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In Matjila's words: Details of Edcon rescue to be made public as ousted CEO's testimony looms

Jul 07 2019 14:24
Janice Kew and Antony Sguazzin

Daniel Matjila, the ousted chief executive officer of Africa’s biggest fund manager, is expected to say his opposition to funding the rescue of clothing retailer Edcon ahead of national elections was one of the reasons he was dismissed.

Matjila is scheduled to begin testimony to the commission of inquiry into the affairs of the Public Investment Corporation on Monday.  It will include his assertion that the rescue of Edcon, which supports 140 000 jobs through direct employment and its supply chains, didn’t meet the investment criteria of the PIC's clients, according to his prepared statement.

On the day of his exit, November 23, he met the chairperson of the PIC, the country’s economic development minister and the CEO of Edcon to put forward the conditions for supporting the deal, he is expected to say at the inquiry. Those weren’t viewed favourably, he said.

The ongoing inquiry has heard from about 70 witnesses - several of whom flagged Matjila as playing a key role in approving questionable deals. He has denied that. President Cyril Ramaphosa ordered the investigation in October last year, one of a handful he’s instituted to probe alleged graft since taking office 16 months ago after Jacob Zuma’s scandal-marred nine-year rule.

Union pressure

In February, a senior official of the Congress of South African Trade Unions emailed the chairman of the PIC, who was also deputy finance minister at the time. He wrote that unless the PIC supported the rescue, the laboUr federation wouldn’t be able to encourage its members to vote for the ruling African National Congress party in the May elections.

The rescue was announced a week later, with the PIC leading the R2.7bn effort. It used R1.2bn of money from the Unemployment Insurance Fund, one of its clients.

Matjila is expected to say he was removed, at least partly, to ensure the Edcon rescue could take place. He cited the email, from Cosatu’s Parliamentary Coordinator, Matthew Parks, as evidence.

Matjila asserts that he and the PIC’s then head of private equity, Mervin Muller, maintained they would only back the rescue if Long4Life Ltd.’s proposal to invest R500m in the deal went ahead. Long4Life is led by Brian Joffe, a veteran South African businessman. The company didn’t invest.

While the bailout would have rescued jobs it was unlikely to generate adequate returns, according to Matjila.

The PIC on Thursday denied that the decision to invest the funds was politically influenced. Mondli Gungubele, the former deputy finance minister and chairman of the PIC, hasn’t responded to phone calls and text messages about the Edcon deal. Parks said in an interview that the mandate of Cosatu was to protect jobs and he would do the same again.

edcon  |  pic  |  dan matjila  |  pic commission of inquiry
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