Mboweni says PIC making progress in implementing Mpati commission report

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Minister of Finance, Tito Mboweni (Photo by Gallo Images/Ziyaad Douglas)
Minister of Finance, Tito Mboweni (Photo by Gallo Images/Ziyaad Douglas)
Gallo Images/Ziyaad Douglas
  • Minister of Finance Tito Mboweni says state-run asset manager the Public Investment Corporation is making progress implementing the recommendations of the Mpati Commission report.
  • The finance minister suggested Parliament consider calling former PIC CEO Dan Matjila and Sekunjalo chair Iqbal Survé to explain the PIC's investment in Ayo Technology Solutions. 
  • The PIC is Africa's largest asset manager, with over R2 trillion in assets in its care, including the pension funds of more than a million public servants.

Minister of Finance Tito Mboweni has told Parliament while the state-run asset manager the Public Investment Corporation is making progress implementing the recommendations of the Mpati Commission report, time and guidance would be needed to bring all matters to finality.

Mboweni and the PIC board on Wednesday briefed the Standing Committee on Finance on progress in implementing the recommendations of the report compiled by the commission of inquiry into the management of the PIC. The commission was chaired by retired judge Lex Mpati. 

The Mpati report, which was released in March, led to the exit of then-PIC CEO Dan Matjila and the suspension of the group's CFO, Matshepo More.

The PIC is Africa's largest asset manager, with over R2 trillion in assets in its care, including the pension funds of more than a million public servants.

The report concluded that Matjila acted improperly in a deal with Ayo Technology in late 2017, that saw the asset manager subscribe to 99.8 million shares for R4.3 billion. Ayo's share price has since plunged, and the PIC has instituted a court in an attempt to compel it to return the full investment plus interest. 

More, who the report says signed off on the deal before the PIC's portfolio management committee was informed formally, was placed on suspension last year, and has had her suspension extended.  

The Mpati commission also looked into the PIC's questionable investment decisions the ill-fated Steinhoff and VBS Mutual Bank, amongst others.

Mboweni said that while it would take some time for the PIC to ensure that it implements all recommendations contained in the report, the corporation and National Treasury agreed that dividends due to the PIC from its investments must come to the PIC.  

The minister also suggested to the committee that it consider calling Matjila himself, and Sekunjalo chairperson Iqbal Survé to take the committee into their confidence about the circumstances of the PIC's investment into Ayo. 

"I think that maybe this committee should invite the chair of Ayo and Sekunjalo and also the previous CEO of the PIC to have a conversation on how those arrangements were made. But I think it would be wrong to tarnish the reputation of the whole Ayo or Sekunjalo organisation based on this," Mboweni said.

Mboweni criticised instances of mismanagement which compromised good investments by the PIC, including the investment into VBS Mutual Bank, which he said was a good model that was taken over by ill-intentioned individuals.

PIC CEO Abel Sithole told the committee that, out of the total of 308 recommendations in the Mpati report, 52% have been partially implemented, 16% have been fully implemented and 31% have not yet entered the implementation phase.

Sithole said the PIC's portfolio was impacted by the sovereign credit ratings downgrades which took place at the beginning of the year. The impact of subsequent downgrades, meanwhile, was less significant as the Covid-19 pandemic was being taken into account.

"The one that impacted the portfolio substantially was the first downgrade in March which coincided with Covid. It impacted the portfolio to the tune of R223 billion. The good news is that we have substantially recovered most of that," said Sithole.

Asked by MPs whether distressed assets in the PIC's portfolio were written off, Sithole said the writing off of assets at the PIC was not done.

"We do not write off assets. We impair assets and try to put a realistic value on them. We don't stop pursuing or write it off. We do not really write off. The distressed assets are not all due to maleficence. Some are due to audit decision," Sithole said.

He said the larger listed portfolio space of the PIC was performing better than its unlisted assets, and the PIC hoped to get access to a PWC report into the near-collapse of Steinhoff so it could identify individuals who can be held responsible for the depreciation of the investment.

PIC board member and member of the director affairs committee Advocate Makhubalo Ndaba said at the next board meeting, the PIC board would likely discuss the suspended CFO More and how to bring that matter to closure.

"The board has gone out of its way to seek audience with the NPA and the NDPP, the Hawks in order to get an understanding of what is happening with the Steinhoff matter.

"We are satisfied with the accounts of the Hawks and the NPA. From a process point of view, we have been in touch with the authorities and are confident that action will be taken soon," said Ndaba.

PIC investment committee chair, Themba Gamedze, said a key reason for the slow pace of of progress in the Steinhoff situation was that the company had stock in South Africa but was domiciled in the Netherlands. The PIC had to ensure every case was brought to the right authority "or we would get sent from pillar to post".

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