Dan Matjila on PIC funding: ‘I experienced a great deal of pressure from senior politicians’

Former Public Investment Corporation (PIC) CEO Dan Matjila portrayed himself as a victim on 9 July, telling a commission of inquiry into governance issues at South Africa’s biggest fund manager that he was pressurised by prominent business figures and politicians to release investment funds to their entities as early as 2005.

Matjila, the man at the centre of corruption allegations at the PIC, has a 15-year-long history with the fund manager that manages about R1.8-trillion of state workers’ pension funds. His run at the PIC ended on November 2018 when he resigned, with immediate effect, as CEO.

Matjila joined the PIC when he was seconded in August 2003 from Stanlib Asset Management to set up a risk management platform, which would protect the fund manager’s portfolio of investments from risks including, among others, currency fluctuations.

The brainchild behind Matjila’s secondment was Brian Molefe, who was then the PIC’s secretary of commissioners (equivalent to a chief investment officer [CIO] role today) and who later became CEO in 2005. Matjila fulfilled his secondment role between 2003 and 2004 and was later appointed as the PIC’s CIO in 2005, a powerful role that would allow him to oversee major investment decisions.

It was during his CIO tenure that Matjila said he faced pressures, especially when the PIC was asked to invest funds in Black Economic Empowerment transactions or those involving the PIC’s unlisted investments.

At the heart of governance failures and corruption allegations at the PIC has been its unlisted portfolio, which consists of investments in companies that are not traded on the JSE and are therefore harder to value and fall short on disclosure.

“Throughout my time spent as CIO, I experienced a great deal of pressure from senior politicians of most parties, very influential people in various fields and business people who, for no other reason than entitlement, felt that their business venture or those of their associates deserved to be financed by the PIC,” he said in his testimony.

“Over the 15 years as CIO and CEO (later appointed in 2014), I found this aspect of my work to be extremely stressful, as I was not there to respond to relentless funding requests by political and business elite, but to pro-actively search for assets that would fit a defined portfolio structure and the client mandate.”

Matjila didn’t name politicians and influential business figures as his testimony is still in the early stages. His testimony will continue until 11 July.

Matjila’s version of events is the antithesis of testimony heard at the inquiry from about 70 witnesses, some of whom have accused him of being a central figure in approving deals based on favouritism rather than commercial viability.

One of the deals includes the PIC’s controversial R4.3-billion investment in Ayo Technology Solutions, majority-owned by Sekunjalo Investments, which in turn is owned by Iqbal Survé.

The Ayo deal was controversial due to the high valuation it commanded when it listed in 2017 on the JSE, which saw the PIC take a 29% stake at R43/share. Ayo’s shares were worth R9 during the intra-day trade on 9 July, meaning that the PIC has lost about R3-billion from its initial investment. The PIC’s assistant portfolio manager Victor Seanie testified that Matjila was a close friend of Survé, which influenced the fund manager’s decision to invest in Ayo.

Ministry of finance conflict

Matjila’s relationship with the Ministry of Finance and several PIC non-executive directors was tempestuous on several deals.

He cited the decision by the PIC to not support the acquisition of JSE-listed pharmaceuticals Adcock Ingram by Chilean drugmaker CFR Pharmaceuticals in 2014 because it undervalued the fund manager’s shareholding. At the time, the PIC owned a 24% stake in Adcock.

Matjila’s decision to not support the deal incensed the ministry of finance, which was led at the time by finance minister Nhlanhla Nene and his deputy Mcebisi Jonas.

“(This) caused tension between me and the Ministry of Finance. I was accused of blocking foreign direct investments into the country. However, as the CIO at the time I felt strongly that the shareholder needed to be advised not to exert direct influence on how the PIC conducted its investment activities as it was highly regulated,” said Matjila.

This tension prompted the ministry of finance to embark on a governance review of the PIC, which was led by the fund manager’s non-executive directors. Matjila, who was CIO during this period, said he was deliberately excluded from this governance review as he was not privy to its terms of reference.

“It became clear that the governance review was targeted against me… It was clear that there was a personal vendetta to target me... It was a way to probably remove me from the PIC at the time.” DM