Business Maverick


Reuel Khoza: ‘Natural’ to work with law agencies to prosecute the people responsible for wasting PIC money

Reuel Khoza: ‘Natural’ to work with law agencies to prosecute the people responsible for wasting PIC money
Reuel Khoza, board chair at the Public Investment Corporation. (Photo: Gallo Images / Sunday Times / James Oatway)

Business Maverick spoke to the Public Investment Corporation’s board chair on how former CEO Dan Matjila managed to become such a powerful force (a ‘massive faux pas’) and how to fix governance issues at the state-owned asset manager.

It has been nearly six months since Dr Reuel Khoza was appointed by finance minister Tito Mboweni as board chair of the Public Investment Corporation (PIC), the custodian of pension savings worth R1.8-trillion belonging to public servants.

And the 70-year-old has made a searing diagnosis of how the state-owned asset manager fell into a web of corruption and corporate governance scandals that he inherited.

Along with internal corporate structures that were not robust enough to pick up red flags in various big-ticket deals that the PIC was involved in, Khoza has placed former CEO and long-serving chief investment officer (CIO) Dr Dan Matjila at the centre of firm’s descent into scandals.

The structure of the PIC from a corporate vantage point was wrong,” said Khoza in an interview with Business Maverick.

Matjila, a qualified mathematician who reinvented himself from being a mathematics lecturer at Technikon Northern Transvaal (now Tshwane University of Technology) to an asset manager at Stanlib, joined the PIC in 2003 at the invitation of former CEO Brian Molefe.

Matjila helped the firm diversify its portfolio of investments beyond JSE-listed shares to include private equity and real estate investments and set up a risk management platform, which ensured the monies of public servants were managed prudently. After all, the PIC’s mandate is to invest the pensions of 1.7-million current and former public servants — collected by the Government Employees Pension Fund — with the mandate of generating sufficient returns to pay out money once they retire.

By 2005, Matjila was appointed as the PIC’s first CIO after the firm was corporatised — a process that saw it no longer being a part of the National Treasury but rather a stand-alone asset manager that mirrors private-sector investment practices even though it is state-owned.

Molefe’s employment contract at the PIC expired in April 2010, but Matjila stepped in as acting CEO until Elias Masilela was appointed to the top job in February 2011.

Masilela resigned with immediate effect as CEO in June 2014 — said to be linked to a clash with Matjila over politically motivated investments the PIC was involved in with individuals close to former president Jacob Zuma. Matjila permanently replaced him as CEO from December 2014. From then, Matjila held the CEO post in tandem with that of CIO, until his resignation from the PIC, in November 2018.

Khoza said this was a “massive faux pas” as Matjila “arrogated himself what used to be his position (the CIO position) and collapsed the two (CIO and CEO roles) into one. Then who checks who and who asks who questions?”

How Matjila came to occupy the roles of both CIO and CEO at the PIC is a mystery. In the private sector, the roles are normally held by two people with the CIO being responsible for managing an organisation’s investment decisions. Overseeing entire operations would be the job of a CEO.

At a commission of inquiry established by President Cyril Ramaphosa in October 2018 to probe allegations of impropriety and corruption at the PIC, Matjila said he earned the CEO position “through merit and performance, and not as a cadre or political appointee being deployed by any political party or faction”.

After taking over from Masilela, Matjila said he embarked on a Vision 2030 strategy to position the PIC as a global investor, a process which unleashed changes to its governance and organisational structure and roles in the PIC.

The two roles that Matjila held appears to have contravened the PIC’s memorandum of incorporation, a Companies Act-governed document that outlines the roles and fiduciary duties of directors and executives. Previous versions of the document called for the roles to be held by two individuals.

Khoza said the PIC has begun to reverse the firm’s corporate governance structure by changing the memorandum of incorporation to split the role of CEO and CIO. The asset management firm is going on a recruitment drive; the post of a permanent CEO was advertised last week, the roles of CIO, chief risk officer, chief technology officer and chief operating officer will be added or filled.

Khoza steps in

The appointment of Khoza, a former chairperson of Eskom and Nedbank, was an anomaly because a deputy finance minister historically chaired the PIC board, which in itself had politicised a firm that should stay above the political fray.

Khoza took on the job for a year — from 12 July 2019 to 31 July 2020 — out of a sense duty and not financial need, he states. Before taking on the job, Khoza was the chairman of Aka Capital (private equity firm) and Dzana Investments (investment holding firm). He is a visiting professor at universities teaching business leadership and corporate governance; an author of six books on leadership; a farmer of cattle, macadamia nuts and avocado who built a school in his hometown of Bushbuckridge in Mpumalanga and a music producer of no less than nine CDs.

I don’t think I agreed to the job. My sense is that national duty called. My sense was that I could make a contribution in stabilising the organisation and setting it on a course to its former glory. There was a time when the PIC was operating robustly, it was operating cleanly and didn’t call for anybody to institute a commission of inquiry on its affairs.”

The PIC inquiry has investigated, among other things, deals concluded before 2017 that have not made it into the public eye, deals that contravened PIC policy, allegations that deal-making is influenced by politically connected individuals, and the role of directors.

The inquiry, which concluded oral testimonies in August 2019 after 77 witnesses testified over seven months, is set to hand over a final report to Ramaphosa on 15 December 2019. It’s unclear if the president will make the report public.

Matjila’s friendship with Survé

Matjila’s PIC colleagues testified at the inquiry that he was “a steamroller” as he allegedly used his CEO and CIO role to unilaterally make investment decisions. He strongly denied this, testifying at the inquiry that he wasn’t a powerful force and all PIC investment decisions were vetted by an investment committee.

Matjila has been named as the architect of many PIC deals that are now being investigated by the inquiry because they have either soured or allegedly been concluded on the basis of his close friendships with ultimate beneficiaries, instead of commercial merit. This was also denied by Matjila. One of Matjila’s alleged pals was Iqbal Survé, who has been a serial beneficiary of PIC funds.

Survé’s firm Sekunjalo Investment Holdings received funding of R1.27-billion from the PIC — some of this in equity (PIC took a 25% stake in the company) and debt — in 2013 to buy Independent Media, which owns publications including The Star and Cape Argus, from its Irish parent, Independent News and Media.

Sekunjalo has not serviced PIC debt of more than R700-million, prompting Khoza’s board to launch formal court proceedings to liquidate Sekunjalo to recoup its money. Survé has attacked the PIC for hauling Sekunjalo to court, saying it’s a politically connected move to crush his newspaper business.

Khoza has hit back:

If the board wants to do its work, they are not going to retreat because of somebody’s bluster and shouting. Whatever money has been given or investment in unsavoury investments, the board will do its best to recover the money.”

The PIC’s benevolence towards Survé saw it invest R4.3-billion in Ayo Technology Solutions (AYO), majority-owned by Sekunjalo.

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 a share, valuing the business at R14.8-billion. On Friday 29 November 2019, AYO shares were worth R5.50 a share, commanding a market value of R1.89-billion. Khoza said the PIC has a plan to recoup money from its AYO investment, but didn’t elaborate.

Asked if the PIC is working with law enforcement agencies to prosecute individuals responsible for throwing money belonging to public servants into shady deals, Khoza said this would be “natural”.

We should be working with law enforcement agencies. But before you get to ask them to come to the party, you must have crystallised your case. The commission of inquiry is a case of crystallisation. There may be a need to complement the inquiry with forensic investigations.”


The broader investment community has welcomed Khoza’s appointment, with one investment analyst calling him a “no-nonsense kind of guy who is not afraid to call out someone on their bullshit.

Before the term “State Capture” was etched into the nation’s lexicon, Khoza criticised SA’s quality of political leadership in Nedbank’s annual report in 2012 when he was the bank’s chairman. He wrote at the time:

Our political leadership’s moral quotient is degenerating, and we are fast losing the checks and balances that are necessary to prevent a recurrence of the past.” These comments drew strong criticism from the ANC‚ with the governing party saying he should focus only on business.

Seven years later, Khoza still holds similar views, saying meritocracy and a rigorous selection process matters in the private sector before someone is appointed in a leadership position.

However, a great deal of our leadership in the public sector is wanting. A good number of people almost toyi-toyi themselves into leadership. A good number of them are not sufficiently schooled. The greatest Achilles heel is cadre deployment. People are deployed into leadership because they seem to embrace those in leadership, who may or not be good themselves.”

Asked if he will be available to serve at the PIC longer when his term ends in July 2020, Khoza said it will be up to Mboweni and Ramaphosa. Asked if he will be available to serve, he said: “I don’t know. I’ll have to consult my wife.” BM


Please peer review 3 community comments before your comment can be posted


This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.

Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

Become a Maverick Insider

This could have been a paywall

On another site this would have been a paywall. Maverick Insider keeps our content free for all.

Become an Insider
Daily Maverick Elections Toolbox

Download the Daily Maverick Elections Toolbox.

+ Your election day questions answered
+ What's different this election
+ Test yourself! Take the quiz