The inquiry into governance at the Public Investment Corporation (PIC) was briefly disrupted on Tuesday during the testimony of the executive head of listed investments at the corporation, Fidelis Madavo. This came as an announcement was made by the PIC confirming the suspension of Madavo and assistant portfolio manager Victor Seanie.
In a statement released by the PIC, it said that a report on a preliminary investigation was submitted to the board on January 21 and “clearly reflects a blatant flouting of governance and approval processes of the PIC”.
“Employees of the PIC have also been implicated in these irregularities. It is for this reason that the board has resolved to suspend Mr Fidelis Madavo and Mr Victor Seanie with immediate effect.”
The news sent shudders through the hall of the inquiry with the commission confirming that it too had only just learnt of the suspensions.
The suspensions are inconsistent with the PIC’s head of Corporate Affairs, Deon Botha’s tone in June last year. He reiterated: “Just because of the media noise regarding the Ayo deal, the board saw it fit to satisfy itself that the Ayo deal was conducted following best practice. The investment committee has since confirmed that nothing untoward happened when we invested in Ayo.”
The transaction he was alluding to is the controversial R4.29 billion injection into Ayo Technology Solutions ahead of its listing in 2017, despite warning signals surrounding the company’s valuation. Consequently, the hasty investment has so far cost the PIC over R2.7 billion as Ayo’s share price tumbled from R45 to R23. The misconduct queries were also exacerbated by confirmation last year that close acquaintances to Iqbal Survé had acquired shares in Ayo since its IPO.
Back at the inquiry, Madavo confirmed that the Ayo Technologies investment was passed to his team by the PIC’s CEO, Dan Matjila as one to consider. This fuels earlier allegations that Matjila had in the past used his position to lobby funding for specific deals.
It now seems to be clear that much of the inquiry’s queries will scrutinise the procedural undertakings at the asset manager with a particular focus on the Ayo transaction. Further questioning on the Ayo valuation has revealed the PIC’s investment processes have some weaknesses.
“In the case of Ayo, I think there were a number of assumptions there. Remember they were going to invest in a British Telecom stake and there were also assumptions on the various platforms that they had,” said Madavo.
When asked whether there were any internal debates within the PIC on Ayo’s valuation, he admitted , “I was out of the country, I only saw these reports after I came back so whether there was (a debate) or maybe there was a debate. I was not part of it.”
The revelation raises questions on the PIC’s internal procedures. If a R4.29 billion valuation could be approved on the basis of assumptions and without consultation with the in-house head of listed investments, what else was approved?