HOW POLITI­CIANS TURNED THE PIC TOXIC

Financial Mail - - EDITORIALS -

The de­par­ture of Pub­lic In­vest­ment Corp CEO Daniel Matjila in murky cir­cum­stances is cause for con­cern. More so be­cause Matjila, who re­signed last week, is not the first to leave un­der un­ex­plained cir­cum­stances. Nor is he the first to leave his post be­fore his con­tracted term of of­fice ex­pired.

It was the same story with Matjila’s im­me­di­ate pre­de­ces­sor, Elias Masilela, who re­signed and left with im­me­di­ate ef­fect in June 2014. Masilela had been in the po­si­tion just over three years, cut­ting short his five-year con­tract. As with Matjila, no rea­sons were given for his abrupt de­par­ture. And yet both of those ex­ec­u­tives should have given six months’ no­tice.

In fact, look back fur­ther and you’ll see that not a sin­gle CEO of the PIC in SA’S demo­cratic era has served out the con­tracted term. Dis­turbingly, it seems that each new in­com­ing head of state has felt the need to ap­point his own lead­er­ship at the PIC. Brian Molefe, for ex­am­ple, served un­der Thabo Mbeki and Trevor Manuel; Masilela and Matjila served un­der Ja­cob Zuma and Pravin Gord­han. Pres­i­dent Cyril Ramaphosa will now get his own CEO at the PIC. Whether this is all mere co­in­ci­dence is not clear.

The is­sue is im­por­tant for many rea­sons, not least be­cause the PIC is the sin­gle largest in­vestor on the JSE and the con­ti­nent. It also man­ages more than R2-tril­lion in pub­lic ser­vants’ pen­sions. Any ruc­tions in its lead­er­ship will be wor­ry­ing for the mar­ket, the civil ser­vice and the coun­try as a whole.

Matjila’s con­tract would have ex­pired in Novem­ber next year, and he ini­tially of­fered to leave six months early. But Matjila had been at log­ger­heads with in­flu­en­tial mem­bers of the PIC board for nearly two years, so it was no sur­prise that the board didn’t want to wait.

Ten­sions be­gan sim­mer­ing in May last year when for­mer fi­nance min­is­ter Malusi Gi­gaba ap­pointed his deputy, Sfiso Buthelezi, chair of the PIC. Three months later Gi­gaba ap­pointed Xolani Mkhwanazi and Mathukana Mokoka to the board, Mkhwanazi as deputy chair.

Within weeks Matjila was fight­ing to hold onto his job af­ter be­ing ac­cused of lean­ing on a com­pany that had bor­rowed money from the PIC to help a woman al­leged to be his lover, Pretty Louw. She also al­legedly ben­e­fited to the tune of R23m from Matjila’s in­ter­ven­tion.

In Septem­ber last year, the board ap­par­ently cleared Matjila of these charges. Yet soon af­ter­wards, ad­vo­cate Ge­off Budlen­der con­vened a new in­quiry. The Budlen­der in­quiry ended sev­eral months ago, but the PIC has yet to re­lease its find­ings. That is an alarm­ing case of dou­ble stan­dards for an en­tity that is meant to act as an ex­am­ple of good gover­nance and trans­parency for the com­pa­nies in which it in­vests.

Still, one part of the Budlen­der re­port leaked — a find­ing that while Matjila did not have a ro­man­tic re­la­tion­ship with Louw, he did in­ter­vene in­ap­pro­pri­ately to help her, and that she was in­tro­duced to Matjila by for­mer in­tel­li­gence min­is­ter David Mahlobo.

So, in some sense, we can trace the in­sta­bil­ity at the PIC to the enor­mous power that politi­cians wield over of­fice-bear­ers who should be in­de­pen­dent. As it stands, the fi­nance min­is­ter has the sole power to ap­point the board, as well as the CEO and the CFO.

It’s clear that politi­cians have far too much in­flu­ence over the PIC, yet with no ac­count­abil­ity. This in­flu­ence has been abused in the past, and prob­a­bly will be again. So now is the per­fect time to fix this. Per­haps for a start, we could al­low the ben­e­fi­cia­ries and in­vestors to ap­point their own rep­re­sen­ta­tives to the board.

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