Bid to paper over the cracks at PIC

• Buthelezi proclaims full confidence in CEO • Matjila backs down on claims of plot to oust him

A highly charged meeting between the finance ministry and the Public Investment Corporation (PIC) ended on Tuesday afternoon with an unconvincing attempt at a united front.

CEO Dan Matjila backed down on claims that there was a plot to remove him and capture the R1,9-trillion fund.

PIC chairman and Deputy Finance Minister Sfiso Buthelezi said that he had full confidence in Matjila.

The two have been at loggerheads on the board, with Buthelezi taking a hard line on Matjila, insisting on an investigation of allegations of impropriety against him by the internal audit committee, even after his explanations were accepted by a majority of the board.

Matjila went public on Sunday, claiming that there were people who wanted to remove him “to get the keys to the big safe”. But at a media conference on Tuesday after the meeting, Matjila recanted, saying that a Sunday Times article was “distasteful and inaccurate” and “designed to drive a wedge between myself and the minister [of finance], and myself and the board”.

However, the contradictions were glaring. Matjila would not say where the inaccuracies with the report lay, promising to release a statement on Wednesday. Buthelezi, while insisting there were no differences between him and Matjila, continued to attempt to justify a probe into the CEO.

“Allegations were made that some people want to remove the CEO. We had a very robust exchange and the board of directors reject that allegation with contempt… But when allegations come, the board has got a duty to look into it,” he said.

The meeting also came after weekend media reports that the finance ministry intended to raid the PIC for R100bn to fund ailing state-owned enterprises. It was

also claimed that SAA had approached the PIC with a request for a R6bn loan.

The PIC manages funds that belong mostly to the Government Employees Pension Fund (GEPF) as well as other government social funds.

Finance Minister Malusi Gigaba denied emphatically that the Treasury had made an approach to the PIC for R100bn in funding.

“I want to assure all pensioners that there is no attempt to dig into their pensions,” he said.

In a veiled warning to Matjila, though, Gigaba said that he expected the PIC board and its executive committee “to stay away from politics”.

Treasury director-general Dondo Mogajane said the Treasury had explored the use of PIC funds for SAA on two occasions.

The first was an application made in May by the SAA board for a loan of R6bn. “The PIC engaged with SAA and a due diligence was done … it is obvious that option did not work.”

Matjila said the outcome of the due-diligence exercise “was not favourable” as it was not within the terms of the mandate of its GEPF. He said the PIC had not shut SAA out entirely and was engaging with it on what it would take to become investment grade.

Mogajane said that the second approach was more recent to explore whether the PIC would buy part of government’s 39,7% stake in Telkom, the proceeds of which could be used to fund SAA. The PIC already holds 11% of Telkom. Mogajane said the Treasury was aware that the PIC would be unlikely to want to hold more than 15%.

Matjila said the PIC would participate in the purchase of Telkom shares. “It is a good asset; we will participate. However we have investment parameters and might not be able to take the entire stake.”

The Treasury is, meanwhile, in a last minute dash to raise the funds necessary to pay SAA funders that will not roll over loans at the end of September.

Mogajane said the Treasury would return to the Cabinet tomorrow for permission to again make use of emergency funding provisions. Apart from Standard & Chartered, which insisted on being repaid R2,2bn in June, Citibank indicated it would not roll over its R1,8bn loan. Mogajane said talks with funders continued and agreement had been reached with Citi that the full amount would not be repayable on September 30.

Both amounts, the R2.2bn as well as whatever is authorised by the Cabinet on Wednesday, will need to be regularised through Parliament and allocated to a specific budget vote. To repay the National Revenue Fund, from where the funds will be borrowed, the Telkom stake will have to be sold.