It’s time for an investigation into the PIC

Week in, week out, SA is waking up to new allegations of scandal at the Public Investment Corporation (PIC), the largest asset management company in the country. It is about time the government appointed a credible inquiry to investigate the potential rot at the PIC as part of wresting it from politicians.

This past weekend the Sunday Times reported that senior ANC politicians — including former treasurergeneral Zweli Mkhize and former National Intelligence Agency head Billy Masetlha — might be owed millions in “commissions” (read: kickbacks) for arranging a R200m loan for energy company Afric Oil. Mkhize, who denies the allegations, has threatened to sue. Curiously, Masetlha, who until last December was a member of the ANC’s national executive committee, wants his “commission”, as does Joseph Nkadimeng, a member of the ANC’s alleged black ops machinery, which cost Ignatius Jacobs his job at Luthuli House a year ago.

Bantu Holomisa, the leader of the opposition United Democratic Movement, has a dossier of alleged governance malfeasance implicating PIC head Dan Matjila in suspicious investment decisions. He has written to President Cyril Ramaphosa asking him to expand the terms of reference of the Zondo commission of inquiry into state capture to include the goings-on at the PIC.

The DA has asked Themba Godi, chairman of Parliament’s standing committee on public accounts, to subpoena the PIC to account for the transactions mentioned by Holomisa and other whistle-blowers.

The allegations in the Holomisa dossier include corruption, overlooking duediligence reports, misrepresentations, money laundering and purging of staff. The charge of purging of staff, which directly implicates Matjila, relates to the dismissal and suspensions of various executives, including the heads of IT and risk as well as the company secretary.

The transactions relate to entities including Steinhoff, Sagarmatha Technologies, S&S Oil Refinery, Erin Energy and Ayo Technologies.

GOVERNANCE

The latest allegations come almost a year after another set, including a suggestion that the PIC funded a deal of a company belonging to the CEO’s close friend.

There are several problems facing the PIC. The main ones include governance, leadership, operations, transparency and funding criteria.

The PIC is chaired by the deputy minister of finance. This is the first part of the problem because it in effect politicises the PIC. There’s no clear case why a politician makes a better chairman than a business person with a solid track record of good corporate governance and leadership. Having a politician chairing the board opens it to undue lobbying by politically connected individuals. This practice has created a new industry around the PIC, peopled by politicians who peddle their proximity to political power.

In other words, ticking all the boxes becomes the first step for a transaction to secure funding. Passing a due diligence is no guarantee for funding. Having the right political sponsor — not only from the governing party, it should be said — is a guarantee that even a transaction with a weak business case can pass muster. Thus it is no surprise that politicians of all persuasions have been circling the PIC.

For years MPs have been calling for more transparency in the PIC portfolio, especially the unlisted entities. Half-hearted efforts are under way to improve this. But they don’t go far enough. Parliament should force the finance ministry, as custodian of the PIC, to open the corporation to more scrutiny.

The PIC has always courted controversy, especially in relation to the transactions it rejects. But lately the controversy has been swirling around the CEO — notably his leadership style and integrity. His two immediate predecessors never faced such allegations; at least not with such intensity and frequency. This is concerning given the importance of the role played by the institution in the economy. The board and the government have hitherto done little or nothing about this issue.

Holomisa has asked for a probe into the PIC to be added to the Zondo commission’s mandate. This is tempting, because the commission is well resourced. But it is an inappropriate forum and will set a bad precedent. Burdening the commission with everything will make its work so unwieldy that it may as well probe state capture from 1652 or from 1910.

What’s needed is an urgent, specific and multifaceted inquiry with clear terms of reference. The first part of the inquiry, which should have powers to subpoena witnesses, should focus on the internal operations of the PIC, including the organisational culture and all the allegations surrounding the CEO. The second part should look into all transactions over the past decade and the role of all politicians (not only ANC politicians and their hangers-on) in influencing decisions at the PIC.

For his own sake Matjila, who has protested his innocence, should take a leave of absence while this inquiry is sitting.

The PIC is too important to be mired in such controversy. This would be the first step towards restoring good governance and integrity at the PIC, and shielding it from political interference.

THIS PRACTICE HAS CREATED A NEW INDUSTRY AROUND THE PIC, PEOPLED BY POLITICIANS WHO PEDDLE THEIR PROXIMITY TO POLITICAL POWER