AS IT HAPPENED: PIC inquiry hears from Matjila, govt pension fund | Fin24
 
  • Cadre Cover

    The ANC is planning to launch a funeral policy scheme for members and supporters.

  • VBS Collapse

    Ramaphosa has acknowledged South Africans' impatience to see justice done.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

AS IT HAPPENED: PIC inquiry hears from Matjila, govt pension fund

2019-07-15 09:53

Former PIC boss Dan Matjila returns to the commission of inquiry.

PRETORIA, SOUTH AFRICA - JULY 8: Former Public Inv
LIVE NEWS FEED

Jump to
bottom

Last Updated at 14:02
15 Jul 16:13

The inquiry adjourns for the day.

It will resume at 09:30 where Matjila will continue testimony on Ascendis. 


15 Jul 16:08

Matjila says it is not strange that Mulaudzi sent him Christmas greetings.

He says many people would do that- even his bank does that and sends nice cookies.

When asked if receiving greetings from someone would make them his friend - Matjila says no.

Commissioner Lex Mpati asks would Matjila get greetings from strangers. Matjila says no - he would know them, one way or the other.


15 Jul 15:59
Matjila maintains he did not force the two parties to merge.

15 Jul 15:58

Matjila has no comment. 

He says he has explained himself.


15 Jul 15:58

Marcus says it is unusual that someone could follow Matjila - as a CEO - into another room for a separate meeting.

She asks if records were kept on a decision involving nearly R2bn. 


15 Jul 15:57

Marcus probes Matjila on the separate meetings with Mulaudzi and Mseleku arranged on the same day.

Mseleku ended up joining Matjila and Mulaudzi for their meeting too.

Marcus suggests it appears that there was influence for the two entities to merge.

Marcus says the merger is clearly a desired outcome of Matjila's so that the PIC did not have to choose between the two companies.


15 Jul 15:44

Monnahela aks Matjila again why no due diligence was done on the newly formed entity.

To this Matjila replies that the entity was newly formed. "I do not know the extent to which we can do due diligence on a newly formed entity."

He reiterates that due diligence as done on the separate entities prior to their merger.


15 Jul 15:36
Matjila says non-binding letters of interest are issued to all parties approaching the PIC - to ensure a competitive bidding process.

15 Jul 15:28
Matjila said he cannot comment on evidence the commission has that no due diligence was done.

15 Jul 15:27

Monnahela asks Matjila if he still stands by his statement that the PIC followed the investment process to the letter in both the Tosaco and Ascendis deals.

Matjila says he does.

Monnahela asks if the PIC conducted a due diligence of the newly formed company - merger between KiliCap and Tosaco.

Matjila said he did not expect a separate due diligence- because the entities were merged. The PIC had information on both of them- he did not expect a due diligence on the newly formed company.


15 Jul 15:23

Matjila says Sakhumnotho is small by value relative to the transaction being dealt with.


15 Jul 15:22

Monnahela asks Matjila to confirm that he said in his statement that KiliCap and Sakhumnotho had to merge because they are small companies.

Matjila confirms - he did say a merged entity stands a better chance than two separate entities, that have different weaknesses. 


15 Jul 15:17
The inquiry resumes

15 Jul 14:55
The inquiry breaks for 10 minutes

15 Jul 14:47

Evidence leader Isaac Monnahela now asks when Sakhumnotho approached the PIC for funding.

Matjila says he does not know when they approached the PIC.

The head of legal of Sakhumnotho had sent a letter expressing interest.

 


15 Jul 14:41
Matjila said he never called a meeting specifying a merger. 

15 Jul 14:41

Marcus brings up testimony from Mulaudzi - that Matjila compelled Mulaudzi to help Pretty Louw with her business.

Matjila responds - he asked Mulaudzi to assist and said he does not understand what Mulaudzi meant that Matjila ostracised anyone. 


15 Jul 14:35

Matjila says he did not influence a merger between KiliCap and Sipho Mseleku of Sakhumnotho so that they could pursue the Tosaco deal with funds from the PIC. 


15 Jul 14:30

Matjila confirms to the commission he met Lawrence Mulaudzi in pursuit of the Tosaco transaction.

He says they were not friends.

He says he knows of WhatsApp messages of Mulaudzi wishing him over Christmas.


15 Jul 14:27
Matjila discusses the creation of KiliCap, a company created to pursue an investment in Tosaco.

15 Jul 14:20
The inquiry resumes, Dan Matjila to continue his testimony.

15 Jul 13:26

Commission hears from GEPF's Abel Sithole

PIC did not consult GEPF on AYO Investment CEO of the Government Employees Pension Fund Abel Sithole told the PIC Commission of Inquiry that the asset manager did not consult it before it made a decision to invest R4.3bn in Ayo Technologies.

Sithole appeared before the commission, investigating allegations at the PIC which oversees R2trn in state funds. There is an investment agreement between the two organisations in that the PIC invests on behalf of the GEPF, Sithole told the commission.

In a meeting, the PIC clarified why it invested R4bn in Ayo despite the R2bn limit the GEPF placed on investments, Sithole said. The PIC's explanation is that they understood the R2bn limit applies to the unlisted portfolio. It asked the GEPF to clarify that the R2bn apply to both unlisted and listed investments in future.

Sithole told the commission less than 5% of the GEPF's assets managed by the PIC. The unlisted portfolio is performing well - and getting returns and there is a case to invest more in the unlisted portfolio.

Sithole also explained that the GEPF's investments have a high exposure to the SA economy, and to manage risk the GEPF's board of trustees is looking to diversify its investments. Sithole also said that the GEPF is not limited to choosing the PIC as an asset manager.

"Some people believe there is an unbroken umbilical cord between the two organisations. In law there is no such," he said. The GEPF can look for other avenues to manage its assets to the extent it believes it is correct to do so – this might not necessarily will be easy.

The commission resumes at 14:15 with testimony from PIC's former CEO Dan Matjila


15 Jul 12:59
It is preferred more is invested in the unlisted portfolio because of the good returns.

15 Jul 12:58

Sithole says the unlisted portfolio comprises less than 5% of the GEPF's assets managed by the PIC.

The unlisted portfolio is performing well - and getting returns. 


15 Jul 12:54

The PIC Act does not prescribe the chairperson of the board must be the deputy finance minister.

In practice, the finance minister appoints the chairperson and often appoints the deputy minister. 


15 Jul 12:51

Sithole says the constitution of the PIC board is prescribed in the PIC Act, and is being addressed in the PIC amendment bill.


15 Jul 12:40

Loans related to the Lebashe transaction have been repaid with interest, Sithole confirms.


15 Jul 12:38

Lebashe Investment Group

Sithole says the decisions in Lebashe did not involve the GEPF.

The PIC engaged with Lebashe independent of the GEPF.


15 Jul 12:30

Sithole says he is still making enquiries on how the joinder application against Ayo came about.

The GEPF will seek legal advice on the best course of action.


15 Jul 12:29

Sithole says the GEPF's legal counsel advised the fund not to undertake any action in parallel to the commission's work.

The commission's work must be concluded before it takes any action.


15 Jul 12:27

15 Jul 12:26

Sithole says it was aware that the PIC had issued a summons to Ayo.

But was shocked to learn that when it saw the summons, the GEPF was a joinder to the summons.


15 Jul 12:19

The GEPF was shocked to learn of Fidelis Madavo- head of investments' - and assistant portfolio manager's suspension due to preliminary findings in a report reflecting flouting of governance wrt Ayo Investment transaction.

The PIC assured the GEPF that the correct governance process was followed in the Ayo transaction.

The GEPF views this as a breach of trust.


15 Jul 12:15

In a meeting, the PIC clarified why it invested R4bn in Ayo despite the R2bn limit the GEPF placed on investments.

The PIC's explanation is that they understood the R2bn limit applies to the unlisted portfolio. It asked the GEPF to clarify that the R2bn apply to both unlisted and listed investments.

The PIC believed it did not need the GEPF approval- Sithole says this is wrong.



15 Jul 12:11
The GEPF also requested information on all investments made on behalf of the PIC into companies linked to Sekunjalo Investments.

15 Jul 12:10

The GEPF requested a detailed report of the Ayo transaction from the PIC, Sithole says.

The PIC noted the request. 


15 Jul 12:09

15 Jul 12:06

Ayo Technologies

Sithole says the PIC did not consult with the GEPF when it invested in Ayo.

The PIC only responded to questions from the GEPF when it learnt of the investments after the decision was made.


15 Jul 11:59

Lediga asks about the GEPF increasing its local allocation in the unlisted portion as well as the global portion.

To this Sithole replies that the GEPF has a significant home bias with 92.5% of it funded in the SA market.

This is not wrong and historically served the GEPF well.

But from a risk management point of view, there is a need to diversify the GEPF's investments.

There is a risk of concentration in the SA economy. 

The GEPF is a significant investor in SA government bonds and state entities.

There is nothing wrong- but there is a need to diversify investments beyond the listed environment and also geographically.

The board has been reviewing its strategic allocations- but no decisions have been made, there needs to be an agreement reached with the finance minister. 


15 Jul 11:56

The chair of the GEPF does not necessarily have to be the hair of the investment committee. That is a decision taken by the GEPF board at its inauguration, says Sithole.


15 Jul 11:51

Sithole says fees paid to the PIC ar agreed to in advance.

He says the fees are not subject to contention.


15 Jul 11:50

Sithole says that process of doing due diligence could be better and it is possible that parties the GEPF is involved with, in investing in entities might not be the parties the fund should be doing business with. However the intentions are good.


15 Jul 11:48

Lediga says there are allegations BEE only benefit a few people. BEE trusts are supposed to be broad-based - but it is not in reality. He asks Sithole's views on perceptions that BEE trusts are not working well.

Sithole says the GEPF believes transformation is necessary and correct which is why it wants to play a role in it.

He says when it comes to execution, the GEPF is playing its role and doing so properly.

 


15 Jul 11:44
It is the view of the GEPF that it plays a role in driving transformation.

15 Jul 11:43

The GEPF is a significant investor in the SA economy.

There has been a strong correlation between the returns to the GEPF and the SA economy's performance.

The GEPFs returns through the PIC largely reflect how the SA economy is performing, given the significant exposure to the SA economy.

it is important for the GEPF's portfolio that the SA economy performs well.


15 Jul 11:42

Sithole says the GEPF believes it has a role to play in addressing some of the challenges the country faces.


15 Jul 11:39
The inquiry resumes

15 Jul 11:29

15 Jul 11:20
The inquiry adjourns for a 15-minute tea break.

15 Jul 11:18
The PIC is required to seek approval from the GEPF for investments in listed and unlisted portfolios exceeding R2bn, Sithole says.

Jump to
top

 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What's your view on deep sea mining?

Previous results · Suggest a vote

Loading...