Treasury split over action on PIC chief

• Nene argues there is insufficient evidence • Gungubele will not oppose UDM’s application

Finance Minister Nhlanhla Nene is opposing legal action to suspend Dan Matjila, the embattled CEO of the Public Investment Corporation (PIC), pitting him directly against his deputy, Mondli Gungubele.

The urgent application, brought by the United Democratic Movement (UDM), is to get a court order to prevent the PIC’s board from making any decisions on the suspension and/or disciplinary action against Matjila, giving these powers to Nene. The party also wants Nene, who in his responding affidavit described the allegations against the CEO as “uncorroborated hearsay evidence”, to suspend Matjila with immediate effect.

Gungubele, who as deputy minister of finance chairs the PIC board, opted not to oppose the UDM’s application, saying in his affidavit that he “cannot confidently state” that the PIC’s board “acted properly” when it dealt with the Matjila matter.

This view has also pitted Gungubele against the PIC board. In an affidavit on behalf of the board, nonexecutive director Dudu Hlatshwayo says suggestions that it engaged in a “sham” investigation against Matjila, “acted irrationally and that it has a conflict of interest are all entirely without merit”.

The application relates to an allegation Matjila acted improperly by awarding a R21m loan to a company that was linked to his purported girlfriend. Matjila also stands accused of asking a company in which the PIC had invested to settle a R300,000 personal debt of Pretty Louw, the alleged lover.

Matjila has denied the relationship. Gungubele joined the board earlier this year, after an internal probe cleared Matjila of wrongdoing but did not investigate his relationship with Louw.

The PIC, which manages pension money on behalf of government employees and has nearly R2-trillion under management, has faced increased scrutiny over its governance and investment processes, including the management of its stake in VBS Mutual Bank. VBS

was placed under curatorship in March after looting, including by executives and board members, saw it run out of cash.

In his affidavit, Nene says he has “engaged multiple stakeholders for representations in respect of the prevailing governance issues at the PIC, including the allegations against the CEO”, including PIC board members, as he considers appropriate action. His decision will be communicated once he has “considered the evidence at his disposal, consulted thereon and obtained advice”.

Highlighting the fact that a police investigation into the Matjila matter started in October 2017 and that no arrests have been made to date, Nene says should evidence against Matjila come to light that was “proved to be true and correct in all material respects, this is evidence that will form part of an investigative process at the appropriate forum, in due course”.

The board was criticised in the UDM’s application for resolving to subject the allegations against Matjila to an independent forensic investigation in September, but then changing its mind and limiting the scope of the probe. It did so after Matjila attacked the credibility of the allegations against him, and the manner in which the allegations had reached the board, which he said was not in line with the PIC policy on whistle-blowing.

The board, which only opposed the UDM’s application for an order that it is conflicted and thus cannot make decisions on the Matjila matter, says the party has failed to show that “any member of the board has a personal interest in the matter”.

“The suggestion that the deputy minister and 10 independent board members all suffer from a disabling ‘conflict of interest’ is a startling and serious one and would require the most cogent evidentiary showing to be accepted … this is certainly not the case.”