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Dan Matjila – the PIC’s one-man wrecking ball (with...

South Africa

PIC INQUIRY ANALYSIS

Dan Matjila – the PIC’s one-man wrecking ball (with a little help from Brian Molefe)

Former Public Investment Corporation CEO Dan Matjila. (Photo: Gallo Images / Netwerk24 / Elizabeth Sejake) / Background: Mockaroon / Unsplash)

Dan Matjila may have been trying to paint himself as a victim of political interference and greed. But what he instead succeeded in doing is show how much he bent over backwards to curry favours with politicians of every shape and persuasion.

When John Maree received a call from Prime Minister PW Botha in 1984, begging him to take over as Eskom chairperson and rescue the utility from yet another self-inflicted imminent collapse, he had only one condition:

The first time any government minister or state official sets foot in my office without my invitation, you will get my resignation,” Maree is reputed to have told Botha, infamous for wagging his finger at those who were reluctant to accept his authority.

Had former Public Investment Corporation (PIC) chief executive officer Daniel Matjila heeded Maree’s advice on dealing with politicians, there might never have been a need for him to appear before the commission of inquiry into governance malpractice and alleged irregularities at the fund manager. In fact, there might never have been such an inquiry in the first place.

For it is Matjila himself, more than any other individual, who should shoulder the blame for the governance failures that led to the establishment of the inquiry.

Matjila joined the PIC in 2003 as chief risk officer, having been head-hunted by none other than that corporate governance heavyweight Brian Molefe, who was the de facto crown prince at the then Public Debt Commissioners. By this time Matjila had already earned himself a doctorate in Applied Mathematics and had already established himself as one of the influential brains in the asset management industry while he worked at fund manager Stanlib.

So his secondment to the PIC, at Molefe’s recommendation, was by no means a favour. In fact, it was an acknowledgement of his talents and skill. Thus he would have been best equipped to deal with truant politicians.

But during his second day of testimony before the commission led by Judge Lex Mpati, Matjila painted his entire stay at the PIC as marked by “a great deal of pressure” he received from politicians.

Without mentioning names, Matjila told the commission:

Throughout my time spent as CIO (chief investment officer), 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.

As Matjila admitted, these politicians went beyond those who were in charge of the government, much less the PIC. Questioned by commissioner Gill Marcus about what he would do when a minister would summon him to a meeting, Matjila said he would up and go to the said meeting. He gave the example of meeting ministers at the airport, or at hotels, outside the premises of the PIC and outside the said minister’s own office.

By admitting this, Matjila may have been trying to paint himself as a victim of political interference and greed. But what he instead succeeded in doing was to show how much he bent over backwards to curry favours with politicians of every shape and persuasion.

First of all, I would have to acknowledge they are (government) ministers,” he said when Marcus pressed him on how he would respond to an invitation to meet. Marcus made it clear she was referring to any minister, whether or not in charge of the finance ministry, to which the PIC is accountable.

By his own admission, Matjila would attend such unofficial meetings when he knew clearly the intention of the said minister would be to request funding for one deal or another. If the most qualified and senior executive at the PIC would willfully subject himself to that kind of inappropriate pressure, how would officials further down the PIC ladder be expected to respond?

The thing to note here is that the PIC is the 10th-largest fund manager in the world, with R2-trillion of assets under management. Every cent of this belongs to public servants and their beneficiaries, and as a defined benefit fund, every taxpayer is exposed should the PIC not be able to meet its obligations to the pension needs of current and former state employees.

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

However, the thing Matjila neglected to tell the commission is that he was far from an unwilling participant in all of this. More than anybody, it is Matjila who should bear the most responsibility for introducing this culture of entitlement from this political and business elite with regard to the PIC’s funds. That burden he must share with his former boss, Brian Molefe.

In May, Standard Bank’s then head of compliance and now special counsel, Ian Sinton, presented evidence before the commission that placed Matjila firmly at the centre of the irregularities the commission is investigating. Sinton told the commission that Matjila had personally signed a letter authorising SA HomeLoans and Standard Bank to pay R45-million to businessman Kholofelo Maponya in 2009.

Ostensibly this was a fee for arranging a R9-billion loan from the PIC for the acquisition of a 25% stake in SA HomeLoans. Except Maponya, through his Matome Maponya Investment Holdings, was the beneficiary of the very same transaction that apparently gave rise to the R45-million fee. It was American lender JP Morgan that had disposed of its 50% stake in SA HomeLoans. The PIC acquired the other quarter of SA HomeLoans while Standard Bank held the remaining 50%.

In reality, Standard Bank, through its chief executive Sim Tshabalala and Sinton himself, decided no such fee could be legally justifiable and then declined to pay it over. Instead, they reported the attempt to the Hawks. The victims of this apparent irregularity would have been the beneficiaries of the funds under the control of the PIC. The fiduciary responsibility for this lay with Matjila.

Sinton told the commission he had asked Maponya how of all people he had been chosen by the PIC to acquire the 25% of SA HomeLoans, which it also funded. According to Sinton, Maponya told him: “It was because of my relationship with Matjila.”

It does not end there.

It was during Matjila and Molefe’s tenure at the helm of the PIC that some of the most controversial and possibly irregular deals were funded by the asset manager. Former ANC spokesman and close Thabo Mbeki confidante Smuts Ngonyama gave us this memorable quote in November 2004, soon after benefiting from the PIC’s largesse:

I did not join the struggle to be poor.”

He had been exposed as being part of the Elephant Consortium, on whose behalf the PIC acquired a large Telkom stake (which at the time included Vodacom shares) from a departing Malaysian investor. Other than enriching the consortium, there had been no commercial motive for the PIC’s involvement in the R6.6-billion deal.

It was under Matjila’s guidance as CIO that the PIC funded the R6.6-billion buyout of the South African interests of cement maker Holcim. Former president Thabo Mbeki had personally intervened on behalf of the BEE buyers when the other shareholders in Holcim were reluctant to sell their shares at what turned out to be a hugely inflated price. The company was renamed Afrisam after the deal, which put the beneficiaries of the PIC’s funds at about R20-billion to date.

Recently, and directly as a chief investment officer, Matjila should accept the blame for some of the poorest funding deals the PIC has engaged itself in. The R4-billion it invested buying about 30% of AYO Technologies in December 2017 quickly shrank to just under R1-billion after listing on the JSE. Iqbal Survé, the controlling shareholder of AYO, has loudly claimed Matjila as a personal friend and questioned the public criticism of the PIC’s involvement in the deal.

The R4-billion the PIC invested in Camac Energy in 2014 has all but evaporated after the oil company was suspended from the New York Stock Exchange and the JSE in 2018. Camac’s major movers and shakers have close relations with former president Jacob Zuma, under whose tenure Matjila was promoted to CEO at the PIC. The PIC admitted in May that it did not have any documentation related to its investment on this deal.

Both the AYO and Camac Energy deals were characterised by a stark absence of due diligence studies before the PIC committed funds. Both investments also lacked commercial rationale.

The PIC also inexplicably acquired the majority of shares in SacOil Energy a few years ago. Politics was suspected to have played a role in this transaction, too. It repeated the exercise at platinum miner Lonmin. While Lonmin turned out better for it after Sibanye-Stillwater took over the company earlier in 2019, the PIC will struggle to see a return from the 60.72% stake in what is now Efora Energy.

As chief risk officer, and later chief investment officer, these decisions were all within the purview of Matjila. As CEO for the five years ended October 2018, during which the most questionable deals were inked by the PIC, the buck stops firmly at Matjila’s desk. Far from a victim of political pressure and greed, Matjila has been a willing participant, if not a facilitator of the irregularities at the PIC.

After reading PW Botha the riot act all those years back, Eskom chairman John Maree was able to resuscitate the utility and turned it into one of the top five cheapest and best global electricity producers in the world by the early 1990s.

After kowtowing to all sorts of politicians and their underlings, Matjila bequeathed a dysfunctional and highly politicised PIC, denuded of skills. DM

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