PIC plagued by poor management and culture of fear, says former independent non-executive director Vuyo Jack
The asset manager faced a myriad management shortfalls, including poor governance and a lack of focus
FORMER independent non-executive director at the Public Investment Corporation (PIC) Vuyo Jack told the PIC Commission of Inquiry yesterday that the asset manager faced a myriad management shortfalls, including poor governance, lack of focus on social and ethical issues, including the culture of intimidation expressed through management through fear and poor people management.
Jack was making reference to the Deloitte’s Climate Survey, which highlighted a culture of fear and dissent, lack of strategic direction, management not having employees’ best interests at heart; blame-shifting and poor decision-making abilities, an inability to address problems as well as constant shifting of goal posts.
Part of Jack’s submissions included findings of a draft governance review report which found the need for urgent remedies for the asset manager’s governance.
“The risks identified after staff interviews and the documentary review necessitated urgent action on the board’s part,” Jack said, outlining the findings as inchoate delegation of authority, weak and unaccountable leadership, dereliction of fiduciary duties by the executive, suspicion and polarisation, misaligned principaI-agent relations, weak monitoring and accountability as well as low specificity and oversight of deals.
He also went into views of former chief investment officer Dr Dan Matjila, who had raised some concerns around the governance review with the chairperson of the Social and Ethics Committee, Rejane Woodroffe. He said the gist of the narrative was that Matjila had raised concerns at board level with the methodology used for the Governance Review process. However, he neither attended any of the sessions conducted nor did he honour meeting requests sent to his office.
“He also hardly attended workshops where governance issues were tabled, he only attended board meetings and his attendance record at the FIPS and some other subcommittee level engagements was a concern.
“This was an issue that was raised at the director affairs committee, where a resolution was passed that he should scale back on the boards he sits on, such as Ecobank, so he could be more present within the PIC,” said Jack.
Jack maintained that he and Matjila had a cordial relationship when the question was posed. Jack said, given the gravity of the issues raised through the Deloitte’s Climate Survey, the board decided on conducting a governance review, which was to be led by the head of the Audit and Risk Committee Ignatius Sehoole.
In 2013, KPMG was commissioned to undertake the governance review.
Jack, who joined the PIC in December 2012, told the commission that he suggested to the PIC board that they engage the leadership in remedying the issues raised as they had final responsibility in the reporting chain.
“I proposed to the board that we confront the issues through a PIC innovation lab. The idea behind the innovation lab was to address staff issues in a proactive manner, rather than taking a reactive stance. We all knew what the problems were and needed an innovative way to address them. The innovation lab was designed to cover both technical knowledge and human resources issues within the PIC, in line with the issues emphasised by the climate survey. Its objective was to give meaning to working at the PIC, hence the theme ‘It must mean something to work at the PIC’.”
Jack said he drafted a presentation to the board and it was approved with the resolution. On another note he described how he was removed as the chairperson of the audit and risk committee and replaced by Sibusisiwe Zulu. Jack confessed that in 2015 his attendance of the PIC board meetings declined considerably because he could not invest his attention capital in a place where it was difficult to generate a return on investment for the organisation.
He said the gist of the narrative was that Matjila had raised concerns at board level with the methodology used for the governance review process. However, he neither attended any of the sessions conducted nor did he honour meeting requests sent to his office. Jack went on to describe how a draft Governance Review Report found the need for urgent remedies for the asset manager’s governance. “The risks identified after staff interviews and the documentary review necessitated urgent action on the board’s part,” Jack said before presenting the following summary of the report:
Among these was the inchoate delegation of authority where a number of governance and structural issues which confound clear fiduciary decision-making authority and reflect a highly fragmented and dysfunctional system. He said weak and unaccountable leadership overlay a crisis of leadership and challenge of purpose.
He said there were several limitations to the review, which effectively prevented further investigation of the impact of the practices at the PIC on its core business: investments.
Some evidence emerged which suggested derelictions of the fiduciary duties of leadership which should be investigated. They included deliberate and conscious efforts by Exco to dissemble crucial oversight bodies such as risk from an independent look at investment processes and decisions.