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  • The commission into wrongdoing at the Public Investment Corporation (PIC), which manages civil servant pensions, has released its long-awaited report.
  • The PIC wasted billions in suspect deals and paid exorbitant fees to "privileged insiders", often former employees of the PIC.
  • President Cyril Ramaphosa appointed the commission, chaired by Justice Lex Mpati, in October 2018.
  • Here's what it found.
  • For more stories visit Business Insider South Africa.


The commission into wrongdoing at the Public Investment Corporation (PIC), which manages civil servant pensions, has finally released its long-awaited report.

It paints a shocking picture of losses due to misconduct.

In October 2018, President Cyril Ramaphosa appointed the commission, which was chaired by Justice Lex Mpati. It concluded eight months of public hearings, before wrapping up in August last year.

Ramaphosa finally released its findings on Thursday. The report shows how the PIC wasted billions in suspect deals and paid exorbitant fees to "privileged insiders", often former employees of the PIC.

Here are the main culprits in the misconduct, according to the report:

Former PIC CEO Dan Matjila

Former Public Investment Corperation CEO Dan Matji
Former Public Investment Corporation CEO Dan Matjila gives evidence during the Judicial Commission of Inquiry into the PIC on Monday, 8 July 2019. (Photo by Gallo Images / Phill Magakoe)

The report is absolutely scathing of Matjila, accusing him of dishonesty and impropriety in PIC investments. The commission wants the PIC to hold him financially responsible for “fruitless and wasteful expenditure”.

Among other transactions, the commission accuses him of "gross negligence" in the PIC’s R4.3 billion deal to buy a 29% stake in Iqbal Survé’s AYO Technology in 2017. The PIC paid R43 a share – based on a valuation of AYO at R13 billion when in fact the company had total assets worth only R292 million.

The commission also suspects that Matjila colluded with businessman and former Cosatu general secretary Jayendra Naidoo. Naidoo was Steinhoff’s BEE partner. The PIC agreed to a R9.4 billion deal with Naidoo to invest in Steinhoff via one of his subsidiaries.

The commission found that Matjila directly solicited donations for Cosatu and the ANC from individuals whose companies the PIC had invested in, and that he asked a PIC investment partner to pay money to a friend of a government minister after her spa ran into financial difficulties.


Iqbal Survé

Chairperson of media group Independent Media and t
Chairperson of media group Independent Media and the head of Sekunjalo, Iqbal Survé gives evidence during the Judicial Commission of Inquiry into the Public Investment Corporation on April 02, 2019. (Gallo)

The commission accuses the chairperson of the Sekunjalo Group of “outright manipulation” of the Ayo valuation – increasing it from an initial internal assessment of R2.3 billion to R13 billion. 

Survé and Matjila were in a “close relationship”, the commission found. Together, they created “top-down pressures” to get approvals for questionable deals.

In addition, Survé tried to create the impression that there was an over subscription for the AYO shares (which turned out later to be related parties to Dr Survé/Sekunjalo), the commission found.

It says that Survé company boards were not independent. Instead they were packed with family, long-serving employees, long-time friends, or non-executive directors on other Sekunjalo Group company boards .

The commission said Survé's Independent News and Media SA did not repay a PIC loan, and that Matjila showed "complete disregard of the PIC’s investment processes" in signing an agreement that allowed the PIC to swap its debt and shares in INMSA for a stake in another Survé company, Sagarmatha, in December 2017.


Jayendra Naidoo

Jayendra Naidoo. (Steinhoff website)

The commission found that Naidoo, who was the only shareholder of the Lancaster Group, had a longstanding relationship with Steinhoff, particularly with former Steinhoff chair and current Shoprite chair Christo Wiese.

Instead of investing directly by buying shares in Steinhoff, the PIC bought a stake via Lancaster, which was Steinhoff’s BEE partner.

The commission found that Matjila tried to “buy” influence and a Steinhoff board seat by investing via a Lancaster company. The board seat never materialised.

Also, the original proposal from Naidoo was for an investment of R10.4 billion, but this was reduced to R9.35 billion so that it was within the limits of what could still be approved by the PIC’s investment committee.

On top of that, Steinhoff paid a commission of R114 million to Lancaster (whose sole shareholder was Naidoo) as part of the share allocation, which was funded by the PIC.

Naidoo said he told Matjila about the R114 million, but Matjila denied this. The commission wants the PIC to investigate whether the R114 million should have gone to the PIC instead.


Former PIC director Sibusisiwe Zulu

The commission found Zulu encouraged the PIC to do a deal with Ascendis Health, which would have benefited her lover, businessperson Lawrence Mulaudzi. It also found that R100 million which was approved by the PIC for the purchase of shares in Ascendis, was not used for that purpose. Rather, it seemed that the R100 million had been added to the transaction fees and paid to two entities of Mulaudzi.

Mulaudzi was also involved in other PIC deals.

A lifestyle audit by PwC found "serious discrepancies" in Zulu’s affairs. She undertook to provide the Commission with a written explanation, which she failed to submit. This included that R100 000 was paid by Mulaudzi into her account for a couple of months in 2018. Zulu also couldn't explain where she got R6.7 million to buy a house in Umhlanga Rocks.

The commission wants a further investigation into the discrepancies in her lifestyle audit.


Former minister of intelligence David Mahlobo

David Mahlobo at the 54th ANC national conference
David Mahlobo at the 54th ANC national conference at the Nasrec Expo Centre. (Alet Pretorius, Gallo Images)

Mahlobo asked Matjila to meet with him at OR Tambo International airport, and then introduced him to Pretty Louw, who had an investment proposal for the PIC.

The commission found that, in the end, Louw received R800 000 from her introduction by Mahlobo to Dr Matjila. The PIC paid her an amount of R500 000 for work that was not defined.

Matjila requested that Mulaudzi (Zulu's lover) pay Louw money after her spa ran into financial difficulties. 

"Dr Matjila’s repeated efforts to have Mr Mulaudzi provide financial assistance to Ms Pretty Louw reflects the abuse of his office and influence over investee companies," the commission found.


Tshepo Mahloele, former PIC head of corporate finance

JOHANNESBURG, SOUTH AFRICA ? APRIL 14: Businessman
Businessman Tshepo Mahloele (Photo by Gallo Images / Business Day / Robert Botha)

In 2005, Mahloele (on behalf of the PIC) requested a mandate from the Government Employees Pension Fund (GEPF) to manage R1.65 billion in civil servant pension money in investments in African infrastructure projects.

This was granted and the PIC set up Harith Fund Managers to manage a fund for these projects. Mahloele resigned from the PIC in 2006, but was then appointed as an external contractor to head the funds.

The commission found that Harith charged “significantly high fees” - equal to more than 8% per year. There was also a big poison pill: if the PIC terminated HFM, it had to pay 12 months’ management fee and 13% of the market value of all investments. Management later bought a big stake in Harith from the PIC.

"Harith’s conduct was driven by financial reward to its employees and management, and not by returns to the GEPF," the commission found.

 “It is the Commission’s view that there is no question that the approach taken provided easy access to PIC funds, influence and including an enhanced ability to secure additional investment, including from the GEPF [government employee pension fund].”

The commission recommends that the PIC and the GEPF should together appoint an independent investigator into Harith “as soon as possible”.

“The mandate must be to examine the entire PAIDF [the African infrastructure fund] to determine that all monies due to both parties have been paid and properly accounted for; to determine whether any monies due to overcharging or any other malpractice should be recovered, and to provide the results of such investigation within six months to the Boards of both the GEPF and the PIC.”

The commission also wants Mahloele investigated for a potential breach of his fiduciary duties as a director in terms of the Companies Act.

Mahloele chairs the Lebashe group, which bought Tiso Blackstar’s media assets (including the Business Day and Sunday Times) last year.


Former deputy finance minister Jabu Moleketi

jabu moleketi

The commission also wants the PIC to investigate the conduct of Moleketi. He is a former chair of the PIC, and chaired Harith.


Former PIC head of private equity and structured investment products, Koketso Mabe

As part of a deal to buy a stake in Edcon, the PIC paid almost R33.7 million to two advisors – one of which was a company owned by Mabe.

"The terms of the above agreement significantly disadvantaged the PIC, to put it mildly," the commission found, and recommended that the PIC review all contracts signed with advisors over the past five years.

It also recommended that the Edcon transaction be reviewed, to see whether the advisers really earned the money.


Former PIC IT head Simphiwe Mayisela

Simphiwe Mayisela

The commission found that he accessed emails and privileged information of the PIC illegally. He passed on this information to third parties, "with severe consequences for the PIC", the report stated.


Wellington Masekesa, former executive assistant to Matjila

The commission wants a full investigation into the role of Masekesa, after allegations that he asked South African Home Loans to “regularise” “arranging fees” of R95 million in a funding deal between the PIC and the company. According to one report, this was seen as an attempted bribe.


Former PIC executives Ernest Nesane and Paul Magula

Paul Magula
Paul Magula.

The two PIC executives were appointed to the VBS board. They punted a revolving credit facility from the PIC to the VBS, and Nesane received R16.7 million from the bank, while Magula got R14.8 million.

“Both men used their positions of trust and responsibility to unduly enrich themselves at the expense of the depositors, clients and investors of VBS, including the PIC."

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