Mass resignation of board could have cost PIC its FAIS licence
A contravention of the Companies Act
SANDRA Beswick, a director of the Public Investment Commission (PIC), revealed yesterday that the directive from Finance Minister Tito Mboweni on February 1 that they resign or be fired was highly irregular.
Beswick said in her submission to the PIC Commission of Inquiry that the repercussions could have been disastrous for the PIC as it could have lost its FAIS licence and the directive was in contravention of the Companies Act.
The Companies Act provides that the business and affairs of a company must be managed by or under the direction of the board of directors, which has the authority to exercise all of the powers and perform any of the functions of the company.
This general authority of the board is curtailed by other provisions of the act and may also be limited in terms of a company’s Memorandum of Incorporation.
The head of the School of Economic and Business Sciences at Wits University, Professor Jannie Rossouw, said as a registered fund manager the PIC, which is the biggest fund manager in South Africa as well as the fund manager of the Government Employees Pension Fund, had to be compliant with all relevant legislation.
“If the PIC is in breach of any legislation, there will be legal consequences for the PIC and will impede the PIC’s ability to continue doing business,” said Rossouw.
The Finance Minister’s ire was triggered after a whistle-blower under the pseudonym of James Noko sent several emails accusing various board members and management of impropriety and corruption as well as delving into their personal lives.
Beswick said at the February 1 board meeting it was informed by the PIC chairperson, Deputy Finance Minister Mondli Gungubele, that he had received a call from the Finance Minister, who was allegedly angry at the allegations contained in the emails and said the board should consider resigning immediately “failing which, he will fire us and appoint an interim board within the next week”.
“I emphasise that the chairperson was the only channel of communication with the Finance Minister and we did not speak to him directly. This demand was highly irregular, because the repercussions could be disastrous for the PIC because it could lose its FAIS licence and was in contravention of the Companies Act,” she said.
Beswick’s testimony was in line with that of PIC director Dudu Hlatshwayo, who also said on Tuesday that the board was given the ultimatum to resign or be fired, communicated to them by Gungubele at the February 1 board meeting.