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WRAP: Ex-PIC CEO claims wide delegated powers to sign investment deals

2019-07-25 09:42

The former CEO of state-run asset manager the Public Investment Corporation is testifying for the 11th day before the judicial commission of inquiry into the PIC.

PRETORIA, SOUTH AFRICA - JULY 8: Former Public Inv
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Last Updated at 14:32
25 Jul 12:16

Before Matjila can start answering questions about the timeline, the inquiry's chair notes he has an afternoon commitment. 

The parties decide in it an appropriate time to break. 

The inquiry will resume at 09:30 on Monday when Matjila will testify for a 12th day. 


25 Jul 12:12

Matjila is now shown a timeline of the AYO deal by the evidence leader. 

 

25 Jul 11:57

The commission is now considering Matjila's delegated powers to enter into agreements and where his authority to deviate from the standard operating procedure. 

He is asked what delegated authority allowed him to sign the subscription for R4.3bn in AYO shares in late 2017 without approval from the portfolio management committee.

He again states that he is responsible for the day-to-day running of the organisation, including assets under management.  

Matjila is asked to point out exactly where in the delegation of authority it is stated that he can sign off on deals without oversight. 

"We are not finding each other on this matter," states Matjila.  

He states section 8.1.2 of a delegation of authority document the inquiry is probing allows him to deviate from normal procedures. He previously cited a different section.  


25 Jul 11:42

The inquiry has resumed after a short break. 


25 Jul 11:12
Matjila says the AYO investment has not performed as anticipated due to aspects of the deal pipeline, not materialising, negative media reports, previous testimony before the commission of inquiry, and ligitation. 

25 Jul 11:05
Matjila says that the PIC's internal audit department is acting like a "mercenary hitman" to remove employees close to him. 

25 Jul 11:01
Matjila says he was shocked to learn that, after he left the PIC, two employees had been suspended based on a draft internal audit. 

25 Jul 11:00

He says that, following media reports that the PIC did not follow procedure in subscribing for AYO shares, the investment committee held a number of meetings. 

He said the decision to buy AYO shares did not need to come before the PIC's board.  


25 Jul 10:59
He says a later resolution noted the mistake between approval and ratification. 

25 Jul 10:58

Matjila says he was under the impressions that everyone at the meeting on December 20 knew the subscription had already been signed, saying this was the nature of an IPO. 

AYO was set to list on the JSE on December 21 and share subscriptions had already closed on December the 15.  


25 Jul 10:56

Matjila is now asked about a PMC meeting on December 20 to approve a share subscription in AYO. 

The meeting had been called, according to Matjila, to ratify the fact that the PIC had already subscribed for R4.3bn in shares in AYO on December 14. 

But the meeting, which Matjila attended, did not ratify the decision that had already but approved a new or "fresh" resolution to subscribe for shares. 

The chair of the inquiry asks Mathila why, if he was attending the meeting, he did not correct it?

"It never came into my mind that it would be an issue, commissioner," he says. 

Matjila says that he understands ratification and approval to have the same meaning. 

 

25 Jul 10:48

Matjila says that, at the PMC meeting of December 20, no senior person could have been under the impression that the share subscription had not been concluded. 

He notes that a memo had been sent to the committee members earlier, although none appear to have signed and returned it. 


25 Jul 10:32

Matjila says that Lebogang Molebatsi, the acting executive head of listed investments, had already signed for 20% of AYO's share capital when he brought Matjila the form. 

Matjila says he suggested to Molebatsi that this be upped to 29%. 

"I co-signed with him with the understanding that the PMC would ratify," he says. 


25 Jul 10:30

Matjila says that he wouldn't know who else would have got the final PLS. 

He says it could also have been couriered or hand-delivered. 

He notes again that the share subscription form must come from the final PLS, notes he wouldn't have the form if he of his team didn't have the final PLS. 


25 Jul 10:28

Assistant commissioner Gill Marcus notes that, according to timestamps in emails, it appears that the finals PLS was sent to the PIC only after the share subscription had been signed. 

She says the signed subscription was sent to Matjila's PA at 11:44am on December 14. Matjila confirms this. 

But she states that, according to her reading of the documents before her, the PIC was only sent the final PLS at 2:42pm. 


25 Jul 10:20

The inquiry again turns to the AYO's draft and final pre-listing statements. 

Matjila says it is his understanding that the PIC was in possession of the final PLS when the irrevocable share subscription was signed, as the form to sign was included in the final PLS. 


25 Jul 10:16

He says that a share subscription is irrevocable, says it is common and standard. 


25 Jul 10:10

Matjila said that an investment meeting on December 20 approved the AYO investment. The due date for share take-up had been December 15 and the share subscription had been signed on December 14. 


25 Jul 10:07

Matjila said the valuation of R43 a share was based on AYO's deal pipeline with BT SA as its strategic partner. 

"I was satisfied this valuation was reasonable" 


25 Jul 10:06

He notes the valuation of R43 per share for a 29% stake in AYO. 

Even though AYO only had net assets of R222m, Matjila says that, for an ICT company, its real value lies its contract and deal pipeline. 


25 Jul 10:04

He says selling liquid shares to fund a new acquisition is normal. 

"There is nothing untoward, it is normal". 

He says that, in practice, liquid shares were similar to cash for the PIC. 


25 Jul 10:02

Matjila reiterates he has never forced a colleague to take a decision they didn't want to. 

"I categorically deny this allegation that I put pressure on my colleagues do to this deal". 

He said an instruction to "create liquidity" to fund the AYO share purchase was not unusual. He says the asset manager has no other source of funds. 


25 Jul 09:56

Matjila says a resolution of the PMC is not the only way that investment could be finalised.

He says the PIC's CEO has the authority to personally sign off on an investment valued at up to 3% of the asset manager's total listed portfolio of about R900 billion. 

3% would be R27 billion, says Matjila. 

He says he did not, however, use this power to conclude the AYO deal, saying he didn't want power to be "too concentrated". 

He said he deliberately did not use this authority. 


25 Jul 09:52

Matjila is asked when he attempted to get a round robbin resolution from AYO's portfolio investment committee to okay the deal. 

The committee could not meet as its members were away on holiday. 

This is important as the PIC only received the final pre-listing statement on December 14. 

Matjila says he tried to get a resolution on either the 13th or the 14th. 


25 Jul 09:50

The PIC's R4.3bn investment in AYO will continue to be the focus of proceedings. 

Matjila is set to give more evidence about the signing the share subscription agreement in December 2017. 


25 Jul 09:42

Dan Matjila, the former CEO of state-run asset manager the Public Investment Corporation, will continue to testify before the judicial commission of inquiry into the PIC on Thursday. 

On Wednesday, Matjila said the asset manager's investment of R4.3bn in AYO Technology Solutions was above board. AYO's share price has fallen from R43 a share at listing to R9. 

Matjila also said that his relationship with businessman Iqbal Survé, the head of investment holding company Sekunjlo, did not influence the PIC's investment decisions.  


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