South Africa

PIC Report

‘Malfeasance’, ‘outright manipulation’ on part of Iqbal Survé – ‘gross negligence’ on part of Dan Matjila

The PIC inquiry found that the PIC’s interactions with and investments in Iqbal Survé's Sekunjalo Group were questionable. (Photo: Gallo Images / Wessel Oosthuizen)

The PIC’s interactions with, and investments in, Iqbal Surve’s Sekunjalo Group were questionable from the start, the Judicial Commission of Inquiry into Allegations of Impropriety at the Public Investment Corporation has found.

Several companies within Iqbal Survé’s Sekunjalo Group, including Sekunjalo Independent Media (SIM), Independent News and Media South Africa (INMSA) [later renamed Independent Media]; Premier Fishing, Ayo Technology Solutions Limited (Ayo) and Sagarmatha Technologies Limited were all investigated by the PIC Commission.

  Report of the PIC Commission

The inquiry found that “from the outset it appears that the PIC’s interactions with and investments in the Sekunjalo Group were questionable. The different investment proposals emanated from direct discussions between Dr Survé and Dr Matjila.”

The PIC’s Ayo transaction, the report found, demonstrated “the malfeasance of the Sekunjalo Group, the impropriety of the process and practice of the PIC as well as the gross negligence of both the CEO [Dan Matjila] and CFO [Matshepo More]”.

“By both omission and commission, the two most senior executive directors of the PIC demonstrated not only their lack of credibility as witnesses, but their readiness to distance themselves from decisions taken and blame others, including the most junior staff members involved in the transaction.”

In its recommendations, the inquiry ordered the PIC board to conduct a forensic review of all the processes involved in all transactions entered into by the PIC with the Sekunjalo Group.

It also instructed the PIC to “take the necessary steps to recover all monies with interest due to the PIC, especially where personal or other surety was a precondition to approval of the investment”.

Furthermore, “appropriate” action should be taken to “recover the funds, with interest, invested in Ayo, taking into account the precondition set as to what the PIC funds could be spent on and the money movements between the Sekunjalo related companies”.

The report recommended that the PIC ensure that “all pre-and post-conditions for all investments made, and not just those in the Sekunjalo Group”, be “fully met and implemented, and that effective processes and systems are in place to properly monitor the investment post disbursement.”

The future role, “if any” of the PIC in “all of the transactions done with the Sekunjalo Group, to protect the interests of the PIC and its clients” had to be determined and that all aspects of the transactions entered into with the Sekunjalo Group must be reviewed “to determine whether any laws or regulations have been broken.”

Furthermore, all internal processes “including standard operating procedures followed by the PIC, together with the delegation of authority, to determine responsibility and culpability” should be reviewed.

Consideration should also be given as to “whether there are grounds for disciplinary, criminal and/or civil legal action against any PIC employees or Board members, current or previous. “

Regulatory authorities should also consider “whether any laws and/or regulations have been broken by either the PIC and/or the Sekunjalo Group” and to determine “what legal steps, if any, should be taken to address any such violations.”

The PIC should also assess “whether the movement of funds between accounts” was “intended to mislead/defraud investors and/or regulators.”

Breaking it down

Sekunjalo Group companies featured at various PIC governance committee meetings where investment proposals were made, including Premier Fishing and Ayo, which were listed on the JSE in 2017.

The investment in Independent Media took place in 2013, and while the PIC had signed “an irrevocable undertaking and committed” to the investment in  Survé’s  “unicorn” Sagarmatha, this was scuppered thanks to the JSE’s last-moment change of heart.

With regard to Independent News and Media South Africa, the report noted that during 2013 the PIC had advanced a number of loans to SIM and INMSA.

The PIC had also bought a 25% equity stake in INMSA. These were five-year loans and, together with interest, were repayable in August 2018.

The PIC Board, on 11 March 2013, had resolved to participate in the 100% acquisition of INMSA to the value of R1.44-billion.

This was made up of a direct equity payment of R167-million for a minimum of 25% equity stake in INMSA; a shareholder loan of R773-million at an Internal Rate of Return (IRR) of 15% on INMSA’s balance sheet; and an equity loan to the Sekunjalo Consortium of R500-million to purchase 75% equity in INMSA.

The acquisitions were to be secured by a R150-million corporate guarantee by Sekunjalo Investment Holdings (Pty) Ltd and repayments totalling R325.75-million were received the same day as a result of the equity restructuring and the Interacom Investment Holdings’ (a Chinese investment company) purchase of 20% equity.

In 2017 “it became clear that INMSA and SIM would not be able to repay the loans when these fell due”.

Sekunjalo Investment Holdings (SIH), the holding company of both INMSA and SIM, made an offer to the PIC in a letter dated 14 September 2017 proposing that the PIC exit its investment.

According to this deal, SIH and/or its nominee would acquire PIC’s shares and loan claim(s) against INMSA as well as its loan claim(s) against SIM.

The September letter stated that SIH had intended to list one of its subsidiaries, Sagarmatha, with a primary listing on the JSE and secondary listings on the New York and Hong Kong stock exchanges.

SIH would not make any cash payment for its acquisition of PIC’s shares and loan claims, and “all of the above equity will be settled by the issue of shares [to PIC] in Sagarmatha prior to its listing on the [JSE]”.

“The letter, from Dr Survé and addressed to Dr Matjila, claimed that a similar offer had been extended to the PIC’s co-shareholders in INMSA. Dr Matjila was requested to countersign the offer, if it was acceptable to the PIC, resulting in the conclusion of a binding agreement between the PIC and SIH,” said the report.

The PIC credit risk report signed on 9 and 10 November had assessed the proposed transaction as “high”. It had also highlighted that due to the non-valuation of Sagarmatha by the PIC’s Listed Equities team at the time, “an exit opportunity had to be considered in conjunction with the valuation of Sagarmatha – and inter-related party transactions.”

Matjila signed the appraisal report on 15 November 2017. The PIC’s Private Equity, Priority Sector and Small Medium Enterprise Fund Investment Panel (PEPPS FIP) had considered SIH’s offer at a meeting on 6 December 2017.

There it resolved to approve the offer “subject to conditions different from those proposed by SIH”.

These were that “the offer to exit INMSA and SIM investment should be separate from the offer to acquire a stake in Sagarmatha”, that the PIC’s exit from INMSA “should not be conditional upon the PIC’s participation in the listing of Sagarmatha” and the “PIC should be provided with the information pertaining to how SIM would fund the proposed offer prior to accepting same.”

These conditions made it clear that SIH would have to make a cash payment for the proposed acquisition of the PIC’s shares and loan claims.

Agreeing to this proposal, the report noted, “would have essentially meant that the exit of the PIC from IM would have been funded by the PIC itself.”

In spite of this, Matjila, on 13 December 2017 signed “what appears to be a sale of shares and claims agreement between the GEPF represented by the PIC and Sagarmatha.

“The agreement was signed on behalf of Sagarmatha a day later. In terms of clause 5 of the agreement, the debt of approximately R1.5-billion due to the PIC would be discharged through the issuing of shares to the PIC in Sagarmatha. The agreement stated that the price per share was R39.62.”

Matjila, testifying before the commission, had confirmed that he had signed the “share swap” but said he had done so on the recommendation of Mervin Muller, the PIC’s head of private equity and structured investment products.

In the end, Matjila had sealed the share swap agreement, said the report, while being aware that the Listed Investments Team “had not yet done a valuation” of Sagamartha. The PIC team had later valued Sagarmatha at R7.06 per share and not R39.62.

Matjila’s conduct in relation to SIH’s offer, the report found, had to be considered “together with his conduct in respect of other transactions relating to the Sekunjalo Group of companies.”

“Essentially, if the Sagarmatha listing had proceeded and the share swap agreement signed by Dr Matjila executed, the PIC would have invested in Sagarmatha at a price of R39.62 and not the R7.06 valuation of the PIC team,” said the report.

Even worse, PIC funds would have been used to settle INMSA debt to the PIC, “with the full knowledge by Dr Matjila that this was effectively what was going to happen”.

Premier Fishing

While Premier Fishing had not been one of the listed transactions investigated by the inquiry “for the sake of completeness” of the transactions the PIC understood with the Sekunjalo group, facts were relevant.

This was because the PIC’s Portfolio Management Committee-Listed Investments (PMC: LI) had ratified a maximum amount of R339.3-million at R4.50 per share in a private placement for a 29% shareholding in Premier Fishing, ahead of its listing on the JSE on 2 March 2017.

Premier Fishing was a subsidiary of Survé-controlled African Empowerment Equity Investment (AEEI).

“The deal team was interested in this opportunity as it was a black-owned and managed fishing company that could easily obtain and renew fishing rights. Its growth potential was high due to the demand for abalone farming which produces 70% gross profit margins and 30% net profit margins. China is a huge market and they had 100 tonnes pre-ordered from South Africa.”

But the PIC’S Environmental, Social and Governance (ESG) team had identified “governance issues” as the chairman and the majority of directors of Premier Fishing were also AEEI directors “and therefore not independent”.

The ESG team had identified Arthur Johnson of 3 Laws Capital, a related party company to the Sekunjalo Group, was listed as an independent non-executive director and a member of the Premier Fishing audit committee.

Rosemary Mosia had also been identified as an independent non-executive director on the audit committee and on the 10 October 2017, Mosia was appointed as a non-executive director to the Sagarmatha Board. On 22 August 2018 she was appointed to the Ayo Board and resigned from the Sagarmatha Board on 26 September 2019.

However, on 30 August 2019, her daughter, Moleboheng Gabriella Mosia, was appointed as a non-executive director on the AEEI Board.


In late 2017, Sagarmatha had approached the PIC with an offer for it “to subscribe for shares worth between R3-billion and R7.5-billion. The price for the shares was R39.62 per share.”

The transaction, the report noted, was considered internally by the relevant teams “who raised certain concerns ”.  The team had valued the shares at R7.06 per share, considerably less than R39.62.

“It is clear from the evidence of the members of that team that they did not support the transaction, with Mr Seanie testifying that he thought Sagarmatha would abandon its listing based on their valuation,” the report noted.

The transaction was indeed abandoned when the JSE cancelled the listing due to Sagarmatha’s failure to file its financial statements with the CIPC.

“Although the PIC ultimately did not invest in the transaction, there are serious concerns that arise from what transpired,” the report noted.

Matjila, who was not a member of the deal team, “was actively involved in the transaction. He wanted PIC to subscribe for Sagarmatha shares at R39.62 per share or at another price higher than that recommended by the deal team.”

Matjila had already signed the share swap agreement and had irrevocably “bound the PIC to a share price of R39.62 prior to Sagarmatha being valued by the deal team.”

Negotiations between Survé and Matjila had been conducted without the “knowledge of the members of the deal team” who had made it clear that they had been against the investment in Sagamartha.

However, Matjila, the report found, “did not only negotiate the share price without the knowledge of the deal team, but also requested Ms Mathebula to arrange a telephone conference and a meeting between members of the IC and Sagarmatha officials shortly before the IC was to consider the transaction.”

It was difficult to understand “why Dr Matjila thought investing at a price significantly higher” than recommended by experts and also by ignoring that the company already had liquidity problems “was in the best interests of the PIC”.


The report noted that Ayo’s biggest selling points for listing was its relationship with BTSA (British Telecom — South Africa) as well as its B-BBEE credentials.

“Given its empowerment credentials and strategic alliance with BT, Ayo allegedly identified an opportunity to aggressively grow its business and approached the PIC to participate in a private placement in which it initially indicated that it planned to raise R5.7-billion.”

When Ayo had approached the PIC on 16 November 2017, it had planned to list on the JSE that December.

Ayo had requested the PIC to invest R4.3-billion through subscribing for 104.7-million shares offered at R43.00 per share.

This had initially been proposed to be 78% of the total Initial Public Offering (IPO) which constituted 134-million shares for a total capital raise of R5.7-billion (and a 30.2% stake in Ayo).

In the end, the panel found that “the outright manipulation by Dr Survé of the valuation numbers to increase the Ayo valuation from its own initial staff assessment (by former CIO, Mr Malick Salie) of R2.3-billion to range between R10-billion and R15-billion, ultimately determining a value of R13-billion, which translated to the R43 per share or R4.3-billion paid by the PIC for its 29% investment in Ayo, was defended by Dr Matjila, who acknowledged that the value of the Ayo assets were estimated at R292-million at the time”.

The PIC’s overall exposure to the Sekunjalo Group, the report found, “seemed not to be an issue” neither was the fact “that IM was not servicing their loan”.

Sekunjalo Investments, said the report, showed “a marked disregard for PIC policy and standard operating procedures. Not only that, but: “Proper governance was absent or poor, and risk identification processes were downplayed by looking for risk mitigants to make sure the deals were approved”.


An analysis of accounts belonging to 3 Laws Capital, Ayo and African News Agency (ANA) found that monies were “transferred to fund other group companies and then transferred back when it is time to reflect that company’s interim or year-end results. This occurs particularly in the case of Ayo, as it is listed on the JSE and its results are available publicly”, the report noted.

In its concluding remarks, the report found that “from the outset it appears that the PIC’s interactions with and investments in the Sekunjalo Group were questionable” and that “ the different investment proposals emanated from direct discussions between Dr Survé and Dr Matjila”.

“The Ayo transaction demonstrates the malfeasance of the Sekunjalo Group, the impropriety of the process and practice of the PIC as well as the gross negligence of both the CEO and CFO.

“By both omission and commission, the two most senior executive directors of the PIC demonstrated not only their lack of credibility as witnesses, but their readiness to distance themselves from decisions taken and blame others, including the most junior staff members involved in the transaction. At no point did either acknowledge deficiencies in the process or accept either responsibility or accountability for the investment.” DM


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