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SAFTU alarmed by PIC corruption charges


The South African Federation of Trade Unions is alarmed at the revelations emerging in all three public inquiries currently taking place – into state capture,  the National Prosecuting Authority (NPA) and the Public Investment Corporation (PIC).

The PIC is particularly important to workers because the money that it manages belongs them – assets worth over R2 trillion in the Government Employee Pension Fund (GEPF) and four smaller state-run funds. It is the biggest single company listed on the Johannesburg Stock Exchange (JSE).

That is why SAFTU is so concerned at PIC investments which have led to the loss millions of rands of employees’ savings, some of them allegedly as a result of corruption.

It is why we welcome the inquiry chaired by Judge President Lex Mpati into  into impropriety at the PIC.

It has already exposed a growing number of serious charges and counter-charges by and against PIC officials and board members, which has now led to the resignation of all the board members, following the resignations or suspensions of half of the executives, including former CEO Daniel Matjila.

The federation has already commented on the PIC’s disastrous investment in Steinhoff, whose share price plunged from R46 a share to R1.81 after the resignation of its former CEO Markus Jooste in December 2017 amid an accounting scandal.

Now there is a similar scandal around an investment of R4.3 billion in Ayo Technology Solutions, ahead of its listing on the JSE.

Ayo is controlled by the owner of Independent Media, Iqbal Survé. 49% of Ayo shares are held by Africa Equity Empowerment Investments, 61% of which is owned by Sekunjalo Holdings, which is wholly owned by the Haraas Trust, whose trustee is Survé; and his two children are beneficiaries.

The PIC paid R43 for each Ayo share, but at the end of January 2019 they were trading at less than R22 per share.

The PIC’s head of internal audit, Lufuno Nemagovhani, has confirmed that both he and the commission’s investigators are still probing the Ayo deal, but there is evidence of flouting of the PIC’s governance and approval processes.

Assistant portfolio manager, Victor Seanie and the head of listed investments, Fidelis Madavo, were suspended during the first week of the commission of inquiry, based on an internal investigation which found that they had “clearly” flouted the governance and approval processes of the state asset manager in the Ayo transaction.

Seanie’s response that the opposite is true – his attempts, early in December 2017, to get Ayo to move the listing dates to the end of January so that the PIC would have time to complete its processes were dismissed by Ayo’s representatives, who stated a day before the listing that it would “definitely proceed” in that month.

“The Ayo process was unusual in that it seemed to me that Ayo was dictating timeframes to the PIC. I found this strange and untoward… Individuals with decision-making authority at the PIC had already decided that they would ensure that the PIC invest in Ayo. The Ayo transaction was a foregone conclusion,” he said.

Of particular concern to SAFTU is that one of those who has allegedly benefitted from the PIC/Ayo deal is Dennis George, general secretary of the Federation of Unions of South Africa (FEDUSA), who has been a non-executive director of Ayo since 20 August 2018.

George says he is an “independent” director and has urged people to invest in the company. But according to a report by amaBhungane, “What George did not disclose was that Fedusa was one of the unions cut into a pre-listing deal in which they were gifted millions of Ayo shares at a price of R1.50 per share – while the PIC was charged R43 per share.

“(Other cut-price beneficiaries included the SA Clothing and Textile Workers Union, the police and prisons union Popcru, the Black Business Council and something called the Social Entrepreneurship Foundation.)

“The injection of the PIC’s R4.3-billion immediately raised the net asset value per share to R12.47. (On a R1.50 investment per share, beneficiaries made an immediate gain of nearly R11 per share.)

“What was also not disclosed was that George appears to have been cut in personally. Shareholding records seen by amaBhungane show that a company called Difeme Holdings was part of the pre-listing BEE bonanza and got three million shares at R1.50. George is the sole director of Difeme and is described elsewhere as its ‘managing director…

“The records seen by amaBhungane list Fedusa as having a separate shareholding of just over eight million shares in its own name. If George is indeed the beneficial owner of Difeme, then he picked up a cool R900,000 when Ayo declared a first dividend of 30 cents per share in November 2018. The dividend was justified based on Ayo’s revenue increasing from R478-million to R638-million, compared with the prior year.”

If these allegations are true then George should be condemned for enriching himself from workers’ savings, including those of many of FEDUSA’s own members in the public service. SAFTU urges members of FEDUSA affiliates to call for his immediate resignation.

Another new allegation of corruption has been made in an anonymous e-mail from ‘John Moko’  against board member Sibusisiwe Zulu, who allegedly approved transactions worth about R6 billion for her live-in partner, Lawrence Mulaudzi. She is accused of benefiting from this by more than R600m in shareholdings and well over R100m in fees, to buy a multi-million-rand mansion in Umhlanga Ridge and on luxury vehicles.

Zulu’s uncle – former ANC treasurer-general and Cooperative Governance and Traditional Affairs Minister Zweli Mkhize – is himself now alleged to have repeatedly used his influence in his former position as the ANC’s treasurer-general to help facilitate business deals involving money from the PIC.

These include a R210 million oil investment, he brokered in 2016 and from which  Mkhize allegedly stood to earn a R4.5 million facilitation fee, and two deals involving an Israeli company, one of which earned his “people” a R1 million payment.

SAFTU is appalled by such scandals in an institution which is charged with investing workers’ savings in the most responsible way, to ensure that the funds grow and are invested in socially beneficial projects.

The federation demands that all those whom the inquiry finds to have been guilty of corruption and other crimes must be prosecuted.

In addition the new board must not be restricted to business representatives but include elected representatives of the workers whose money the PIC manages and the communities who should benefit from its investments.