Admin
25 Jul, 2018
UDM notes minister’s decision re PIC independent inquiry
Media release by Mr Bantu Holomisa, MP and UDM President The United Democratic Movement notes finance minister Nhlanhla Nene’s instruction to the Public Investment Corporation (PIC) board to commission a forensic investigation into allegations of corruption and to institute an independent inquiry into the PIC’s affairs. The mere fact that the minister has so decided shows that there must be prima facie evidence of wrong doing. We however completely disagree on the minister’s approach of giving the responsibility for instituting the inquiry by the very same people who may be tainted. Who will draft the terms of reference for the inquiry? The minister cannot rely on the very same board and the Chief Executive Office, Dr Dan Matjila, to be player and referee. In addition, we are also surprised that the CEO has in fact not been suspended. This smacks of favouritism and protection of a person that might be on the wrong side of the law once the commission gets to work. The UDM will consult with its lawyers on what the next step will be on our side, given that we have taken the minister to court.
Admin
31 May, 2018
@PresidencyZA, UDM writes to #PresidentRamaphosa abt #corruption in #PIC: Mr President plz walk the talk! Scandal bigger than #Guptas?
Mr CM Ramaphosa President of the Republic of South Africa Union Buildings Private Bag X 1000 Pretoria 0001 and Deputy Chief Justice RMM Zondo Chairperson of the Commission of Inquiry into State Capture Private Bag X1 Constitution Hill Braamfontein 2017 Dear Mr President and Deputy Chief Justice THE PUBLIC INVESTMENT CORPORATION, THE GOVERNMENT EMPLOYEE PENSION FUND AND SUSPECTED CORRUPTION; A SCANDAL BIGGER THAN THE GUPTA-FAMILY’S STATE CAPTURE? 1. I refer to the below information which is a summary of the alleged corruption involving, in main, the Chief Executive Officer of the Public Investment Corporation (PIC) Dr Daniel Matjila. 2. The allegations contained therein describes serious corruption, dodging of due diligence, misrepresentation, money laundering and purging of staff (possibly for a cover-up) in deals of the PIC, which could only be the tip of the proverbial iceberg. 3. The extent of the rot could in fact be worth billions of rands, which makes it potentially bigger than the Gupta Scandal. Through PIC, Dr Matjila appears to have tentacles across various sectors of society – from unions, political parties and possibly parts of the fourth estate. He seems to have built a platform that has so far protected him from scrutiny and they have been protecting him against accusations of serious corruption. 4. There are many other nauseating examples of corruption which the media (like amaBhungane Centre for Investigative Journalism) have uncovered and have put in the public domain. Yet we have not seen the authorities do anything about the allegations of corruption and irregular deals, especially those within the past nine years. 5. It is therefore the United Democratic Movement’s urgent request that this matter forms part of the inquiry into state capture, because of the potential scope of the corruption. The commission’s terms of reference could be widened to include these allegations, especially considering that this could only be the tip of the iceberg and that more corruption will be exposed in its investigations 6. Because of the sophistication with which this alleged wheeling and dealing in the PIC was done, we suggest that a team of specialist professionals (including but not limited to forensic auditors, as well as finance and investment experts), should speedily investigate this matter, before proof of these misdeeds are ferreted away. 7. Mr President, you have categorically stated that you will root out corruption in government, which includes State Owned enterprises; but in this instance it will also directly affect hundreds of thousands of families for whom this is a life or death situation. Yours in stamping out corruption Mr Bantu Holomisa, MP UDM President Re: Investigation of CEO, Dr Daniel Matjila, with regards to irregularities at PIC Background Public Investment Corporation (PIC) is one of the largest asset manager managing South African government public funds. Its biggest client is the Government Employee Pension Fund (GEPF), which constitute approximately 90% of its fund under management. GEPF is a defined benefit fund, which means it is guaranteed by the employer. Employer, with regards to GEPF, is the South African Government. Any shortfall in member benefits or liabilities are therefore guaranteed by the government. It is for this reason that any maladministration from the asset/investment management is detriment to both the members of the fund and the fiscus. There have been several irregularities that have been raised in the media which are of concern and could impairment the ability of GEPF to meet its obligations over the long-term, such eventuality could trigger support from the fiscus. The following deals need further investigations by an independent party: Steinhoff Steinhoff on the unlisted side where PIC gave R 9.3 billion to an entity led by Jayendra Naidoo called Lancaster01. The shareholding of Lancaster01 is as follows is as follows: GEPF 50%, J Naidoo, 25% and community trust 25%. (Why such a narrow-based BEE structure with one person getting 25% of the deal? Does the community trust a front?). The transaction was done in two phases: • Phase 1 PIC gave Lancaster R 9.3 billion secured by both shares and collar structure if share price decline for capital preservation. • Phase 2 was the restructuring of the transaction wherein PIC was to partially forego its security to another lender Citibank. Citibank funded Lancaster02 Investment in STAR worth over R 6 billion. • Compromising of the security package in favour of J Naidoo in phase 2 resulted in impairment amount worth billions of rands. (could be up to R 5 billion possible loss for doing a favour to J Naidoo and Citibank) Ayo Technologies Ltd • Ayo Technologies Ltd, a start-up company, listed on the Johannesburg Stock Exchange and due diligence was waived. Funds were disbursed without a condition precedent – put option being in place. Put option is an insurance instrument that would protect PIC if the share price declines. • PIC was the only material participant in the private placement despite media reports of oversubscription. • Lack of market participation could be indicative of the poor underlying investment value. The share price has remained below listing price and have experience very limited liquidity. • PIC invested R 4.3 billion, current market value is R 3.3 billion. Already lost R 1 billion on market to market basis. Sagarmantha Technologies • The CEO lobbied the investment committee members even by using letters from unions and convenient press release from a political party. Has the CEO allowed governance processes within PIC to breakdown to such a level that he felt better outsourcing the function of PIC Investment Committee to the political and union formations? Why did he deem it fit to have the letters from unions be sent to investment committees if he believes in the internal process that they will do the right thing? What was his intention to have these letters given to members of investment committee? • Despite the lobbying, the deal was declined due to critical media scrutiny. • Sagarmatha technology proposal lacked investment rationale and largely mirrored the same methodology used to get R 4.3 billion for AYO technology and backed by the same sponsor –Iqbal Surve. • GEPF was expected to invest a minimum of R 3 billion. S&S Oil Refinery • S&S Oil Refinery in Mozambique. PIC funds are tied in an asset that is currently not producing much of what have been projected? And the sponsor-Momade Rassul is alleged to be an underworld figure. Rassul is based Nacala in Northern Province of Mozambique was arrested on 29 June 2017 facing an assortment of serious charges including money laundering, illicit enrichment, tax fraud, foreign currency manipulation, smuggling and misappropriation. • Total investment at risk of full write down is R 1 billion. Erin Energy Media reported on a dodgy deal concluded with an American – Nigerian businessman – Kase Lawal. The ownership of the underlying oil asset by Erin Energy was disputed at the point of PIC investment, but the PIC proceeded. Erin Energy failed to get full ownership of the asset. Considering the PIC’s $270-million equity investment and the fact that Erin had drawn $65.6-million against the $100-million PIC-backed loan but held $9.1-million in cash security, the PIC could lose roughly R 4 billion. The girlfriend story • PIC utilisation of CSI budget to fund the project introduced by the girlfriend of the CEO. • CEO asked an Investee company to financially assist the girlfriend. Note that the CEO has not disputed this. It borders on money laundering and serous conflict of interest, this is subject to Police investigations. Other issues for further investigations: Corporate finance Advisory on deals seem to be for selected few. • Sao Capital has been an advisor on many deals. Why does the company have such a great strike rate within PIC? How many deals have they done through PIC? • Kurhisani has been an advisor in many deals – MOGS, Distell, etc. Why does the company have such a great strike rate within PIC? How many deals have they done through PIC? Recent purging of staff Head of risk is fired. Head of IT, IT security and Company secretary are under suspension. Over the last few years the PIC has victimised a lot of black professionals. Independent investigations of the staff issues will show the extent of the rot.
Admin
29 Dec, 2017
#PIC #GEPF: employees lost R12bn of pension money with Steinhoff corruption! Any political party that (may) have benefitted through #Steinhoff should: #PayBackTheirMoney
Of course, the call to “pay back the money” was a legitimate demand for the return of taxpayer money illegitimately used to fund Nkandla, the “Gupta industry” and other sinister personal gains. Right now, there are other monies that should be paid back; that should be returned from whence it came. The Steinhoff debacle shows that corruption and unethical behaviour place people in the path of clear and present danger. The Public Investment Corporation (PIC) who invests and manages funds on behalf of the Government Employees Pension Fund (GEPF) announced on 13 December, a week after the Steinhoff collapse that: “It is important to note that notwithstanding the collapse in the Steinhoff share, the GEPF portfolio remains financially healthy, because of its diversified nature. It is also important to note that GEPF members’ benefits will not be changed by these developments, given that the GEPF is a defined benefit pension fund.” GEPF’s Steinhoff loss was 0.6% of its portfolio on 6 December. This means that for every R100 of GEPF value sixty cents were lost. Even if this could be described as a manageable setback, the reality remains that the Steinhoff debacle cost the PIC R12 billion! This is a dangerous situation, where civil servants’ pensions are adversely affected no matter who downplays the scenario. The Steinhoff powers that be should provide guarantees that this R12 billion will not disappear into nothing and that the money shall be paid back to government employees. On another note, perhaps the Steinhoff saga is also a turning point in private political party funding looking at the African National Congress and the Democratic Alliance’s refusal to lay bare their books. If perhaps they, or any other political party, benefitted in any way from Steinhoff they should also be held to account. Given that the PIC has invested in Steinhoff, each and every political leader, should own up and confirm or deny that their parties (and/or functionaries) have accepted money from any source associated with Steinhoff profits. Any and all Steinhoff related money, and every cent, must be returned, with interest, to the coffers of the providers of compromised money, to set off that R12 billion loss in government pensions. Why should workers lose money to greed and corruption? Issued by: Mr Bantu Holomisa, MP and UDM President
Admin
26 Sep, 2017
UDM rejects Government’s attempts to tap into PIC funds to bail out failing SOEs
The allegations that the Ministry of Finance is trying to access Public Investment Corporation (PIC) funds to bail out failing State Owned Enterprises (SOEs) confirm the United Democratic Movement’s (UDM’s) long-held suspicion that the mafia styled ruling elite would, once cash-strapped, extend its grubby hands to workers’ pensions entrusted to them for safekeeping. The true intention of these transactions is not to bail out struggling SOEs, but rather to ensure that there is enough state resources to plunder for those “whose turn it is to eat”! We therefore reject any attempts by government to use PIC funds to fund failing SOEs. Bearing the aforementioned in mind, the UDM believes that steps should be taken to develop a mechanism to protect workers’ assets against abuse and misuse by government. Such a mechanism should, among others, also ensure that workers, as a key stakeholder, have a voice in how and where their assets are invested and accessed. In addition, steps should be taken to restructure the PIC board to ensure that other stakeholders are accommodated and that it is not under the full control of government. We call for the implementation of more checks and balances, with minimal bureaucracy, such as risk mitigation systems and a watertight Code of Ethics. We demand a comprehensive investigation of all transactions since 2009, as we believe that under Mr Zuma, the PIC may have been used as a source of funding for suspicious deals that have nothing to do with growing an inclusive and distributive economy. Statement issued by: Mr Nqabayomzi Kwankwa, MP UDM Deputy President and Chief Whip
Admin
20 Jan, 2016
Public Protector must investigate Public Investment Corporation (PIC)
Dear Advocate Madonsela REQUEST FOR AN URGENT INVESTIGATION: Public Investment Corporation (PIC). I take this opportunity to welcome and wish you and your office, a very successful year in the service of the nation, in 2016. In this regard, I wish to table the following matter with you, so that you may investigate it appropriately for the benefit of the South African public. I have anonymously received serious allegations with regard to the possible corruption in the Public Investment Corporation (PIC) fund. It looks like the institutionalised corruption, which has resulted to South Africa being downgraded by various global grading bodies, has extended its vicious arm to the pensions of government employees, Judges, Members of Parliament and others who are paid from the public purse. It is alleged that, during the second week of December 2015, an amount of R40m was transferred from the PIC account to a company whose name is attached herein. This company is known for handling the PIC and government transactions. It is further alleged that this R40m was meant to fund salaries of the ANC staff members and its Birthday Anniversary Celebrations held on the 8th of January 2016. Another allegation is that, in January 2016, an amount of R2m was transferred from the PIC account to a company whose name is also attached, for the benefit of the ruling party. You are further requested to investigate another allegation that the PIC is about to fund a company whose name is attached herein, with an amount of R1.5bn, in order for this company to purchase a 25% stake from another person who holds this stake with TOTAL Oil Company. I request you to investigate whether due diligence of this transaction was conducted and whether it is in accordance with the relevant laws governing the PIC. Given the specific allegations above, it is clear that there is a need for a thorough and comprehensive investigation of how the PIC is managing all the monies entrusted with them. A judicial commission of enquiry may be relevant in order to ensure that these monies are not vulnerable to the whims of the political elite. I look forward to your excellent investigative work on this matter. Kind regards Bantu Holomisa President of the United Democratic Movement
