In an interesting turn of developments, the Public Investment Corporation (PIC) board issued a statement on Thursday confirming that a board meeting earlier this week included “extensive discussions” about the controversial settlement with AYO Technology Solutions last month.

The billions that were lost in the original investment of around R4.3-billion belong to the Government Employees Pension Fund (GEPF), which has more than 1.2 million active members in addition to about 450,000 pensioners and beneficiaries and assets of more than R1.6-trillion.

Daily Maverick tried to contact the chairman of the PIC board, David Masondo, at the time, but he had not responded by the time the article revealing the full details of the settlement was published.

Read more in Daily Maverick: AYO Technology finally reveals full details of PIC settlement

The settlement will see AYO repurchase more than 17 million ordinary shares from the PIC for R619.4-million while the GEPF will retain a minimum stake of 25% in AYO Technology. The GEPF has the option to sell another 5% of the AYO shares back to AYO after three years at either R20 a share or the 90-day average weighted price of the share at that time — whichever is higher.

The board meeting earlier this week included a review of the commercial value of the settlement and the corporate governance around it. Although management can settle disputes with defaulting companies that the PIC has invested in, the board noted that management has a duty of care to protect the PIC’s integrity and reduce the risk of reputational damage. 

“This includes the responsibility of management to timeously inform the board of intended settlements,” Masondo said.

While the statement acknowledges “deep concern about management’s handling of the governance processes”, the board believes the AYO settlement is a good commercial decision. 

“Good governance, appropriate transparency, accountability and integrity should be principles embedded in every decision the PIC makes. This is more important in the light of the findings of the Mpati Commission,” Masondo said.  

AYO Technology responded with its own statement noting that management is “pleased to see the PIC has publicly ratified the settlement agreement”. 

This is a curious interpretation of a statement that was clearly anything but a ratification. Ratification means the action of signing or giving formal consent to an agreement, making it officially valid. You cannot ratify an agreement after its conclusion.

Rather, the statement by the PIC board is more along the lines of a public announcement that the settlement was made without prior knowledge or approval by the board, and also a public rebuke of the PIC’s chief executive, Abel Sithole.

Masondo’s statement also says quite clearly, “This settlement seeks to recover money from a questionable investment, salvaging value for its client and its beneficiaries…” DM/BM