Follow-Up Meeting with National Treasury, PIC, Sekunjalo Group and Mr Maponya

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Finance Standing Committee

12 May 2021
Chairperson: Mr J Maswanganyi (ANC)
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Meeting Summary

Video: Standing Committee on Finance
Audio: National Treasury, PIC, Sekunjalo Group & Mr Maponya follow-up meeting 

17 Mar 2021: Mpati Commission Report: input from Sekunjalo Group and Mr Maponya

The Standing Committee on Finance met for a follow-up virtual meeting with National Treasury, the Public Investment Corporation (PIC), Dr Iqbal Surve’s Sekunjalo Group, and Mr Kholofelo Maponya of Matome Maponya Investments (MMI).
 

The Committee had previously met in March with the Sekunjalo Group and Mr Kholofelo Maponya in response to their request meet about their concerns about the Mpati Commission of Inquiry Report and the Public Investment Corporation (PIC).


Both parties claimed they faced discrimination as black-owned entities, particularly the Sekunjalo Group in the wake of the numerous legal proceedings there were engaged in with the PIC, which sought to reclaim overdue loan repayments. The PIC claimed that loans due to be repaid by the entities owned by the Group in mid-2018 were, by 2017, at risk of default, threatening the asset manager’s mandate for the protection of the Government Employees Pension Fund (GEPF), the Unemployment Insurance Fund (UIF) and the Compensation Fund (CF).  

Sekunjalo claimed to be the subject of coordinated and unfair smear campaigns due to its links to Independent Media (IM), due to its exposure of corruption under the current administration. Sekunjalo asserted that it was the subject of a smear campaign and a misguided Mpati Commission. Four of the 11 companies investigated by the Commission were linked to Sekunjalo. The Mpati Commission had not investigated white companies which had also presented losses to the PIC. South Africa had not been transformed.

Criticism of the PIC was raised by both Sekunjalo and MMI for resorting to strong-arm legal tactics which it would be able to win through attrition due to the large funds for legal processes at its disposal. The PIC told the Committee that it had had been forced to resort to the courts to settle the disputes after numerous failed attempts to recover payments and resolve disputes out of court with the entities in question. Moreover, the PIC was seeking to respond to and implement the findings and recommendations of the Mpati Commission of Inquiry into the PIC (Mpati Commission). The findings had, most notably, exhorted the PIC to recover irregularly awarded funds. The PIC was not in the position to challenge the Mpati Commission findings and should therefore not be targeted by those with grievances with the processes and findings of the Commission, such as Sekunjalo.

The PIC asserted that it did not “target anyone or anything” – the PIC did not institute legal proceedings based on “personalities”. The actions taken by the PIC arose from disputes when terms and conditions entered into at the beginning of partnerships with the PIC were not met.


The Deputy Minister of Finance said the Committee was the incorrect platform for aggrieved parties to seek to institute amendments to the investigation processes and findings of the Mpati Commission report. Aggrieved parties should seek resolution in court to review the Commission’s report. Neither National Treasury or the Committee could amend or set aside the Commission’s findings.


The Chairperson emphasised that Parliament promoted participatory democracy. Anyone approaching the Committee or making a petition was welcome. The members were fully aware of their mandate as Parliament. If a matter was before the court, that was how it would be treated. The doctrine of separation of powers was clear from the meeting. The Committee did not deal with issues that were “for the court”. However, there was no way that the members could not listen to stakeholders approaching the Committee.
 

Meeting report

Opening Remarks
The Chairperson said Sekunjalo Group and Mr Maponya had asked to re-do their presentations to the Committee.

Apologies were noted.

He said to Sekunjalo and Matome Maponya Investments (MMI) to be sure to speak to their reports, and not present line-by-line. The presentation was a follow-up.

Mr Maponya Follow-Up
Mr Kholofelo Maponya said he represented Matome Maponya Investments (MMI), which had been formed by his father. MMI had interests in various companies, mostly structured around social investments. He introduced his team.

Introduction
Black people had historically not had access to certain funding in South Africa. This was the driving force behind the formation of MMI.

MMI had ended up in dispute with the Public Investment Corporation (PIC), as it was hindering the ability of people to do business freely irrespective of their race. Black people continued to struggle to receive finance and be overcharged. Their dreams had been deferred. He was looking to the PIC to uphold the hope for realisation of this. The PIC should be used to uphold black business and ensure meaningful participation in the economy, not only MMI.  Because they spoke out, they should not be taken as arrogant blacks when entering new industries and businesses.

He therefore sought a correction to the situation. There needed to be more room for other black entrepreneurs and professionals. This was the vision of MMI as a socially-orientated company – to utilise social funds for social goods.

Mr Zacharia Mogotsi explained that MMI was a diversified group, mostly within social enterprise. These included 2UFoods, AFGRI, and SA Home Loans. These investments were undertaken by MMI self-funded, with a personal balance sheet meaning it had skin in the game. This demonstrated the social aspect of the business. This was particularly important as the South African retail market kept out smaller retail players.

The apprehension to fund MMI had nothing to do with the business case itself. In having to defer to a commercial bank for funding meant the PIC was failing in its funding mandate.

Opening Statement

Ms Lindiwe Mthembu said that MMI was part of the PIC’s “experiment” of dealing with non-listed organisations and entrepreneurs due to their structure and skill sets. In terms of the purpose of the Judicial Commission of Inquiry into the PIC, MMI had not fallen into the mandate spoken to and had written various letters of complaint to previous Ministers and Chairpersons.

MMI’s grievances were chiefly for agricultural and human settlements interests. These related to disagreements relating to Magae Makhaya (RF) Proprietary Limited (MMH), SA Home Loans Investment Holdings Proprietary Limited (SAHL), Bafepi-AFGRI (RF) Proprietary Limited (Bafepi), as well as AGRI Poultry Proprietary Limited.

Ms P Abraham (ANC) interrupted and informed members that Mr I Morolong (ANC) was leaving the meeting.

The Chairperson asked why.

Mr Morolong said he had pressing commitments that he was required to attend to.

 

Presentation Continued...

What do we want to achieve through this dialogue?

Mr Maponya said MMI sought to reform the overall relationship with the PIC, the re-instalment of MMH facilities, reach a settlement on the balance on profit participation at SAHL, settle the share of Bafepi at the current value, as well as re-instatement of Daybreak shares.

Litigation: Our Synopsis

Mr Bophelo Malabela, MMI’s Attorney said MMI wished to respond to allegations made by representatives of the PIC. He asked to be shown where in the PIC (Mpati Commission) report MMI was implicated in any wrongdoing.

As previously discussed, the Mpati Commission’s treatment of MMI was unfair. He supported Mr F Shivambu’s (EFF) previous suggestion that while matters in court could not be discussed, it would be more advantageous to have productive discussions between aggrieved parties instead of resorting to costly litigation.

Courts and legal processes were being used to keep MMI and its entities in the courts at great cost, causing them to run into default. Contracts had been signed which MMI was doing everything to honour; otherwise it would be sued and told it had breached terms that did not exist.

Mr Maponya concluded the presentation.

The Chairperson thanked MMI and handed over to Sekunjalo.

Sekunjalo Group Follow-Up

Dr Iqbal Survé, Chairman, Sekunjalo Investments, thanked the Committee for the opportunity to present to the Committee again, focusing on the Mpati Commission.

Introduction and Background

Dr Surve said the PIC had only invested in three of Sekunjalo’s 80 investments. This was emblematic of the failure of the PIC to invest in black companies on the JSE. He claimed that the Mpati Commission had not investigated the 97% white owned companies on the JSE. It was clear that Sekunjalo had been the target of the Mpati Commission and was a victim of a massive smear campaign.

Mpati Commission Report

Advocate Wallace Mgoqi, the Chairperson of Ayo, presented a review of the Mpati Commission report. He said that the Commission had relied on evidence from unreliable witnesses.

Conclusion

Dr Surve said that the Mpati Commission had, along with toxic media influences, deliberately sought to tarnish the reputation of Sekunjalo. Detractors, working with competitor media companies to Independent Media (IM), had selectively quoted parts of the report to promote a negative image of Sekunjalo. The Commission had been established from these false media narratives, which informed its terms of reference. Sekunjalo should not be undermined because of its highly transformed group of companies.

The Chairperson thanked Sekunjalo and said the Committee would move to responses from the PIC and National Treasury.

He invited the Deputy Minister to speak.

Dr Masondo said he preferred to comment after the responses.
 
Public Investment Corporation (PIC)

Mr Abel Sithole, CEO, PIC, said the PIC was not dealing with personalities. It was not targeting entities or individuals because of the individuals, rather it dealt with the nature of transactions. The PIC’s responses spoke to issues arising in the transactions that had led to the PIC’s action when terms and conditions of the PIC investments were not met.

The PIC was said to be looking after social funds. The PIC looked after the Government Employee Pension Fund (GEPF), the Compensation Fund (CF), and the Unemployment Insurance Fund (UIF). Those were funds that looked after the benefits of public servants. The PIC was not a sovereign fund; it looked after funds with liabilities behind them – those of public sector workers. It had to generate returns on and protect the funds it invested on behalf of workers.

What was clear from both presentations was that the PIC had happily funded entities related to Sekunjalo and MMI multiple times in the past. This discredited allegations that the PIC was attempting to withhold funding. The facts spoke to themselves. The allegations did not line up and the PIC dealt with cases on the merits of the transactions involved.

The PIC could not be held responsible for the terms of reference provided to the Mpati Commission. Moreover, the PIC was not involved in the investigation and inquiry itself – it itself was the subject of the inquiry. It could not be held responsible for the terms of reference, findings or recommendations that were made. Criticisms of the work of the Commission should be directed to it, not the PIC.

On statements made in the presentation on the matter of the GEPF funding of Revego Africa Energy, the PIC was not a funder of Revego.

There had been reference to the stopping of funding to employees of the PIC. This needed to be taken in its proper context. This dealt with the allocation of responsibility within the organisation and unhappiness with how actions were taken against individuals concerned in decision making processes. This had resulted in individual and organisational reputational damage against the PIC without the allegations having been tested.

He outlined the transactions that the PIC had entered into with entities linked to Sekunjalo and MMI in the way the Commission had intended them to be answered.
 
For Sekunjalo, the transaction the PIC had entered into with Independent Media was in August 2018. The invested capital was R500 million. The valuation was currently R700 million owed. The reason for the valuation being higher than the original amount is due to interest accrued on the capital that had not been paid. The full amount due by Independent Media had been defaulted with repayments due to the GEPF by August 2018. The report of the Mpati Commission dated 13 December 2019 recommended that investments made where money had been lost or had not been correctly used, they needed to be quantified and recovered.

The PIC had been unable to agree to the proposal made by Sekunjalo Independent Media (SIM) to repay the R330 million debt in tranches over a four-year period, resulting in the PIC instituting proceedings to recover the money in June 2020. To date, SIM had failed to pay the GEPF.

On the 2013 R183 million investment in IM, its default on this had been brought about by the declining print media environment. The current value was over R392 million. In September 2020, IM had been informed that the PIC remained in good faith to negotiate on default notifications. Notice of default had been served on 19 November 2020, followed by a letter of demand on 27 November 2020. Legal action to recover the funds had been taken in January 2021.

He outlined further transactions with other entities such as Magae Makhaya, Daybreak, SA Home Loans, and Ayo, noting that they were all entities that the PIC had been alleged to not have funded. This was clearly not the case, shown by the figures. The allegation of the PIC not being willing to provide funding was not the case.

Only once other measures to recover funds had been exhausted had legal action been instituted against SIM, IM, and Ayo, where the PIC had already acknowledged a R4.3 billion investment made in violation of internal investment government processes.

He handed over to National Treasury.

National Treasury Responses

Dr David Masondo, Deputy Minister of Finance, said that the Ministry of Finance, National Treasury, and the PIC had briefed the Committee on 2 December 2020 on the government’s response to the Mpati Commission and its recommendations. This meeting had discussed how, together with the PIC, the groups intended to implement the Mpati Commission recommendations. National Treasury was happy to report regularly on progress when requested by the Committee.

He had assumed that the current session and the previous meeting on 17 March 2021 was not a platform to further report on progress on implementation of the report, as it dealt with entities concerned with MMI and Sekunjalo.

Having listened attentively to presentations by MMI and Sekunjalo, it would seem there were two primary issues and a third. The first pertained to a shared discontent regarding the findings of the Commission.
 
The second pertained to disputes over transactions between the PIC and parties involved. The view of National Treasury was that those aggrieved with the adverse findings by the Commission had a legal recourse. They could challenge the report findings legally. He did not think that the findings could be amended or set aside on the current platform of the Committee. He strongly recommended that those unhappy with the findings should approach the necessary authorities and take legal action.

On the issue of disputes of transactions between the PIC and the parties concerned, the PIC should be allowed to do its work. He urged the PIC to be allowed to deal with the issues with aggrieved parties without interference. The PIC had a fiduciary responsibility to its investors, the GEPF, and the UIF, through the mandate it was given. The PIC’s responsibility was to protect and recover funds where the risk exceeded the appetite, whether the companies concerned were black or white owned. The PIC, importantly, invested workers’ money. It was given the mandate to invest the funds, grow and transform the economy, and importantly generate returns for the workers. The Committee, the Ministry of Finance, or anybody else, could not tell the PIC how to act, as this could jeopardise the PIC’s investment mandate on behalf of majority workers. The PIC needed to be able to do what they did consistently and fairly. The PIC took action against entities by taking into account the investment mandate from its clients – which were largely workers.

He cautioned all, including the Ministry and MPs that they should not come across as seeking to tell the PIC how it should settle with any parties. This should be left to the PIC to resolve. Otherwise, it would undermine the mandate of the PIC provided by the GEPF and other investors.

The PIC was an asset manager. Investors, the GEPF, could decide which other asset manager should manage their funds in their interests if they were dissatisfied. He said it was important once more to therefore emphasise that the PIC be allowed to do what it needed to in the interests of its investors and growing and transforming the economy.

The third issue was that of the allegations made against members of the PIC, including its Chairperson. He suggested that if there were issues against certain members of the PIC, that the correct platform to raise such issues should be used. It was unfair to cast aspersions on the Chairperson of the PIC who was not present in the Committee. The allegations also did not appear to be substantiated. He had heard Mr Matome make some serious allegations against the Chairperson of the PIC. Mr Matome knew the channels that were available to him to address such allegations.

He would not want to respond to various allegations in the media against National Treasury, the PIC, or the Conduct Authority. All he wished to say was that as a ministry, the view was that the PIC, the Conduct Authority, the Financial Intelligence Centre (FIC), and National Treasury, were institutions that had a lot of credibility and it was important that where there was a lack of hard evidence to show otherwise, to have the institutions continuously attacked was unhealthy. By continuing to do so without credible evidence, investor confidence in the country was eroded. Those institutions continued to play major roles in ensuring South Africa was one of the most competitive and attractive investment destinations.

National Treasury’s view was that Standing Committee on Finance was not the right platform to seek to amend the Mpati Commission report and its findings on behalf of those mentioned in the report. The aggrieved entities needed to exercise their legal right to raise challenges in court and not expect Parliament to do so on their behalf.

He wished to reaffirm confidence in the PIC, the Financial Sector Conduct Authority (FSCA), the FIC, and National Treasury. He urged for bodies to be allowed to work without fear or favour. They had public mandates to act for the benefit of the country. He could not see any evidence of actions otherwise.

Ms Unathi Ngwenya, Chief Director: Governance and Financial Analysis, National Treasury, said she had wished to introduce the nature of the Deputy Minister’s response but had disconnected from the meeting.  

Deputy Minister Masondo said that concluded his response and he would return to respond if called upon.

Discussion

Mr Shivambu said the context was that there were companies that the PIC had invested in on behalf of the GEPF, the CF, or the UIF. There were disputes and court judgements where the PIC was dragging the processes in court. These actions were damaging company reputations that were needed to operate in the business environment to secure capital in this process. These companies had written to Parliament for assistance as a platform to raise their concerns. This was his understanding of the day’s meeting.

Prior to the parliamentary recess, the Committee had asked the PIC if there was a process where engagement without litigation could be taken with aggrieved parties. This protected the money of workers and investments made by the PIC. Broad principles could be spoken to.

The role of Parliament was that of overseeing institutions. The objective was to protect the pension funds of workers.

In one of the findings of the Commission, the PIC was said to be overexposed for investing R1.85 billion. The question was of the PIC’s Naspers exposure of R250 billion. The Committee had cautioned against this. Would the crisis that had defined Steinhoff and the associated write-offs not be repeated? Where was the wisdom of overexposing in such a manner? Why was the Naspers exposure similar, which, due to dynamics of global economy, could suffer the same fate as Steinhoff?

There was a conversation needed to determine the PIC’s investment policy mandate. Why was a bigger portion of eggs allowed to be put in one basket?

The other issue was the allegations against the Chairperson of the PIC board. For the Deputy Minister to present this issue as if it was the first time it was mentioned before the Committee was dishonest. It had been a question in the December 2020 meeting with the Committee where the Chairperson had been asked if he was part of a bid to buy SA Home Loans. There had been disputes on certain PIC investments. The PIC had been continuously in court. During this process, the Chairperson of the PIC had put in a proposal to purchase the shares in question. This was a governance issue, the matter needed to be investigated. A document had been sent to the Chairperson of the Committee and the Ministry to highlight that the Chairperson of the PIC looked to be engaged in improper practises. These were not simply criminal issues but that of governance and ethics. He demanded a response from the PIC board. The deal document confirming the attempt to buy SA Home Loans needed to be confirmed or denied.

Mr Shivambu referred to the amended legislation that gave guidance on how the PIC board should be constituted, the Committee needed to be told why this was not being complied with. At governance level there was no stability in the PIC.

He insisted that the Committee needed to oversee the PIC, rather than allow it to make independent decisions, as suggested by Dr Masondo. This was in the interest of workers and transformation, taking a hands-off approach would be “reactionary”. The issues could not simply be dealt with in court.

The PIC was owned by the South African government. The main shareholder was National Treasury. There could not be a hands-off approach to oversight.

There were issues required to be dealt with at a broader policy level, such as multiple beneficiaries. The Committee needed to deal with the amount of exposure allowed to the PIC. These rules should apply to all companies, black or white. This concerned how much exposure the PIC could nominally have to all companies. This required clear guidance.

There should be a framework and scope within which National Treasury and the PIC could be driven to explore resolution without litigation. This was in the interests of workers and driving transformation in the South African economy. There had to be a different approach to how the issues were resolved. If discussions were held between aggrieved parties, the matters could often be solved. If no resolution could still be found, then they could go to court.

The presenters had said there had been no adverse findings against them by the Mpati Commission. It was not about this. The issue was about the acrimony between the entities and the PIC. There were allegations of a systematic mobilisation of undermining black business in South Africa. National Treasury should not fall into such a trap of undermining black business. Work could be done without compromising anyone.

Mr G Skosana (ANC) noted the Deputy Minister’s remarks that it was the incorrect platform to handle issues of dispute between the PIC and the entities.

From what had been heard from MMI and Sekunjalo, the two were saying that there were no adverse findings against them from the Mpati Commission. It was one thing to say that parties should accept adverse findings and contest them through legal routes. However, if, through their understandings, there were no adverse findings against Sekunjalo and MMI, it was a different issue. Hence his question for the PIC was whether there were adverse findings from the Mpati Commission on MMI and Sekunjalo?

Sekunjalo had disputed a number of investments the PIC claimed to have made to different entities under their control. This was concerning. Sekunjalo were saying that there was a serious misrepresentation of asset allocation from the side of the PIC. He wished to hear from the PIC on the matter.

One last serious allegation from Sekunjalo was that the PIC was seen to be mainly invested in predominantly white companies and deliberately overlooking black companies. After so many years since having the 1994 democratic breakthrough, that should be a concern of the Committee. He wished to hear the PIC’s comment on that.

The Chairperson asked the PIC if it had a BEE policy on how to help black people emerge in the business sector.

Mr Sithole said he would address the direct questions to the PIC.

He was not contesting the issue of overexposure to certain companies raised by Mr Shivambu. The concern was correct. The PIC was overexposed to Naspers. However, this needed to be understood in context. The reality was that Naspers was as big a part of the PIC’s portfolio as it was due to its performance. It was not that the PIC had been buying into Naspers, but the relative growth of Naspers had been significantly higher than other entities held by PIC, leading to the exposure. He supported the concern raised by members to diversify. It needed to however be understood that the issue was that one asset had performed significantly better than other investments.

On the questions of the Chairperson of the PIC, the Chairperson was not present to defend himself, but he would present the facts. He could not talk to the engagements of the Chairperson outside the PIC; he was not privy to such actions. However, he categorically assured the Committee that there had been no approach by the Chairperson of the PIC to ask for funding from the PIC for any entities he had dealt with in his time as Chairperson. He had been running businesses long before he became the Chairperson of the PIC and may have had other dealings in that capacity. However, in his time at the PIC he had never asked the PIC to seek funding of the entities.

On why the PIC was exposed to certain assets and the policy on funding BEE related ventures, the answer was yes. Part of the reason for the PIC being present was the historical funding of black business. The PIC was never shying away from transformation and social investment whilst honouring its mandate in terms of clients’ return expectations. This came from the PIC Amendment Act and was part of the mandate going forward. The PIC therefore took on board the transformational mandate whilst ensuring it was achieving financial results.

On investing in unlisted investments not on the JSE, the matter was clear according to the mandates of the GEPF, UIF, and CF. The PIC had made commitments to invest in the space where returns could be generated. The dispute was not about whether to invest or not, but that the terms and conditions entered into had not been met by the companies.

The way the PIC invested was informed by different instruments and asset classes. Lending money to governments and companies was not the same as buying stakes in them. This spoke to asset class investments in terms of bonds, equities, or loans. In terms of listed versus non-listed entities, the associated rights and obligations were different as the instruments were different. The PIC was not investing in the JSE to favour a company of any colour. The PIC was investing in the JSE in listed instruments. On the unlisted side, the PIC invested directly in companies not listed on the JSE. Unlisted instruments had historically been where the PIC focussed on black companies. However, the PIC took action when terms and conditions were not met, wherever the entity concerned was in the dispute, not because of their race or gender.

The PIC did not always resort to litigation. Sometimes the PIC went to court but also sought other alternatives such as mediation and arbitration. However, such attempts could not detract from the need to recover the money the PIC looked after. The PIC therefore always looked to alternatives, but this did not mean it would stop protecting the interests of the money the PIC was looking after.

Deputy Minister Masondo said there had been a question asked by Mr Shivambu.

Mr Shivambu said the issue about the Chairperson of PIC was not that he had asked for money from the PIC, it was that he was attempting to buy assets that belonged to the PIC. He asked for clarity on that component. The asset of SA Home Loans was currently in dispute and the Chairperson had made an offer to buy it “from himself”. The issue needed to be responded to. The categorical denial was not within the context of the question and therefore not correctly responded to.

On the matter of being chairperson of Discovery Bank, was that not a conflictual relationship? Discovery was one of the invested companies of the PIC.

Ms Abraham said the comments by Deputy Minister Masondo had a disarming effect on the Committee as an oversight body. This was something she said with all due respect.

She had clarity questions that she had wished to ask. In the previous engagement with the stakeholders and the PIC, the PIC board had been represented. What was outstanding was the presence of the Chairperson of the PIC. She said the Committee needed to check where the representation was.

On a transformation policy at the PIC, the question was still relevant. She had heard that the CEO spoke to the issue of fairness in dealing with stakeholders. She asked if the PIC had some form of a measuring stick to assure the Committee that there was action taken according to a policy. Otherwise, decisions would be random and go “either way”.

On the issue of “all the litigations”, inasmuch as the Committee did not have the power to make decisions over what happened, the Committee stood to defend and represent the shareholders in the PIC, it should have an interest that said as much as possible: “let the entities stay out of court”. However, she had heard the Deputy Minister explain that, when all else failed, court would be the route taken. If the court found in a particular way, why then would parties still go further in a court review when the court had decided? In whose expense was the PIC going to court in that instance?

Mr Skosana said he had asked three questions and only received one response.

Were there adverse findings against Sekunjalo and MMI in the Mpati Commission report?

A representative of Sekunjalo had quoted a number of entities that the PIC was said to invest in but allegedly was misrepresented by the PIC, what was the PIC’s comment on this?

Dr Surve said that Sekunjalo was not an adversary of the PIC. The two were co-investors in the country. He had enormous respect for the CEO of the PIC, and had known him for numerous years, as well as Mr Matjila. Sekunjalo welcomed the effort at seeking to find a solution to the benefit of all parties. There had been some constructive comments. He reminded the members that the matters concerned the people’s money. It was not just the PIC that had invested in those companies, the two were co-investors. Sekunjalo had in fact invested more than the PIC in IM. Sekunjalo had invested R1.2 billion in Independent Media.

It had been mentioned in Mr Sithole’s slides that the PIC had went to court as directed by the Mpati Commission to see where the funds had gone. This had been seven to eight years ago. The full R2 billion invested by the PIC and Sekunjalo had “gone to the Irish”. The Irish had wanted R2.8 billion but had been negotiated down. The PIC had invested R800 million. It did not make sense to go to court to see where the money had gone.

There were also other concerns. South Africa had a problem of huge unemployment. The two companies targeted by the PIC had 4000 employees, and over 20 000 dependents. At a time of COVID-19 and mass unemployment. 90% of the employees happened to be black and the majority in leadership happened to be African. This was unacceptable that the companies could be targeted without accepting those factors. The customers also needed to be considered, as well as the signals sent to investors when a R2 trillion asset manager made an investment then turned around eight years later as was the case in Independent Media and not wish to continue. In the case of Ayo, three years later the PIC had backtracked and said it wished to withdraw due to internal processes not being right. There had been no wrongdoing on Sekunjalo’s side as proven by the Commission. What signal did this send to investors? The PIC was at that point due to false media reports. This had led to the President setting up the Mpati Commission with the terms of reference to deal with the PIC’s own governance. This had been misconstrued to target Sekunjalo.

An important point made by Dr Masondo was to leave the PIC to invest and do its job. He agreed with this. The PIC had invested in Ayo after numerous engagements and viewing an 80-page prospectus. Now, Ayo was suffering from political interference and being discriminated against and targeted by the PIC as a result. Recently, the PIC had invested in a company on 75 times forward multiple at a valuation of R15 billion. Ayo had been four times multiple at 16 times. Of course, the company in question was white, coming from Stellenbosch.

From the PIC’s own annual report, it had lost R50 billion and had not instituted recovery of any of that money. Surely the PIC could not be defending pensioners’ rights if it had not instituted recoveries against all the companies concerned. According to the GEPF’s and PIC’s own report the loss amounted to R170 billion over the last seven years.

There was no consistency shown by the PIC. It was clear that it was targeting Sekunjalo. It was nothing but McCarthyism. One of the largest asset managers in the world could not operate in such a manner. The PIC could not act on “buyer’s remorse” three months after signing an investment in Ayo. This showed a lack of proper governance structures. South Africa needed investment – he urged the PIC to be allowed to get on with that job. For this to happen there needed to be consistent and stop targeting people.

South Africa also needed media freedom. Independent Media had shown the PPE corruption of R40 billion, robbing nurses and doctors of millions of essential protective equipment. It was an attack on media freedom that the PIC was targeting Sekunjalo because of its association with Independent Media to ensure the corruption was covered up. Sekunjalo was the victim of a targeted smear campaign.

He knew Mr Sithole as a man of integrity. However, there were “hidden hands” interfering in the PIC to the detriment of Sekunjalo. The country would suffer if such behaviour continued. If a domestic black company in existence for 25 years was targeted viciously and aggressively by media detractors with the PIC being party to that, he did not see a future for black people in South Africa. If such behaviour continued, black people would choose not to open businesses in sectors controlled by white people.

Sekunjalo would definitely take the Mpati Commission on review. It had not already done so due to there being no adverse findings in the report. He urged the members to consider that Sekunjalo was the target a discriminatory, targeted, racist smear campaign. He urged the PIC not to be party to that under any circumstances.

Mr Maponya requested Mr Skosana’s questions on the status of adverse findings be answered by the PIC before he commented.  

The Chairperson said that the PIC would respond after Sekunjalo and MMI had asked their follow-ups.

Mr Maponya said that MMI had come to Parliament as citizens of the country who paid taxes and voted. MMI had exhausted all means available. The Constitution allowed the seeking of oversight of Parliament when a party was abused.

The first allegation made against the PIC Chairperson had been put in writing “long ago”. It was on record.

On the second allegation, it had come to Mr Maponya’s attention recently. It was an indirect investment that had gone into the entity concerned. He did not feel safe as a businessperson where the chairperson of a public institution was a competitor.

The CEO of the PIC had said the PIC supported black business. He disputed this. On the question of which historical involvement had been reneged on leading to MMI appearing before the Committee, he had provided evidence in the presentation. He said the PIC was no longer investing in black business. It had started well, meaning well, but had now stopped.

The issue of a letter written by employees had mentioned that the mandate of the GEPF on transformation and investment in unlisted entities had not been renewed.

On the issue of court expenses, two officials of the PIC had allegedly said to MMI that it would be taken to court “until it bled”, as the PIC did not use their personal money but the massive savings of pensioners. MMI had been told “who are you to take the PIC to court”. The CEO was disingenuous when he spoke to the issue of social money versus social investment. The PIC’s actions reflected egotistical behaviour.

He did not say that the Committee needed to do the PIC’s work, the Committee and National Treasury needed to apply more oversight on the PIC regarding the personalisation of issues.

The PIC was not recovering anything from MMI; MMI had never lost the PIC’s money.

The PIC had allegedly taken an asset from MMI voluntarily. This was not the case. Mr Maponya had undertaken a voluntary resignation as director of the company in order to not lose other assets. He had not sold or transferred any shares to the PIC. Thereafter, his shares had been illegally transferred following the resignation.

The issue of AFGRI had been dealt with extensively. The loss of value emanated from the PIC’s actions.

Mr Sithole said that the entities involved in disputes had been shared in detail. The PIC did not go against entities in general, it went specifically. He had enumerated specific investments with entities involved in Sekunjalo and MMI. This only spoke to entities presented to the Committee in that meeting. The PIC did not make any allegations against entities, only the specific investments.

On the issues around the PIC allegedly targeting specific companies, he first thanked Dr Surve for noting his integrity. The PIC did not target black companies at all, and would never do it. It dealt with companies that were not meeting the terms and conditions that had been entered into. The companies the PIC was taking action against were not meeting the terms and conditions that they themselves had signed up to without any duress. The PIC simply wanted the conditions that had been acceded to be met.

On the GEPF mandate, anyone saying the GEPF mandate to invest in unlisted companies had expired did not understand the mandate the GEPF had with the PIC. Such people would benefit from examining the GEPF mandate. The GEPF invested in 11% unlisted companies. This had never been changed. The details and modalities of how this was managed was constantly engaged with clients.

On the question about adverse findings in the report, the point had been made by the Deputy Minister, unhappiness with the findings of the report could not be dealt with by the PIC or National Treasury and the PIC could therefore not respond to such issues.

On the matter of Sekunjalo’s representation of certain entities, he only spoke to entities invested in by Sekunjalo that had contravened terms with the PIC, not the entire Sekunjalo Group.

He found it interesting that Sekunjalo had gone to court to appeal outcomes, which then ruled in favour of Sekunjalo. Yet when those findings had been appealed, Sekunjalo then criticised the PIC for acting in the same manner as they had. To say the PIC could not appeal seemed very odd in this situation.

Deputy Minister Masondo said that the issue raised by Mr Shivambu on the Chairperson of the PIC had been dealt with by the CEO of the PIC.

Reporting to other relevant authorities where looting of companies had happened; it was in this context that Dr Masondo had said that such issues should be taken to relevant authorities.

He had no issue about using any conflict resolution mechanism that parties chose to undertake, whether this was out of court or in court settlement. That was the prerogative of the parties concerned. However, the courts were needed to decide despites in the final analysis if parties could not agree using other means. It was therefore incorrect to say that the PIC had no right to exercise legal recourse. Some decisions had been taken in favour of the PIC, and then it had to defend itself. Any form of conflict resolution that made both parties happy and was in the interests of the clients of the PIC and South Africa, was a priority. In the absence of consensus among parties, the PIC was left with no choice but to allow the courts to resolve matters, despite this being a costly endeavour. National Treasury could not prescribe how to resolve issues. He had confidence in the board and management of the PIC to decide what was in the best interests of their clients and South Africans in resolving matters. National Treasury could not prescribe how to deal with disputes at the PIC. Yes, the issue of costly legal fees remained, but in the absence of any other resolution, it was necessary. An important point had been raised regarding recent media reports, especially Sibaya. This would be monitored. The board of the PIC was dealing with that. The Committee represented the people of South Africa and should be worried about such reports. The Committee would get feedback on how the PIC dealt with issues.

The role of the PIC and the GEPF in growing the economy needed to be continuously debated. If there was a need to amend laws, it could be done. Once laws were made, they had to be monitored in terms of implementation and ensure bodies were bound by them.

It had been said by Dr Surve that Sekunjalo was being targeted by “hidden hands”. Who were these, and how was it being done? He preferred to deal with facts. In the absence thereof, such statements would move to the realm of conjecture. It would be important for Dr Surve to say how Sekunjalo was being targeted and present the facts of how black companies were being targeted. No one in National Treasury would want to be part of unfair targeting of anyone in business. However, it was important for Dr Surve to present and deal with facts in this regard.

The point about the PIC and its terms of reference was clear. The Mpati Commission of Inquiry had been formed to establish the state of impropriety regarding investment decisions by the PIC in 2017/18. The question before the Commission was whether impropriety had taken place regarding PIC investment decisions and whether any legislation or contractual obligations had been contravened resulting in any undue benefits. The Mpati Commission had provided the report on its findings. Any other issues that it was unaware of should be brought to attention based on facts and would be dealt with. He was concerned about people making allegations and statements without facts.

He appreciated the conversation that had been held. It provided them with more opportunity to reflect as Government. Such conversations presented Government with a mirror to determine whether it was doing the correct thing.

The Chairperson said he had heard members say the court should not always be the last point of arbitration. Other platforms available to use should be utilised prior to the courts.

He understood that the board of the PIC to be an accounting authority. The Minister was the executive authority. There was nothing stopping stakeholders such as MMI and Sekunjalo to approach the Executive to hold people accountable. The Executive had a responsibility as a body elected by the people of the country to deal with such issues.

It was against this background when approached by MMI and Sekunjalo that the Committee could not “close the door”. Parliament promoted participatory democracy. Anyone approaching the Committee or making a petition was welcome. The members were fully aware of their mandate as Parliament. If a matter was before the court, that was how it would be treated. The doctrine of separation of powers was clear from the meeting. The Committee did not deal with issues that were “for the court”. However, there was no way that the members could not listen to stakeholders approaching the Committee.

From his understanding of MMI, they were prepared, if there were amicable ways to resolve the issues, to do so. MMI had broken down how their entities wished to be treated and the outstanding issues resolved with the PIC. He hoped that the door would remain open to resolve the issues.

The Committee would not prescribe how the matters should be resolved. The interest was to ensure the money of the workers was secured, as well as that the loans businesses received from the PIC were serviced and paid back. He understood that Ayo was committed to repay the loans from the PIC. He did not think that every time there was a dispute that it needed to be resolved in the courts. The Committee was going to complain at a later stage that courts were overreaching and taking over the responsibility of governance. The work as legislatures was “bothered” by some findings and judgements of the courts. He believed that, as emphasised by Ms Abraham, if there were other platforms and mechanisms to resolve issues, those needed to be exhausted before going to courts. The Committee was not making a finding against the PIC that they had closed the doors against those who had borrowed from them. He emphasised that there should be amicable relationships between the PIC and borrowers.

In the next engagement with the PIC, either when presenting their APP or quarterly report, the Committee would have to be briefed about the transformation policy at the PIC. The issue of BEE was an important issue to redress the injustices of the past. The Committee and the PIC should not be apologetic of it. If the PIC, as a large public institution, did not have the specific mandate to empower black people, it would remain extremely difficult environment in South Africa. Mr Sithole had said such a policy existed. He requested that in the next engagement the policy be presented to the Committee, National Treasury, and the Chairperson. This was in the background of statements that were continuously made of a bias against previously disadvantaged people.

Deputy Minister Masondo said the Executive had no issue in meeting people to resolve disputes. Another issue was what was to be done with complaints. This needed to be clarified. There should not be an impression of the Executive and the PIC refusing to meet or engage people. If it was coming across as such, it was not the intention.

The Chairperson made it clear to Sekunjalo and MMI that the doors of the PIC were open for engagements and to raise issues. If the platform was open, it should be used before coming to Parliament. He welcomed the commitment to provide platforms to aggrieved stakeholders.

Parliament would be monitoring outcomes between the PIC and Sekunjalo and MMI. Parliament was a decision-making body, not a talk show. The Committee would ensure follow ups.

The meeting was adjourned.
 

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