PIC hits back at 'irrational' allegations, says CEO appointment process is above board

Dr Reuel Khoza, the new interim chairperson of state asset manager the Public Investment Corporation,  at the Sunday Times Directors Event in June 2015 in Johannesburg. (Photo by Gallo Images / Sunday Times / James Oatway)..
Dr Reuel Khoza, the new interim chairperson of state asset manager the Public Investment Corporation, at the Sunday Times Directors Event in June 2015 in Johannesburg. (Photo by Gallo Images / Sunday Times / James Oatway)..

The Public Investment Corporation's board has denied claims made in a media article that it is not following due processes in its search for a new CEO.

The board's chairperson, Reuel Khoza, on Monday issued a statement in response to an article published in Business Report last week which claimed the state-run asset manager had flouted procurement processes in appointing executive search company Heidrick & Struggles to assist it in recruiting a new head. 

The PIC manages R2.2trn in investments on behalf of public servants. Its largest client is the Government Employee Pension Fund. 

The judicial commission of inquiry into the PIC has handed over its final report to President Cyril Ramaphosa. The findings have not yet been made public.

In the statement on Monday, Khoza said that the PIC board and its management are "committed to entrench a culture of accountability and proper governance", expected of a "reputable" asset management firm. 

Khoza labelled the allegations in the report as "false, malicious and contrived".

The allegations made in the report are:

  • That Heidrick & Struggles is a service provider which was not on the PIC's supplier list.
  • That the appointment was irregular, and when questioned, board member Maria Ramos "threw a tantrum and went ahead with the process".
  • That the PIC board or its management are trying to "cover up an unethical bid for control of the state's key financial asset".

"These allegations are irrational. The PIC Board and its executive management team are appointed, and are legally mandated, specifically to be in 'control' of the PIC and to manage the institution responsibly," Khoza said.

In response to the allegations in the article, the PIC has said that in 2019 its board established a task team to lead and oversee the executive search assignment. An open tender process was followed and public advertisements in print and digital media were published on August 25, 2019, which called for proposals from executive search companies.

Khoza maintained that a "competitive bidding process" was followed – whereby 18 eligible search companies were evaluated. Four companies were short-listed.

Further evaluation and a second round of presentations were made before "The Boardroom Alliance (Pty) Ltd., t/a Heidrick and Struggles", was appointed.

"The company is registered on the National Treasury Central Supplier Database which lists accredited service providers," Khoza said. He added that this was made clear to Business Report.

"The Board rejects the allegations propagated by Business Report. The PIC and the Board’s Task Team followed all the requirements of a bona fide tender process and have documented their actions in this regard," said Khoza.

"The recruitment process for a new CEO has started and appointing a proficient candidate is a top priority for the Board.

"The Board and the Commission of Inquiry into the PIC agreed that the search for a new CEO must proceed even before the Commission concludes its work. The PIC is too important an institution to remain without a permanent CEO indefinitely," Khoza said.

Former CEO Dan Matjila resigned in late 2018. He was one of the witnesses of the inquiry. He was questioned allegations of his influence on some investment deals. The PIC has not had a permanent CEO since. The current acting CEO is Vuyani Hako.

"Credible journalism, in the public interest, must concern itself with facts or must strive to establish true facts. This strengthens accountability and ultimately, the health of our democracy," he added.

Business Report falls under Independent Media, which in turn is majority-owned (55%) by Sekunjalo Independent Media.

The PIC has lodged a court bid to have Sekunjalo Independent Media liquidated to recover loan made from the GEPF. Sekunjalo Independent Media has said the liquidation application is an attack on media freedom.

However, Khoza said the application is strictly a commercial dispute. "The legal action that the PIC lodged against Sekunjalo Independent Media in November last year for failing to repay its loan obligations to the Government Employees Pension Fund is of a commercial dispute and should not be misconstrued for anything else," he said.

Khoza added that the board was working to restore the credibility and integrity of the PIC and would not be "distracted" from its commitment.

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