Probe: no evidence Harith fleeced PIC

• PIC and GEPF inform company that allegations against it were baseless

An investigation into Harith General Partners has found no evidence of wrongdoing in allegations that it fleeced the Public Investment Corporation (PIC), a development that has the potential to help the infrastructure focused private equity outfit to turn the page on a painful chapter in its 17-year history.

The investigation, conducted on behalf of the PIC and its biggest client the Government Employee Pension Fund (GEPF) by Nexus Forensics, emanated from a recommendation by the Mpati commission, which probed allegations that the PIC, Africa’s largest asset manager, had been reckless in some of the investment decisions it had been making.

Headed by former president of the Supreme Court of Appeal Lex Mpati, the commission concluded its work in 2020. Its recommendations included that the GEPF and the PIC should jointly appoint an independent investigator to look into allegations made against Harith.

“The mandate must be to examine the entire Pan African Infrastructure Development Fund (PAIDF) initiative to determine that all monies due to both parties have been paid and properly accounted for; to determine whether any monies due to overcharging or any other malpractice should be recovered; and to provide the results of such investigation within six months to the boards of both the GEPF and the PIC,” the report recommended.

The PIC and GEPF have now informed Harith that the allegations against it were baseless.

The outcome of the probe could help Harith to close an agonising chapter in its history after Bantu Holomisa set the cat among the pigeons when in an open letter to President Cyril Ramaphosa he accused Harith and Lebashe of corruption, saying they appeared to be the same company “dressed up differently” to fleece the PIC.

Harith CEO Sipho Makhubela said the outcome of the independent probe vindicates the company.

“Harith operates in the highly regulated financial services sector, so we are no strangers to, and are quite comfortable with, heightened scrutiny. Our line of business requires the utmost fidelity to those who entrust us with their funds and investments. That’s why throughout these processes that have ensued since these allegations were first raised, we have been fully co-operative and played open cards at every stage,” said Makhubela

“This is therefore not a case of Harith being ‘cleared’ by the forensic probe. It is a case of the forensic probe arriving at the only logical destination of the truth-seeking exercise that any conscientious investigation was inevitably destined to reach; a finding that the truth has been on our side all along.”

MANDATED

Harith traces its roots to the mid2000s when then president Thabo Mbeki mandated the then PIC CEO, Brian Molefe, to initiate the creation of an Africa Fund as a core investment.

This new fund’s creation would require the GEPF to change the PIC’s investment mandate to include non-South African investments.

The PIC then initiated a multiyear process to establish a panAfrican investment fund which materialised as PAIDF.

The goal of the PAIDF managers was to secure funding of at least $1bn. PAIDF, a 15-year fund, was set up as a vesting trust and commenced operations in September 2007 with commitments totalling $625m from nine investors, including $250m from the GEPF.

On April 23 2012, the PIC wrote to former finance minister Pravin Gordhan to request authorisation for the PIC to acquire a 30% shareholding in the issued share capital of Harith, which Harith management incorporated and was intended to manage PAIDF II funds as well as those of other funds. This was approved by Gordhan.

Harith became active in October 2012, Harith Holdings owning 70% and the PIC 30%. The establishment of Harith led to the creation of PAIDF II, which was closed in June 2014 with total capital commitments of $435m, of which $350m came from the GEPF. Thus, the GEPF invested a total of $600m in the PAIDF initiative.

In September 2022, the country’s apex court ruled that Holomisa failed to prove that the corruption claims it made against Lebashe and Harith in 2018 were true and in the public interest.