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Matjila cross-examined on merger related to Tosaco deal

Jul 15 2019 17:05
Lameez Omarjee, Fin24

Former PIC CEO Dan Matjila said he did not force a merger between two companies seeking funding from the asset manager to pursue a deal in Tosaco Energy.

Matjila appeared before the commission on Monday. The commission, led by Justice Lex Mpati is investigating allegations of wrongdoing at the PIC, which manages R2trn of funds on behalf of more than 1.2 million state workers.

Matjila resumed his testimony at 14:15, as the inquiry heard from the Government Employee Pension Fund's CEO Abel Sithole earlier. Evidence leader Advocate Isaac Monnahela led the cross examination on Matjila's statements on the Tosaco deal.

Matjila had previously told the inquiry that companies KiliCap and Sakhumnotho were among those that approached the PIC for R1.8bn in funding to secure the Tosaco deal. However, Matjila could not make a decision between the two companies, describing it as "catching a falling knife". He asserted that the companies decided on their own to merge in order to get funding from the PIC. This is contrary to businessman Lawrence Mulaudzi's testimony that Matjila forced the merger.

Matjila has denied forcing Mulaudzi and Sipho Mseleku, who represented Sakhumnotho, to merge – even though the commission has learnt that Matjila met with both parties on the same day. What is of most concern to the commission is that following his meeting with Mseleku, Matjila met with Mulaudzi and Mseleku had followed him into the room.

Picking up on this on Monday, Monnahela asked Matjila to confirm that he told the parties they had to merge because they are both small companies. To this Matjila agreed that he previously said in his statement to the commission that a "merged entity would stand a better chance than two separate entities".

Assistant commissioner Gill Marcus has suggested that it appears that the desired outcome was for the two parties to merge. Matjila however said he did not want to comment further as he has provided enough explanation on the matter. He reiterated that he did not force the entities to merge.

Due diligence

Monnahela then probed Matjila as to whether a due diligence was conducted on the newly merged entity. To this Matjila responded that he did not "expect" a separate due diligence on the newly formed entity as due diligence was conducted on the separate companies – KiliCap and Sakhumnotho – before the merger.

"I do not know the extent to which we can do due diligence on a newly formed entity," Matjila told the commission.

Matjila will continue his testimony before the commission on Tuesday at 09:30.

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