The Public Investment Corporation (PIC), which manages more than R2-trillion in government employees’ pension money and other government funds, is poised to take disciplinary action against 11 staff members for their part in the decision to invest more than R4bn in Ayo Technologies .
The recommendation, in an internal PIC report verified by Business Day, comes as the fallout from the organisation’s decision to take part in Ayo’s initial public listing in December 2017 at an inflated valuation, continues to bedevil Africa’s biggest fund manager.
The PIC bought a 29% stake at R43 a share, implying a valuation of R14.8bn. But a few months before, financial statements showed that Ayo had total assets of R292m and a book value of R67m.
Since then, the share has traded at far below the original valuation, and the transaction has emerged as one of the most contentious deals being examined at the commission into the PIC. Ayo has consistently denied that there was any wrongdoing in the transaction.
Several staff testified at the Mpati commission of inquiry that the investment had the support of former PIC CEO Dan Matjila, who also approved previous investments in companies owned by Iqbal Survé, who holds a large indirect stake in Ayo. Survé’s Sekunjalo Investment Holdings also got financial support from the PIC to fund its takeover of the Independent Media Group.
The commission, headed by justice Lex Mpati, a former president of the Supreme Court of Appeal, was appointed by President Cyril Ramaphosa in 2018 to look into allegations of governance failures at the PIC, which is the single largest investor in SA. Its brief includes looking into whether directors or employees misused their positions for personal gain.
But in addition to Matjila’s support for the Ayo transaction, 11 other staff members, including suspended CFO Matshepo Moré, are accused of cutting corners and diverting from due process to make sure the deal
happened, says a report by the PIC’s internal audit. The report says that Moré — who chaired the meeting at which the final investment decision was taken
— could face dismissal or a final warning if found guilty.
Moré, who testified at the commission this week, said she had not yet been served with any charges.
However, the internal audit report says she was “grossly negligent” in signing the “disbursement memo”, which enabled the release of the funds to Ayo, before the PIC’s portfolio management committee, which approves its listed equities portfolio, had approved the transaction. She is also accused of breaching her fiduciary duties as the CFO and an executive director as well as her contract of employment, which required that she act in the interests of the PIC.
Moré’s testimony on Tuesday provided more insight into the involvement of individuals who are the subject of disciplinary processes at the company.
She describes arriving at the office on December 19 2017, one day before the portfolio management committee meeting convened to consider the Ayo transaction, and being informed that a disbursement memo was awaiting her urgent attention that would approve payment for the R4.3bn investment.
Moré says that the disbursement memo had already been signed by six other PIC executives, including Matjila, and that her’s “was the only one outstanding.” She says she signed the memo “for the sole purpose of confirming that the requisite funds are available”.
The 10 other staff members who could face disciplinary action could receive sanctions from dismissal to counselling. Not all of those named in the report have had the opportunity to reply to the allegations.
The PIC declined to comment on its internal processes.