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PIC's Matjila to Say He Was Ousted to Facilitate Edcon...

Business Maverick

Business Maverick

PIC’s Matjila to Say He Was Ousted to Facilitate Edcon Rescue

Former Public Investment Corporation CEO Daniel Dan Matjila. (Photo: Gallo Images / Netwerk24 / Elizabeth Sejake)
By Bloomberg
08 Jul 2019 0

Daniel Matjila, the ousted chief executive officer of Africa’s biggest fund manager, is expected to say his opposition to funding the rescue of a clothing retailer ahead of national elections was one of the reasons he was dismissed.

Daniel Matjila is scheduled to begin testimony to a special commission of inquiry on Monday that will include his assertion that the rescue of Edcon Holdings Ltd., which supports 140,000 jobs through direct employment and its supply chains, didn’t meet the investment criteria of the Public Investment Corp.’s clients, according to his prepared statement.

On the day he was ousted, Nov. 23, he met the chairman of the PIC, the country’s economic development minister and the CEO of Edcon to put forward the conditions for supporting the deal, he is expected to say at the inquiry. Those weren’t viewed favorably, he said.

The ongoing inquiry has heard from about 70 witnesses — several of whom flagged Matjila as playing a key role in approving questionable deals. He has denied that. President Cyril Ramaphosa ordered the investigation in October last year, one of a handful he’s instituted to probe alleged graft since taking office 16 months ago after Jacob Zuma’s scandal-marred nine-year rule.

Union Pressure

In February, a senior official of the Congress of South African Trade Unions emailed the chairman of the PIC, who was also deputy finance minister at the time. He wrote that unless the PIC supported the rescue, the labor federation wouldn’t be able to encourage its members to vote for the ruling African National Congress party in May elections.

The rescue was announced a week later, with the PIC leading the 2.7 billion rand ($191 million) rescue. It used 1.2 billion rand of money from the Unemployment Insurance Fund, one of its clients.

Matjila is expected to say he was removed, at least partly, to ensure the Edcon rescue could take place. He cited the email, from Cosatu’s Parliamentary Coordinator, Matthew Parks, as evidence.

To read more about the email, click here

Matjila asserts that he and the PIC’s then head of private equity, Mervin Muller, maintained they would only back the rescue if Long4Life Ltd.’s proposal to invest 500 million rand in the deal went ahead. Long4Life is led by Brian Joffe, a veteran South African businessman. The company didn’t invest.

While the bailout would have rescued jobs it was unlikely to generate adequate returns, according to Matjila.

The PIC on Thursday denied that the decision to invest the funds was politically influenced. Mondli Gungubele, the former deputy finance minister and chairman of the PIC, hasn’t responded to phone calls and text messages about the Edcon deal.

Matjila’s departure from the PIC “occurred in the context of an avalanche of allegations of serious looting, indefensible investments costing billions of rand and a complete collapse of good governance at the PIC” and the labor federation only got involved two months later, in January, Cosatu said in an emailed statement on Sunday. “Yes we unashamedly championed the Edcon intervention. Cosatu’s members have mandated us to fight to the very end to defend workers’ jobs.

Gallery

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