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WRAP: Ex-PIC head says R4.3bn AYO investment was above board

2019-07-24 10:40

Dan Matjila was continuing to testify about the PIC's investments in companies linked to the Sekunjalo group.

PRETORIA, SOUTH AFRICA - JULY 8: Former Public Inv
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Last Updated at 02:06
24 Jul 15:49
With that, the inquiry adjourns until Thursday at 09:30. 

24 Jul 15:47

Matjila says it is his understanding that the investment committee could ratify the fact that he signed the AYO share subscription after he signed. 

He says the PMC has ratified authorisation after the deal before. 

He notes that the Government Employees Pension Fund did not have to be consulted about the AYO investment, and it did not have to approve it. 

The PIC invests on behalf of the GEPF.  

 

24 Jul 15:07

Assistant commissioner Gill Marcus again asks about when Matjila had the final pre-listing statement before him, and when he had the provisional pre-listing statement. 

Matjila says he had the final statement on December 14. He says it was his understanding that the acting executive head of listed investments Lebogang Molebatsi brought the statement to him on that day. 

Matjila says he and Molebatsi then signed. 


24 Jul 14:59

An internal PIC audit report from late 2018 states that the PIC did not have the audited financial statements of AYO from 2017 when the share subscription was complete. 

Matjila again states that AYO's pre-listing statement was "very stringent". 

He says then there was no need for the audited financial statements from 2017 to be consulted. 


24 Jul 14:52

Matjila again says he did not put any pressure on anyone to push through the AYO share subscription deal. 

He says claims that due diligence processes had been completed. 

He tried to obtain a resolution for the transaction to proceed via a round robbin resolution from the members of the PMC - or portfolio management committee. 

He says this was not possible as they had already left on holiday.

He then made a "judgement call" - and signed the share subscription form. He said this was on the understanding that the PMC would later regularise the transaction. 


24 Jul 14:46

Matjila says the valuation of AYO did not look odd to him. 

He says he was basing his views on what was provided to him by staff. 


24 Jul 14:40

Matjila says there was nothing in AYO's pre-listing statement to make him doubt the veracity of the numbers. 

He says the PLS had to be signed off by JSE-approved entities. 


24 Jul 14:34

Matjila says he phoned team members and ahead of the subscription of shares in late December 2017, and he was told there was nothing adverse in the reports they were preparing. 

It is noted that, in the internal audit review one of the team members - Candice Abrahams - denied that Matjial phoned her in December 2017. 

Matjila claims he contacted Abrahams on Decemebr 13. 

He says that it seems that he has become the "easiest to point fingers at". 

He said he was "not surprised by a turnaround by the witnesses" because of "fear" at the PIC after he left. 


24 Jul 14:29

The inquiry has resumed. It will now consider a PIC audit report from December 2018. 


24 Jul 13:42

Matjila says that the PIC's investment team started working from the draft pre-listing statement received in November for the AYO listing. 

The JSE-approved PLS was received on December 14, one day before the due date for the subscription of shares. 

He said the final PLS did not contain differences from the draft PLS, apart from date changes. 

He says a PIC portfolio management committee meeting scheduled for December 6, 2017, was skipped due to quorum challenges - this was intended to okay a due diligence process.

A meeting on December 13 also dis not take place due to quorum challenges.

Matjila said he was then consulted on December 13 to check if due diligence reports had been finalised. He said he was told appraisal reports concluded that the PMC approve an R4.3bn investment in AYO's shares. 

He said he never put pressure on colleagues to get the deal done. 

With that the inquiry adjourns. 


24 Jul 13:13
Matjila says due diligence for an IPO, or an initial public offering, can be done in a much shorter space of time than for other investments, as most required information will already be included in a company's pre-listing statement. 

24 Jul 13:10
Matjila says the outcome of due diligence processes was that AYO was an appropriate investment opportunity for the PIC. 

24 Jul 13:10
Matjila notes that the deadline for subscription was December 15, 2017. 

24 Jul 13:09
Matjila says Fidelis Madavo lead the PIC's analysis of the investment potential in AYO. 

24 Jul 13:05
The commission previously heard from AYO's former chief investment officer, in mid-May, that the AYO valuation was "stretched out" so that it appeared to be worth more than it was in reality.

24 Jul 13:03

He says the proposal would give the PIC exposure to the growing ICT information space. 

It was also a black-owned company. 


24 Jul 13:02

The inquiry has resumed. 

It will now deal with the AYO Technology Solutions deal. 

Matjila says the opportunity to invest in AYO was introduced to him by Iqbal Survé around October 2017. 


24 Jul 12:42
The commission is taking a short break. 

24 Jul 12:37

Monnahela asks if this is in line with protecting the independence of the PIC. 

Matjila says when he receives correspondence for the investment committee, he passes it on. 

Monnahela says he doesn't believe the letters were addressed to the investment committee, however,

Matjla, in response, says he could have passed the letters on "for information".

 


24 Jul 12:34

Evidence leader Monnahela notes previous testimony from the state-owned asset manager’s company secretary, Bongani Mathebula, that the day before the PIC's investment committee sat to consider the Sagarmatha transaction, Matjila forwarded on letters from "political formations" to her and asked her to give them to members of the investment committee. 

"Yes, she was correct commissioner," says Matjila. 

 


24 Jul 12:30

The commission is now considering whether Sagarmatha was loss-making or insolvent before its proposed listing. 

Matjila notes that the JSE would not have allowed it to list if it was insolvent. 


24 Jul 12:24
Assistant commissioner Gill Marcus, the former governor of Reserve Bank, has now largely taken over the questioning of Matjila about the proposed Sagarmatha listing. 

24 Jul 12:22

Marcus notes the testimony of someone on the PIC's legal team who said he was told to "not be a hindrance" in the proposed Sagarmatha deal and recommend that the transaction proceed, even though he did not think it right. 

Matjila says he did not know this at the time and says it was a junior person who made the claim. 

'I can't smell there is that sort of thing happening," he said, saying people should have come to him. 


24 Jul 12:17

Assistant commissioner Emmanuel Lediga now asks Matjila about other options for the PIC to salvage some value from its investments in Independent Media. 

"It's dragging on and the value keeps going down". 

Lediga says staff at the group must be feeling very insecure. 

Matjila says the PIC is in position to deal with the matter. He left the asset manager in late 2018. 


24 Jul 12:11

The inquiry is now considering when the PIC decided not to continue with the Sagarmatha deal and when Sekunjalo was informed. 

Matjila said the decision was taken just before the group's failed listing on the JSE on April 12, 2018. 


24 Jul 12:06

Matjila is now asked whether he was interacting with Sekunjalo at the same time that the PIC's investment team was also interacting with Sekunjalo. 

He says that he did receive emails and counterproposals from Sekunjalo, but says he forwarded all of these on to the investment team. 

He denies that he tried to force the deal through. 


24 Jul 11:54

Matjila says that, in media reports around the AYO Technology Solutions, Independent Media and Sagarmatha deals, it was reported that the dealings came about to a close personal relationship with Iqbal Survé.

"I would at this opportunity like to set the record straight," he says. 

"Yes there was a continuous engagement with Doctor Surve, and the reason for this was not because of friendship per se, but because I and my colleagues were worried that the PIC was being increasingly exposed to high risk and I neede to be closely involved with the major players so as to continually assess the situation. 

"There was talk of restructuring the organisations involved and I needed to be at the forefront so as to influence decisions that would be in the best interests of the PIC. 

I strongly believe that not having this continuous engagement would have been reckless."


24 Jul 11:47

Matjila says that, after the failed Sagarmatha listing, Sekunjalo Independent Media was in default.

The PIC and Sekunjalo Independent Media approved a proposal to get the media group to start paying back its debt, but Matjila says this was reversed after he left the company. 

He says that the PIC currently has an R1.275bn investment in the Independent Media group. 


24 Jul 11:43
He says that, after the Sagarmatha listing fell through in April 2018, the PIC's investment committee met in October to consider a new proposal from Sekunjalo. 

24 Jul 11:39

The listing was subsequently withdrawn by the JSE citing non-compliance, he says. 


24 Jul 11:38

He says the PIC's investment committee did not support the deal, but handed the matter back to management. 

He says there were various proposals of Sekunjalo to bring down the entry price to around the R7.06 mark. 

He says the PIC withdrew its support for the listing because the differences in the share prices were too high. 


24 Jul 11:35

He again says Sagarmatha would be the exit strategy for the PIC's investments in Independent Media. 

He notes the Sagarmatha pre-listing statement gave a listing price of R39.62. He notes that the PIC's listed investment share arrived at a valuation of R7.06 per share. 


24 Jul 11:33
Matjila said he was accompanied to the meeting by Fidelis Madavu. 

24 Jul 11:33

Matjila now moves on to the Sagarmatha listing timeline, after the commission spent some time trying to untangle different resolutions and agreements relating to its proposed listing. 

He says he was invited by Surve to attend a meeting with senior Sagarmatha management in Cape Town on November 14. He said a full presentation was given about its business plan and its intention to list. 

 

24 Jul 11:27

The inquiry references evidence given by Lebohang Molebatsi, general manager for listed equities at the PIC.

In March Molebatsi told the commission that the Sagarmatha proposal raised red flags from the start.

He told the commission that, the first thing that struck him about the proposal was that another company linked to Sekunjalo Group was looking to list soon after AYO Technology Solutions, and that the capital raised was to facilitate the purchase of Independent Media.


24 Jul 11:19
Matjila is asked about the Sagarmatha offer price of R39.62 a share in the agreement. Matjila says it was still very early days, and a lot of conditions still had to be fulfilled.  

24 Jul 11:17

Matjila says there was no PIC resolution that Independent Media's debt to the PIC could be swapped for equity in Sagarmatha, but said there was an agreement in place. 


24 Jul 11:14
The planned investment in Sagarmatha was, in part, a way for the PIC to exit their investments in Independent Media, Matjila has said. 

24 Jul 11:12
Monnahela now moves on to the PIC's proposed investments in Sagarmatha. After the company failed to list on the JSE the investment was abandoned. 

24 Jul 10:58

Monnahela asks Matjila about how media communications worked at the PIC. Matjila says that he has been given the authority to be the PIC's spokesperson, and doesn't have to run his responses past other PIC's members. 

This appears to be in relation to Matjila sending emails to Survé.

He previously said that he sent emails to Survé about a whistle-blower called 'James Nogu' or 'James Noku' who had been making allegations of wrongdoing against him. 

"The issue of James Nogu was in the news and he [Surve] asked for a copy [of the emails] because his journalist was writing a story about it," he said. 

"He wanted to see the emails because some other journalists had it already."


24 Jul 10:46
To start, Monnahela wants to return to email correspondence between Matjila and Iqbal Survé, the chair of Independent Media and the head of global investment holding company Sekunjalo. 

24 Jul 10:44
Evidence leader Isaac Monnahela will be asking Matjila questions. On Wednesday, the chair cautioned him to avoid the appearance of cross-examination. 

24 Jul 10:42

Proceedings have commenced, a little late, after Matjila asked for time to look at some new documents and WhatsApps submitted to the inquiry. 


24 Jul 10:40

On Wednesday, Matjila said that many print media groups apart from the Gupta-owned New Age "took a hit" due to government advertising drying up. 

This was in relation to the PIC's R888m investment in Independent Newspapers, the owners of titles such as The Star and Cape Times. 

He said that the initial plan to grow Independent Media included attracting more government advertising, as it would be the most transformed media group in SA after it was taken over of Sekunjalo. 

But "all the business was taken away," by the Gupta-owned New Age. 


24 Jul 10:40
The former CEO of state-run asset manager the Public Investment Corporation, Dan Matjila, is continuing his testimony before the judicial commission of inquiry into the PIC on Wednesday. 

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