PIC twists and turns more gripping than Zondo inquiry
Iam following the testimony at the commission of inquiry into the Public Investment Corporation (PIC) with a great deal of interest. Somehow it is more gripping than the Zondo inquiry into state capture as it is more financially orientated. So far, it is drama all the way.
My two favourite issues have been the devastating testimonies of Siphiwe Nodwele and Kevin Hardy, former executives of Ayo Technologies, and the interrogation of Bantu Holomisa by lawyers hired by Harith General Partners.
Let’s start with Ayo. The
allegations that its February 2018 interim financials were fraudulent trumps everything else we have heard or read to date about overvaluations.
If true, this has serious implications for both Ayo as well as its listed parent company, African Equity Empowerment Investments (AEEI). If Ayo’s financials are incorrect, so are AEEI’s. It means investors have bought and sold the shares based on false information.
The fact that it is alleged the massaging of the numbers was done with the involvement of Iqbal Survé and his brother-inlaw and CEO of AEEI, Khalid Abdulla, means that if proven true they are both likely to face dire consequences.
At the same time, the Financial Sector Conduct Authority has finally launched an investigation into the trading of shares in AEEI, Ayo and Premier Fishing and Brands (another subsidiary company of AEEI) during 2018. Rumours and articles about share price manipulation have been circulating since August 2018.
One needs to question why this did not trigger anything at the JSE, which claims to have “very sophisticated systems” to detect share price manipulation. Perhaps because of the revelations, or because of being summoned to appear in front of the PIC commission themselves, the JSE has finally been jolted out of its stupor and has demanded that auditors audit the financials of Ayo as at February 28 2018 and 2019 (interim results do not ordinarily need to be audited).
And finally, AEEI announced a delay in the release of its own interim results to February 28 2019, quoting “unexpected developments” within the AEEI Group. “Unexpected” is a nice euphemism. It also cancelled its presentation to analysts. One could argue that, given the nature of the allegations, trading in all these shares should be suspended, but I guess that is too much to ask of the JSE.
I am really looking forward to the JSE annual general meeting. As a shareholder I want to know why the questions I put to it on May 17 2018 regarding Ayo were simply swept aside. Given the tsunami of media articles and allegations, all these investigations should have ensued a long time ago.
The other testimony that has been riveting revolves around Harith Fund Managers and Harith General Partners, two entities that manage the assets of the Pan African Infrastructure Development (Paid) Funds 1 and 2, in which the Government Employee Pension Fund (GEPF) invested $600m.
It is a story full of twists and turns, which has made billionaires of Tshepo Mahloele, former head of corporate finance and the Isibaya Fund division of the PIC, and Jabu Moleketi, former deputy finance minister and chair of the board of the PIC between 2004 and 2008, which spans the period the first Paid fund was set up.
Together, they became 70% shareholders in Harith, which manages the assets of the Paid funds without putting a cent of its own money into the pot.
They also purchased Capitec shares from the PIC with financial help from the same PIC.
Given that he is not a financial expert, Holomisa did an outstanding job testifying, as well as subjecting himself to cross-examination by Mahloele’s and Moleketi’s lawyers. One can’t help feeling that there is still a lot to come out, as the same lawyers were as jumpy as cats on a hot tin roof. Whenever you see facts and figures being quoted out of context, listen closely. It is never random.
The old adage holds true. There is never a dull day in SA.
● Wierzycka (@Magda_Wierzycka) is Sygnia Group CEO.