We got it wrong with Steinhoff, says ex-PIC board member

A former board member at the Public Investment Corporation on Tuesday said that the asset manager got it wrong when it decided to invest in embattled retailer Steinhoff, whose share price has plunged by over 90% since December 2017. 

Testifying before the commission of inquiry into allegations of impropriety in the PIC in Pretoria, Claudia Manning said the investment was "debated robustly in the investment committee" and the decision was a "unanimous one to invest in it".

"One can make good investment decisions and not good decisions, and in hindsight, we got it wrong," she said. 

The PIC, which invests and manages funds on behalf of public servants, was one of the businesses hardest hit by the dramatic plunge in Steinhoff's shares price following the abrupt resignation of its former CEO Markus Jooste in early December 2017 amid an accounting scandal. 

The PIC held a 10% stake in Steinhoff International Holdings [JSE:SNH], the group's holding company listed on the Frankfurt and Johannesburg stock exchanges.

Steinhoff shares were trading at R1.81 a share on Tuesday in the early afternoon. In early December 2017, before Jooste quit, the group's share price stood at about R46 a share. 

The corporation had also, in 2016, loaned R9.35bn to empowerment company Lancaster 101 to buy shares in Steinhoff. In December 2018, the Government Employee Pension Fund said it had recorded a R4.3bn impairment in Lancaster as a result of a meltdown in Steinhoff shares.

Several investment decisions by the PIC have come under scrutiny at the inquiry, including a decision to invest R4.3bn in AYO Technology Solutions before its listing in December 2017. The share price of the company has almost halved in since the listing.

PIC employees who have appeared before the inquiry have raised red flags over lack of due diligence in the handling of AYO investment.

Manning on Tuesday detailed how the corporation had attempted to address concerns over the deal.

She said that, as a result of the committee’s unhappiness, the PIC's investment committee took a decision to recommend to the board that the delegation of authority be amended to ensure that all transactions valued at R2bn or more be approved by the investment committee.

"This review of the delegation of authority was still ongoing at the time of my resignation," she said.

Manning resigned from the PIC in July 2018.

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