquidation announcement is one of the biggest in a series of attacks against Survé and his companies.
The inquiries, raids, commissions and omissions were nothing but a witch-hunt.
Phaphano Phasha, of the Anti Poverty Forum put it bluntly when she highlighted that these witch-hunts were racist. This move may put over 1500 employees at risk.
She goes on to say that when faced with such rampant unemployment and economic stagnation, how does the PIC, which lost R25bn in Steinhoff and invested another R2bn in Edcon when it was on the verge of collapse, justify its actions?
“Why does the PIC not pursue the same intervention that it sought when it saved Steinhoff.
“Steinhoff was found to have lost almost R25 billion, which belongs to the Government Employees’ Pension Fund. Was Steinhoff saved because it is white-owned and therefore untouchable?”
She said Steinhoff is one of the many companies that had been funded by the PIC, lost shareholder value, but are continuously protected by our government entity. This then presents a conundrum.
The PIC, under Mboweni’s tutelage, cannot be seen to be protecting oligarchies and monopolies who are stagnating the South African economy with their anti-competitive behaviour.
* Ayanda Mdluli is a senior journalist at Independent Media.