Matjila and the mystery R50m
● A consortium that applied for a R1.7bn loan from the Public Investment Corporation (PIC) to buy a stake in oil giant Total SA claims that then PIC boss Dan Matjila forced it to partner with another company — and pay that company R50m.
The deal is to be probed by the judicial commission of inquiry looking into allegations of impropriety at the PIC. The inquiry is chaired by former president of the Supreme Court of Appeal justice Lex Mpati.
The PIC is a state-owned entity that manages more than R2-trillion in assets and invests the monies of the Government Employees Pension Fund and the Unemployment Insurance Fund.
Sources close to the deal said that in 2015, Kilimanjaro Capital, known as KiliCap, applied for a R1.7bn loan to buy a majority stake in Total SA (Tosaco), a BEE group that owned 25% of Total SA (TSA).
The Sunday Times understands the loan was to develop 20 TSA-branded retail service stations across SA. The deal went through the rigorous PIC process, including due diligence. After being considered by two investment committees, it was recommended to the board that it be approved.
It was at this stage, claimed KiliCap, that Matjila told it to partner with another bidder, Sakhumnotho Group Holdings. After KiliCap agreed to partner with Sakhumnotho, the PIC approved the deal and lent the merged consortium R1.8bn — R100m more than had originally been requested. It was believed the additional R100m was for the costs of due diligence, though sources said R50m would have been sufficient. Following this, KiliCap paid R50m to Sakhumnotho.
The PIC has been embroiled in controversies that include allegations of corruption against four of its directors, among them deputy finance minister and chair Mondli Gungubele.
It has also faced criticism for paying R4.3bn for a 29% stake in the Iqbal Survélinked company AYO Technologies at R43 a share when its real value at the time of listing was hovering around 15c a share.
The Sunday Times reported last week that Survé had been using AYO’s bank account, which received the PIC billions, as his personal piggy bank
Earlier this month, the entire PIC board of nonexecutive directors wrote to finance minister Tito Mboweni and asked to be relieved of their duties. The board, however, is remaining in place until Mboweni makes the new appointments.
Documents show that Kilicap applied for the loan in May 2015. In June, the PIC’s portfolio management committee gave the green light for the company to go ahead with its due diligence. A month later the
committee recommended the KiliCap transaction be submitted to the Private Equity Priority Sector and Small Medium Enterprise Fund Investment Panel — a subcommittee of the PIC board — for final approval.
But before the final subcommittee met, Matjila allegedly told Kilicap that there was another consortium, Sakhumnotho, that wanted the same BEE stake from TSA and that they should form a partnership.
“[KiliCap director Lawrence Mulaudzi] was shocked as to why they would be taken through the whole due diligence process only to be told they are not the only one,” a highly placed PIC source said.
“They were told to either partner with Sakhumnotho or lose the entire deal. Because they didn’t want to lose out on the deal, they agreed that half a loaf is better than no bread at all.”
Contacted yesterday for comment, PIC spokesperson Sekgoela Sekgoela said the entity would not be able to respond before going to print.
Sakhumnotho chair Sipho Mseleku told the Sunday Times he had been introduced to Mulaudzi by Matjila, who called them both to his office.
Mulaudzi denied this, saying: “No. I never met Matjila and Mseleku in the same room.” He met both men separately, he said.
Asked to comment, Matjila said: “I cannot comment on anything related to PIC. I’ve been approached by the commission [of inquiry] to give evidence.”
Mseleku claimed the process was conducted professionally.
“Many BEE companies (including among them Kilimanjaro and Sakhumnotho) were invited to bid for the shares. We then proceeded to submit our bids separately, as we were not aware at the time who else was invited.”
Mseleku said he had met Matjila, who told him he was meeting another bidder directly after their meeting.
“I then proceeded to follow him to the boardroom to meet Mulaudzi and he introduced us and said here is Mr Mulaudzi, who is here for the same reason as yourself. He repeated what he had told me to Mulaudzi, that the PIC will only engage with the winning bidder as opposed to many competing prospective buyers.”
He said that for commercial reasons and to have a win-win situation they both agreed to merge the two consortiums and have 50% share each in the merged entity.
Regarding the R50m paid to his company, Mseleku said it was because Sakhumnotho had “separately commissioned the services of transaction advisers, technical advisers, legal advisers, financial advisers etcetera to advise us on the transaction and conduct the due diligence on our behalf”.
“We at Sakhumnotho have built our company over the last 19 years on the values of good business ethics, moral values and good corporate governance. We value honesty and integrity. We do not in our business participate in paying bribes to anyone,” he said.
Asked when Sakhumnotho had submitted its funding proposal to the PIC, Mseleku said he was travelling and could not remember the dates.
“To my knowledge the information you are requesting is internal PIC information which they don’t normally share with applicants,” he said.
Mulaudzi said KiliCap was formed at the start of 2015 and first approached the PIC in May 2015. “The decision for KiliCap to merge with Sakhumnotho was taken in July 2015.”
Mulaudzi confirmed the payment to Sakhumnotho. Asked what it was for, he said: “We would direct you to Sakhumnotho, who would be better placed to provide an answer on what this amount was used for.”