According to a Sunday Times article under the headline “Survé’s R4.3bn PIC piggy bank”, the former executives, Kevin Hardy and Siphiwe Nodwele, were very aggrieved that they had to report to AYO Technology chief investment officer Abdul Malick Salie.
In an interview, Dr Survé explained that Salie represented a transaction adviser to the AYO investment committee. Hardy and Nodwele recklessly wanted to place almost R3.2billion of the capital raised in about four transactions.
“They were prepared to overpay, they did not wish to have warranties and there are strong suspicions that they may have benefited from such transactions.
“It is clear that they were either inexperienced in transactions or had ulterior motives for trying to push some of these transactions through against the advice of the AYO board and investment committee,” he said.
What led to the resignation?
When the AYO board was reconstituted at the insistence of the PIC to reduce the influence of AEEI and Sekunjalo, the new chair of the board, Dr Wallace Mgoqi, insisted that the two executives sign a conflict of interest policy statement and indicated that, due to their forcibly trying to get AYO to acquire overvalued companies, they should subject themselves to a forensic inquiry, in particular for one company.
Sources close to the matter claimed that Hardy and Nodwele were trying to get 9% of the shares in a transaction that AYO was completing. This has not been verified, but a forensic investigation would have clarified this position.
After the AYO chairman indicated that this would be done, Hardy and Nodwele resigned and did not wish to subject themselves to a forensic investigation.
Subsequent to this, the two allegedly tried to extort from the company a generous settlement well in excess of their remuneration package, according to Dr Survé.
Both received no money from AYO and hence the attempt to try to shake down the company for a settlement.
Dr Survé said the AYO board was now confident that its current management team would be well placed to execute this competent executive strategy.
Far from the Sunday Times slamming AYO, it should be applauded for taking due regard for investors’ money, in particular, public money from the Public Investment Corporation (PIC).
Dr Survé said: “AYO is proud of the fact that today, just more than a year after its listing, it has more cash on hand than what was raised at the listing, and this point seems to be deliberately ignored.
“The Sunday Times article refers to the AYO share price of 15c. This is dishonest and financially irresponsible reporting.”
He said the information and communications technology (ICT) companies, including those listed on the JSE, were valued according to earnings, historic and forward. “They are never valued on net asset value (NAV). NAV is an investment criterion that is used for companies such as property companies and other hard-asset companies.”
Dr Survé explained that, contrary to media reports, AYO had been significantly profitable year-on-year and showed high growth in profitability over the last five years.
“AYO does not have debt. AYO currently has cash reserves of R4.5billion. Its businesses continue to generate cash and it has lined up significant acquisitions in order to fulfil its strategic plan and utilise the cash raised for acquisitions to transform the ICT landscape in South Africa in favour of black companies and ICT professionals,” he said.
Much ado about nothing
A lot has been written in the Sunday Times about the investment of AYO funds in 3Laws Capital and other asset management companies. “This is nothing un- usual,” said Dr Survé.
He said all significant corporates in South Africa had a central treasury function aimed at ensuring that cash on hand was placed with multiple institutions, such as banks, asset managers and other financial services institutions.
All of these must be registered with the Financial Services Conduct Authority.
They must also not have any risk attached.
Dr Survé added that the Sekunjalo group, as part of its central treasury function, often allocated capital to various asset managers and banking institutions in line with optimising their returns.
“In AYO’s case, the board took a decision to allocate R1.5bn of its R4.3bn to banks and other asset management institutions in order optimise returns.
"These are done on an annual basis. All the funds belong to AYO and are invested on behalf of AYO in either fixed-income new funds, money market funds or high-yield asset management investments,” he said.
“The despicable attempt by the Sunday Times to make it seem that these funds have been misappropriated is misleading, defamatory and shows an ignorance of how corporates function in a modern economy,” Dr Survé added.
He said that while a lot had been written about AYO and the PIC Commission of Inquiry, not once had anyone pointed out something that AYO had done wrong.
“AYO presented a sound investment case to the PIC and does not have sight on the PIC’s processes and therefore cannot comment on these processes.
"However, from AYO’s point of view, it has raised the capital and intends to spend the capital as part of its acquisition strategy.”
Dr Survé described the report as nothing but corporate terrorism at its best.
“The Sunday Times article refers to the WEF payment. Any corporate has a shared services structure.
"In Sekunjalo’s case, the shared services structure allows the executives of investee companies to participate in multilateral forums for their benefit.
"This is particularly important in order to get black executives to participate in a way that helps with up-skilling of a country’s competency at management level.
"More than 100 executives who are part of the Sekunjalo group have participated in numerous multilateral forums. Each investee company of the group pays a proportionate amount of their participation in these multilateral forums. It is no different for AYO, and to suggest that AYO is responsible for this payment is mischievous, misleading and without fact.
"On Independent Media’s software and hardware business forming part of AYO, the Sekunjalo group does not apologise to competitor media or explain its strategy in terms of the digital and software businesses. In fact, it is unheard of that it has to explain its strategy to its competitors."
Dr Survé said the attack on AYO and the Sekunjalo group was an attack on transformation in the country, cloaked as pointing out governance issues.