Report of PIC Inquiry: Executive Summary

Commission concludes that there has been substantial impropriety at the PIC







1 On 4 October 2018 the President of the Republic of South Africa, President Cyril Ramaphosa (the President), acting in terms of section 84(2)(f) of the Constitution of the Republic of South Africa, appointed a Commission of Inquiry (the Commission) into allegations of impropriety regarding the Public Investment Corporation (the PIC/ the Corporation). The appointment of the Commission was published in the Government Gazette, No. 41979 of 17 October 2018, under Proclamation No. 30 of 2018.

2 The PIC is a Financial Services Provider (FSP) in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (the FAIS Act)1.

3 The PIC is an asset management company that manages assets for clients for a fee. As a company, it is subject to the provisions of the Companies Act 71 of 2008 (Companies Act) and it, being a state–owned company, is also subject to the provisions of the Public Finance Management Act, No 1 of 1999 (PFMA).

4 The assets managed by the PIC on behalf of its clients amounted to R2.08 trillion as of March 2018. Its mandate is to generate returns and to contribute to the developmental goals of South Africa.

5 In order for it to qualify as an FSP in terms of the FAIS Act, the PIC has to satisfy the Registrar of Financial Services Providers that it complies with the requirements for ‘fit and proper financial services providers’ in respect of:

5.1 personal character qualities of honesty and integrity;

5.2 its competence and operational ability to fulfil the responsibilities imposed by the FAIS Act; and

5.3 its financial soundness.

6 In addition, as a FSP, the PIC would have to satisfy the registrar that any ‘key individual’ in respect of it (PIC) complies with the requirements of honesty and integrity, as well as competence and operational ability, to the extent required, in order to fulfil the responsibilities imposed on key individuals by the FAIS Act.2


7 The Commission’s Terms of Reference (ToR), which are set out in the schedule to the Proclamation, and which, on 19 March 2019 was amended to include ToR 1.17, read as follows:

‘1. The Commission must enquire into, make findings, report on and make recommendations on the following:

1.1 Whether any alleged impropriety regarding investment decisions by the PIC in media reports in 2017 and 2018 contravened any legislation, PIC policy or contractual obligations and resulted in any undue benefit for any PIC director, or employee or any associate or family member of any PIC director or employee at the time;

1.2 Whether any findings of impropriety following the investigation in terms of paragraph 1.1 resulted from ineffective governance and /or functioning by the PIC Board;

1.3 Whether any PIC director or employee used his or her position or privileges or confidential information for personal gain or to improperly benefit another person;

1.4 Whether any legislation or PIC policies concerning the reporting of alleged corrupt activities and the protection of whistle-blowers were not complied with in respect of any alleged impropriety referred to in paragraph 1.1;

1.5 Whether the approved minutes of the PIC Board regarding discussions of any alleged impropriety referred to in paragraph 1.1 are an accurate reflection of the discussions and the Board’s resolution regarding the matters and whether the minutes were altered to unduly protect persons implicated and, if so, to make a finding on the person/s responsible for the alterations;

1.6 Whether the investigations into the leakage of information and the source of emails containing allegations against senior executives of the PIC in media reports in 2017 and 2018, while not thoroughly investigating the substance of these allegations, were justified;

1.7 Whether any employees of the PIC obtained access to emails and other information of the PIC, contrary to the internal policies of the PIC or legislation;

1.8 Whether any confidential information of the PIC was disclosed to third parties without the requisite authority or in accordance with the Protected Disclosures Act, 2000, and, if so, to advise whether such disclosure impacted negatively on the integrity and effective functioning of the PIC;

1.9 Whether the PIC has adequate measures in place to ensure that confidential information is not disclosed and, if not, to advise on measures that should be introduced;

1.10 Whether measures that the PIC has in place are adequate to ensure that investments do not unduly favour or discriminate against -

1.10.1 a domestic prominent influential person (as defined in section 1 of the Financial Intelligence Centre Act, 2001);

1.10.2 an immediate family member (as contemplated in section 21H(2)of the Financial Intelligent Centre Act, 2001) of a domestic prominent influential person; and

1.10.3 known close associates of a domestic prominent influential person;

1.11 Whether there are discriminatory practices with regard to remuneration and performance awards of PIC employee;

1.12 Whether any senior executive of the PIC victimised any PIC employees;

1.13 Whether mutual separation agreements concluded in 2017 and 2018 with senior executives of the PIC complied with internal policies of the PIC and whether pay-outs made for this purpose were prudent;

1.14 Whether the PIC followed due and proper process in 2017 and 2018 in the appointment of senior executive heads, and senior managers, whether on permanent or fixed- term contracts;

1.15 Whether the current governance and operating model of the PIC, including the composition of the Board, is the most effective and efficient model and, if not, to make recommendations on the most suitable governance and operational model for the PIC for the future;

1.16 Whether, considering its findings, it is necessary to make changes to the PIC Act, the PIC Memorandum of Incorporation in terms of the Companies Act, 2008 and the investment decision – making framework of the PIC, as well as the delegation of authority for the framework (if any) and, if so, to advise on the possible changes.’

1.17 Whether the PIC has given effect to its clients’ mandates as required by the Financial Advisory and Intermediary Services Act, 2002 (Act no. 37 of 2002) and any applicable legislation.’

8 The ToR further provide as follows in relation to the temporal scope of the enquiry:

‘ 2. The Commission must, in its enquiry for the purpose of its findings, report and recommendations, consider the period 1 January 2015 to 31 August 2018.

3. The commission must submit -

3.1. an interim report to the President by not later than 15 February 2019; and

3.2. a final report by not later than 15 April 2019.

4. The commission may, if necessary, investigate and make findings and recommendations on, any other matter regarding the PIC, regardless of when it is alleged to have occurred, on condition that such other investigations, findings and recommendations do not cause any delay in the submission of the reports on the applicable dates referred to in paragraph 3.’

9 To empower the Commission in its fact-finding function, the TOR further provided that:

‘5. The Commission may request the advice or views of any organ of state or any other person or organisation that the Commission is of the opinion may be able assist.

6. In order to -

6.1 enable the Commission to conduct its work meaningfully and effectively; and

6.2 facilitate the gathering of evidence, by conferring on the Commission such powers as are necessary to secure the attendance of witnesses and to compel the production of documents and any other required information, including the power to enter and search premises, regulations must be made under the Commissions Act, 1947, which will apply to the Commission.’


10 The hearings were held over a period of 63 days, from 21 January 2019 until 14 August 2019.

11 The Commission’s hearings were widely publicised, which, together with the testimonies of particular witnesses given in public, we believe, encouraged a number of people, particularly employees of the PIC, to come forward to testify.

12 Where the legal team intended to present a witness to the Commission whose evidence would, or might, implicate another person, it was required in terms of Rule 3.3, through the Secretary of the Commission, to notify that person in writing within a reasonable time before the witness gave evidence. The legal team by and large complied with the provisions of this rule, but where a person was implicated whilst not having been notified beforehand, they would be informed after the fact and advised to lodge a statement or an affidavit in response should they so wish, or apply, in terms of regulation 9(3) of the Regulations or rule 3.3.6 of the Commission Rules, to cross-examine the witness concerned and to give evidence. Two witnesses who testified before the Commission were cross- examined under these provisions; leave having been obtained from the Commissioner.

13 77 (seventy-seven) witnesses gave oral testimony before the Commission over the 63 (sixty-three) days of hearings. The names of the persons who testified before the Commission are set out in an annexure to the Report.


14 The structure and functioning of the PIC is set out here so that the Commission would be in a position to assess and explain whether any findings of impropriety could be located in structural deficits or organizational pathologies impeding the proper functioning of the PIC. As the testimony and explanation of the structure indicates, sound structures and operating procedures were in place but these cannot act as a complete check on the malfeasance of public officials.

15 In terms of section 8 of the PIC Act, the business of the PIC is controlled by a Board of directors (the Board) which, in terms of section 6, must be determined and appointed by the Minister, in consultation with Cabinet. The Minister is enjoined to appoint the members of the Board ‘on the grounds of their knowledge and experience, with due regard to the FAIS Act, which, when considered collectively, should enable the Board to attain the objects of the corporation’3.

The Memorandum of Incorporation

16 There was some confusion during the testimony of Dr Matjila relating to the Memorandum of Incorporation (MOI) under which the PIC is currently operating. The Commissioners had been provided with a copy of a MOI that had been signed by the then Minister of Finance, Mr Pravin Gordhan (Mr Gordhan), on 26 April 2013 (2013 MOI). Clause 7.1.11 of that MOI provided that the Board ‘shall, with prior approval of the Minister, appoint the nominees for chief investment officer (CIO), chief financial officer (CFO) and chief operations officer (COO) to those positions as employees, in accordance with applicable labour legislation’. It was common cause that the PIC has been operating without a CIO and COO. Dr Matjila was appointed to the position of CEO in December 2014.

17 The evidence has revealed that on 24 March 2017, Minister Gordhan wrote to his deputy, Mr Mcebisi Jonas (Mr Jonas), in his capacity as chairman of the Board, advising that he (Minister Gordhan) had identified three sub-clauses in the 2013 MOI which needed to be amended, namely, sub-clauses 7.1.12, 7.3.1 and 7.3.6.

18 One of the proposed amendments (sub-clause 7.1.12) would make provision for the CEO and CFO becoming ex-officio directors of the Corporation. Minister Gordhan also requested that the PIC call a shareholders’ meeting within two days of the date of his letter.However, on 29 March 2017, the Board, in addition to approving the Minister’s proposed amendments, resolved to approve further amendments, including the deletion of sub-clause 7.1.11.The effect of the deletion would be the elimination of the positions of CIOand COO in the PIC.

19 At the shareholders meeting held on 29 March 2017, a special resolution was passed in terms of which ‘the existing Memorandum of Incorporation of the Public Investment Corporation . . . is hereby amended’. All the proposed amendments were accordingly approved and Minister Gordhan signed the amended version of the MOI on 30 March 2017 (amended MOI).7 The amended MOI was accepted and filed by the Commissioner of the Companies and Intellectual Property Commission (CIPC) on or about 19 April 2017.8

20 We are satisfied that the statutory procedures to amend the PIC’s 2013 MOI were followed and that the amendments were, consequently, valid. It is, however, common cause that subsequent to Mr Gigaba succeeding Minister Gordhan as Minister of Finance in March 2017, he requested the Board, in a letter dated 19 April 2017, to not implement the amended MOI and that the 2013 MOI remain in existence until he had familiarised himself with the PIC. The attempted substitution of the amended MOI was not in accordance with statutory requirements and, on this basis, it was concluded that the PIC’s current MOI is the amended MOI, which was signed by former Minister Gordhan on 30 March 2017 and accepted by CIPC on 19 April 2017.

The Composition of the Board

21 Clause 7.1.1 of the Corporation’s MOI provides that the Board ‘shall comprise of no less than 10 and no more than 15 directors . . .’. The shareholder, defined in the MOI as the State acting through the Minister, is required, in terms of clause to ensure that the Board consists of executive and non-executive directors.

22 The Board committees which have been established can be seen in the diagram below:


23 The individuals who serve on these Board committees are all members of the Board as envisaged in section 7(1) of the PIC Act.

24 The Board has issued DoAs in respect of the following:

24.1 Corporate Governance/Affairs;

24.2 Unlisted Investments;

24.3 Listed Investments; and

24.4 Property Investments.

25 The powers of the Board and management committees are set out in the Delegations of Authority (DoA). In addition, policies and procedures have been developed, which are designed to influence, determine and guide all major investment decisions and actions.

The Executive Committee

26 The responsibility of the day to day management of the PIC rests with the CEO in line with the approved DoA framework and the strategic direction set by the Board. The CEO is assisted in the discharge of further responsibilities by an Executive Committee (EXCO), comprising the CEO as Chairman, the Chief Financial Officer (CFO) and the Executive Heads of the ten (10) PIC divisions, namely:

26.1 Research and Project Development;

26.2 Impact investing;

26.3 Private Equity and Structured Investment Products (SIPS);

26.4 Property Investments;

26.5 Listed Investments;

26.6 Investment Management;

26.7 Human Resources;

26.8 Risk;

26.9 Legal Counsel, Governance and Compliance; and, lastly

26.10 Information Technology.

27 The EXCO has established six (6) sub-committees, three (3) of which relate to corporate affairs and the other three (3) to assets under management. These sub-committees are in line with the PIC investment strategy to instil a culture of compliance and good governance, so as to ensure that the Corporation’s governance processes and affairs are conducted in a transparent, fair and prudent manner and that accountability becomes a certainty. The Executive Committee and its Sub-committee structures are depicted below:


Client mandates

28 The PIC’s clients have provided the PIC with investment mandates, which set out, among others, their investment objectives, risk appetite, investment parameters as well as the asset class allocations. In order to ensure compliance with client mandates, the PIC utilises a special system, which enables it to capture the mandates for monitoring purposes. According to Ms W Louw, the PIC reports to clients on a monthly and quarterly basis, detailing, among other things, portfolio performance. Clients are thus able to engage with the PIC during these presentations and to seek clarity, if they so wish.


1 The James Nogu emails led to an atmosphere that was not conducive to good, healthy and effective working relations between members of the Board and between the Board and certain senior executives, particularly the CEO and CFO. These emails were sent on 31 August 2017, 5 September 2017, 13 September 2017, 28 January 2019 and 30 January 2019 (For convenience, we shall refer to the emails collectively as the ‘James Nogu emails’.)

2 An extraordinary general meeting was convened by Minister Nene on 25 July 2018, where the Board was instructed to conduct a forensic investigation on the Nogu/MST allegations and to develop a plan of action by 17 August 2018. Subsequently, after some consultation with counsel, the Board appointed Advocate Budlender SC to conduct the above investigation.

3 Advocate Budlender SC found that there was no evidence of a romantic relationship between Dr Matjila and Ms Pretty Louw (Ms P Louw) and that no impropriety could be found in the MST transaction.

4 Dr Matjila was aggrieved by the action of the chairman of the Board, deputy Minister Gungubele (the Chairman), of failing to oppose the UDM application that was brought in the Pretoria High Court to have him suspended for the very allegations in respect of which he had been cleared. He met the chairman at his office in Cape Town and advised him that he (Dr Matjila) had decided to exit the PIC in due course, but only once the Budlender SC report had been released. Apparently, the chairman had not at that point shared the report with the other non-executive directors.

5 The Board then put together a task team consisting of Dr Xolani Mkhwanazi (Deputy Chairman of the Board), Ms Toyi and Dr Goba to negotiate the CEO’s

exit. When Dr Matjila subsequently met the task team, Dr Mkhwanazi was not in attendance, apparently because he wanted the CEO to first present a letter of resignation. Dr Matjila reluctantly delivered a letter on 7 November 2018 in which he made certain exit proposals to the Board.

6 On 23 November 2018, Dr Matjila was called to a Board meeting. His letter was tabled at this meeting for the first time, although already in public circulation. At this meeting, the Chairman informed him that the Board had accepted his resignation with immediate effect. His protestations that he had not resigned, but had merely given an exit proposal containing, amongst others, an intention to give notice to resign in keeping with his contract, fell on deaf ears. The Chairman’s response was that his employment contract had been terminated.

7 A little over two months thereafter, at a Board meeting on 1 February 2019, the Chairman, having taken a call from the current Minister of Finance, Mr Mboweni, informed the rest of the members of the Board that the Minister wanted the whole Board to resign immediately, failing which they would be dismissed by Monday, 4 February 2019. Ms Hlatshwayo said the mood became one of indignation and the Board members decided to resign en masse. A letter to that effect was dispatched to Minister Mboweni. However, they continued with their function until the interim Board was appointed.

8 The James Nogu emails and media reports about the PIC not only affected the Board but also senior employees of the PIC. On 5 December 2017, Ms Vuyokazi Menye (Ms Menye), who was the Executive Head: Information Technology, and Mr Simphiwe Mayisela (Mr Mayisela), who was the Senior Manager: Information Security, were charged with ‘accessing unauthorised documentation during an investigation commissioned to unearth the penetration of the PICs mailing list’ and intercepting emails of Executive Directors without obtaining the necessary approval. They were also alleged, inter alia, to have withheld information in a case opened against the CEO under the pretext that it was erroneously done and

Mr Mayisela for obtaining confidential information without prior approval, for the sole purpose of advancing their case, while purporting to be assisting the investigation regarding the identity of James Nogu. Ms Menye left the PIC, having reluctantly accepted a settlement figure of approximately R7.5 million on 11 April 2018.

9 Mr Mayisela was dismissed following a full disciplinary process. Ms Bongani Mathebula, the Company Secretary, who was placed on suspension on 11 April 2018, was charged with, inter alia, breaching her duty of good faith and confidentiality as an employee in her position as Company Secretary, in that she caused the distribution and/or copying of confidential PIC information. The chairman of the disciplinary committee found her guilty and recommended that she be dismissed with immediate effect. However, having been recommended for a dismissal, Ms Mathebula returned to occupy her position of Company Secretary on 27 March 2019.

10 Ms More, the CFO, and Mr Madavo: Executive Head: Listed Investments are currently under suspension and face disciplinary charges relating to their conduct in handling a particular transaction, namely AYO, which will be discussed below. Mr Victor Seanie, the Assistant Portfolio Manager: Non-Consumer Industrials, faced disciplinary charges over the same transaction. His disciplinary hearing was concluded, finding him guilty, and he was dismissed on 22 October 2019 with one month’s pay in lieu of notice.



1. In 2018 the media reported on certain political parties that had called for transparency in the PIC. Mention was made of particular transactions.

2. The transactions that formed the subject of media reports during this period are discussed below. It should be noted, however, that these transactions and/or case studies do not constitute a comprehensive list of improprieties identified by the Commission.

3. The case studies prepared by the Commission appear in this ToR, with the exception of the VBS and Harith case studies, which are contained in ToR 1.3, below.

CASE STUDY: Matome Maponya Investment Holdings (MMI)

4. The Isibaya Fund’s investment in MMI is an example of multiple investments with a single counterparty.

5. While prior exposure to any single counterparty would be raised as part of deliberations at approval committees, there was previously no firm counterparty limit. However, recently counterparty limits have been established, and they are contained in the Private Placement Memorandums (PPMs).

6. The Commission found that the total PIC exposure to Mr Matome Maponya (Mr Maponya) amounted to R1.85 billion. The exposure to Mr Maponya in the investments of Magae Makhaya and Daybreak alone amounted to R1.023b. Therefore, one could say the PIC was overexposed.

7. The Commission finds that the PIC’s decision to make cumulative investments in various transactions with a single individual has resulted in significant exposure to reputational risk and financial losses.

8. The MMI investments call into question the PIC’s thoroughness in conducting its due diligence as well as its assessment of cumulative and reputational risks.

9. In order to ensure that PIC funds are available to as many South Africans as possible and to not be exposed to risks associated with any single party, single counterparty limits should be determined and adhered to by the PIC.

10. The PIC must also restrict funding from the Isibaya Fund to counterparties or unlisted investments to a maximum of two projects (businesses) but only until capacity and servicing of loans has been established. It should also limit the cumulative monetary amount of exposure to a single counterparty or unlisted investment.

SA Home Loans (SAHL) Investment

11. Regarding the investment in SAHL, Dr Matjila confirmed the statement by Mr Kevin Penwarden of SAHL that a combination of SAHL and JP Morgan were the first to present the equity opportunity and a proposal for housing finance for GEPF members to the PIC. Consequently, Dr Matjila’s statement that, ‘I was under the impression that this R9bn funding application was a joint plan of the SAHL and MMI partnership’9 is extremely concerning. The question must be asked how thorough the processes were before a transaction of R9 billion was approved that the CIO/CEO did not know, or did not endeavour to find out, what the actual situation was.

12. Furthermore, Mr Kevin Penwarden, CEO of SAHL, stated that Mr Wellington Masekesa (Mr Masekesa), Executive Assistant to Dr Matjila and PIC non- executive director on the board of SAHL, and Mr Maponya had approached a colleague, Mr Dlamini, and said that SAHL should ‘regularise’ what were called ‘arranging fees’ of R95 million.10

13. The Commission recommends that the Board should develop clear policies to guide the involvement of PIC employees and non-executive directors in investee companies. Appointment of PIC employees and/or non-executive directors of the PIC to serve on the boards of investee companies must be reconsidered.

14. The role played by Mr Masekesa in respect of the SAHL Investment, as indicated in paragraph 12 above, is found to be an irregularity as envisaged in Section 45 of the Auditing Profession Act, being, in the SAHL auditors’ (Deloitte) opinion, a prima facie contravention of Section 3 of the Prevention and Combatting of Corrupt Activities Act (soliciting a bribe to obtain a contract).

15. The Board should ensure that there is a full inquiry into the role played by Mr Masekesa in the SAHL matter and engage with the GEPF to ensure that there has been no undue influence exerted by any party on the SAHL application for R10 billion further funding.


16. In relation to a number of the transactions considered above, there were contraventions of PIC Policy, processes were not followed, necessary disclosures were not made to the Board and on certain occasions the Board was misled. Furthermore, in certain transactions, the Commission found that the Standard Operating Procedure was not followed.

17. The Commission found that a number of individuals unduly benefited from the improprieties identified. The role of Dr Matjila is concerning in terms of his one- on-one meetings with individuals who stood to be vastly enriched, undercutting the objectives of the Isibaya Fund and in contravention of the PIC’s mandate from its clients. In addition, the Commission found that Dr Matjila’s role in pressurising Mr Mulaudzi was improper and posed a reputational risk for the PIC.

18. The PIC’s decision to make cumulative transactions with a single individual is of concern to the Commission and recommendations in this regard are made.

19. Finally, governance, at a variety of levels, was undermined by the conduct of several individuals in relation to the transactions discussed above and in the conduct addressed in the ToRs which follow.


20. The following companies, within the Sekunjalo Group, are dealt with below:

21. Sekunjalo Independent Media (Pty) Ltd (SIM) and Independent News and Media South Africa (Pty) Ltd (INMSA), which was later renamed Independent Media (Pty) Ltd (IM).

22. Sagarmatha Technologies Limited (Sagarmatha).

23. Premier Food & Fishing Limited, later renamed Premier Fishing and Brands Limited (Premier Fishing).

24. Ayo Technology Solutions Limited (Ayo).


25. During 2013, the PIC advanced a number of loans to SIM and INMSA. The PIC also bought a 25% equity stake in INMSA. The loans were for a period of five years and, together with interest thereon, were repayable in August 2018.

26. The GEPF did not support the deal and expressed the view that it was an investment in a sector that ‘had a bleak future’. However, their view was that the PIC should make the decision provided that the exposure did not exceed R2 billion.

27. In 2017, it became clear that INMSA and SIM would not be able to repay the loans as they became due. Sekunjalo Investment Holdings (Pty) Ltd (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 in INMSA and SIM. In terms of the offer, SIH and/or its nominee would acquire the PIC’s shares in and loan claim(s) against INMSA as well as its loan claim(s) against SIM.

28. The letter stated that SIH intended to list one of its subsidiaries (Sagarmatha) with a primary listing on the JSE, with secondary listings on the New York and Hong Kong Stock Exchanges. It further stated that SIH would not make any cash payment for its acquisition of PIC’s shares and loan claims and that the payment would be settled through the issue of shares in Sagarmatha to the PIC.

29. In terms of the letter, a similar offer had been extended to the PIC’s co- shareholders in INMSA and Dr Matjila was requested to countersign the letter, if it was acceptable to the PIC, resulting in the conclusion of a binding agreement between the PIC and SIH.

30. In a credit risk report signed on 9 and 10 November 2017, the risk team assessed the risks relating to the proposed transaction as ‘HIGH’.

31. The Private Equity, Priority Sector and Small Medium Enterprise Fund Investment Panel (PEPPS FIP) approved the offer subject to certain conditions. It is apparent from these conditions that the PEPPS FIP required SIH to make a cash payment for the proposed acquisition of the PIC’s shares and loan claims and that there would be no link to the proposed listing of Safarmatha. This is important to note because agreeing to the proposal would have meant that the exit of the PIC from IM would have been funded by the PIC itself. It is clear from the conditions that were imposed that the resolution was in the best interests of the PIC.

32. Despite the resolution taken by the PEPPS FIP, on 13 December 2017 Dr Matjila 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.

33. 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.

34. Dr Matjila signed/approved the appraisal report on 15 November 2017, approximately one month prior to signing the share swap agreement. That report was for the attention of the PEPPS FIP and made it clear that its purpose was to request approval from PEPPS FIP for the PIC to accept the offer from SIM to acquire all the shares and loan claims that the PIC has in and against INMSA and SIM, (the ‘Offer’), thereby exiting its investment in INMSA.

35. As someone who knew the operations of the PIC, Dr Matjila was aware, or ought to have been aware, that the risk, legal and ESG teams would also have to submit their reports for consideration by the PEPPS FIP.

36. When questioned about the share swap agreement and when informed that the terms thereof violated the PIC resolution, Dr Matjila claimed to have not been aware of the resolution. Even if he had not seen the PEPPS FIP resolution, one would have expected him to enquire what resolution had been taken before signing the share swap agreement.

37. Dr Matjila was also aware, or ought to have been aware, that the Listed Investments team had not yet done a valuation of Sagarmatha when he signed the share swap agreement.

38. If the Sagarmatha listing had proceeded (it did not because the JSE did not approve the listing) 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. Moreover, 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.


39. In late 2017, Sagarmatha offered the PIC to subscribe for shares worth between R3 billion and R7.5 billion. The price for the shares was R39.62 per share.

40. The deal team valued the shares at R7.06 per share. It is clear from the evidence of the members of that team that they did not support the transaction. The transaction was eventually abandoned after the JSE disapproved Sagarmatha’s listing.

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

42. The deal team members, in particular Mr Molebatsi and Mr Seanie, made it clear that they were opposed to the PIC investing in Sagarmatha. Notwithstanding this, not only did Dr Matjila negotiate the share price without the knowledge of the deal team, but he 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. Dr Matjila’s support of the transaction went to the extent of asking Ms Mathebula to forward documents in support of the transaction from various trade unions and other organisations – which were going to be part of the BEE component of the deal - to members of the IC. This was improper conduct and went against standard practice.

43. It is difficult to understand why Dr Matjila sought to invest in a company at a price significantly higher than that recommended by the very experts he claimed throughout his testimony to rely on, and ignoring the fact that the company already had liquidity problems and was not servicing debt due to the PIC.

44. The conduct of the IC in referring the transaction back to the PMC despite serious concerns raised by some of its members, calls into question its professionalism and whether, at all times, it was acting in the best interests of the PIC.


NOTE: This transaction is merely included for the sake of completeness of the transactions that the PIC undertook within the Sekunjalo Group

45. PMC Listed 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 African Empowerment Equity Investment (AEEI).

46. The deal team was interested in this opportunity. However, the PIC ESG team had identified that there were governance issues around the fact that the chairman and majority of directors of Premier Fishing were also AEEI directors and therefore were not independent. The ESG team had identified, in their due diligence (DD) report, that Mr Arthur William Johnson (Mr Johnson) from 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. Mr Johnson was appointed as a director of 3 Laws Capital in April 2008 which makes him a non-independent non-executive director of Premier Fishing. Ms Rosemary Mosia had also been identified as an independent non- executive director on the audit committee. Subsequently, on 10 October 2017, Ms Mosia was appointed as a non-executive director to the Sagarmatha Board and on 22 August 2018 she was appointed to the Ayo Board.

47. She resigned from the Sagarmatha Board on 26 September 2019, and on 30 August 2019, her daughter, Ms Moleboheng Gabriella Mosia, was appointed as a non-executive director on the AEEI Limited Board.

48. Other issues identified by ESG were around the need for a remuneration policy aligned to the business strategy and performance indicators linked to both short- and long-term incentives. The company also did not provide details on its health and safety programmes, labour practices or working conditions.

49. The PIC’s Risk Due Diligence report had foreign exchange risk as its only high risk, but overall did not raise any objection to continuing with the transaction. The PMC Listed also requested that at least two board seats be allocated to the PIC, one being that of the lead independent director, or that they have the opportunity to participate in the appointment of the lead independent director.


50. In this transaction, the PIC subscribed for 99.8 million shares at a total price of R4.3 billion, being R43.00 per share.

51. The opportunity to invest in Ayo was presented to Dr Matjila in or around October 2017 by Dr Survé, the chairman of the Sekunjalo Group of companies. Dr Matjila testified that, because he did not get involved with the analysis of investment potential of opportunities presented to the PIC and the processing thereof, he requested the Executive Head of Listed Investments, Mr Fidelis Madavo (Mr Madavo), to look into the opportunity and assess its investment potential.

52. On 16 November 2017, Mr Madavo instructed Mr Seanie, the Assistant Portfolio Manager for Non-Consumer Industrials, and Equity Analyst at the PIC, to attend a meeting with Ayo representatives. Mr Seanie learnt at the meeting that Ayo’s intended listing on the JSE was scheduled for 15 December 2017.

53. Due to the time pressure, and before scheduling a PMC1 meeting, on 27 and 30 November 2017, Mr Seanie requested ESG, Risk and Legal teams to allocate team members to assist in the Ayo initial public offering and to conduct a due diligence which, in terms of the PIC’s processes, would be done once PMC1 had approved a due diligence exercise. However, meetings of PMC1 failed to materialize and the due diligence was never authorized.

54. Due to the looming placement date, namely 15 December 2017, and since the PMC1 meeting did not materialize, Dr Matjila told Mr Molebatsi that it was impossible to organize another meeting of the PMC at such short notice. He therefore suggested to Mr Molebatsi that they both sign an irrevocable share subscription form, subject to the understanding that he would request PMC to regularize the transaction at the first available opportunity. The subscription form was signed on 14 December 2017 by Dr Matjila and Mr Molebatsi who irrevocably committed the PIC to participating in the listing of Ayo.

55. The transaction was approved at a hastily scheduled PMC2 meeting held on 20 December 2017, chaired by the CFO, Ms More. Dr Matjila, Ms More (who had signed the disbursement memo the day before) and Mr Seanie attended the meeting, but none of them informed those present at the meeting that an irrevocable subscription form had already been signed, as had the disbursement memo, and that PMC2 should ratify the actions of Dr Matjila and Mr Molebatsi of prematurely signing the irrevocable subscription form instead of approving the transaction.

56. Further evidence came to light that Dr Matjila had, in fact, signed an irrevocable commitment to purchase 92% of Ayo – the full issue – at a price of R43 per share, on 4 December 2017, ten days prior to the signing referred to above. This, too, was not revealed to the PMC2 meeting of 20 December 2017.

57. Emails provided to the Commission also indicate that PSG Capital, the transactional advisor and sponsor for the listing, received a “generous” bonus in the region of R4 million from Dr Survé for successfully listing Ayo.

58. Dr Survé and Dr Matjila had both indicated at the Commission that the monies received from the PIC are still in Ayo’s bank accounts. This is partly correct, due to the fact that the results are published at a point in time and indicate that the monies were transferred back to Ayo just before the interim and year end cut-off periods (28 February and 31 August respectively). The evidence gleaned from various bank statements show that there has been significant movement of the funds between different related parties. This created the impression of funds in bank accounts but, in reality, this was only the case at specific moments in time.

59. The Commission has also noted that Grant Thornton signed off on a limited assurance report on forecasted financial information contained in Ayo’s PLS. BDO and Grant Thornton merged in July 2018. BDO Cape Incorporated has been the auditor of Ayo for 21 years. This indicates a long-standing relationship between the audit firm and Ayo and brings into question its independence.


60. It is found by the Commission that the failure of the PIC to obtain approval from PMC1 to proceed to the due diligence and the signing of the irrevocable subscription form without first obtaining the approval to invest from PMC2 amounted, in each case, to improper conduct since the actions were not in accordance with the PIC’s investment procedures.

61. By instructing ESG, Risk and Legal to proceed with the due diligence without the approval of PMC1, Mr Seanie acted improperly and thereby contravened the PIC’s policy on Standard Operating Procedure.

62. In failing to disclose to PMC2 that an irrevocable share subscription form had already been signed, Dr Matjila and Mr Seanie acted improperly and were dishonest. (Mr Molebatsi did not attend the PMC2 meeting.)

63. As a key individual in terms of the FAIS Act, Dr Matjila failed to comply with the fit and proper requirements in terms of section 8A(a) of the FAIS Act in that he acted dishonestly and without integrity, thereby contravening the provisions of section 8A(a).

64. There is no evidence that the impropriety or contravention resulted in any undue benefit for any PIC director, or employee or any associate or family member of any PIC director or employee at the time.


65. The Commission recommends that stringent measures be taken to ensure that there is adherence to, and compliance with, the procedures which are designed to serve the interests of both the asset manager and the investee company.

66. Both Dr Matjila and Mr Seanie are no longer employees of the PIC, Mr Seanie having been charged and dismissed following disciplinary proceedings arising from his actions or inaction relating to the Ayo transaction. With regard to Dr Matjila, the PIC must consider reporting the contravention of the provisions of the FAIS Act to the relevant authorities.


67. The Sekunjalo Group investments showed a marked disregard for PIC policy and standard operating procedures.

68. Proper governance was absent or poor, and risk identification processes were downplayed by looking for risk mitigants to make sure the deals were approved.

69. Due diligence reports highlighting issues around independence of Board members, policies to be implemented etc. were not followed up by the PIC to ensure implementation post the deal being approved and monies having flowed.

70. The “close relationship” between Dr Matjila and Dr Survé created top down pressures that the deal teams experienced to get the requisite approvals.

71. Board members within the Sekunjalo Group of companies are not independent. Some board members are related to Dr Survé, are long-serving employees, long- time friends or are non-executive directors on other Sekunjalo Group company boards and dominate the board seats in those companies. Independent non- executive directors are in the minority on the boards of AEEI and Ayo.

72. In the light of the above, the Commission recommends that the PIC must conduct a forensic review of all the processes involved in all transactions entered into with the Sekunjalo Group and ensure that the PIC obtains company registration numbers of every entity in the Sekunjalo Group to be able to conduct a forensic investigation as to the flow of monies out of and into the Group.

73. It is further recommended that the PIC must ensure that all pre- and post- conditions for all investments made, not just those in the Sekunjalo Group, have been fully met and implemented, and that effective processes and systems are in place to properly monitor investments post disbursement.

74. Steps must be taken to recover all monies with interest due to the PIC, especially where personal or other sureties was a precondition to approval of the investment.

75. The PIC must also determine the future role, if any, of the PIC in all of the transactions with the Sekunjalo Group, to protect the interests of the PIC and its client; and review all aspects of the transactions entered into with the Sekunjalo Group to determine whether any laws or regulations have been broken.

76. It is also recommended that the PIC reviews its internal processes, including its standard operating procedures, together with the DoA, to determine responsibility and culpability, and to consider whether there are grounds for disciplinary, criminal and/or civil legal action against any PIC employees or Board members, current or previous.

77. The Commission recommends that the Regulatory and Other Authorities should consider whether any laws and/or regulations have been broken by either the PIC and/or the Sekunjalo Group; determine what legal steps, if any, should be taken to address any such violations; and assess whether the movement of funds between accounts, as indicated above, was intended to mislead/defraud investors and/or regulators.

Case Study: S & S REFINERY

78. S&S Refinery (S&S) is a palm oil refinery and saponification plant based in Nacala, Nampula Province, Mozambique. The PIC decided, in October 2014, to invest in S&S. The legal agreements relating to the investment decision were concluded on 14 November 2014.

79. Although the investment decision was made in 2014 and therefore falls outside the period 1 January 2015 and 31 August 2018, the transaction is among those mentioned in media reports in 2017 and /or 2018 as per ToR 1.1.

80. The allegations in the media reports were that Dr Matjila had authorised an investment to the tune of nearly R1 billion in a dilapidated Mozambican palm oil refinery plant (S&S) that was not operational. It was also alleged that, apart from injecting US$ 63 million (approximately R812 million) for a 50% stake in S&S, the PIC also paid millions in facilitation fees to a company named Indiafrec Trade & Investment (Pty) Ltd.

81. A reading of the evidence of the four witnesses who testified before the Commission on the S&S transaction shows that there was no substance in the media reports that the PIC invested in a dilapidated refinery and does not show any impropriety in the investment decision. However, given the evidence presented before the Commission and the fact that a further investment was made by the PIC in the same project, the information, in particular matters presented in the Risk report, will be considered.

82. In or about August 2014, the PEPSSME Fund Investment Panel approved the total investment of US$ 62.5 million in S&S. On 21 January 2016, the PIC, through the PEPSS Fund Investment Panel, resolved to increase its investment in S&S from 45% to 70% by acquiring a further 25% shareholding for a consideration of US$ 10 million.11 In the result, as a number of Mozambican banks also invested in the project, the PIC’s total exposure in S&S stood at US$ 63 million.


83. It is found that the Risk assessment and investment decisions relating to the S&S investment did not take sufficient account of the following issues

83.1. The fact that raw materials essential for the business were imported and paid for in US dollars, while earnings were in the local currency, namely the Mozambican metical;

83.2. The purchase by the PIC of its equity shares in S&S was in US dollars, while repayment would be in meticals;

83.3. The reliability and sustainability of supplies of the imported raw material, as well as the transport costs thereof, would also have to be paid for in US dollars;

83.4. The economic outlook in Mozambique, where deteriorating economic conditions affected the financial viability of the enterprise, and interest rates on local borrowing escalated rapidly;

83.5. The dependency on imported raw materials; and

83.6. The assumptions used for the assessment of risks were not rigorous enough.


84. Accordingly, it is recommended that greater focus and interrogation must be given post an investment decision to the management and the performance of existing investments, prior to such investments becoming distressed.

85. The IT infrastructure for unlisted investments must be addressed as a priority, as at the time of giving evidence, there were no automated portfolio management systems in place. This would make the process of monitoring compliance more efficient and effective.

86. Furthermore, a separate workout and restructuring department that focusses on resolving and reconfiguring distressed assets should be established as well as a stand-alone division within the PIC that looks at investment proposals to be made outside South Africa.

87. It is also recommended that the role of risk, in investment decisions, needs to be strengthened.

88. It should also be noted that the conditions precedent which applied to the transaction were not implemented. This failure is a serious management oversight and those responsible should be held to account.

89. When investing abroad, a careful analysis of local partners, who should be established corporates and not individuals or family run businesses, must be undertaken.

90. The documentation submitted to the various committees for decisions must be reviewed to ensure authenticity and any changes to investment amounts and that shareholding reflects both names and percentages, and dates.

Case Study: Lancaster Steinhoff Project Sierra

91. The investment proposal was prepared by Symphony Capital on behalf of the Lancaster Group for the acquisition of 2.75% of the shares in Steinhoff International Holdings N.V. (SNH) amounting to R9.35 billion. Symphony Capital was paid R76.95m for this work, and an amount of R22,85m was paid to Lancaster Group, and to L101, a subsidiary of the Lancaster Group.

92. Paragraph 20 of the 20 July 2016 appraisal report of the PIC states that Mr Jayendra Naidoo (Mr Naidoo) has a long and established relationship with major shareholders of SNH, particularly Mr Christo Wiese. This was confirmed by Mr Naidoo.12

93. Steinhoff had a voting pool arrangement in place, which pool controlled 33% of the company and exercised significant influence over all matters that required shareholder approval. Through this transaction, Mr Naidoo, being the sole Shareholder of Lancaster Group, had been invited to join the voting pool. The PIC at the time owned 9% of Steinhoff. At no point was the PIC going to get a seat on the Board, and Mr Naidoo in testimony before the Commission stated that the shares were ordinary shares and did not have any special voting rights, as claimed by Dr Matjila.13

94. The proposal further provided for the PIC to acquire a 50% equity stake in L101 for R50 million.

95. The total funding provided by the PIC amounted to R9,4 billion (loan + equity). This was reduced from the initial request for R10,4bn, according to Dr Matjila, so that the investment decision would fall within his delegated authority and would not have to be referred to a higher committee or the Board for consideration.14

96. An equity derivative backed financing structure was put in place by L101(ratio collar structure), with the PIC’s capital guaranteed by an international bank (Citibank) through a primary cession and pledge of L101’s put option proceeds as security for its loan obligations. However, the security arrangements were altered with 100% of the primary cession being granted to Citibank for it to provide R6,5bn to fund the transaction as part of a second phase of the transaction, known as Project Blue Buck (L102).

Findings and Recommendations

97. The PIC could have purchased any quantum of Steinhoff shares outright in the market instead of entering into a transaction to do so through Mr Naidoo. The ‘joining’ of the “voting pool” by Mr Naidoo did not materialise.

98. The Investment Committee (IC) of the PIC approved the transaction. The chair of the IC was Mr Roshan Morar, a PIC non-executive director, who signed off on the IC resolution for this investment. At the same meeting, he was also appointed as a board member to L101 representing PIC’s interests which clearly indicates a conflict of interest. He continues to be a director of the Lancaster Foundation which is a non-profit company.

99. As at the end of February 2019, the amount outstanding on this loan was approximately R11.6 billion with interest accrued. The loan has not been serviced by L101 to date.

100. On 26 September 2016, a SENS announcement was put out by Steinhoff stating that a 2.5% underwriting commission was paid to the Lancaster Group (this was not reflected in L101’s financials) when the shares were subscribed for in Steinhoff – R114 million was paid to the Lancaster Group, and not to L101.

101. The Commission finds that it would not have been possible for these shares to have been subscribed for by L101 had it not been for the funding advanced by the PIC. Yet the underwriting commission was paid to the Lancaster Group.

102. It is questionable whether the Lancaster Group or L101 should have received an underwriting commission at all, and whether this should have gone to the PIC itself.

103. Based on the evidence of Mr Naidoo, it also appears that no discussion took place in relation to whether the commission should have been paid to L101, instead of the Lancaster Group.

104. The Commission recommends that the PIC must obtain a legal opinion as to whether the R114 million underwriting commission that was paid to the Lancaster Group should have been paid to L101, or if it was in fact due to the PIC, and if the latter is shown to be the case, appropriate steps should be taken to recover the money.

105. It should further be noted that a total of R100 million in equity contributions were made by both the PIC and Mr Naidoo which Mr Naidoo has failed to prove is still in the relevant bank account.

106. The Commission has noted that the PIC did not use any transaction advisors, notwithstanding the complexity of the proposed structure and deal. The PIC team indicated that the Lancaster Group then dictated the terms through their advisors. This is found to have placed the PIC team at a significant disadvantage.

107. The Commission finds that the conduct of Dr Matjila in reducing the amount so that it falls within his DoA was wholly improper. This might be taken to indicate collusion between Dr Matjila and Lancaster.

108. The Commission recommends that the PIC’s MOI and DoAs regarding the PIC’s investment decision making framework be amended to require the Board to approve any amendments to proposals which require the Board’s approval when they are submitted to the PIC.

Project Blue Buck

109. L101 was to subscribe for shares in STAR for R6.2 billion (5.9%). This was to be funded by raising new bank finance against the put option proceeds under the ratio collar. The amount raised was R6.5 billion.

110. The PIC loan and security package was re-negotiated in favour of L101 and essentially was diluted with an addition in security over the shares that L101 would acquire in STAR through a primary cession and pledge over these shares.

111. Steinhoff agreed to match the R6.2 billion of funding in order to ultimately buy additional shares in STAR, after the acquisition of Shoprite held by Thibault. Due to free float issues, the funding was later reduced to R4 billion. Steinhoff committed to provide the additional R2.2 billion to L101 for future investments, which did not materialise.


112. A significant amount of money had already been loaned to Mr Naidoo, amounting to R9.4 billion for Project Sierra. Yet the PIC was ready to entertain a second transaction, notwithstanding that the terms of their loan and security package were diluted in favour of L101.

113. The reasons provided by Dr Matjila for his decision to invest in Steinhoff through Mr Naidoo reflect a disregard for the interests of the clients of the PIC in pursuit of an ostensible ability to secure influence over a JSE listed company. Given that Mr Naidoo is also a PEP, the PIC was obliged to ensure a thorough due diligence was undertaken. Yet the PIC IC, and Dr Matjila, approved a transaction that would significantly enrich a single individual, and at the same time took decisions that removed the safeguards that were in place to protect the interests of the PIC.

114. The PIC renegotiated the terms of its loan and security and in the process diluted its security. The proceeds from the ratio collar put option proceeds of L101 were then ceded in favour of an international bank, which would then fund the R6.2 billion acquisition of STAR shares by L101. PIC agreed to a reversionary cession and pledge on these proceeds (their loan capital no longer guaranteed) whereas previously it had a primary cession and pledge over these proceeds (their loan capital was guaranteed.)

115. The only security the PIC has that has any value is the primary cession and pledge over the STAR shares which could be sold and set-off the debt owed under Project Sierra, but this would realise a significant loss.

116. It is concerning that the PIC approved the first and second transactions and transferred the funds, notwithstanding that the Lancaster Group had not established the B-BBEE Trust. This constituted an inexplicable waiver of the PIC’s right to defer the transaction as a result of the Lancaster Group’s failure to adhere to the conditions upon which its proposal to the PIC was approved. Those responsible for this very material oversight must be the subject of disciplinary action within the PIC.

117. It would have also been appropriate for the PIC to ensure that conditions precedent were expressly agreed to as part of the approval of the transaction, particularly with regard to the date for the establishment of the Trust, prior to any transfer of funds. This would have enabled the PIC to monitor and enforce such conditions and to cancel the transaction if such conditions were not adhered to.

118. It should also be noted that, although the initial approval by the PIC was for the establishment of a Trust; there was a subsequent request for the Trust to be converted into a non-profit company, which the PIC approved. The non-profit company was only established in 2017, a year after the transaction was finalised.

119. The PIC agreed to a second transaction with the same individual, ignoring both cumulative and counterparty risk, at great cost to the PIC/GEPF.

120. The PIC did not adhere to its criteria for funding B-BBEE as these two transactions had the same single individual as a counterpart. The transaction also enabled significant enrichment to accrue to a single individual.

121. A B-BBEE transaction with one individual cannot be construed as a broad-based empowerment transaction and does not comply with the Structured Investment Products mandate to facilitate B-BBEE given by the GEPF. The PIC essentially imposed the creation of an empowerment trust on the Lancaster Group, but provided the funding without it being in place.


122. ERIN, previously Camac, sought, in February 2014, a secondary listing on the JSE. Dr Matjila signed a letter in which the PIC confirmed that on the day of the secondary listing of Camac, an injection of USD135 million would be made by the PIC and a further amount of USD135 million would be paid 90 days thereafter.

123. In 2013, Camac declared that it was technically bankrupt. This fact was not disclosed to the JSE in the PLS. By virtue of the cash injections (totaling USD 270million) made by it, the PIC acquired a 30% shareholding in ERIN15.

124. During May 2016, ERIN approached the PIC for a guarantee in the amount of USD100 million to cover loan funding it had requested from the Mauritius Commercial Bank. The IC considered ERIN’s request and resolved to approve it. ERIN then obtained a loan facility for the amount of the guarantee from the Mauritius Commercial Bank (“MCB”).

125. There is no evidence before the Commission to support a finding of impropriety in the PIC’s decision to approve the provision of a guarantee in favour of MCB. However, it is necessary, to make the following observations:

126. In their report, the risk team, consisting of Mr Tshifhango Ndadza and Mr Paul Magula, recommended that the approval of the guarantee be subject to a number of conditions. In its wisdom, the IC did not include this recommendation as a condition precedent to the approval coming into effect.

127. It is understood, from certain media reports in Nigeria, that in 2019 the Nigerian government revoked ERIN’s oil mining licence/lease (OML) 120 and 121.

128. ERIN had drawn down on the MCB loan facility amounts totaling approximately USD67 million, which the PIC has had to pay as guarantor.


129. In approving the transaction to provide a guarantee of USD100 million, while disregarding the recommendation of the risk team to approve the transaction subject to certain conditions precedent, the Investment Committee acted improperly.

130. In addition, no thorough due diligence and legal risk assessment was done to enable the IC to give proper consideration to Erin’s application for funding and for the provision of the guarantee referred to above.

131. This impropriety is in contravention of the investment policy of the PIC relating to investment processes.

132. However, there is no evidence that the impropriety or contravention resulted in any undue benefit for any PIC director, or employee or any associate or family member of any PIC director or employee at the time.


133. The Commission is of the view that, if due diligence and legal risk assessments had been given proper attention, the difficulties encountered by ERIN would probably have been highlighted. Their respective roles therefore need to be strengthened so as to ensure that no investment decisions are made without following due process.

134. The PIC should investigate what measures can be taken to retrieve any tangible assets of ERIN to reduce losses and engage with the Nigerian government in this regard if deemed appropriate.


135. The PIC concluded two transactions that involved the same BEE company and Mr Lawrence Mulaudzi from Kilimanjaro Capital (KiliCap), namely Tosaco and Ascendis, in terms of which an investment was to be made into Ascendis Health and Bounty Brands. Kefolile Health Investments (Pty) Ltd (KHIH) was the investment vehicle.

136. During the review of the deal, the Commission found that R100 million which was approved by the PIC for the purchase of shares in Ascendis, was not used for that purpose. Rather, it seemed that the R100 million had been added to the transaction fees and paid to two entities of Mr Mulaudzi.

137. It was also established that the transaction in question was not initially approved but, according to Dr Matjila, as chairman of the Social and Economic Infrastructure and Environmental Sustainability Fund Investment Panel, Ms Zulu, albeit after this transaction, whose personal relationship with Mr Mualudzi was confirmed during his testimony, signed the resolution in terms of which it was resolved that the PIC would provide the funding to KHIH.

138. It should be noted that, during his testimonyMr Mulaudzi also stated that:

I … received a call from Dr Matjila, requesting my urgent assistance. He advised that the same lady [Ms Pretty Louw]… was in financial trouble … He asked me to urgently come to her rescue by settling her debts…’16


139. The Ascendis transaction was presented to the PIC at virtually the same time as the Tosaco transaction, yet the two appear to have been considered by the relevant PIC approval committee as two discrete investments.

140. The PIC approval conditions, in this instance how the funding was to be utilised, were very specific. Yet again, the Ascendis investment shows the PIC’s weakness, indeed failure to monitor the implementation of the decision and ensure that the funds provided were used as approved. Transaction costs were determined as R19m, yet there is a payment to Mr Mulaudzi of R79,8 million from KHIH.

141. Dr Matjila states that ‘we had to buy some time to assess the performance of Kisaco in the Tosaco transaction before we commit to another entity led by Mr Mulaudzi’.17 It is highly questionable that the approach to be taken is one of buying time to assess the previous transaction. This borders on reckless investing, and timelines should not drive deal decisions.

142. Ms Zulu requested that the Ascendis transaction be brought back for consideration by a committee that she chaired. Mr Mulaudzi asserts that he has ‘not attempted to influence her professional views in any way…’.18 Yet the sequence of events and the eventual outcomes raise significant concerns as to the role of non-executive directors in investment decision making, as well as undue and inappropriate influence from the Board. This is a critical matter.

143. Dr Matjila’s repeated efforts to have Mr Mulaudzi provide financial assistance to Ms Pretty Louw reflects the abuse of his office and influence over investee companies. The investigative work into tracing the money also raises concerns as to how influence and advisor fees were utilised behind closed doors, and that fees may have been paid out of client funds, regardless of value received.


144. The PIC must undertake a forensic audit of the utilisation of the funds provided to Ascendis to ensure they were utilised as approved, and legal avenues be pursued to recover any money not utilised in accordance with the PIC approval stipulations.

145. Parallel investments in different transactions with a common counterparty should be limited by the PIC both in number and value.

146. Coordination within the PIC between the different approval structures and processes must be addressed to ensure that investments and exposures to an entity or counterparty are clearly understood, and that cumulative financial and reputational risk is integral to risk assessment.

147. The role of non-executive Board members in investment decisions must be reviewed and the relevant PIC legislation and DoAs reconsidered. The matters of governance and oversight must be given a higher priority and role. Such a review should be completed by no later than June 2020.

148. Controls must be put in place to ensure investment decisions as approved in the governance process are implemented in the actual transaction prior to funds being dispersed.

149. The PIC should reconsider the use of SPVs and layered legal entities within investment structures or ensure there are appropriate mechanisms to enforce its rights.


150. Allegations of impropriety in the Karan Beef transaction came by way of the email of 30 January 2019, referred to in Chapter I of the report, from a sender with the name or pseudonym ‘James Noko’. It was alleged in the email that a non- executive director of the PIC, Ms Dudu Hlatshwayo (Ms Hlatshwayo), as Chairperson of the Fund Investment Panel, approved the Karan Beef transaction, in which a high ranking politician, Mr Paul Mashatile, Treasurer-General of the ANC, has a financial interest, held through another individual. It was also alleged that the construction of the deal was simply to inflate the selling price by R1 billion, and to pay the amount to Mr Mashatile.

151. Despite numerous invitations issued by the Evidence Leader and announced by the Commissioner during the hearings, for those with information relevant to the Commission’s Terms of Reference to come forward, no one came forward to substantiate the allegations made in the email referred to above. The only person who submitted a comprehensive statement to the Commission was Mr Sello Adson Motau (Mr Motau).

152. Mr Motau sets out, in his statement, the route the transaction proposal took to the PIC investment process. It went through PMC1, PMC2 and ultimately the Investment Committee, which approved the transaction on certain conditions. The conditions were met. However, since the resignation of the whole Board of the PIC on 1 February 2019, the transaction has stalled – the executive, according to Mr Motau, decided that the deal should be referred back to PMC2.19

153. The Commission finds that the allegations in the James Noko email of corruption and impropriety in the Karan Beef transaction have not been substantiated. There is therefore no substance in them. Consequently, no finding of impropriety in the investment decision in the Karan Beef transaction can be made.

CASE STUDY: Mobile Satellite Technologies (MST)

154. In the James Nogu email of 5 September 2017, it was alleged that Dr Matjila had funded Ms P Louw in the amount of R21 million through her company, Maison Holdings, co-owned by Ms Annette Dlamini (Ms Dlamini). It was further alleged that Ms P Louw was Dr Matjila’s girlfriend. Dr Matjila denied these allegations.

155. There was no other evidence placed before the Commission (nor in fact before the Budlender Inquiry) on this issue.

156. Dr Matjila conceded that he was introduced to Ms Dlamini and Ms P Louw by then Minister of Intelligence, Mr David Mahlobo at OR Tambo International Airport. Dr Matjila then introduced Ms P Louw and Ms Dlamini to Mr Lawrence Mulaudzi.20 At a later date, upon Dr Matjila’s request, Mr Mulaudzi made a donation, in his personal capacity of R300 000.00 to Ms P Louw to assist Maison Holdings with the financial difficulties it was facing. 21

157. As to the PIC’s funding of MST, Mr Rajdhar testified that MST applied to the PIC in June 2015 for a loan of R45 million to procure buses.22 After completion of the due diligence, PMC 2 approved the transaction for a term loan of R50 million plus 25% equity at a nominal amount of R25. However, MST was not willing to offer equity to the PIC unless the company value was increased. After some negotiation, PMC-UI granted approval of a revised proposal in the form of a debt facility of R21 million plus a 5% profit share.23 The loan facility was to be disbursed upon fulfillment of conditions precedent set by PMC-UI. Thereafter, term loan agreements were signed and the funds disbursed on 6 July 2017. However, the conditions precedent was not fulfilled in more than one respect.

158. Although it has been found that there is no substance to the allegation that Dr Matjila directly funded Ms P Louw to the tune of R21 million, which in fact, is the funding that was provided by the PIC to MST; it appears that there were certain MST proposals to the PIC, in which Ms P Louw was involved.24 Mr Rajdhar also testified that Ms P Louw initiated a number of CSI proposals that were not approved.

159. On 1 April 2017 MST paid an amount of R438 000 plus VAT to Maison Holdings for ‘work done to date’. It was found in the Budlender report that the money was paid as a reward for Ms P Louw’s efforts and to encourage her to continue therewith.


160. No finding of impropriety can be made on the established facts regarding the investment decision of the PIC in the MST transaction. What is of concern is the failure, on the part of the PIC, to demand from MST its 30 July 2016 audited financial statements prior to disbursing the funds.

161. The Commission finds that Dr Matjila acted improperly in pressuring Mr Mulaudzi, as the owner of an investee company of the PIC, to assist Ms P Louw and Maison Holdings. This conduct constitutes an abuse of Dr Matjila’s position as CEO and is a reputational risk to the PIC.

162. MST did not adhere to the conditions precedent for the loan of R21 million, which were very specific, namely, that the borrower (MST) would apply all the funds for the purpose of designing, constructing, assembling, operating and leasing of bus units; and that MST would submit to the PIC its Audited Financial Statements by no later than a period of 90 days after its financial year end. In addition, the funds were not used by MST for the agreed purposes set out above. Indeed, a number of busses were not purchased and monies were used to settle the debts of MST.

163. The R5 million CSI donation made directly to MST, of which approximately half a million went to Ms Louw’s company, reflects a misuse of what the funds were intended for.

164. The Commission recommends that the R500 000 paid to Ms Louw from the PIC CSI donation must be repaid by MST to the PIC.


165. During 2015, TOSACO announced its intention to sell 91.8% of its shares to qualifying buyers.

166. Three companies, namely, Kilimanjaro Capital (Pty) Ltd (Kilicap), Sakhumnotho (Pty) Ltd (Sakhumnotho) and Lereko (Pty) Ltd, separately approached the PIC for funding to purchase the shares. The PIC’s Investment Committee (IC) approved funding to the Kilimanjaro Sakhumnotho Consortium (Pty) Ltd, a consortium comprising of KiliCap and Sakhumnotho, in the amount of R1.8 billion to acquire the shares. However, the Consortium acquired the shares for R1.7 billion. The additional R100 million was allegedly funding for transaction fees, but this was not brought to the attention of the PIC’s relevant committees for approval.

167. Certain concerns were raised in relation to the circumstances surrounding the merging of the two companies. Dr Matjila denied the allegation that he imposed the merger on the two companies however, evidence to the contrary was put before the Commission.25

168. On the issue of whether due diligence was conducted by the PIC on Sakhumnotho before the merger, it was conceded that this had not been done. However, it is clear from the evidence of Mr Mongalo that a thorough due diligence should have been done as it is a critical part of the PIC’s decision- making processes.


169. The Commission is of the view that there is no merit to the claims that –

169.1. the merger between KiliCap and Sakhumnotho was voluntary.

169.2. there was no need to do a detailed due diligence on Sakhumnotho as it was already an existing client of the PIC;

169.3. Dr Matjila only became aware of the transaction fees through media reports.

170. There was also no justification for the various PIC committees not to be informed of the transaction fee.

171. While advice offered to the two entities, KiliCap and Sakhumnotho, to merge for purposes of improving their chances to win the bid, would probably not be improper, Dr Matjila should not have, imposed the merger on KiliCap. Notwithstanding this, the Commission is unable to point to any policy of the PIC, legislation or contractual obligation that may have been contravened in this regard.

172. The failure to do due diligence on Sakhumnotho or the new entity, KISACO, after the merger amounted to a disregard of the PIC’s investment policy.

173. In giving the instruction that the transaction amount be increased from R1.7 billion to R1.8 billion and thereafter failing to ensure that the alteration is disclosed to the approving committee, Mr Rapudi acted improperly. As a FAIS representative in terms of section 7(1)(b), read with section 13 of the FAIS Act, he failed to comply with the requirements of ‘fit and proper’ relating to personal character qualities of honesty and integrity, thereby contravening the provisions of section 8A(a).26

174. There is no evidence that the contravention resulted in any undue benefit for any PIC director or employee or any associate or family member of any PIC director or employee at the time.


175. The Board should interrogate the approval process and authorisation of the payment of the R100 million transaction fee and determine whether the R50 million paid to both KiliCap and Sakhumnotho was due, and in fact paid to the advisors.

176. If the money was not due, then the PIC should institute legal proceedings with regard to recovering the R100 million.

177. The Board should review the structure of the PIC to ensure that there are no parallel processes and teams working with different potential investees on the same transaction, unbeknown to each other.

178. The signing-off approval and disbursement processes require greater legal oversight to ensure that the proposals, approvals and final disbursements are not manipulated or changed from the original decision.

179. The role of the PIC in proposing advisors to investees for potential transactions needs to be reconsidered as it can inappropriately create a system of patronage and enrichment.

180. The PIC should consider whether or not appropriate action must be taken against Mr Tshepo Rapudi as a FAIS representative in terms of section 7, read with section 13, of the FAIS Act, for issuing the instruction to increase the amount of the transaction from R1.7 billion to R1.8 billion, and determine on whose authority he issued the instruction.


'Whether any findings of impropriety following the investigation in terms of paragraph 1.1 resulted from ineffective governance and/or functioning of the PIC Board.’

1. When considering the above Term of Reference, it is necessary to take account of a number of factors, including current best practice and codes for the effective functioning and accountability of boards, the legislation applicable to the PIC (and GEPF), and the practice and role of the Board of the PIC. This, together with further issues regarding governance, has been addressed in ToR 1.15 below.

2. ToR 1.1 refers to ‘any alleged impropriety regarding investment decisions by the PIC …’ Consequently, as illustrative examples, reference will be made to the following ten transactions, all of which have been dealt with in different chapters of this report, as set out below:

2.1. The Sekunjalo Group of companies, namely:

2.1.1. Ayo Technology Solutions (Ayo);

2.1.2. Independent News and Media South Africa (Pty) Ltd (INMSA); and

2.1.3. Sagarmatha;

2.2. Steinhoff/Lancaster Transaction


2.4. Ascendis

2.5. S&S Refineries

2.6. VBS Mutual Bank

2.7. Erin Energy

2.8. MST27

3. The approach taken has been to consider whether there was impropriety in the above transactions, and if so, was this the result of a failure of governance and/or ineffective functioning of the Board. The details of each transaction will not be covered and can be found in the case studies in ToR 1.1, above.

Ayo Technology Solutions (Ayo)

4. The Commission has found that there was impropriety in the Ayo transaction in two respects, viz:

4.1. Mr Seanie giving instructions to ESG, Risk and Legal to proceed with due diligence approval from PMC1, thereby contravening the policy on Standard Operating Procedure; and

4.2. Failure by both Dr Matjila and Mr Seanie to disclose to PMC2 that an irrevocable subscription form had already been signed by Dr Matjila when PMC2 considered approval of the transaction.

5. The Commission concludes that these improprieties resulted from ineffective governance.

6. This is found in the decision-making process, the material non-disclosures, as well as a lack of interrogation of essential information – such as the determination of the valuation – and the parallel processes that took place to give effect to the transaction.

7. There was no proper valuation to back the investment that was done, and therefore the question remains as to whether the PIC subscribed for the shares at a fair and reasonable value. At the listing date, the shares were R43 per share, while as at 23 October 2019 the share price was R5.60 per share, a decrease in value per share of 87%.


8. It is recommended that the PIC should introduce stringent measures to ensure that each step in the investment procedure is followed before the transaction is allowed to proceed to the next step. In this regard, a committee should satisfy itself before dealing with a matter that there was compliance with the processes leading up to its consideration of the transaction.

CASE STUDY: Independent News and Media South Africa (Pty) Ltd (INMSA) and Sagarmatha.

9. The Commission did not consider the initial investment in INMSA, and therefore cannot make any findings in that regard. However the Commission finds that in the subsequent INMSA and Sagarmatha proposed transactions, there was impropriety that occurred as a result of ineffective governance.

10. The impropriety lies in Dr Matjila signing the share swap agreement with Sagarmatha, claiming that he did not know of the resolution by the approving committee, (the PEPPS-FIP), in terms of which the transaction had been approved with conditions diametrically opposed to the share swap agreement that he signed. This evidences a complete disregard of the PIC’s investment processes by Dr Matjila.

11. Further indicators of ineffective governance relating to these transactions are:

11.1. The PIC appraisal documents did not assess the implications of cumulative group exposure in any of the applications to invest. Moreover, even when the investment proposals were tabled at the required approving structures, the question of overall exposure to a group seemed to not be an issue, nor was the fact that INMSA was not servicing their loan.

11.2. The Sekunjalo investments showed a marked disregard for PIC policy and standard operating procedures.

11.3. Proper governance was absent or poor, and risk identification processes were downplayed by looking for risk mitigants to make sure the deals were approved.

11.4. Due diligence reports highlighting issues around the independence of Board members and policies to be implemented were not followed up by the PIC to ensure implementation post the deal approval and monies having flowed.

11.5. The proposed Sagarmatha transaction, including the suspected share price manipulation and essentially attempting to use the PIC’s own investment to pay the debt INMSA owed to the PIC, demonstrates a lack of ethics, lack of compliance with laws and regulation, and a disregard for the best interests of the PIC and its clients.

12. The recommendation proposed in Ayo above, applies equally in respect of this INMSA/Sagarmatha transaction.

CASE STUDY: Steinhoff/Lancaster Transaction

13. The Commission finds that there was impropriety in the decision to invest in both the Steinhoff and Lancaster transactions. This was due to ineffective governance and the poor functioning of the PIC Board.

14. This is evidenced in the approach taken by Dr Matjila to essentially ‘buy’ influence and a Steinhoff Board seat, the change from the original proposal from Mr J Naidoo for an investment of R10,4 billion, reduced by the PIC to R9,35 billion to enable the transaction to fall within the mandate limit of the Investment Committee and the further decision to invest in Lancaster for the STAR transaction.

15. The statement by Dr Matjila exemplifies this ineffective governance: ‘we could have gone to the Board but it was more convenient for the IC to deal with the matter at that level’ adding that the Board has never rejected an Investment Committee decision.


16. The Commission has found that there was impropriety in the process that led to the approval of the transaction. The merger imposed by Dr Matjila, the failure to do due diligence on Sakhumnotho and the inclusion in the capital amount of transaction fees that were not requested by KISACO, nor recommended or approved by the committees, reflects this.

17. In giving the instruction that the transaction amount be increased from R1.7 billion to R1.8 billion and thereafter failing to ensure that the alteration was disclosed to the approving committee, Mr Tshepo Rapudi acted improperly. As a FAIS representative in terms of section 7(1)(b), read with section 13 of the FAIS Act, he failed to comply with the requirements of ‘fit and proper’ relating to personal character qualities of honesty and integrity, thereby contravening the provisions of section 8A(a).

18. The Commission finds that there was impropriety that resulted from ineffective governance in the TOSACO Transaction

CASE STUDY: Ascendis

19. The Ascendis transaction was presented to the PIC at virtually the same time as the TOSACO transaction, yet the two appear to have been considered by the relevant PIC approval committee as two discrete investments, notwithstanding the comment below.

20. Ms Zulu, a non-executive Board member, requested Mr Rajdhar (Head: Impacting Investing at the PIC) to bring the Ascendis transaction back for consideration by a committee that she chaired. Mr Mualudzi asserts that he has ‘not attempted to influence her (Ms Zulu’s) professional views in any way and have never expected any undue influence from her through the positions she holds, including at the PIC’.28 Yet the sequence of events and the eventual outcomes raise significant concerns as to the role of non-executive directors in investment decision making, as well as undue and inappropriate influence from the Board. This is a critical matter. Clearly, as chair of the relevant committee, Ms Zulu played a significant role, not only in getting the deal back onto the table but also in the recommendations to make the investment.

21. It is of concern that Mr Mulaudzi admitted in his testimony before the Commission that he had known Ms Zulu from around 2016, but they only began a personal intimate relationship in 2018. He confirmed that at the time of appearing before the Commission he was in an intimate relationship with Ms Zulu.

22. The Commission finds that there was impropriety in the Ascendis transaction due to both ineffective governance at executive level and in the functioning of the PIC Board, in that Ms Zulu participated in the PIC consideration of a transaction in which Mr Mulaudzi had an interest. This is particularly important given the roles that non-executive directors play in the PIC’s transaction decision making, and the responsibilities exercised in that regard. This issue is addressed in the section on ‘Lifestyle Audits’ in Chapter V.

CASE STUDY: S&S Refineries

23. The Commission found that there was no impropriety regarding the decision taken to invest in S&S Refineries.

24. The Commission finds that failure to ensure that the decision taken to invest was based on a rigorous and thorough analysis of the relevant information points to ineffective governance, which is also evidenced by the fact that the conditions precedent which applied to the transaction were not implemented.


25. The Commission found that there was no impropriety on the part of the Board of the PIC in the decision to invest in the VBS transaction.

26. The Commission is of the view, however, that there is clear evidence of ineffective governance in the PIC in that two of its executive directors, Mr Nesane and Mr Magula, egregiously violated their fiduciary duties towards both VBS and the PIC.

27. They acted in collusion, such that the PIC was not aware of critical information relating to, among other things, shareholding in VBS, notwithstanding that the information that they were privy to was critical to any investor/shareholder. They hid behind the excuse that they could not share such information as they had fiduciary responsibilities to the VBS Board. Nor did they act responsibly as non- executive directors on the Board of VBS as they did not insist that the information be made available to all shareholders and investors.

28. Both men used their positions of trust and responsibility to unduly enrich themselves at the expense of the depositors, clients and investors of VBS, including the PIC.

CASE STUDY: Erin Energy

29. The Commission found that there was impropriety in the decision to approve the Erin transaction. This came about, in the Commission’s view, as a result of ineffective governance. This investment (provision of a guarantee) was made notwithstanding Erin being technically insolvent and against the advice of the PIC’s own energy experts and internal team that had identified the problem as being one of insolvency and not that of liquidity. Dr Matjila himself conceded that the legal risk assessment was not properly done. Given the fact that this transaction was to be performed outside the South African borders, and particularly that the first transaction was to facilitate the purchase, by the investee, of oil leases/licenses, it was imperative that legal risk established that the purchase did occur, yet legal risk did not establish this fact. In addition, conditions precedent proposed by credit and risk analysts of the PIC were disregarded. These factors point to a serious lack of effective governance.

30. The question has to be asked as to how appropriate it is for an asset manager of a pension fund to invest in oil exploration, which is a high risk endeavor.


31. The Commission found that there was no impropriety in the decision to invest in MST. However, the circumstances that led the PIC to consider the investment in the first place are indicative of a serious lack of appropriate governance.

32. During the presentation by MST for loan funding in November 2015, Dr Matjila requested Corporate Affairs (PIC) to consider CIS funding for the MST project. After a number of unsuccessful attempts to obtain funding, as the request did not find favour with the Executive Committee, R5 million was approved in February 2017, with payment authorised by Dr Matjila on 20 March 2017. On 1 April 2017 MST paid R438 plus VAT (R500 000) to Maison Holdings, Ms Louw’s company, ‘for work done to date’.

33. The link to Ms Louw arose from the former Minister of Intelligence, Mr Mahlobo, calling Dr Matjila to a meeting at OR Tambo airport without any indication of the purpose of the meeting or who would be present. Moreover, Dr Matjila said he saw no problem with this conduct. In this instance, he was asked, as the PIC, to help Ms Pretty Louw.

34. There was ineffective governance in the provision of R5 million as a CSI contribution to MST, of which Ms Louw received R500 000.


‘Whether any PIC director or employee used his or her position or privileges, or confidential information for personal gain or to improperly benefit another person.’

1. This Term of Reference will be answered by way of illustration using the case study of Harith, Venda Building Society Mutual Bank (VBS) and the Edcon Mandate letter.


2. From the evidence and testimony before the Commission, the PIC created two funds – PAIDF I and PAIDF II – and appointed a senior employee, Mr Tshepo Mahloele (Mr Mahloele), to establish the funds and who, in due course, became the CEO of Harith in its various forms.

3. Harith was a company established precisely to manage the two Funds, and at significantly high fees. The Deputy Minister and Chair of the PIC, Mr Moleketi, was appointed chairman of Harith. Through various processes, two employee bodies were created, the HSIST and Harith Holdings, which was held 100% by an employees’ equity trust of the same type as the HSIST, in which its skilled employees participated.

4. The GEPF, the most significant investor in the Funds, initiated a legal process to enforce its rights to both dividends and share ownership.

5. The earnings and incentive schemes provided rich rewards for those selected by the PIC to fulfil these roles, confirming that PIC directors and employees used their positions for personal gain and/or to benefit another person.

6. Legal structures can be engineered such that they obfuscate substance for form. In other words, the substance may still be legal. The ‘arm’s length’ loan, based on the minutes of the PIC, clearly shows that this was not done at an arms’ length. It is the Commission’s view that there is no question that the approach taken provided easy access to PIC funds and influence including an enhanced ability to secure additional investment, including from the GEPF.

7. Harith’s conduct was driven by financial reward to its employees and management, and not by returns to the GEPF. In essence, the PIC initiative, created in keeping with government vision and PIC funding was ‘privatised’ such that those PIC employees and office bearers originally appointed to establish the various Funds and companies reaped rich rewards.

8. The Commission recommends that the GEPF and the PIC should jointly appoint an independent investigator as soon as possible after receiving this report. The mandate must be to examine the entire PAIDF initiative to determine that all monies due to both parties have been paid and properly accounted for; to determine whether any monies due to overcharging or any other malpractice should be recovered, and to provide the results of such investigation within six months to the Boards of both the GEPF and the PIC.

9. The Board of the PIC should examine whether the role played by either Mr Moleketi and Mr Mahloele breached their fiduciary duties or the fit and proper test required of a director in terms of the Companies Act.

10. The Board of the PIC should develop appropriate policies and guidelines for the secondment/transfer/appointment of employees to external entities such that the interests of the PIC and its clients are duly protected.

The VBS Mutual Bank

11. The PIC saw VBS as a strategic asset with the potential to grow into a regional bank. According to Dr Matjila, the PIC supported the conversion of VBS from a building society into a mutual bank as a vehicle to assist in the development of a black-owned and black managed player in the banking sector.29

12. On 29 March 2012, Dr Matjila proposed that the Directors’ Affairs Committee (DAC) of the PIC appoint two of its senior executives to the VBS Board, namely Mr Ernest Nesane (Mr Nesane) and Mr Paul Magula (Mr Magula). Their appointment was approved. The resolution does not reflect any concern by the DAC that both men were responsible for signing off on PIC legal and risk approvals for the investment, and were now being appointed to the board of VBS, which would be a conflict of interest.

13. In her evidence, Ms Brendah Mdluli (Ms Mdluli), stated that the VBS request for a revolving credit facility (RCF) from the PIC was introduced by Mr Magula and was approved by the relevant committee.30

14. Giving testimony before the Commission, South African Reserve Bank Deputy Governor, Mr Kuben Naidoo (Mr Naidoo) covered the investigation into VBS, the evidence of Mr Magula and Mr Nesane and the confidentiality of their evidence given to the Motau investigation.

15. Mr Naidoo testified that,

‘(Mr Nesane) eventually confessed after putting up strenuous denials that he had received unlawful payments made to a nominee company31… in a total amount in excess of R7,2 million in order to buy his silence. Mr Nesane resigned from his post at the PIC two days after testifying …’32

16. In relation to Mr Magula, it is stated at paragraph 21.4 of Motau’s report that:

‘…[he] eventually confessed, after putting up strenuous denials, that he had received unlawful payments, made to two companies which acted as his nominees, in a total amount in excess of R7.6 million in order to buy his silence.’

17. Motau’s report further states at paragraph 39.3 that:

‘The monthly payments of R300 000 all took place on the same date each month that Vele made a distribution of monies to a variety of related parties, including Magula’s front companies, Nesane’s front company, Makhavhu, who is the advisor to the Venda king.’

18. In Para 52.4, it is stated that Mr Nesane testified that he ‘did not properly comply with his fiduciary duties as a director of VBS.’

19. The Motau report, in paragraph 237, deals with the extent of the looting, indicating that R1 894 923 674 was gratuitously received from VBS by 53 individuals for the period 1 March 2015 to 17 June 2018. These recipients included Vele and Associates (R936 699 111) and the two PIC senior executives who were appointed to the Board as non-executive directors to exercise their fiduciary duties to ensure PIC investments were not wasted. It was found by Adv Motau SC that, in total, Mr Nesane received R16 646 086 and Mr Magula, R14 818 098. They seem to have been handsomely rewarded for turning a blind eye.

20. The Commission finds that Mr Nesane and Mr Magula egregiously violated their fiduciary duties towards both VBS and the PIC. They acted in collusion, such that the PIC was not aware of critical information relating to, among other things, shareholding in VBS, notwithstanding that the information that they were privy to was critical to any investor/shareholder. They hid behind the excuse that they could not share such information as they had fiduciary responsibilities to the VBS Board. Nor did they act responsibly as non- executive directors on the Board of VBS as they did not insist that the information be made available to all shareholders and investors.

21. Both men used their positions of trust and responsibility to steal and unduly enrich themselves at the expense of the depositors, clients and investors of VBS.

22. The Commission recommends that the Board of the PIC must ensure due legal process is pursued to recoup investment funds lost in so far as this is possible. This is dealt with in more detail in Chapter V Next Steps: Investment Risks and Losses.

23. The Board of the PIC must institute due legal process to recover the ill-gotten gains from both Mr Nesane and Mr Magula, who were in their employ at the time of the theft.

24. The PIC should explore recovering any bonus or enhanced payments made to both men during the period that they served on the VBS board, whether related to the VBS matter or their regular duties.

25. The actions of both Mr Nesane and Mr Magula should be referred to the relevant regulatory and professional bodies to consider what action they should take, should this not have been done already.

26. It is further recommended that the criminal conduct of Mr Nesane and Mr Magula should be referred to the National Prosecuting Authority.

The Edcon Mandate Letter

27. Kleoss Capital, in a letter to the PIC’s Mr M Muller dated 8 August 2017, and signed by Mr Andile Keta, sets out the terms of their appointment as joint financial advisors to the PIC in relation to a potential investment by the PIC and/or funds managed by it into Edcon Holdings Ltd. The second adviser is Mr Koketso Mabe of Keletso M Squared (Pty) Ltd). He is a former PIC employee who, at the time of his employment, was Executive Head, Private Equity and SIPS (structured investment products). He left the PIC at the beginning of February 2017.

28. The fees and expenses to be paid to the joint financial advisors, were “a success fee in the amount of 1,5% of the total capital raised from the PIC, including any potential co-investors, payable upon closing of the transaction once all the conditions precedent have been fulfilled”.

29. The relevant part of this agreement is contained in Paragraph 4.2, which states that:

It is confirmed that, unless otherwise agreed by both parties on termination of this Appointment Letter, or unless this Appointment Letter shall have been terminated as a result of a breach by the Joint Financial Advisers of their obligations in terms of this Appointment Letter, should the Transaction be completed within a period of 2 years from termination of this Appointment Letter, the Joint Financial Advisers full fee in respect of the Transaction shall remain payable upon completion thereof, regardless of such termination, and regardless of the fact that the PIC may have completed the Transaction with the assistance of no advisers or advisers other than the Joint Financial Advisers”.

30. Confirming this agreement, the “PIC hereby agrees to the terms and conditions of the appointment of the Joint Financial Advisers as recorded above.

31. The above agreement is signed by Ms More on behalf of Dr Matjila on 17 August 2017.

32. On 11 October 2019, Kleoss Capital, on behalf of the joint advisors, presented an invoice to the PIC claiming R44 661 975 as payment from the PIC for the services rendered as per the Appointment Letter.

33. The terms of the above agreement significantly disadvantage the PIC, to put it mildly

34. The open-ended commitment in the agreement raises a number of questions:

34.1. Is this the only contract with such a clause, and if so, what were the special circumstances that gave rise to it?

34.2. Was this contract signed off and approved by the PIC legal team?

34.3. Was any work as set out in the appointment letter performed by the advisors, and if so was any assessment of their contribution made to the conclusion of the Edcon deal undertaken?


35. The PIC Board of Directors institute a review of all contracts signed with advisors over the past five years to see if any contain similar or the same agreements.

36. The PIC review the Edcon transaction and determine whether the joint advisors executed the mandate they were engaged to fulfil, or were utilised in any way.

37. The PIC consider the legal options available to it regarding recouping any payments made to the advisors.

38. Ms More be asked to explain her approval of the flawed agreement.


Whether any legislation or PIC policies concerning the reporting of alleged corrupt activities and the protection of whistle-blowers were not complied with in respect of any alleged impropriety referred to in paragraph 1.1.

1. On the evidence before the Commission, the Commission finds that the PIC failed to implement a Fraud Prevention Plan in terms of the Protected Disclosure Act, 26 of 2000 (PDA).

2. The Commission further finds that Dr Matjila failed to initiate training programmes to create awareness of the PIC whistle-blower policy and the Board in situ at the time also failed to exercise its oversight function in this regard.

3. Dr Matjila also acted in breach of the PIC’s whistle-blowing Policy by demanding the passwords from the IT Department, insisting that all whistle-blower reports be handed to him and taking charge of a forensic investigation in which he and his fellow executive director, Ms More (CFO), were directly implicated.

4. The Commission is of the view that the content and tone of the Noku/Nogu emails indicate that the intention of the originator was not to blow the whistle on corruption but to cause maximum reputational damage to the PIC and its directors/top management. Investigations conducted by the forensic team of the Commission, assisted by the FIC, could not establish the veracity of the allegations contained in the emails, except for the R 300 000 paid to Ms Pretty Louw (discussed in the MST transaction) by Mr Mulaudzi at the request of Dr Matjila.

5. Noku/Nogu cannot seek protection as a whistle-blower in terms of the PDA as his/her emails cannot be classified as bona fide as they contain false information in general except for elements of the ‘Pretty Louw’ matter. The probabilities are that Nogu/Noku is a person within the PIC with access to information not readily available to PIC employees, such as Board/Exco minutes.

6. The Commission cannot, on the evidence before it, comment on the disciplinary enquiries of Mr Mayisela and Ms Mathebula as the enquiries were conducted in terms of the PIC disciplinary policy and the hearings were chaired by independent chairpersons. It must be recorded that Ms Mathebula was suspended and resumed her duties after the departure of the former CEO, following a decision by the Board not to implement the sanction of dismissal as recommended by the Chairperson of her disciplinary hearing.

7. It is important to note that the practice of issuing anonymous emails has continued at the PIC, with the latest being in or about October 2019. With regard to the latest email, it is clear that the contents were obtained from a specific PIC email address, probably by hacking emails of certain employees of the PIC and distributing them in various forums. It appears that information within the PIC’s information system platforms of communication continues to be accessed without permission and leakages continue unabated, including records of meetings of various forums within the PIC, such as the Exco, Board and Board subcommittees.

8. The Commission recommends that the Board of the PIC must, as a matter of priority, develop a comprehensive policy to give effect to the PDA and institute a programme to ensure that there is information and training available to implement the amended policy. The implementation and effectiveness of such a programme must be regularly reviewed and measured by the Board.

9. A complete review of the whistle-blowing policy and how it has been implemented is essential.

10. The Commission further recommends that the PIC IT systems need to be adequately and appropriately secured and the document management policy should be reviewed to reflect levels of confidentiality, access, processes and versions that can be tracked appropriately.

11. The continued use of anonymous emails, the leaking of confidential documents and abuse of social media reflects a serious breakdown of trust and confidence within the PIC. The Board and Executive need to address this as a matter of urgency through, among other things, reviewing existing policies on ethics and values; examining and addressing the behaviour of leadership, including that of the Board and Executive, to ensure they practice, and are seen to live up to, the values and ethics the PIC espouses. This will ensure transparency and fairness throughout the organisation.


‘Whether the approved minutes of the PIC Board regarding the discussions of any alleged impropriety referred to in Clause 1.1 are an accurate reflection of the discussions and the Board’s resolution regarding the matters, and whether the minutes were altered to unduly protect persons implicated and, if so, to make a finding on the person/s responsible for the alterations’

1. In order to answer the question ‘whether the approved minutes of the PIC Board regarding the discussions of any alleged impropriety referred to in Clause 1.1 are an accurate reflection of the discussions and the Board’s resolution regarding the matters, and whether the minutes were altered to unduly protect persons implicated and, if so, to make a finding on the person/s responsible for the alterations’ it is necessary to consider the following two aspects:

1.1. Firstly, in relation to whether the approved minutes accurately reflect the discussions of the Board and the resolutions taken, it is clear that the Board was concerned about recording the discussions. The instruction to Ms Mathebula not to record the meeting, and the subsequent redaction of the minutes to exclude references to the discussions, reflect the concerns, and perhaps fears and tensions within the Board, of individual comments and opinions being recorded. The concern about leakages also informed this approach.

1.2. Secondly, it is not possible to determine the accuracy of the minutes as only resolutions were in the minutes of the Board meeting of 29 September 2017. The above minutes were signed by the Chairman of the Board. These are therefore the final minutes and evidence of the proceedings of the meeting. Furthermore, the only changes to the minutes were those that occurred in the normal course of Board members commenting on or changing draft minutes, and the final minutes presented to the Board took such changes into account, and were then signed by the Chairman on 29 September 2019.

2. The evidence presented to the Commission consistently indicates that there was a decision not to record the Board meetings dealing with the anonymous email allegations, as there were concerns about such minutes being leaked and becoming public.

3. Furthermore, the content containing discussions that took place in the meeting was deliberately removed from the draft minutes, but there was no apparent difference of view between Board members as to the accuracy thereof.

4. It would be impossible for the Commission, given the time and resources available, to properly examine all the minutes of all the investment decisions. Nothing was brought to the attention of the Commission regarding alteration of minutes of investment decisions.

5. In relation to the Board meeting of 29 September 2017, it is reasonable to conclude that there was no intention to change the record of the discussions or purposefully alter the outcome and decisions. It is reasonable to recognise this as an honest error of judgement taken at a time of great tension and fragility in the PIC and significant distrust among members of the Board itself.

6. Therefore, the Commission recommends that the Company Secretary must in future ensure that the Board minutes document the discussions that lead to decisions, including the issues raised and the reasons for the decision.

7. All Board meetings, whether ad hoc, in camera or regular meetings, as well as those of Board sub-committees established for any special purpose, should have an experienced minute-taker and an audio recording for ease of reference. Audio recordings must be kept for at least 30 days after the formal minutes have been adopted.

8. Where appropriate, resolutions should indicate whether the decisions taken were unanimous or record the vote and any dissenting views, including, if requested, the director/s name.


Whether the investigations into the leakage of information and the source of emails containing allegations against senior executives of the PIC in media reports in 2017 and 2018, while not thoroughly investigating the substance of these allegations, were justified;’

1. At the Board meeting of 15 September 2017, besides finding no wrongdoing by the CEO as alleged in the contents of the Nogu email, the Board authorised Dr Matjila to investigate the leakage of information himself.

2. The Commission finds that the investigations into the leakage of information and the source of emails containing allegations against senior executives of the PIC in media reports in 2017 and 2018 were justified.

3. The Commission finds that the Board abdicated its responsibilities by failing to take charge of all aspects of the investigations. It was the responsibility of the Board to manage the process, to ensure that the IT systems of the PIC were protected and that due and fair process was followed throughout the investigations.

4. The PIC suffered considerable reputational damage as a consequence of the leakages and the internal turmoil that resulted.

5. The role of the Board is to ensure due process and proper governance at all times. In the matter of the anonymous email allegations, the Board did not respond adequately. It should have obtained specialist legal advice on the matter.

6. The Commission recommends that conflicts of interest need to be thoroughly evaluated and properly managed and the policies of the PIC should be reviewed to ensure that provision is made for appropriate guidance in the circumstances such as those under consideration. Such policies must be known to all and adherence thereto must be enforced.

7. The Board must also ensure that investigative processes are fair, transparent and thorough in the interests of affected parties, the PIC and its employees.


Whether any employees of the PIC obtained access to emails and other information of the PIC, contrary to the internal policies of the PIC or legislation?

1. In June 2018, the PIC commissioned a legal opinion from the law firm ENS Africa (opinion) in response to the actions of Mr Simphiwe Mayisela (Mr Mayisela) with regard to him accessing or attempting to access the PIC’s confidential information without authorisation. Human Resources head, Mr Christopher Pholwane (Mr Pholwane), attached the Opinion as an annexure to his statement33 which he confirmed under oath at a hearing on 27 May 2019.

2. The background to the Opinion was that Mr Mayisela had allegedly informed Mr Lufuno Nemagovhani (Mr Nemagovhani), the Head of Internal Audit, that he was in possession of an electronic password protected copy of the internal audit report on the investment by the PIC in Ayo Technology Solutions. He requested Mr Nemagovhani to provide him with the password for the report, but Mr Nemagovhani declined the request.

3. The Opinion concluded that Mr Mayisela could have contravened, among others, section 86(1) of the Electronic Communications and Transactions Act, 25 of 2002 (ECTA), which reads:

‘Subject to the Interception and Monitoring Prohibition Act, 27 of 1992, a person who intentionally accesses or intercepts any data without authority or permission to do so is guilty of an offence.’

4. The Commission agrees. The Commission is of the view that, since Mr Nemagovhani refused to provide Mr Mayisela with the password and the latter could therefore not gain access to the report, he could also have been guilty of a contravention of section 88(1) of ECTA, in that he had attempted to commit an offence referred to in section 86. Section 88(1) provides that:

‘[a] person who attempts to commit any of the offences referred to in sections 86 and 87 is guilty of an offence and is liable on conviction to the penalties set out in section 89(1) or (2), as the case may be’.

5. It should also be noted that, over the past few years, especially in 2017 and 2018, confidential information belonging to the PIC has found its way to external parties, including the media and retired General Bantubonke Holomisa (General Holomisa).

6. An important point to note is that a number of employees went through disciplinary processes (which are dealt with below) presided over by independent Senior Counsel, where they were represented by experienced lawyers during hearings that often lasted many days. The Commission will not interfere with the findings and recommendations or conclusions of these hearings. It has no review or appeal jurisdiction.

Past disciplinary processes

7. Mr Mayisela faced a number of charges, including being found guilty of being in possession of a document – Loan Market Association (LMA) Risk Participation - that related to a transaction between Deutsche Bank, the Government Employees Pension Fund (GEPF) and the PIC. According to the decision of the chairman of the disciplinary committee, he also ‘accessed and retained the letter of appointment of Naledi Advisory Services to investigate the circumstances relating to the opening of the corruption case against the CEO’. This document related to an investigation conducted into Mr Mayisela himself. The disciplinary committee held that there was no justifiable reason or reasonable explanation for accessing and retaining these documents. This amounted to misconduct on his part and a dismissal was recommended by the Chairperson (Advocate N.A. Cassim SC), which recommendation was carried out by the PIC.

8. Ms Matshepo More (Ms More) testified that Mr Mayisela utilised the access privileges to monitor email communications of employees, including hers. Ms More said granting of super-administration rights to Mr Mayisela without following procedures exposed the PIC to major risks.34

9. The Commission finds that Ms Menye did not follow the process laid out by the PIC to grant the access rights to Mr Mayisela, and Mr Mayisela utilised this to obtain wide ranging information not related to the police investigation into Dr Matjila’s alleged acts of corruption. In any event, he was not supposed to irregularly access this information.

10. Ms Mathebula, the Company Secretary, went through a full and, in our view, independent, disciplinary process where she was charged with enabling Mr Mayisela to have access to confidential minutes of the Board, which were then found to be in the public domain.

11. Ms Mathebula was found guilty in March 2019 of breaching PIC policies and a dismissal was recommended by the Chairperson, Adv W Hutchinson SC.

12. Although Ms Mathebula denied, before the Commission, that she caused the distribution of confidential PIC information in the form of minutes of the Board, the Commission accepts the findings of the disciplinary committee until they are successfully challenged. After Ms Mathebula had been found guilty of a dismissible offence, the Board of the PIC opted to give her a final written warning.

However, it was never suggested that Ms Mathebula was irregularly in possession of the minutes at the time that she would have breached PIC policies, or at any other time. She can therefore not be said to have ‘obtained access to emails and information of the PIC contrary to the internal policies of the PIC or legislation’.

13. There may well be more PIC employees involved in irregularly obtaining and disseminating information of the PIC. In fact, Mr Mayisela testified that he was still receiving documents leaked from the PIC, which he passed on to a member of the South African Police Service.35 This was after he had been dismissed from the PIC. Despite the Commission having appointed, through the investigation team, experts in the field of IT, the person/s behind the pseudonyms James Nogu, James Noko and Leihlola could not be identified.

14. The question whether any employees of the PIC obtained access to emails and other information of the PIC, contrary to the internal policies of the PIC or legislation, is answered in the affirmative. There is sufficient evidence for the Commission to conclude that Mr Mayisela obtained access to emails and other information of the PIC contrary to the internal policies of the PIC or legislation (at least section 86(1) of the Electronic Communications and Transactions Act, 25 of 2002).


15. The PIC has thorough policies and procedures in relation to safeguarding its information and employees are obliged to familiarise themselves therewith. It is accordingly recommended that the PIC should regularly review and enhance its policies on protection of its information, particularly given the pace of change taking place in the IT environment.

16. Leakage of information and similar transgressions of policies and ethics have a great deal to do with the culture of the organisation. The PIC should therefore continue to inculcate values of integrity, honesty and transparency.

17. The Board of the PIC must determine what legal recourse it intends taking with regard to the deliberate actions by Mr Mayisela to obtain privileged information and pass such information on to third parties, with severe consequences for the PIC. As indicated above, Mr Mayisela could have contravened, among others, section 86(1) of the Electronic Communications and Transactions Act, 25 of 2002 (ECTA), which reads:

‘Subject to the Interception and Monitoring Prohibition Act, 27 of 1992, a person who intentionally accesses or intercepts any data without authority or permission to do so is guilty of an offence.’

18. Furthermore, Mr Mayisela may well have contravened section 88(1) of ECTA, in that he had attempted to commit an offence referred to in section 86. Section 88(1) provides that:

‘[a] person who attempts to commit any of the offences referred to in sections 86 and 87 is guilty of an offence and is liable on conviction to the penalties set out in section 89(1) or (2), as the case may be’.

19. It should also be noted that, Dr Matjila alleged that the first Nogu email appears to have emerged, in some ways, through the electronic platforms of Dr Mkhwanazi and that his personal assistant might also have played a role here, which allegation Dr Mkhwanazi denied. Though not related to this ToR, but treated here, it should also be noted that Dr Matjila accused Dr Mkhwanazi of being involved in political interference at the PIC. Dr Mkhwanazi has yet to answer to these allegations. It is recommended that the Minister and/or Chairperson of the PIC investigate these concerns and bring them to finality.


Whether any confidential information of the PIC was disclosed to third parties without the requisite authority or in accordance with the Protected Disclosures Act, 2000, and, if so, to advise whether such disclosure impacted negatively on the integrity and effective functioning of the PIC;

1. From the second half of 2017 to the present, the PIC has received negative media and other coverage. Confidential information found its way into the hands of a variety of third parties, including print, radio, television and social media. These platforms have disseminated material that contained confidential information on PIC transactions, internal treatment of staff and PIC Board deliberations.

2. It has been determined that highly confidential documents, including Board papers, transaction reports and correspondence were leaked to the media and other external parties (Statement of Ms Sandra Beswick, non-executive director, paragraph 3.3.4), irregularly and without the requisite authority of the PIC (also see ToR 1.7).36 Even prior to the James Nogu emails, confidential PIC information could already be found in the public domain. This distribution of information was in violation of PIC protocols on handling of information and was thus done irregularly.

3. Certain of the witnesses who testified before the Commission emphasised that information that was released was in keeping with the PIC’s Whistle-Blowing Policy (WBP), which policy is based on the PDA. However, there was no evidence that anyone followed the protocols contained in the WBP and PDA, including Nogu / Leihlola; nor were these protocols taken into account, notwithstanding the damage that would be inflicted on the reputation and functionality of the PIC. The leakage of information through the Nogu emails was not in keeping with the processes as determined by the WBP. The confidential information disclosed to the SAPS by Mr Mayisela was done without authority nor in accordance with the PDA.

4. As outlined above, negative media coverage escalated over the past few years. External parties have had access to confidential information and placed it in the public domain. General Holomisa was also provided with much of the information, which was integral to his allegations against the PIC. Certain parties that appeared before the Commission were critical of the PIC and how it had handled the leakage of its information. Among these, the Association for Monitoring and Advocacy of Government Pensions (AMAGP) and Congress of South African Trade Unions (COSATU), organisations that have a direct interest in the funds managed by the PIC, expressed unhappiness with losses that the PIC had allegedly incurred, as per evidence placed before the Commission.

5. AMAGP’s key complaints against the PIC related to the various transactions that had attracted controversy such as VBS losses, the R5 billion loan to Eskom and the Harith/Lebashe transactions. They accused the PIC of lack of accountability and transparency.

6. COSATU accused the PIC of looting pensioners’ funds and claimed that they had lost faith in the PIC and demanded that labour federations have representation on the Board of the PIC.

7. Inevitably, the information leaks have fueled negative public and stakeholder perceptions about the PIC, which has in turn impacted negatively on the integrity of the PIC, denting the confidence in it by key stakeholders and clients.

8. The extent to which the PIC’s Board of Director’s Code of Conduct and Code of Ethics Policy have been breached, as per the testimonies presented to the Commission, and the widespread concerns raised by the general public and stakeholders with regard to the functioning of the PIC – at both Board and Executive level – makes it is clear that confidence in, and the integrity of, the PIC have been impacted negatively.

9. From evidence presented before the Commission, there is no doubt that the effective functioning of the PIC, at all levels, has been negatively affected by the events of the past two to three years. From receipt of the first James Nogu email on 5 September 2017, the PIC has been severely affected. This is reflected in the resignation letter of Dr Manning to the then Minister of Finance Nene, dated

22 July 2018, wherein she states: ‘I would urge you, as the shareholder representative of the PIC, to act swiftly to introduce stability and restore public confidence in the PIC …’.37

10. In the aftermath of the Nogu emails, the representative of the shareholder of the PIC, the Minister of Finance, Minister Mboweni, was called upon to intervene. This resulted in the Finance Minister commissioning the Budlender report.

11. The Board experienced deep divisions on how to deal with the issue of the CEO, Dr Matjila, in relation to the allegations contained in the emails and what action should be taken.

12. The functioning of the Board was significantly affected, particularly in 2018 when General Holomisa launched litigation to have Dr Matjila suspended.

13. Individual members of the Board resigned at various times. The Board, as a whole, offered to resign and the Minister of Finance, Mr Mboweni, ‘advised’ the members of the Board, through its Chairperson, Deputy Minister Gungubele, to resign.

14. Ultimately, the Board resigned on 1 February 2019 and a new interim Board was appointed to serve from 12 July 2019. Investigations, including various disciplinary charges, were instituted that resulted in a number of senior executives of the PIC losing their jobs.

15. At present, the PIC has a substantial number of executive heads in acting positions, including acting positions for the CEO, CFO, heads of legal, risk and others. The staff at the PIC operated under extremely difficult circumstances during these times, but they have largely continued to execute their duties in a professional manner.

16. The Commission finds that confidential information was disclosed to third parties without the requisite authority. This was neither in accordance with the PDA of 2000 nor in keeping with the PIC’s own whistle-blowing policy.

17. This unauthorised disclosure of the PIC’s confidential information impacted negatively on the integrity and functioning of the PIC. Major reputational damage has been done to the PIC. It is apparent that while codes and policies to address ethics and values were developed and put in place, they were not respected in many of the practices followed at the PIC.


18. The Commission recommends that the Board must review the codes and policies that address ethics, values and whistle-blowing, examine why they have not been effective and put in place appropriate measures to enhance the value system adhered to by all employees, including management, the executive and directors of the PIC.

19. The PIC should take measures to ensure that directors, management and employees at all levels know, espouse and live the values and policies of the PIC.

20. Initiatives and induction for all new employees and/or Board members should be reviewed and strengthened so as to embed the values and ethics of the PIC into the culture of the organisation. This should include the protection of information and the imperative to always carry out duties and responsibilities with integrity.

21. The Board will need to take appropriate measures to rebuild trust, confidence and integrity both internally and with clients and stakeholders, as well as with the business sector and the general public.


Whether the PIC has adequate measures in place to ensure that confidential information is not disclosed and, if not, to advise on measures that should be introduced;’

1. As indicated in ToR 1.7 above, the PIC has implemented various measures to safeguard its confidential information. These measures are embedded in the Corporate Affairs Department, employee contracts, Information Technology (IT) policies and procedures and also include reference and adherence to relevant legislationThe PIC requires physical space to secure information in its physical form, such as printed documents, as well as the ability to ensure the physical security of its hardware and IT systems; in other words, essentially all elements of IT security. There is no suggestion that physical space for these purposes is inadequate.

2. IT security is found in the following policies of the PIC.

2.1. Acceptable Use Policy;

2.2. IT Disposal Policy; and

2.3. Third Party Management.

3. In relation to whether any of the abovementioned measures were breached, it should be noted that from August/September 2017 the PIC experienced unprecedented instances of leaked information. The first occurred on 5 September 2017, namely, the Mobile Satellite Technologies (MST) investment and allegations regarding Dr Matjila’s romantic involvement with Ms P Louw. For purposes of this ToR, it is important to trace the events relating to this leak:

3.1. The message emerged from an external email address in the name of ‘James Nogu’ (Nogu).

3.2. The message was sent to a number of people, including Board members of the PIC and National Treasury officials.

3.3. It is not clear how the sender –

3.3.1. obtained the email addresses of the people to whom the message was sent;

3.3.2. obtained the information contained in the body of the email; or

3.3.3. obtained access to the document attached to the email, which was about the Pan African Infrastructure Development Fund (PAIDF, but referred to as PADF).

3.4. It appears that the anonymous sender obtained access to internal information of the PIC and sent it to the parties he/she desired. There are, seemingly, three possible means by which ‘Nogu’ could gain access to the information:

3.4.1. Irregularly breaching the IT systems of the PIC by exploiting the vulnerabilities therein, essentially hacking into the systems; or

3.4.2. Internal parties at the PIC with access to the information providing that information to ‘Nogu’; or

3.4.3. Being provided with illegal access to the IT system by unknown internal parties such that the information could be directly accessed by ‘Nogu’.

4. Ms Menye testified that there was no hacking of the IT systems during the time of the leak. In her statement, she said the following:

‘24. He then enquired whether there was anyone who would like to say something. Mr Deon Botha raised his hand and he said that he does not believe that we were hacked, Mr Botha indicated that whoever has been sending those emails has that information. I also raised my hand to clarify that what was contained in the email, which I had seen is far from hacking. I then explained what hacking is. I also indicated that the information that was contained in the email by the looks of things appeared to come from someone who has been "drinking coffee from the same cup and eating from the same plate with Dr Dan". I also clarified that the systems of PIC do not

store such personal information.’38 (Emphasis added).

5. It is difficult to ensure protection against this form of breach since the means to enable a contravention have, in all likelihood, been provided by internal parties.

6. The PIC’s IT team responded as follows to the breach:

6.1. Further dissemination via the PIC IT system was blocked.

6.2. Steps were taken to investigate employees of the PIC who had access to and/handled the information that was leaked and whether they may have sent or delivered it to external parties.

6.3. Steps were taken to identify the domain source of the emails and to establish ‘Nogu’s’ identity so as to halt further leaks.

6.4. The contents of the email were investigated to establish whether policies of the PIC were flouted and any legislation contravened. The Board mandated the Internal Audit Department to investigate the matter and later appointed an external and independent Counsel, Advocate G. Budlender SC, to investigate the veracity of the allegations contained in the email.

7. From the above, it appears that the PIC had put in place a reasonable level of protection for its information. Notwithstanding such policies, collusion between internal parties in breach of policies, practices and laws, or collusion between internal and external parties, is very difficult to prevent.

8. Securing information is clearly a multi-dimensional undertaking and since the leaks the PIC has moved to strengthen its protection measures in the following way:

8.1. It took action immediately after the leaks. The then CEO, Dr Matjila, indicated at the hearings that the PIC had commissioned an investigation into options to strengthen the IT protective environment. He stated that the action and future plans, recommended in the resulting report, are being implemented.

8.2. There is an on-going effort to finalise a comprehensive classification of the PIC’s information so that various levels of access can be designated, accordingly.

9. The current and planned measures for the protection of the PIC’s information are wide ranging and among best-in-class levels. The successful implementation, monitoring and regular review of the measures are essential steps to ensure ongoing effective protection that is able to adapt to the rapidly changing world of IT systems. This must include vulnerability awareness programmes for all employees at all levels, an improved overall control environment and ensuring that a suitable IT system is put in place for unlisted investments.

10. The PIC is intent on strengthening the protection of its information and aspires to have a high-level state of security in the next few years. Security remains a moving target. The PIC has taken significant steps to address the vulnerabilities identified and to create a greater awareness among all employees. It has committed to assigning responsibilities for information security, enhancing the capacity of the IT teams and implementing a security strategy that focuses on key areas the Board and Executive have identified.

11. The Commission finds that the PIC had reasonably good information protection policies in place prior to the leaks, which policies did not allow the type of action taken by those parties who deliberately chose to leak information and documents. Policies that were in place include the Acceptable Use policy, the IT Disposal Policy and the Third Party Management Policy that covered key aspects of the PIC’s IT resources.

12. The parties who participated in the leaks appear to have simply taken the information to which they had access and provided it to third parties.

13. Besides admitting that he stole and was given PIC information, Mr Mayisela misused the super-administrator rights enabling him full access to the whole of the PIC’s IT systems. He did not need to and did not, in fact, hack the system.

14. The PIC is instituting comprehensive measures to protect its information from current and possible future threats.


15. Clearly defined and enforced classification of information will enhance the security of sensitive information.

16. The Commission recommends that the PIC should continue to strengthen its information protection measures. Appropriate measures on how to classify and declassify information should assist with security of information and enable the detection of leaks with more certainty. The IT systems should be state of the art and regularly updated in keeping with changes in technology, including the capacity to deal with cybercrime.

17. The Commission further recommends that the PIC manual systems that are still in use must be automated as a priority. The PIC should develop an ethical, transparent and value-driven culture and ensure that employee disputes are fairly and quickly addressed.

18. Investments in IT security systems and human resources should continue to be made and the PIC should live its values of integrity, empathy, accountability and respect to ensure a workforce that pulls together.


‘Whether measures that the PIC has in place are adequate to ensure that investments do not unduly favour or discriminate against –

1.10.1 a domestic prominent influential person (as defined in section 1 of Financial Intelligence Centre Act, 2001 [“FICA”]);

1.10.2 an immediate family member (as contemplated in section 21H(2) of [FICA]) of a domestic prominent influential person; and

1.10.3 known close associates of a domestic prominent influential person.

1. The term ‘domestic prominent influential person’, as referred to in ToR 1.10 is more self-descriptive and unambiguous than PEPs (but will be used interchangeably with the latter term), is defined in section 1 of the Financial Intelligence Centre Act, 38 of 2001 (FICA), as a person referred to in Schedule 3A of the FICA.

2. Schedule 3A of the FICA, in turn, defines such persons, through a comprehensive list, as individuals who hold ‘a prominent public function’, ‘including in an acting position for a period exceeding six months, or has held at any time in the preceding 12 months, in the Republic’: in national, provincial and local government, political leaders, traditional leaders, army generals, certain diplomatic officials, judges, as well as accounting officers, CEOs, CFOs and CIOs of entities listed in Schedules 2 and 3 of the Public Management Finance Act, 1999 and those appointed in term of section 54A of the Local Government: Municipal Systems Act, 2000, or in terms of section 80(2) of the Municipal Finance Management Act, 2003.

3. This fairly comprehensive list further includes executives, board chairs and audit committee chairs of companies that provide goods or services to a State organ worth a certain threshold fixed by the Minister of Finance; and head or executive of an international organisation based in the Republic.

4. In respect of the term ‘immediate family member’, section 21H(2) of the FICA provides, in relevant part, that it –


the spouse, civil partner or life partner;

the previous spouse, civil partner or life partner, if applicable;

children and stepchildren and their spouse, civil partner or life partner; parents; and

sibling and step siblings and their spouse, civil partner or life partner.’

5. Whilst the list in Schedule 3A of FICA (relating to the term “domestic prominent influential person”) is fairly exhaustive, section 21H(2) (in relation to the term “immediate family member”) is not, because of the use of the word “includes” in the latter provision, which implies that the ensuing list is not exhaustive.

6. The self-contained test for the adequacy of the measures, discernible from ToR 1.10, is that such measures: ‘ensure that investments’ neither ‘unduly favour’ nor ‘discriminate against’ the class of persons in question.

7. As one of the largest asset managing companies in the country, wholly owned by the State (represented by the Minister of Finance), that manages a diversified investment portfolio comprised of multiple asset classes spanning all sectors of the South African economy, the PIC is vulnerable to the challenges concerning Politically Exposed Persons (PEPs). Dr Matjila in his evidence stated that ‘[w]ith funds exceeding R2 trillion the PIC is a very tempting piggybank for many.’39 He referred to the adverse influence of politics on the PIC, stating that the PIC received a barrage of funding proposals from politically connected people across political formations.

8. However, despite the barrage of proposals that the PIC receives from politically connected persons, and because of the ‘PIC’s stringent compliance practices,’ Dr Matjila testified that many of such proposals ‘have not been fruitful.’40 The ‘stringent compliance practices’ referred to by Dr Matjila include the PIC policies relating to PEPs, which, inter alia, stipulate that once PEPs are identified, an enhanced due diligence be conducted in transactions involving them.

9. Dr Matjila confirmed that whilst there are proper measures in place as part of the internal PIC ‘process’, that ‘access’ pressures is something that still has to be dealt with. Such ‘pressures’ are ascribable to the reality of the PIC’s unique position as a state-owned asset manager.

10. The Commission also heard evidence that the PIC has a plethora of policies that form part of the regulatory framework within which it operates. Ms Wilna Louw (Ms Louw), the PIC’s Acting Company Secretary, in her capacity as custodian of the PIC’s policies and records, stated that the PIC’s policies and procedures are designed to influence, determine and guide all major decisions and actions.’41

11. When Mr Roy Rajdhar (Mr Rajdhar), the Executive Head for Impact Investing, who heads the Private Equity, Impact Investing and Unlisted Properties subdivisions, gave evidence before this Commission on, inter alia, the investment process, function and operation of his division, the two main points that emerged from his evidence were that the PIC PEPs policy is continually being improved to respond to the needs of the PIC and that the PIC adopts a broader understanding of PEPs to include people who are known to be ‘politically aligned’ from reports in the public domain. This encompasses more than ‘known close associates’ and it thus provides for a more effective policy framework governing the risks associated with PEPs.

12. The PIC’s PEPs policy is titled the ‘Unlisted Investment Isibaya Fund: Policy on Treatment of Politically Exposed Persons’ (the PEPs Policy) and is dated May 2014 and was reviewed by the Investment Committee in December 2014.

13. Dr Matjila stated the following in relation to the underpinnings and purpose of the PEPs Policy:

… The politically exposed persons policy, it’s actually derived from the law, this law that deals with politically exposed person, I think it’s under FIC. So we have taken that and crafted a politically exposed persons policy that allows us to do deeper due diligence on the parties spends in any transaction, if there are politicians, we need to understand their sources or finance, delve deep into . . . the relationships that they have . . . so that we ensure that the political reputational risk exposure on the PIC’s side resulting in this transaction is minimised if not eliminated.’(sic) 42

14. These are some the main features of the PEPs Policy:

14.1. The PEPs Policy defines PEPs as ‘Natural persons who are or have been entrusted with prominent public functions by a domestic or foreign country, their family member, relatives, persons known to be close associates of such persons, or trusts and other juristic persons over which they practice control.’43

14.2. The definition list setting out who is regarded as PEPs by the PIC, casts the net wider than Schedule 3A of FICA. By way of illustration, it is not only confined to leaders of political parties, but to members of parliament and of provincial legislatures, senior government officials, including local government officials. In relation to the judiciary, it extends its reach beyond just high court judges, to include Magistrates and even State prosecutors. It further includes labour group officials (i.e. trade union officials) and executives of State-Owned Enterprises.44

14.3. The PEPs Policy further adopts, as wide as possible, definitions in respect of family members and associates of PEPs. This widening of the definitions, however, is at best precautionary as the aim of the policy is not to exclude, but to invoke enhanced due diligence investigations into PEPs, their family members and associates.

14.4. In defining the mischief to which it is directed, namely risk, the PEPs Policy provides that ‘[r]elationships with PEPs can culminate in increased risks for the PIC due to the possibility that individuals holding such political positions may misuse their power and influence for personal gain or advantage of family and/or close associates.’45 It further sets out the reasons why PEPs are screened. Its focus is on the PIC’s business relationships where PEPs are counterparties.46

14.5. It defines the purpose of the policy as the regulation of all investment activities of the Isibaya Fund and ensuring that they comply with acceptable ethical norms and standards. ‘It seeks to manage the resultant reputational and related risks that the PIC and its clients may become exposed to, by virtue of such relationships.’47

14.6. The objectives of the policy are to combat corruption, ensure that the PIC adheres to statutory requirements and best practice. The further objectives are to bring about consistency in the treatment of PEPs and to ensure equity, fairness and transparency whilst also mitigating the risk for the PIC.48

14.7. Although the primary responsibility for the PEPs Policy is that of the CEO, it is also the joint responsibility of all PIC employees and directors without exception, and a breach of the policy constitutes misconduct.49

14.8. The PEPs Policy has features similar to an operations manual that sets out what “markers” to look for in client due diligences to identify PEPs. It, inter alia, sets out what an enhanced due diligence is and when to do it and provides for enhanced on-going monitoring of PEPs related transactions and the keeping of a PEPs database.

14.9. The PEPs Policy sets out ten policy principles on which it is based, such as that ‘Senior management shall decide on the circumstances under which PIC may reject establishing a business relationship with a PEP’: under which principle, it is provided that the intention is not to give reasons for declining transactions involving PEPs, but to ensure that preventive measures are adopted.

15. During Dr Matjila’s testimony, the Commission heard evidence affirming that there is no blanket exclusion of PEPs in transactions at the PIC. He confirmed that, in fact, the PEPs Policy prohibits discriminating against PEPs. In part, this accordingly meets the test under ToR 1.10 for the adequacy of PIC measures, in that the PEPs Policy does not discriminate against PEPs in investments.

16. Dr Matjila also testified that one of the important purposes of the PEPs Policy is the scrutiny and transparency it brings concerning the transactions involving PEPs.50 The Commission further heard evidence on how the pragmatic and combined use of the PEPs Policy, in tandem with the deal screening committee and appeals made to the Chairman of the PIC board, Deputy Finance Minister, Mr Mcebisi Jonas, during meetings, were used to manage some of the pressures from and interferences of politicians. Dr Matjila testified, in another context, about how he raised the PEPs Policy with the then Chairman of the Board, Deputy Finance Minister Gungubele, when the latter castigated him about a certain deal.

17. It should be noted that PEPs were directly involved in a number of the transactions that came under scrutiny before this Commission.

18. The Commission finds that, as a measure directed at addressing the risks associated with PEPs, weaknesses in the PEPs Policy creates the opportunity for abuse and poses a real and on-going risk for the PIC that needs to be addressed.

19. Moreover, the practice, or implementation, of the PEPs Policy as reflected in the actions of Dr Matjila, shows a total a disregard for the policy on PEPS. These are dealt with in the section addressing ToR 1.1 contained in Chapter III.


20. The Board should review, in its entirety, the PEPs policies, taking into account the information presented to the Commission on the weaknesses in practice when implementing the PEPS policy.

21. The Commission recommends that the Board, through the proposed Risk Committee, should ensure oversight and evaluation of the effective implementation of a revised PEPs Policy on a regular basis.

22. The Lancaster/Steinhoff transaction, the Harith/PAIDF investment, the Sakumnotho/Kilicap Tosaco and Ascendis transactions are illustrations of the weaknesses of the PEPs policies in practice.


Whether there are discriminatory practices with regard to remuneration and performance awards of PIC employees.’

Whether there are discriminatory practices with regard to remuneration and performance awards of PIC employees.’

1. Consideration of discriminatory remuneration and performance practices in the PIC needs also to take account of allegations of victimisation, as victimisation also manifests itself in remuneration practices, bonus payments, balanced scorecard assessments, bias in promotions and opportunities for advancement as well as exposure to opportunities that enhance experience and expertise. Therefore, this term of reference needs to be read in conjunction with ToR 1.12, below, which addresses the question of victimisation.

2. The evidence given to the Commission was from a range of very senior PIC employees, many of them having attained positions of leadership, including being Executive Heads of functions and departments. The issues raised, including the level of non-participation in the climate survey, reflects deep- seated discontent, mistrust, a strong sense of grievance and being treated unfairly.

3. The lack of transparency in the process followed by the moderation committee, poor communication to employees and the exclusion of executive management from the various decision-making and evaluation processes has led to a breakdown of trust between employees and management, as well as between executive management, the executive directors and the Board.

4. The responses of those in positions of responsibility for the HR function, both Mr Pholwane and Ms More, were defensive and dismissive.

5. The actions of Minister Mboweni and National Treasury created confusion and uncertainty among employees and appear to violate the remuneration policy of the PIC and its contract with PIC employees.

6. The Commission finds that there are discriminatory practices with regard to the remuneration and performance awards of PIC employees.


7. In the light of the above and in view of the shareholder instruction to retrospectively cancel bonuses, it is recommended that Shareholder proposals should be prospective, not retrospective, and the Shareholder Compact should be agreed on for a defined period, for example three years, and then reviewed to reflect proposed changes.

8. Furthermore, Shareholder intervention should be fair, taking account of the agreed policies and agreements that the PIC has in place with its employees.Dates for payment of bonuses, short term investments and long term investments should be communicated at the start of each year to provide the necessary certainty to all employees.

9. The Commission further recommends that the Board of the PIC should ensure greater transparency, fairness and inclusiveness with regard to salaries, grading, performance criteria and balanced score card assessments.

10. Performance balanced score cards should be relevant to the work performed and the incentive policies and should not be used as a tool or implicit threat to ensure a compliant or subservient employee.

11. The Board should take steps to rebuild staff morale through fairness in performance assessments, remuneration and certainty regarding the bonus policy.

12. The moderating process needs to be transparent, the principles applied clearly set out, and the outcome, including any changes, whether positive or negative, timeously discussed with each employee individually. Similarly, the remuneration and incentive policies of the PIC should be transparent, clearly communicated and adhered to.

13. The Board of the PIC should institute a new climate survey to be conducted within a month of the appointment of the new PIC CEO in order to form a base line from which to measure progress in the organisation.

14. An independent professional body should be commissioned to review the re- grading process and its outcomes. It should be appointed by the Board and finalise its report by the end of April 2020. The Board also needs to urgently address the level of misinformation and distrust that prevails in the PIC.

15. Mr Pholwane should be the subject of disciplinary action for his alleged improper conduct in falsifying the results of the second climate survey, thereby misleading his senior management, as well as the Board. If the above allegations are true, his conduct was dishonest, misleading and seriously undermined the functioning of the PIC.

16. It is clear that on Ms More’s watch many of the critical areas so vital to the functioning of the PIC have developed very serious problems. These include:

16.1. Remuneration;

16.2. Grading;

16.3. Performance evaluation and incentives; and

16.4. Work culture experienced by the employees.


‘Whether any senior executive of the PIC victimised any PIC employee.’

1. The evidence before the Commission presented by employees and previous employees was very clear in that employees alleged victimisation by senior executives of the PIC, in particular the former CEO, Dr Matjila, the CFO, Matshepo More and to a lesser extent the Executive Head: Human Resources, Chris Pholwane.

2. The former CEO, Ms More and Mr Pholwane all denied these allegations in their testimony before the Commission.

3. The fact that there existed a culture of fear and victimisation within the organisation even before 2015, has been established independently and objectively by external service providers in what is called a ‘climate survey’.

4. Some of the pertinent findings of the climate survey presented to the PIC Board were as follows:

4.1. Fear culture and not unified;

4.2. Lack of strategic direction;

4.3. Management by fear and poor people management;

4.4. Management does not have employees’ best interest at heart;

4.5. Blame shifting and poor decision-making abilities;

4.6. Do not address problems; and

4.7. Moving goal post.’51 (sic)

5. Various senior employees testified to being victimised by Dr Matjila, Ms More and Mr Pholwane.

6. The modus operandi allegedly followed by the perpetrators, in most cases, was to make use of a so-called whistleblower report accusing the employee of some or other impropriety. This would inevitably be followed by a disciplinary hearing and eventual dismissal. The exception was Ms Menye, who was initially charged with leaking information to third parties that resulted in the infamous James Nogu emails accusing the former CEO and CFO of impropriety. Ms Menye was eventually, before the start of the disciplinary hearing, offered a severance package which she signed under duress.

7. The alleged victimisation was direct and/or indirect. The ‘victim would be told to his/her face that he/she is not wanted in the organisation’ or indirectly by excluding him/her from meetings or by way of manipulation of remuneration and/or exclusion from eligibility for short and/or long-term incentives. The other method used was to promote a more junior employee over the head of his/her senior, to whom he/she was reporting. This promotion method was used in the risk and legal department with devastating effect on the morale in the two departments.

8. A serious concern is that a number of the Executive and Board members who testified before the Commission appeared to be totally unaware of the culture of fear and victimisation in the organisation. The culture of an organisation is set from the top, yet a number of the Board and executive directors (the CEO and the CFO) appeared to be totally out of touch with the prevailing climate of fear and the culture of victimisation in the organisation. The CEO conceded, however, at least in respect of the CFO, that she was the main role player accused of victimisation; that he realised this and made an attempt to ’coach’ her. It was for this very reason that an employees’ union was established at the PIC and as at September 2019, the union represented more than 60% of the workforce at the PIC. In the Commission’s view, the probabilities are overwhelmingly in favour of the employees’ version that there was a culture of fear and victimisation in the PIC.

9. The Commission finds that senior executives at the PIC abused their positions of trust and responsibility and victimised employees, contributing to a culture of fear that existed, and to some extent still exists, at the PIC.


10. The Commission recommends that the new Board should address the matter urgently and take corrective measures to rebuild confidence and trust in the PIC executive, Board and processes. Such measures should include the following:

10.1. Open discussions on the results of a new climate survey that should be conducted within three months of the appointment of the new PIC CEO;

10.2. An internal communication programme ensuring awareness among all staff of signs of bullying, abuse of office and misuse of promotions/incentives/salary increases or performance assessments to intimidate employees;

10.3. Providing a safe platform for employees at all levels to raise their concerns.

10.4. A leadership and management programme for all incumbents who hold managerial positions to strengthen their skills.

10.5. Implementing a mentorship programme, using both internal and external mentors, to strengthen leadership throughout the organisation.

10.6. Ensuring an appropriate coaching programme is in place, and both mentorship and coaching must be compulsory for all executives and senior management.

10.7. Putting in place programmes and activities that will build a core leadership team effective across the different levels of management.


‘Whether mutual separation agreements concluded in 2017 and 2018 with senior executives of the PIC complied with internal policies of the PIC and whether pay-outs made for this purpose were prudent.’

1. Two cases were specifically dealt with affecting two senior executives, who are both Executive Heads of the Information Technology (IT) department of the PIC, namely, Ms Vuyokazi Charity Menye (Ms Menye); and Mr Luyanda Ntuane (Mr Ntuane).

2. Witnesses alleged that Ms Menye knew, but did not inform the PIC, that Dr Matjila was under investigation by the police for corruption and also that she gave super-administration rights –which was in breach of PIC IT policies and access rights policies - to Mr Mayisela who went on to use them for unauthorised purposes. As such, Ms Menye was due to face disciplinary action and possible dismissal.

3. Given that the ToR specifically mentions the years 2017 and 2018, the Commission shall inquire into, and make findings and recommendations only in relation to Ms Menye; and utilize the matter of Mr Ntuane for comparison purposes.

4. From the inquiry and discussions set out in the Report, it is found that, by entering into the Mutual Separation Agreement (MSA) with Ms Menye, the PIC did not comply with its internal policies because there was no written DoA for Mr Pholwane to sign the MSA and verbal authority was not appropriate. Mr Pholwane should not have signed the MSA as only the CEO is authorised to do so.

5. This deviation by management did not receive any ratification from higher bodies of the PIC, in particular the Information, Communications and Technology Governance Committee (ICTGC) and Audit and Risk Committee (ARC). Though the MSA was reported to the Board, it did not specifically seek ratification as per the minutes of the joint-committee meeting that was held a week following the conclusion of the MSA between Ms Menye and the PIC. Instead, it was presented to the Board meeting for information purposes only.

6. In terms of the 29 month guaranteed salary paid to Ms Menye, the amount was not in accordance with PIC practice as it is significantly above previous amounts paid. On his own version, Mr Pholwane indicated that the amount was excessive and out of the ordinary and no evidence to the contrary was offered by others, including Dr Matjila.

7. Typically, and as confirmed by Mr Pholwane, MSAs signed by corporations usually do not exceed 6 months’ salary. As such, the MSA between Ms Menye and the PIC was ‘precedent setting’ and could not be justified.

8. The MSA is found to be invalid. It should not have been concluded and accordingly, Ms Menye was still supposed to be an employee of the PIC.

9. Dr Matjila breached PIC policies by authorising Mr Pholwane to sign Ms Menye’s MSA and Mr Pholwane should not have acted on his instructions as they were not in writing – contrary to the PIC’s policies

10. It should be noted that, subsequent to the Commission’s hearings, and after seeking legal advice, the (previous) Board decided to reinstate Ms Menye. However, the Board’s proposalwas not accepted by Ms Menye.

11. However, the PIC has alleged that Ms Menye knew, but did not inform the PIC, that Dr Matjila was under investigation by the police for corruption and that she gave super administration rights, especially without limitations on scope and duration – not in keeping with the PIC IT policies and access rights policies - to Mr Mayisela who went on to use them for unauthorised purposes.

12. The extensive use of disciplinary hearings is disturbing and should be cause for concern to the Board and the HRRC, particularly given the number of very senior employees that have been ‘disciplined’, suspended and/or dismissed.

13. It is therefore recommended that the PIC should have a policy on MSAs, which sets out the process to be followed during the negotiation of an MSA and provide guidelines for settlements in terms of pay-outs to be made.

14. The PIC must also ensure that when an authority to execute a decision is delegated, such instruction must be in writing and appropriate to the level of decision-making required. A verbal instruction on significant matters is not acceptable practice.

15. DoAs should be respected and adhered to. If, for any reason, they are not appropriate, inadequate or in conflict with practice, amendments should be considered.

16. Due to the fact that the MSA of Ms Menye was invalid, the monies paid to Ms Menye in terms of the MSA must be returned to the PIC within a month of the publication of this Report.

17. The PIC is to investigate the conduct of Ms Menye in terms of the improper granting of super-administration rights to Mr Mayisela. The same applies to Mr Pholwane in relation to his alleged improper conduct in signing Ms Menye’s MSA without the requisite authority.

18. Mr Pholwane’s conduct and role as EH:HR in relation to the allegations of victimisation against him must be reviewed and concluded within three months of the publication of this Report.

19. The Board, through its HRRC, must undertake a comprehensive review of the use of disciplinary processes in the organisation.


‘Whether the PIC followed due and proper process in 2017 and 2018 in the appointment of senior executive heads, and senior managers, whether on permanent or fixed-term contracts’

1. The key allegations centred on issues affecting two executives, namely Ms Rubeena Solomon (Ms Solomon), who was appointed Executive Head (EH) of Investment Management from 1 September 2017, and is a senior executive head; and Mr Adrian Lackay (Mr Lackay), who was appointed to the position of investor relations from 2 April 2018 and is a senior manager.

2. The statement of Executive Head of Risk, Mr Paul Magula, states:

‘58. Appointment of certain staff members done without following a transparent recruitment process.

58.1. Ms. Rubeena Solomon was appointed as an Executive Head: Investments Support, without approval of organizational structure changes, advert and interview process. PIC did not have staff promotion policy unless if I did not know or was established after I was dismissed.

58.2. Mr. Adriaan Lackay was appointed in the Department of Communications without an advert and interview process.’ 52(sic)

3. The history of Ms Solomon’s appointment as executive head goes back to 2015 when the PIC engaged in a restructuring process. The 2015 restructuring process created major changes in the functioning of the PIC, including changes to executive and other staff positions. From the documentation provided by Mr Pholwane, the restructuring process was approved by the relevant authorities, including the Human Resources and Remuneration Committee (HRRC), the Board and the Minister of Finance as the shareholder representative. Thus, the assertion by Mr Magula that there was no approval of the restructuring is not correct.

4. A further review of the structure took place in 2017 and was approved by the Board and the Shareholder as per the documents provided by Mr Pholwane during his testimony. This also affected Ms Solomon’s position as Mr Pholwane indicated:

‘…the position of General Manager: Investment Management was reviewed and enhanced to Executive Head: Investment Management. This then meant that the position of GM: Investment Management was redundant. The incumbent for the GM: Investment Management position was then absorbed [in]to the position of Executive Head: Investment Management.’53

5. However, according to PIC policy, positions for new appointments have to be advertised to afford suitable candidates an opportunity to apply. Mr Pholwane said that the PIC does at times opt to give internal candidates a chance to fill positions before seeking external candidates.

6. Typically, the position is advertised, and the subsequent recruitment process follows as per steps 1-5 of the recruitment and selection process. It entails shortlisting, interviewing and selection of candidates. Mr Pholwane said Ms Solomons was absorbed into the position on a permanent basis, and did not present any evidence of an advertising process.

7. The issues of company restructuring and redundancies of positions are regulated by section 189 of the Labour Relations Act, 66 of 1995, where it is suggested, in subsection (3)(b), that before proposing dismissals on the basis of operational requirements, an employer must consider alternatives, which would include an attempt to employ redundant employees in alternative positions.

8. Section 16 of the Recruitment and Selection policy lays out the process for creating career development and progression for employees. Given that Ms Solomon appeared to be suitably qualified for the position, this could be interpreted as a promotion, but without following the agreed processes, the approach taken is open to interpretations of favouritism and exclusion of an opportunity for other internal candidates to apply for the position. This is all the more so given the significant salary increase that accompanied the new position.

9. The increase in remuneration of Ms Solomon of the order of R953 304.21 was the increase from her previous position to the new one, and as such, reflected the salary level that any incumbent in that position would have been paid.

10. Ms Petje herself was negatively affected by the restructuring as her position was rendered redundant. She was offered a position as an Environment, Social and Governance (ESG) analyst and from evidence presented to the Commission there is no indication that her managers offered her the position by following PIC processes of advertising and engaging in a competitive process, either internal or external.

11. In relation to Mr Lackay, he was appointed on a permanent basis in 2018 in a position of Investor Relations in the Corporate Affairs Department. According to the evidence of Ms Petje, Mr Magula and Mr Pholwane.

12. Ms Petje indicated that, before being appointed permanently in March 2018, Mr Lackay had been serving on a fixed term contract for 18 months at the PIC, effectively as a contractor. Section 13.6 of the Recruitment and Selection policy says these contracts ‘should follow the normal recruitment process’.

13. Regarding Mr Lackay’s permanent appointment, Mr Pholwane stated that PIC policies and processes were followed: the position was created by the restructuring and human resources processes; an internal advertisement process was complied with; there was a shortlist and in terms of the scoring process Mr Lackay was the best candidate on the list of three.

14. In terms of the increased remuneration for Mr Lackay, in the order of R331 200.00, the approvals from various bodies incorporated changes in remuneration for new positions that had been created. Various employees, including Mr Lackay, were awarded substantial increases in remuneration that accompanied their new positions and roles. Thus, this was within the PIC policy and process.

15. The Commission finds that the appointment of Ms Solomon as Executive Head: Investments Support appears not to have followed PIC policies and processes. She was ‘absorbed’ into the position. The position was not advertised, either internally or externally, and a competitive process was not conducted. Thus the Board should investigate if Dr Matjila, Ms More and Mr Pholwane breached PIC policies in approving her appointment.

16. The approach followed allowed for an interpretation of special treatment of some employees and unfair treatment or limiting opportunities for others, particularly given the substantial remuneration increases that accompanied such appointments.

17. The first appointment of Mr Lackay on a fixed term contract did not follow PIC processes. Thus Dr Matjila, Ms More and Mr Pholwane breached PIC policies in approving the appointment. However, the second appointment of Mr Lackay on a permanent basis followed PIC processes and all the prescribed procedures were followed.


18. The PIC has human resources policies and processes in place, and the Commission recommends that senior executives should follow these policies at all times.

19. It is further recommended that employees need to be, and be seen to be, treated fairly and equally. The inconsistent application of the policies has the potential for employees to feel their careers are limited due to favouritism.

20. Transparency, openness and visible fair employment and promotion processes and procedures are essential to ensure an environment of trust.

21. PIC HR policies should be reviewed by the Board HRRC on a regular basis and the Board HRRC should regularly evaluate senior promotions and appointments to ensure that they comply with policies, procedures and fair practices.

22. In respect of the potential irregular appointment of Ms Solomon and the first appointment of Mr Lackay, referred to above, it is recommended that Ms More and Mr Pholwane, who remain in the employment of the PIC, should be further investigated and, if appropriate, subject to disciplinary charges.


Whether the current governance and operating model of the PIC, including the composition of the Board, is the most effective and efficient model and if not, to make recommendations of the most suitable governance and operating model for the PIC for the future.’


1. Following the PIC investment in Afrisam (where the total investment by the PIC was R12,6bn in what, in essence, is a non-performing asset) and the restructuring that took place in 2013, the GEPF responded to the Afrisam crisis by ‘imposing a cap of R2bn on the amounts that the PIC could invest in a single asset in the future. Also, that any investments above that figure had to be approved by the GEPF54.

2. Mr Sithole specifically stated that, with regard to the Ayo transaction (dealt with above), and notwithstanding the limitations imposed on the PIC by the GEPF, the PIC did not involve or inform the GEPF when it considered and made the investment in Ayo, nor did it highlight the investment in its subsequent reporting to the GEPF, but only responded when the GEPF began asking questions. The PIC contended that they considered the Ayo investment fell under the listed investment DoA, a view that Mr Sithole strongly disagreed with and said that, while he could not pronounce on the legality of the action, it was certainly a breach of faith and trust.

3. Both Dr Matjila and Ms More confirmed that, notwithstanding the DOA requirement that, in many instances, agreement between them was to be obtained prior to a decision being made, they did not do so. They stated that this requirement was, however, met through various committee meetings. When asked about not contacting Ms More as required prior to the Ayo transaction approval, Dr Matjila said: ‘Ms More is in a similar situation as I am because we rely on advice from the technical people as they are the ones who do the work and make recommendations, so it was not necessary to ask her …55 However, he acknowledged that the DOA was not changed to reflect this practice.

4. Dr Matjila’s justification for investing in Ayo is moreover a post facto tailoring of facts and a dishonest one. He vacillated in relation to what authority he had been acting on when he signed the Ayo irrevocable subscription form. And there is no record of any other IPOs subscribed for in the manner he opted for in respect of the Ayo transaction, ie, without prior PMC approval.

5. Dr Matjila, when asked how he had dealt with the matters raised by the Investment Committee (IC) regarding the timing of Ayo and whether (the deal) was in line with the DOA … he replied: ‘I cannot remember … but I remember quite a number of them were dealt with by the team’56

6. Yet there is a conspicuous material non-disclosure in all reporting memoranda given throughout to the Board, GEPF and SCOPA regarding the process followed to approve the deal, in respect of his signing the irrevocable subscription form before PMC approval. Even after ‘ratification’, Dr Matjila failed to give full and frank disclosures on the process followed to approve the deal.

7. In the Steinhoff/Lancaster investment, the original proposal from Mr Naidoo was for an investment of R10,4bn, but this was reduced by the PIC to R9,35bn. When asked about the reasons for this reduction, Mr Vusi Raseroka, the PIC official dealing with Lancaster/ Steinhoff Project Sierra, responded: ‘I can only speculate that the reduction was to enable the transaction to fall within the mandate limit of the IC … which if exceeded would have resulted in the transaction going to the full PIC Board for approval’.57

8. With regard to the Steinhoff/Lancaster transaction (dealt with in 1.1), Dr Matjila confirmed that they had reduced the amount from R10,4bn to R9,4bn ‘to be in line with the Investment Committee mandate, so that they were able to approve it…’.58

9. A significant number of witnesses raised their concerns about time pressures to meet deadlines that compromised processes, valuations and the quality of due diligences being conducted. This is all the more concerning given that the PIC is the funder and the entity approached to consider whether to invest or not. The evidence indicated considerable irregularity, overruling of processes and improper sequencing of decisions including, by way of illustration, signing the irrevocable subscription prior to due process being followed in respect of the Ayo transaction59, in the name of making a quick decision. There can never be a justification for time constraints overruling the merits of investment decision- making being thoroughly interrogated.


10. The current operating model, depicted in the diagram below, which was adopted in 2015 after Dr Matjila became CEO, can best be described as a centralised operating model:

11. As depicted in the diagram above:

11.1. The PIC is a massive and complex organisation with more than R2 trillion in managed assets.

11.2. The scale of the operations of the PIC are akin to managing five large investment management businesses including equities, fixed income and private equity. On a standalone basis these would be some of the largest companies in their field.

11.3. The businesses are aided by departments that support investments such as Risk, Investment Management and Legal.

11.4. Departments such as finance, Human Resources (HR) and Information Technology (IT) complete the picture.

12. Thus, the PIC is an organisation with enormous operations under one roof and it is highly concentrated at the top (with the CFO and the CEO, who has the final say on investment related decisions).

13. In relation to governance, the Commission finds that confusion as to the role, functioning and responsibilities of the Board prevails. Non-executive board members have responsibilities and functions that blur the distinction between the role of a board and that of management.

14. Non-executive Board members fulfil decision-making functions by serving on, and chairing committees that make investment decisions.

15. Non-executive board members also serve on the boards of investee companies, as do executive members, impacting on fiduciary duties, conflicts of interest and where accountability lies.

16. In a number of instances, non-executives (and executives), who have been key figures in making an investment, then serve on that investee company board.

17. The dependency of the earnings of some non-executive board members from serving not only on the PIC Board and the required sub-committees, but also on various other boards and executive committees of the PIC, calls into question their status as ‘independent’.

18. There is ineffective oversight of decision-making and processes by the Board as they are an integral part of the decisions taken. It is not possible or appropriate to be part of overseeing decisions and processes that you have been part of.

19. The Board conducts inadequate risk oversight and assessment and approves inappropriate investee board representatives.

20. The frequent changes to the Finance Minister, who represents the shareholder with regard to the PIC, and role of the Chairperson of the PIC, being the Deputy Minister of Finance, appears to have significantly contributed to ineffective governance and the deficient functioning of the Board. Moreover, their appointment to such positions in the PIC was by virtue of the office they held, whether or not they had the appropriate skills, experience or expertise with regard to chairing and appreciating the functioning and business of such a critical organisation.

21. The reliance on Round Robin Resolutions to take major decisions is inappropriate. This approach completely disregards the benefits derived from engagement about decisions to be taken, processes to be followed and the rigour required to thoroughly interrogate investment proposals.

22. The violation of the MOI, with respect to the restructuring in 2015, was deliberately condoned by the Board, notwithstanding the impact it had on the composition of the Board and the significant enhancement of the power and influence of the two non-executive directors.

23. Minutes of formal meetings are kept. However, records of meetings and interactions of management at various levels are deliberately not kept. The evidence before the Commission showed repeatedly how who was being met, by whom and for what purpose was not recorded. This made who met, when and where, what was discussed and whether any promises or undertakings were made, impossible to validate.


24. In relation to the operating model, the Commission finds that the PIC is a large and complex organisation that needs to evolve and, in a way, be “broken up” or restructured to further enhance efficiency and accountability.

25. The PIC is like running 5 large businesses in one and these need to be delineated properly and managed for efficiency and effectiveness.

26. The decision-making processes are highly centralised and go all the way to the top with all the key decisions ultimately residing with the CEO. This clogs the system and needs to change.

27. The new operating model should consider decentralised decision-making, changing the structure and having focused management. It should consider the creation of three large specialist investment business units. This will hopefully result in better investment performance.

28. Decentralisation does have some drawbacks in terms of duplication and extra costs, but this can deftly be managed.

29. The investment decision frameworks will have to change, but the PMCs should stay.

30. It is important to note that the new model it likely to be more costly, thus the PIC will have to fund this through better investment performance, resulting in increased revenues over time to recoup the costs.

31. The areas of Risk, Legal and IT; Paper-based and spread-sheet based systems in PMV, Investment Operations and Unlisted Investments were identified as weaknesses at the PIC.

32. It has also been noted that the PIC outsources a lot of key capabilities and this might need to be brought in-house. This includes non-complex issues in the Legal department and also derivatives structuring in the SIPS department.

33. The Commission also finds that the old operating model served the PIC well in the past, but it appears to have run its course now that the PIC manages approximately R2 trillion in assets.

34. The PIC has been exploring a new model which seems to accord with good local and international models. It is recommended that the PIC mplements a model in keeping with its future strategies and culture.

35. The new model could involve major restructuring and the creation of units that in time could be managed on an autonomous basis with different sub-cultures and shared services, within a broader HoldCo. It needs to be emphasized that specialist asset classes will be separated and this is where investment decisions will be made and concluded.

36. The Commission further recommends that the PIC needs to overhaul the way it deals with directors that serve on the boards of investee companies and ensure proper oversight and management of conflicts of interest. The process of appointment, skills needed and the fees paid need to be examined to safeguard the interests of the PIC.

37. It is also recommended that round-robin resolutions should be undertaken in rare circumstances, especially for major decisions.

38. There should also be a limit, on a cumulative basis, on how much funds a sponsor can access from the PIC, especially when the sponsor’s companies are underperforming.

39. There should be more meaningful engagement between the PIC and its clients such as the GEPF.

40. The PIC should ensure that it effectively manages any subsidiaries and associate companies, should they be created.

41. Transactions undertaken and fees paid to advisors should be transparent and made public.

42. The PIC should attend to areas of Risk, Legal and IT, among other functions; it should also consider establishing a Legal Counsel office, distinct from the legal department, that advises the Board and Exco.

43. Paper-based processes in Unlisted Investments, PMV and Investment Operations should also be attended to.

44. The Commission has noted the lack of collaboration with stakeholders and a need to achieve more in ESG. This needs to be addressed.

45. There are also HR problems, such as acting positions, vacancies and issues with performance management, bonuses and salary adjustments. In this regard, the Commission recommends that the Shareholder Compact, signed on 7 July 2017, should be reviewed. The clause that requires the Minister of Finance to sign off on the awarding of incentives to all staff has contributed to the uncertainty around the bonus pool, the timing of bonus payments and the quantum thereof.

46. Furthermore, at present, the Shareholder Compact is an annual agreement signed between the PIC and the Minister of Finance representing the shareholder. It is recommended that the Shareholder Compact should be reviewed every three years, not annually. This would also align the Compact with the three-year horizon of the Corporate Plan. The role, expectations and responsibilities of both parties need to be clearly defined in such a compact.

47. The PIC should in-source key and basic skills, particularly in legal and derivatives restructuring, and outsource only complex matters where specialist skills are desired.

48. A cooling off period should be determined for former directors and staff that prohibits them from conducting business with the PIC or an entity established by it for a period of time, possibly 12 months.

Board Composition and Functioning

49. The legislative and regulatory framework governing the PIC should be amended to implement and/ or achieve the following:

49.1. Define the nature and responsibilities of the Board as being one of oversight, in keeping with best practice.

49.2. Ensure the appropriate Board committees are established with clear terms of reference and accountability.

49.3. Separate the Audit and Risk Committees, establishing a specific Board risk committee with clearly defined terms of reference and accountability.

49.4. Formalise requirements for technical skills, personal experience, knowledge and expertise as well as conflicts of interest.

49.5. Term of office of Board members should be a maximum of 3 terms of three years each.

50. It is further recommended that the PIC should develop and put in place appropriate policies for Board and management, regularly monitored and updated, as they relate to:

50.1. Compliance, including whistleblowing and procedures for raising concerns;

50.2. Anti-corruption, including polices on political engagement; payments or assistance to public officials and gifts and entertainment guidelines;

50.3. Intermediaries, including a review of the PEP policy and third-party due diligence requirements;

50.4. Political or other pressure;

50.5. Conflicts of interest;

50.6. Assessing and monitoring culture to ensure it is aligned with the company’s purpose, values and strategy;

50.7. Effective engagement with, and encourage participation from, employees; and

50.8. Overarching governance and board fees

51. In relation to the Chairperson of the Board, the Commission recommends that the ‘role profile’, expertise and personal qualities required of a Chairperson need to be formalised. In addition, the Chairperson needs to be independent and non- executive and he/she needs to have experience and expertise in Pension Funds, finance, markets as well as governance. It is also recommended that the term of office of the Chairperson is to be the same as those of other non-executive board members and the Deputy Minister of Finance should not be the PIC Chairperson.

52. With respect to Board appointees, the Commission recommends that they should go through an induction process dealing with clarity of fiduciary duties and role played if they sit on boards of investee companies. There should be a Service Level Agreement with investee companies as to the role of board members, independence vis-à-vis who is paying board members, clarity of policies and expectations.

53. The Board should also have the skills that are applicable to the PIC’s corporate governance, strategic and operational requirements.

Board selection process

54. The Commission recommends that the process of appointing the Board should reside with the PIC and the Directors Affairs Committee (DAC), and Board members should then be approved by the Minister, together with Cabinet.

55. The PIC, not National Treasury, should source new directors through various means including recruitment agencies and placing adverts in media platforms.

56. The PIC should follow a robust process in selecting Board members and should ensure that the individuals recruited possess the skills needed. Thereafter, this process and its outcomes, without impinging on confidentiality of individuals, should be made public.

57. Thus, the selection of the Board should not follow a full public process in parliament and the appointment of ‘political appointees’ should be avoided.

58. In the event that a full Board, as opposed to rotating members, has to be appointed, the Minister shall be required to utilise the CEO of the PIC to take the role of the Directors’ Affairs Committee and the CEO and the Minister shall follow the process outlined above.

59. Once the Board has been selected, the Board and not the Minister, should choose its own Chairperson.

60. The appointment of the CEO should also follow the current process whereby the Board leads the process and offers the selected name to the Minister to approve. If the Minister rejects the Board’s selection, the Minister should show good cause for that rejection.

61. The removal of directors of the PIC should not be at the whim of the Minister. The MOI says the Minister should offer reasons for removal to the Cabinet. This is not sufficient for the security of tenure of directors and these reasons should be immediately made public by the Minister.In the event that the entire Board is removed, the question of institutional memory arises and needs to be taken account of.

62. In terms of the Board subcommittees, given the complexity of the PIC, it is recommended that the Risk and Audit Committees should be separated and each stand alone.

63. The Information Communication and Technology Governance Committee (ICTGC) should be given greater weight in deliberations, ensure manual systems are replaced and keep modernising the technology environment of the PIC. It should also deal with digital transformation.

64. Given the changes proposed in the operating model, the IC will be the most affected of the sub-committees as it will have to concentrate on an oversight role as opposed to participating in investment decisions. Investment operations would likely be moved to specialist business units.

65. The PIC Board should concentrate on playing a strong oversight role and extricate itself from operations. The Board should thus strengthen rules on oversight – it should be a governance and not a management board.


Whether, considering its findings, it is necessary to make changes to the PIC Act, the PIC Memorandum of Incorporation and the investment decision-making framework of the PIC, as well as the delegation of authority for the framework (if any) and, if so, to advise.’

Shareholders compact

1. It appears that the annual engagement on the Shareholder Compact is onerous to the PIC and thus it is proposed that it be undertaken every three years. This will also create greater certainty, enable envisaged changes to be forward looking and lessen the burden on the PIC.

2. The Commission recommends that the Shareholder Compact needs to be reviewed to ensure certainty and clarity of roles, responsibilities and accountability.

Memorandum of Incorporation (MoI)

3. The Commission recommends that the PIC’s MoI should be evaluated afresh in keeping with GEPF requirements and the roles of CIO and COO should be reinstated. It is also recommended that the CEO, CFO and CIO should be ex officio board members.

4. Consideration should be given to both Risk and IT having executive roles at the same level.


5. Clarity on the primary mandate needs to be obtained – ensuring adequate funds through investment and contributions to meet both short- and long-term liabilities in a sustainable manner. This requires that the GEPF thoroughly review its financial position and the financial progress of the Fund to evaluate the appropriateness of the investment strategy currently in place, taking account of the nature and extent of liabilities.

6. There needs to be agreement between the shareholder, the GEPF and the PIC on what the benchmark return should be to maintain the Fund at a level agreed between the three parties. This should also help determine the investment strategy.

7. The secondary mandate – which includes promoting economic development – should be determined between the shareholder and the GEPF such that the PIC’s implementation thereof, including through a clearly defined developmental investment strategy, also meets the requirements of the primary mandate.

8. Effective monitoring and evaluation of investments should include a clear definition of what success is from the outset.

Delegation of Authority (DoA)

9. The DoA needs to be revised to ensure appropriate oversight and escalation.

10. The reserved powers of the Board, in its totality, need to be reviewed

11. The unintended consequences of the DoA need to be considered.

12. The Board, given changes to governance and the operating model, will have to revise the Reserved Matters and align them to the new reality.

13. The DOAs will also change extensively in so far as they cover various actions and approvals by parties within the PIC.

The Recommendations on the Amendment of Legislation

14. It is the view of the Commission that there needs to be an urgent redrafting of legislation relating to the PIC. The current PIC Act should remain in force until new legislation is promulgated.

15. The drafting of such legislation must take account of the PIC Amendment Bill that has been passed by Parliament, as well as the findings and recommendations contained in the report of this Commission. Such a process must ensure wide stakeholder engagement and consultation and should be a priority to be completed as soon as possible.

16. The Board should not have, as a legal requirement, to include representatives of labour and depositors such as the GEPF. Every Board member owes a fiduciary duty to the PIC and does not represent their own interests on the Board. Thus, proposals in the PIC Amendment Bill on this issue may need reconsideration.

17. To the extent that the Minister might include the above, the representatives of Labour and/or depositors should be appointed as individuals and contribute their experience and expertise in keeping with the needs of the PIC Board.

18. The proposal to have PIC clients, such as the GEPF, on its Board will create conflicts of interest as the GEPF must hold the PIC accountable regarding the implementation of its mandate and investments the PIC makes.

19. Consideration could be given to a director being appointed from National Treasury, as this could assist the Board’s understanding of the Government’s priorities relevant to the PIC. Should such an appointment be made, it should not serve as a substitute for formal meetings between the PIC and the shareholder. There would also need to be clarity as to where fiduciary duties lie.

20. In terms of Directives issued by the Minister, they could be tabled in Parliament for debate. Needless to say, the decisions should be rational.

21. In redrafting legislation, the terms of the PIC Amendment Bill should require the National Assembly to play a stronger role, particularly with regard to reporting requirements and public accountability. To ensure greater transparency, the PIC should provide more information to the relevant parliamentary committee and, where appropriate, the National Assembly, including with regard to strategy, mandate implementation, and performance on both listed and unlisted investments.

22. The PIC should ensure that the actuarial valuation report is presented to the appropriate committee within three months of its conclusion.

23. The PIC Amendment Bill expands and makes explicit the investments the PIC must make such as in manufacturing and local investments. Though well- intentioned, this is not appropriate and, if need be, broad parameters could be included in the GEPF Law or its mandate to the PIC.

24. The re-drafted PIC Act should consider what must be mandatory for the Minister to table in Parliament, for instance draft regulations, and must take into account comments arising from members of Parliament.

25. In terms of the FAIS Act, the PIC is required to meet its obligations in terms of this Act and the mandates it gets from clients.

General Recommendations

26. The Commission recommends that a Legal Counsel office needs to be established, which will be responsible to the Executive and the Board, and separate from the legal department, to ensure that the Board and executive operate within the law and best practice at all times.

27. Keeping records of meetings, including participants in such meetings, decisions taken and relevant, material matters should be standard practice and maintained for both formal and informal meetings.

28. Ensure segregation of roles between Board and management to avoid interference in operational matters

29. Independence of non-executive directors needs to be ensured and it must be considered what percentage of their income is earned from Board fees, and whether their independence could be compromised by a need to remain in the CEO’s/CFO’s ‘good books’ to ensure continued board and committee appointment.

30. Shareholder proposals regarding bonus pools or other HR matters, if not contained in the Shareholder Compact, should only be prospective, and not applied retrospectively, to ensure that contractual agreements with staff are not disregarded.

31. The PIC needs to be made future-proof to ensure that it can deliver on its mandate without undue interference, pressure or attempts at manipulation.

32. It is global best practice that with large asset managers, the CEO does not get involved in investment decisions. The CEO will then be in a position to hold investment professionals accountable for investment performance.


‘Whether the PIC has given effect to its clients’ mandates as required by the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002) and any applicable legislation.’

1. In considering whether the PIC has given effect to its clients’ mandates, the focus will only be on the GEPF given that it comprises 87% of the assets under management by the PIC and it is the client that has appeared before the Commission.

2. The GEPF approved an investment policy in 2007 and the GEPF Board of Trustees (BoT) approved an expanded developmental investment strategy in 201060. This recognised that the GEPF had a tremendous opportunity to make investments with positive economic and social benefits that had not been leveraged to the extent possible.

The Legal Relationship between the GEPF and the PIC

3. In a memorandum prepared by law firms Cliffe Dekker Hofmeyr and Adonisi Malapane Moletsane & Moloi Inc (AMMM) for consideration by the GEPF61 (the Memorandum), the following points are made:

3.1. The GEPF entered into an Investment Management Agreement (IMA) in June 2007 with the PIC, in terms of which the PIC was appointed as an investment manager of the GEPF and is required to act within the investment policy of the GEPF.

3.2. The actions of the PIC are explicitly limited to the parameters of the GEPF investment policy.

3.3. The PIC must ‘manage the investment portfolio as a fiduciary in the utmost good faith, and with the due care, diligence and skill which is to be expected of any expert investment manager, and generally to act in accordance with the terms of the IMA at all times’.

3.4. The IMA also sets out the common law duties of the PIC, which includes the duty to keep the BoT informed of all material matters concerning the investment portfolio. The PIC is required to disclose information to the BoT and not conceal any material information62 relating to the investment portfolio.

3.5. The PIC is liable to the BoT for breach or damages that arise from non- compliance with the mandate.

3.6. Where the PIC has acted beyond its mandate, the GEPF is entitled to ratify such action and where this is not done, the PIC would be liable for the oss or damages incurred as a result of such action.

4. The FAIS Act states that where a provider is a corporate, that provider must at all times be satisfied that every director, member, trustee or partner complies with the requirements in respect of personal character qualities of honesty and integrity. 63

5. The Commission finds that Dr Matjila did not meet the fit and proper qualities of honesty and integrity with regard to providing accurate information to the GEPF, with particular reference to the Ayo Technology transaction.

6. It is unclear whether the register of representatives has been regularly updated and if those currently listed (at the time of looking at the website) are all still in the employ of the PIC.

7. The imperative as set out in the IMA to make ‘prudent’ investments appears to have been largely disregarded. Too many examples, set out in 1.1 of this report, reflect this lack of prudence.

8. The attitude of Dr Matjila to investment performance demonstrates an insufficient commitment to the prudence requirement. An example of this is noted when during his testimony, he stated:

‘The Commission is dealing with almost 2% of the portfolio (in unlisted investments) … If you add up all the problem transactions you are not going to exceed R30bn at best … the total figure could be R40bn’.64

9. At this point, when evaluating materiality and prudence, it is important to note that the use of percentages obfuscates the numerical size of the funds in question. R40 billion exceeds a full year’s state contribution by National Treasury to the pension fund which has averaged R37,7 billion a year and comes in at around 64% of total contributions. All of this makes the ability to absorb write offs and losses precarious which, by definition, is the opposite of prudence. Any 2% capital loss, when the fund is potentially not fully solvent (in terms of the actuarial valuation reflecting the funding level of long-term liabilities), is a significant loss to what should be capital reserves or a buffer.

10. Moreover, given that the losses primarily occurred in the investments made through the Isibaya Fund, the R40bn should be measured against the R123 billion that the PIC has invested through the Isibaya Fund, 41% of which is at risk, on watch, under-performing or non-performing.

11. Using percentages masks the size of the monies involved. While it is recognised that even with the best processes and due diligence, losses and bad investments will occur, the issue at stake here is the failure to follow due process and making investments without the required rigour and authorisation.

12. Improving investment returns is critical to ensure that there is no future requirement to increase government contributions, especially as the government is borrowing to fund total expenditure, including that contributed to the GEPF.

13. The repeat investments that have been made with particular individuals or companies – single name risk - indicates a tolerance of cumulative risk that raises the question as to whether the PIC has deliberately structured the internal risk management function and process to be ineffective. At present, each deal is considered in isolation, irrespective of how many other deals have been applied for by the same individual or entity, approved/not approved or how they are performing, so that there is little assessment or consideration given to the total risk profile or exposure on a cumulative basis. This ‘deliberate structuring’ approach also enabled the favouring and repeated enriching of or providing opportunities to, the same people via different investments and also often ignored the imperative for ‘broad based’ investments, contained in the GEPF mandate.

14. The review of the IMA by an independent consulting firm, expected to be completed in two years, reflects a lack of urgency on the part of the GEPF to ensure the PIC/GEPF agreement takes account of the changing economic and asset management environment or the challenges of governance that the GEPF and the PIC are facing. Such a review should produce an interim report by no later than end June 2020, following which the next steps should be determined.

15. The principal terms regarding investment limits of the Private Placement Memorandums (PPMs) which were approved in 2016, that there should be a maximum of 30% of aggregate Capital Commitments (for each sub-fund) in any single investment, bears deep consideration for future detailed review. A statistically anecdotal review (i.e. the transactions that have been reviewed by the Commission) shows multiple breaches of this resolution of a maximum capital commitment as defined as the sum of debt and equity. Further work should be undertaken to ascertain whether there was intentional subversion of this requirement.

16. Should the stakeholders in this complex relationship between GEPF and PIC wish to consider a change in approach, whereby the GEPF is called on to take direct responsibility and accountability for activities within the PIC, then a new conversation should be started to evaluate if the GEPF should have a material shareholding in the PIC.

17. The Commission recommends that the PIC Board and the GEPF BoT need to jointly determine their purpose, role, relationships, nature and frequency of meetings to rebuild trust and confidence, and then ensure that appropriate interaction at the required level actually takes place. As an example, this could be achieved via a neutral third party facilitation process whereby each side’s requirements and expectations are gathered and consolidated. Then a collaborative session should be held to formalise roles and responsibilities (“the what”) as well as defining new ways of work (“the how”). The facilitator would combine the outcome for final approval on both sides that would then become a foundational operating model between asset managers and clients. It is recommended that this be initiated as soon as possible.

18. It is further recommended that the IMA between the GEPF and the PIC of 2007, as well as the Addendums of 2013 and 2016, should be reviewed in their entirety with a focus on returns expected, management and governance. Particular attention should be paid to the effectiveness or otherwise of the GEPF Investment Committee’s functioning as the Advisory Board of the various sub- funds and its primary function of reviewing the PIC’s compliance to investment objectives and mandate as well as to monitor and review performance. This should inform the mandate given to the independent consulting firm currently undertaking a review, and the timeline for completion should be significantly shortened without compromising quality.

19. The GEPF should ensure it has the required skills, resources and expertise to check and challenge the PIC. The ability of the GEPF to deeply understand the various portfolios will ensure that they have the capacity to fully challenge and review investments, including losses incurred.

20. Consideration should be given by the PIC to removing ‘annual total value of approved transactions’ as a balanced-scorecard key performance indicator (KPI) as it prioritises deal flow over risk/returns.

21. The Commission recommends that the PIC should establish a compliance coordinator and develop a compliance charter by no later than June 2020. There needs to be demonstrable consequences for individuals and teams, and steps taken if there is a lack or breach of compliance. The specifying of the role requirements and creation of this function within the PIC second line of defense should be completed within 6 months of the publication of this report.

22. There is a need to better understand the interplay between investment returns, net contributions or withdrawals and, crucially, consideration of the cost to the country of on-going and historic funding for the clients out of debt, not savings.

23. Adequate benchmark and returns hurdles set by the GEPF (and other clients) for the PIC must take into account the actuarial net present liability. Benchmarks should be set at a level to ensure actuarial solvency and aim to not have to increase government/employer annual contributions. This approach is important so as to remove any non-balance sheet liabilities in the national accounts which are, in reality, a tax on future generations.

24. The setting of investment hurdles must robustly take into account risk appetite, loss capital buffers and the ability to absorb major capital losses, net contributions and actuarial liabilities.

25. The BoT resolution of October 2017 which requires the PIC to seek approval from the GEPF’s Investment Committee for any single investment above the R2 billion for unlisted and property investments should be reviewed to take account of cumulative investments that are made. Such investments may in total exceed the R2 billion cut off, but individually fall within the limit set.

26. The Commission recommends that the role of advisors and the approach to financial engagement thereof must be reviewed and strict commercial boundaries must be codified. This is an essential and immediate requirement. The new approach must be transparent; competitive; have mechanisms for public check and challenge; limit fees paid to value received and, most importantly, must recognise that the PIC, as the largest role-player in the private sector capital markets, should take advantage, in the right way, of its sectoral importance to drive value creation from its advisors for its clients.

27. In addition to the above recommendations, consideration should also be given to–

27.1. developing formalised sub-strategies, for example, an Offshore Strategy and a B-BBEE Strategy.

27.2. conducting a review of the overall scope of all investment strategies and limits that could unlock value by setting boundaries and narrowing focus. The current wide-ranging objectives allow for different investment cases to underpin investments which reduces comparability and the connection to strategy.

27.3. There should be a strict discipline to put in place formal house views that are tracked with a matrix of measures for objectives.

27.4. using a separate entity/dedicated fund involved with B-BBEE and a transformation mandate.

27.5. The use of a separate entity/dedicated fund involved with B-BBEE and transformation mandate.

27.6. including a service level agreement in the Shareholder Compact that sets timelines within which the Minister of Finance is required to deal with matters as they affect the PIC, for instance the asset and liability management assessment finalisation.

27.7. putting formal arrangements in place to regularise meetings between the three key role players, namely the Minister of Finance as Shareholder Representative, the GEPF and the PIC.

27.8. having transparency within the PIC, which would eliminate room for impropriety by removing the GEPF’s and the PIC’s ability to be less than forthcoming with investment decisions and losses. On the other side of the ledger, it would make plain any market outperformance and that should enable solid fund management returns to be rewarded at a level comparable to the private sector.

27.9. daily publishing of the market value of the listed portfolio at that day’s close of business. This should be broken down per each investment. Unlisted investments should be valued regularly, and the valuation updated online approximately every six months, three months in arrears. The timelines need to ensure that publishing such information does not create investor panic in the investee which is imperative in an unlisted investment. The full suite of internal daily risk reporting could be published.

27.10. full disclosure of the ultimate beneficial owners of investments in which the PIC participates. The ultimate beneficial owner would in every instance need to be a natural person or listed entity. This would make any potential financial crime significantly more difficult and would ensure transparent exposure of which individuals are benefiting from PIC support; and

27.11. improving discipline in respect of always creating clarity about the true participants in any investment or activity. Specifically, clarity of the role/s of the clients, for example the GEPF and the PIC legal entity. Much of the time, the specific legal entities are not clear in both documentation and discussion, leading to potential confusion as to what the PIC means.


1. The transactions relating to Ayo and Sagarmatha, amongst other things, have been relied on in reaching the findings set out below.

2. Dr Matjila stated the following in relation to the AYO transaction:

‘In my position as the CEO I was not involved with the analysis of the investment potential of opportunities presented to the PIC. I therefore requested Executive Head: Listed Investments, Mr Madavo, to look into the opportunity … He led the Ayo investment process from the PIC side

… My understanding was that the draft PLS was shared with the PIC even before it was finalised to allow the PIC to begin its internal investment processes. The postponement of the PMC meetings scheduled for 6 and 13 December 2017 added to the pressure of meeting the deadline for the subscription which was by 17h00 on 15 December 2017.’ 65

3. In his testimony before the Commission, Dr Matjila stated that by 14 and 15 December 2017 all due diligence processes and reports had been prepared and submitted as per the appraisal report and annexures.

4. He stated that the subscription form was already signed by Mr Molebatsi for 20% (twenty percent) of the shares, and that he decided that this should be changed to 29% (twenty-nine percent), taking up the full share offer. The subscription form they signed on 14 December 2017 reflected the price of R43.00 (forty-three Rand) per share for 29% (twenty-nine percent) of Ayo. The impact of this is to immediately discredit Dr Matjila’s assertion that Mr Madavo ‘led the Ayo investment process from the PIC side’.66

5. Dr Matjila stated that the final Pre-Listing Statement (PLS) did not contain any differences from the draft PLS and therefore the information upon which the share purchase was made did not differ from the information contained in the final PLS.

6. The final PLS was received by the PIC at 14:42 on 14 December 2017, after the irrevocable subscription form was signed earlier the same day. The final PLS was received 10 days after the irrevocable letter of undertaking had been provided to the Board of Directors of AEEI. Throughout his testimony, Dr Matjila referred to the signing of the irrevocable subscription form on 14 December 2017, and stated that he had made his decision based on the final PLS. There are no indications that a reconciliation was considered on the draft versus the final PLS, although it was repeatedly stated that there was no material difference between the two.

Concerns related to circumvention of the required investment process

7. Neither the CEO nor CFO advised the PMC meeting that the irrevocable subscription form had been signed prior to approval.

8. The information that has come to light during the Commission hearings indicates that an improper process, outside of legal mandate, was followed by Dr Matjila in respect of this transaction.

9. It has now emerged that the evidence and testimony submitted by Dr Matjila regarding the Ayo investment is untrue. This finding is based on the letter dated 4 December 2017 to the Board of Directors of AEEI, headed IRREVOCABLE LETTER OF UNDERTAKING, which Dr Matjila signed as CEO on behalf of the PIC.

10. By signing the above letter to the Board of Directors of AEEI on 4 December 2017, prior to a PMC meeting to approve the transaction, Dr Matjila acted improperly and in breach of the PIC’s processes for transactions under listed investments. In approving this transaction, Dr Matjila also acted beyond the scope of his Delegation of Authority which does not provide for CEO discretion for a R4,3 billion ‘investment’.

11. This letter was not provided to the Commission by Dr Matjila or his legal team, nor was any reference made to its existence. This is evidence of his broader unreliability as a witness whose failure to mention crucial points fundamentally changes the narrative. Throughout his testimony, Dr Matjila stated that he relied on the PIC deal team to do the work and is guided by their expertise and recommendations, yet he decided to make a significant investment prior to team input or the completion of PIC processes.

12. It is our view further, regarding whether the PMC meeting of 20 December 2017 was to ratify or approve the Ayo transaction, that Dr Matjila’s response was disingenuous. When asked by the Commission why ‘there should have been an attempted ratification if ratification and approval mean the same thing’, Dr Matjila replied: ‘I mean the effect is the same’.67 While Dr Matjila stated that the 20 December 2017 meeting was to ratify a decision that had already been taken – a meeting at which he was present and was chaired by Ms More – the meeting in fact approved the transaction. In his written submission, Dr Matjila states that ‘the intention of the meeting of 20 December was always to approve …’,68 yet when asked why he did not clarify to the meeting that the deal had already been done and it was not approval post event, but ratification, Dr Matjila said ‘I did not see any need at the time …’.

13. The evidence placed before the Commission supports the finding that the meeting of 20 December 2017 could only have been to ratify a decision already taken, that decision being the approval of the transaction. Such conduct is not in accordance with the PIC’s processes with respect to transactions under listed investments.

14. The information that has come to light during the Commission hearings indicates that due process was not followed. Firstly, by sending the letter of 4 December 2017 to the Board of Directors of AEEI undertaking that the PIC would subscribe for 29% (twenty nine percent) of the share capital of AYO and confirming the price that would be paid per share, prior to PMC2 approving the transaction, Dr Matjila circumvented the prescribed process for authorising a listed transaction.

15. Secondly, although Dr Matjila undermines the importance of this step in his testimony, the reports compiled by ESG, Risk and Legal were not finalised when Dr Matjila signed the irrevocable subscription form on 14 December 2017, let alone when he signed the 4 December 2017 letter. As such, a substantial component of the necessary due diligence was overlooked. Moreover, whatever Dr Matjila’s actual regard for the importance or otherwise of specific elements of the process like ESG, Risk and Legal, the process is clearly set out and obligatory, and he did not have the authority to override, bypass or ignore the process. In bypassing processes secretly, he acted improperly.

16. Furthermore, as Dr Matjila dealt with this transaction as ‘listed’, and therefore did not obtain GEPF approval in keeping with the R2 billion limit (discussed in further detail in ToR 1.17), the forecasts contained in the draft PLS were subject to Limited Assurance, which was only provided in the final PLS. As there was no reconciliation between the draft PLS and the final PLS, no reliance could be placed on the assurance work performed. It was also too late as the share purchase commitment made by Dr Matjila, ten days earlier, was irrevocable.

17. With regard to the Sagarmatha transaction, which was running parallel with the Ayo investment decision-making process in the PIC, Dr Matjila said that ‘one of the suspensive conditions of the agreement was the successful listing of Sagarmatha which ultimately never happened and therefore the agreement never became operational and lapsed’.69

18. The listing price of Sagarmatha was set at R39,62 (thirty-nine Rand and sixty- two cents) per share, though the PIC internal valuation was R7,06 (seven Rand and six cents) per share. This valuation discrepancy is of great concern.

19. The differentiated pricing proposed at the listing of Sagarmatha is clearly market manipulation and would not have been tolerated by the Johannesburg Stock Exchange (JSE) if they were aware that this was happening. When questioned during his testimony, Dr Matjila clearly recognised this was not acceptable behaviour.

20. In this regard, Mr Molebatsi said: ‘The CEO wanted this transaction [Sagarmatha] to be presented to PMC…and so in that…particular situation it was an instruction.’.70

21. This is another example that contradicts Dr Matjila’s evidence that he relied on the PIC deal team when making investment decisions. Mr Molebatsi’s statement indicates that the deal team itself had the view that Dr Matjila negotiated parallel to their work, dealing directly with Sekunjalo Chairperson, Dr Iqbal Survé (Dr Survé).

22. Mr Tatenda Makuti stated that when he had finished his draft legal report he was informed that a share purchase agreement between Dr Matjila and Sagarmatha had already been concluded in December 2017. Furthermore, he established that the firm of attorneys whose name appeared on the agreement actually acted for Sagarmatha and not the PIC and testified that, ‘We still do not know if the document was reviewed by external legal counsel as is normally the process before an agreement was signed’.71

Dr Matjila’s disregard for established PIC approval, decision- making and other internal processes

23. Dr Matjila’s testimony, in respect of the Tosaco Energy transaction, illustrates a complete disregard for transparency, formal process and proper governance. It also illustrates the implicit understanding of Dr Matjila that his influence, status and power enable him to direct activity without having to detail specifics. It is not reasonable or acceptable business behaviour for a CEO to leave a meeting and be followed by the participant in that meeting into the next meeting without some implicit or unspoken understanding. Dr Matjila also testified that he was thinking that the two (Mr Mseleku and Mr Mulaudzi) should combine forces even if he did not say so, and it is incredulous that his thinking can manifest into reality by accident, ‘and within a brief moment of time’. Simply put, real decision making was effected outside of the PIC governance processes despite a surfeit of those processes bordering on democracy.

24. Dr Matjila was aware that the Investment Committee always led the Board’s investment decision-making process. He was also aware of the role he played in the Investment Committee. It is difficult to believe that the CEO who is also CIO and one of only two executive directors is just a voice at the table. As leader of the organisation, Dr Matjila was clearly the source of authority in the PIC. He was not simply ‘just a member of the Investment Committee’. Dr Matjila underplayed his true role in his evidence to the Commission.

25. Linked to this observation, is a consistent pattern in Dr Matjila’s testimony where he takes no individual accountability for material errors, mistakes or failures.

Dr Matjila highlighting political pressure as a serious concern and his misconduct in relation thereto

26. When asked whether it was improper or unethical for a Minister of State, in particular the Minister of Intelligence, Minister Mahlobo, to call the CEO of the PIC to a meeting at an airport without any indication of the purpose of the meeting or who would be present, Dr Matjila said he saw no problem with this conduct.72

27. His response is disingenuous at best. The issue at hand is not a meeting with a cabinet minister per se, but the circumstances, demands, discussions, records and outcomes of such meetings as they relate to the responsibilities of the PIC and any impropriety or undue pressure that might have occurred.

28. Dr Matjila appeared oblivious of the ramifications regarding reputational risk for himself and the PIC, notwithstanding the damage the allegations in the anonymous emails did to him personally and to the PIC as a whole.

29. This is further illustrated by Dr Matjila forwarding requests for financial assistance to, inter alia, recipients of PIC investments to consider.

30. A reasonable person would not give any credence to the assertion that the CEO of the PIC, who enables funding and fee payments in the ordinary course of running a +R2 trillion asset manager, is merely sharing the information of the ruling party and its tripartite partner looking for funding. This logic is borne out in that Mr Mseleku made a R1 000 000. 00 (one million Rand) contribution shortly thereafter. The “quid pro quo” in action shows that the implicit message was both clear and understood. Similarly, with the R300 000.00 (three hundred thousand Rand) donated by Mr Muluadzi to a beneficiary, unknown to him.

31. Those who gave evidence before the Commission stated that they advised Dr Matjila of donations made or assistance provided, in particular both Mr Mseleku and Mr Mulaudzi. Furthermore, Dr Matjila did not simply pass on requests from political parties and other influential entities for funding, he actually followed up on such requests.

32. The CEO of any organisation should never excuse behaviour – mistaken, unintentional or intentional – on the basis of whether there is a policy in place or not. It is also the responsibility of both the CEO and the Board to ensure that appropriate policies are in place. Furthermore, if the CEO does not take ownership and responsibility for judgement calls and defers to compliance, then that CEO is setting a tone that says anything is allowed if it is not expressly illegal or barred via policy.

33. In these particular instances, the question that arises is, why would anyone follow up on a ‘relayed request’ if it was just a process of information sharing? The act of “following up” strongly implies that there is an expectation that the request would be complied with and that Dr Matjila would want to know that this was the case.

Whistle Blower Concerns

34. Several testimonies from staff alluded to the deep perception that the whistleblowing process was not to be trusted. With some staff taking issues directly to the Police and other insiders using the James Nogu email route, it seems clear that there was no faith in this mandatory process.


35. The following findings are made:

35.1. Evasiveness as a witness;

35.2. A selective view of accountability, a disregard for the legislative and regulatory framework which the PIC is required to operate within, including the Companies Act 71 of 2008 (Companies Act), the PIC’s Memorandum of Incorporation (MOI) and the GEPF mandate;

35.3. A tendency to ride roughshod over the established approval and decision- making processes;

35.4. Perceived breach of the Protected Disclosures Act 26 of 2000;

35.5. Doing repeat deals with individuals and/or their entities, even where no value has been proven from the first deals.

35.6. A disregard for established rather than hypothetical enhanced value. An apparent insensitivity to the risk profile required to build/maintain actuarial solvency of the GEPF where shortfalls must eventually be financed by the taxpayer.

35.7. A consistent behaviour, when interacting with potential investees, or meeting without anyone else present, of not keeping records or minutes or any written audit trail of such interactions. This constitutes a breach of Dr Matjila’s fiduciary duties in that he failed to do the following while adopting a consistent practice of accepting and hosting meetings without anyone else from the PIC being present:

35.8. keep records or minutes of material conversations and decisions; and

35.9. as CEO and Executive Director, ensure that the appropriate control environment for record keeping is maintained throughout the organisation when interacting with potential investees.

35.10. Highlighting political pressure as a serious concern but defending his practice of meeting such parties without anyone else from the PIC in attendance, keeping no record of these meetings, and holding such meetings outside of the PIC premises. This is further compounded by the finding that Dr Matjila directly solicited donations for COSATU and the ANC from individuals whose companies the PIC has invested in.

35.11. Distancing himself from significant fee payments to financial service advisors, notwithstanding the need for both actual and optical propriety in both substance and form. He also claimed no knowledge of fees paid to such parties. However, in reality the benefit was for a few people only, but those who were ‘chosen often reaped significant financial rewards. In building this transformed professional cohort, there is no indication of a structural evaluation metric that was put in place to pre-determine what a measure of success would look like. This gives rise to the perception (and reality) of access to the PIC and significant fee income for privileged insiders, who were, in a number of instances, previous employees of the PIC.

35.12. Taking a decision to keep a transaction below the level that would require reference to a higher decision-making body. This constitutes a subversion of governance.

35.13. Disregarding the advice of experts when such advice did not align with his desired outcome.

35.14. Failure to adequately exercise his CEO responsibilities with regard to the organisational, legal, regulatory, human resource and operational frameworks relevant to good governance and client mandates.

35.15. Failure to ensure that risk was managed at an appropriate level, raising the question of whether this was the result of a deliberate structural and capacity weakness by design, while maintaining the perception of an operational risk management system (when in fact it was unfit for purpose).


36. The Commission recommends that, in relation to the conduct set out above, the GEPF/PIC/Government as shareholder should institute an appropriate investigation as to whether Dr Matjila violated the FAIS Act requirements of honesty and integrity as well as of “fit and proper” given that he was a Key Individual in the PIC.

37. In ToR 1.1, the Commission made findings regarding whether Dr Matjila violated any other legislation applicable to the PIC, including the PFMA, any rules, listing procedures or other requirements of the JSE. The Commission recommends that the PIC gives effect to its findings in this regard.

38. The Commission further recommends that the PIC must give consideration to whether any personal liability is attached to the conduct of Dr Matjila, including with regard to any fruitless and wasteful expenditure which, if found to be the case, would make Dr Matjila liable for the loss to the PIC.

39. Where money has been lost or investments made where the funds provided have not been used for the intended purpose, this must be identified, quantified and recovered.

40. Demonstrating a lack of due diligence and care, Dr Matjila breached his fiduciary duties when approving investments into insolvent and technically insolvent companies, for example Erin. Consequently, the appropriate steps need to be taken.

41. The Commission further recommends that the Independent Regulatory Board for Auditors (IRBA) should open an investigation into the Limited Assurance work performed on the Ayo Prelisting Statement given that the extreme revenue forecasts were clearly very aggressive. For example, the 2018 actual comprehensive income achieved R148 million compared to what was forecast (R764 million), which reflects a significant under performance.

42. Responsibility and Accountability of Mr Rajdhar: the Commission has noted with concern the financial losses and breach of processes that have emanated from the unlisted investments arena, including in the Developmental Investments. Numerous investments that resulted in undue losses for the PIC occurred during the time when Mr Rajdhar was the EH: Developmental Investments. As the head, Mr Rajdhar needs to be held responsible and accountable for this problematic division - not only Dr Matjila. Thus, it is recommended that the PIC Board should thoroughly investigate Mr Rajdhar for any impropriety and negligence arising from the transactions dealt with at the Commission that did not follow processes and/or resulted in financial loss.


Recommendations For Next Steps Regarding Investment Losses And Those At Risk

1. 41% of the R123 billion of Unlisted Investments are on watch, under- performing or not servicing loans (non-performing loans). Elsewhere in the portfolio, there are assets where there is scope for enhancing value as well as capital sitting in insolvent entities. For the purposes of this report, these investments will be called Investment Capital at Risk (ICAR). From a Finance lens, much of this ICAR would be termed “Distressed Assets”.

2. The total ICAR is a significant portion of the portfolio, both in quantum and relative to the AuM. This observation is important because Dr Matjila repeatedly stated that the losses and write-downs are not significant relative to the fund size. Additionally, it is important to note that on-going employer annual contributions are financed not by a profit source, but rather from the fiscus.

3. An element of the current model is that investments are grouped and managed in various portfolios. A recommendation for a more efficient model for the PIC in the future is to create a bifurcated fund to house the Investment Capital at Risk and manage this portfolio to achieve the best financial outcome for the PIC’s clients.

4. A current model for this is the “good bank/bad bank” or “Non-Core Operations Model”. What takes place is that the asset manager looks at the funds being managed and divides the assets into two categories. Into the “bad” column go the investments at risk, the investments on the watch list and all troubled assets as well as illiquid investments where an exit strategy is regarded as challenged. The remaining assets are the “good” assets which represent the on-going investment profile at the core of the fund, optimised for solvency regarding the pension obligations.

5. In the course of the Commission’s investigative work, multiple individual transactions, loans and investments were noted where there were apparent signs of financial stress leading to the various clients having to absorb capital losses.

6. It is proposed that the Board and the Exco determine a set of conditions that defines non-core investments. Then, an exercise should be conducted to scrutinise the entire portfolio of assets against this set of conditions. All assets that are found to be “non-core” should be identified as potential ‘non-core’. Given the subjective nature of the exercise and fluid circumstance specific to each asset, it would be ideal for the PIC Board and the Exco to work through this list to agree on assets that are on the margins of the set criteria to be either excluded or included. These assets should be proposed to be ring- fenced as non-core and managed separately.

7. Management and the Board should agree a high-level approach to be taken to realise optimal value through time and should also define up-front what time horizon the non-core portfolio has before it is liquidated. This step is essential so that timeline and end for the working out of non-core investments should be stipulated. Reasonable performance that clearly determines what success looks like should also be defined.

8. Given that the purpose of the “bad bank” is to focus on optimal ways to de-risk and free up time and energy for the sustainable future-focussed funds, it is essential to ensure the non-core portfolio work out is time-limited. It is suggested that the categorisation and approach be aligned to the perspectives of the clients.

9. At this point, the non-core investments should be hived off to the managers of non-core. This team should be dedicated to the work-down of this fund and should report separately to the governance and executive structures with a direct line to the Board.

10. Given the history, the high-visibility and sensitivity of some of these investments there should also be specific scrutiny on material divestments/exit strategies to ensure the interests of the clients are held paramount and other impacts are managed delicately and thoughtfully.

11. Part of the solution looking to the future is to reconsider the existing organisational approach so that it will now take into account the historic vested interests and ensure the funds’ members’ needs are held paramount. It is essential, in the process of realising maximum value of the “non-core” assets, that focus for the ICAR is placed on, but not limited to, the following:

11.1 Stabilising and strengthening of balance sheets.

11.2 Installing appropriate skilled and incentivised management.

11.3 Enshrining transparency and dedication to good conduct at all times.

11.4 Fostering a culture of constant and consistent reputational risk management.

11.5 Ensuring that value is restored where possible to maximise returns when exiting the investment is imperative.

11.6 Focusing on appropriate due diligence for partners and acquirers to guard against any accusations of preferential treatment for connected parties.

12. It is also essential that all of these actions remain transparent in the public sphere to ensure past mistakes are not repeated.

13. Many investments are not performing at their maximum valuation due to insufficient active management, operational involvement and oversight. Thus, the teams in the non-core fund would need to have the appropriate resources to realise optimal value. The information provided to the Commission has shown a pattern for assets to underperform, and sub-optimal management approaches that are not ideal to turn around the investment with the end result of the investee requiring some form of bail-out, often via an additional capital injection.

14. There needs to be a detailed analysis comparing investment returns with the actual losses written-off, impaired or potentially impaired. This analysis should also take into account the inherent riskiness of the original investment to consider what legal implications there are relative to considerations such as fiduciary duty to pensioners/taxpayers.

15. A comprehensive review of the PIC approach to Risk Measurement and Management as an Investment Manager is urgent and imperative. This needs to consider, at the least, risk measurement pre-deal and portfolio; Model Risk; Credit Risk; Country Risk; Currency Risk if applicable to the investment; Concentration Risk and Client Risk Appetite setting; Risk Reporting for PIC itself e.g. Regulatory and Operational Risk; Breaches, Condonation and Pre- approved Deviations (waivers); Reputational Risk as well as the management of short term volatility versus a 10-year investment approach.

16. As an advance-funded scheme, the GEPF should hold sufficient assets to cover the estimated liabilities it will have to meet future and current retirees, estimates being actuarially calculated based on various assumptions. When comparing previous actuarial reports with the most recent one, the funded position of the GEPF has deteriorated in recent years, primarily because of the growth of benefits and lower than expected investment returns.

17. In terms of the GEPF mandate, employer contributions should be sufficient to ensure that the Fund is able to meet its obligations at all times, subject to a minimum funding level of 90%. The pre-funding level of the Fund remains well above the critical minimum funding level of 90%. The Funding Policy of the Fund also stipulates that the Board of Trustees should strive to maintain the long-term funding level at or above 100%. The long-term funding level equalled 75,5%.


18. Due to the fact that this section is dealt with in Chapter II of the Report, we have not summarised these findings here.


19. On 6 December 2018, the Standing Committee on Public Accounts met with the Deputy Minister of Finance, Mr Mondli Gungubele, in his role as Chairperson of the PIC, as well as a number of the Directors and Executive team of the PIC. Mr David Maynier, a DA Member of Parliament, asked at the Standing Committee on Public Accounts about Mr Nana Sao’s advisory fees. Mr Maynier asked specifically about the transaction costs in the Vodacom transaction, arguing that the fees the advisors received didn’t equate to the work they undertook and, at the same time, questioned the PIC’s selection process and transparency thereof.

20. The Commission undertook an investigation into the matter.

Mr Nana Sao

21. Mr Sao was paid directly by the PIC for three transactions where his fees averaged 1.10%, which is an industry norm.

22. In 2015, the South African government sold 13.91% of its stake in Vodacom to the PIC and in 2016, Mr Sao approached Dr Matjila with a suggestion to purchase Vodacom shares. Dr Matjila responded by advising him of a consortium called Inkanyezi that was interested in buying shares on behalf of the GEPF. Mr Sao was asked by Mr Koketso Mabe, an employee of the PIC, to work with Inkanyezi given his experience in deal structuring and raising capital. He agreed and led the execution of the deal on behalf of Inkanyezi.

23. After the selection process, Mr Sao heard rumours that people connected to the Inkanyezi Consortium were fronts for politicians. This prompted the commission of an external company to perform a Due Diligence on Inkanyezi.

24. The Control Risk report flowing from the Due Diligence revealed that politically connected people were behind the deal, but there was no conclusive link between them and members of the consortium. The Control Risk report was sent to Mr Koketso and Dr Matjila, and all agreed that the transaction should be cancelled.


25. The Commission finds there is no evidence that the PIC’s process of appointing professional advisors was followed in respect of the appointment of Mr Sao.

26. Furthermore, outsourcing the running of an RFP process is questionable and this should be done directly by the PIC.

27. Sao Capital was apparently not paid for their work, despite incurring over R5 million in costs associated with the transaction. They had expected to be paid once the deal was concluded.


28. In respect of the findings relating to Mr Sao, the Commission recommends that the DoA should ensure that the PIC CEO is not authorised to simply appoint an advisor.

29. Policy and approved due process must be clear and followed at all times to ensure a fair selection process of an advisor in a transaction.

30. The allegations and findings in the Control Risk Report must be further investigated by the PIC.

31. If there are substantive allegations of corruption involving an investee company, the PIC should immediately investigate and, where applicable, take legal action.

32. The PIC should ensure that funds allocated are used for their agreed purpose, in this instance payment of transaction fees that were provided for in the agreement.


33. Around mid-2015, Mr Sao was approached by Mr Sipho Mseleku, the CEO of Sakhumnotho. Sao Capital was appointed by Sakhumnotho to prepare an independent valuation report in relation to a potential transaction where Sakhumnotho, as one of the bidders, was contemplating acquiring shares in Total South Africa Consortium (Pty) Ltd (Tosaco).73

34. Even though Sakhumnotho did not sign an advisory mandate, it was verbally agreed that Sao Capital would be paid a transaction fee equal to 1% of the gross value of all shares or other similar securities acquired pursuant to the transaction. The other competing bidder for the aforementioned 91.8% stake in Tosaco was an entity called Kilimanjaro Capital (Pty) Ltd (KiliCap).

35. In August 2015, Mr Mseleku informed Mr Sao that Sakhumnotho was merging its bid with that of KiliCap, creating a new consortium called Kilimanjaro Sakhumnotho Consortium (Kisaco). Once Kisaco was selected as the preferred bidder, Sao Capital was side-lined and had no further involvement. Mr Mseleku told Mr Sao that Sakhumnotho no longer had funds to pay for the advisory services Sao Capital rendered, and reneged on the verbally agreed upon 1% of the transaction value.

36. In October 2015, Sao Capital became aware that the PIC had made available R100 million for the purpose of settling transaction costs relating to the Tosaco transaction. Sakhumnotho received R50 million (half) of the amount paid by the PIC. However, Sao Capital was only paid R5 million by Sakhumnotho.


37. The Commission finds that the role of advisors in determining the valuation of the transaction has a direct bearing on the fee they ultimately earn. The PIC therefore needs to ensure there is a thorough and appropriately skilled process, followed with absolute integrity, in the valuation process to ensure it does not overpay.

38. Sao Capital settled for R5 million even after learning that the PIC had paid Sakhumnotho R50 million to cover their alleged transaction fee.

39. The PIC funds, allocated ostensibly to cover transaction costs, appear to have not been used for the stipulated purpose.

40. There was no signed contract between Sakhumnotho and Sao Capital,

41. There was no evidence presented to the Commission of an invoice from Sakhumnotho to the PIC setting out all transaction costs, as should normally be provided prior to any payment of such costs.


42. In relation to Sakhumnotho, the Commission recommends that the PIC must ensure that greater attention is paid to the valuation of an entity and that such a determination is made with the essential skills, independence and thoroughness.

43. Valuation determinations must be a key feature of all approval processes and thoroughly interrogated.

44. Proper, detailed documentation on transaction costs incurred must be presented to the relevant authority in the PIC, and be validated prior to any payment of such claims.

45. Given the information provided by Mr Sao, appropriate legal steps must be taken by the PIC to recover the monies paid in transaction fees that were not used for the intended and approved process.

Mr Dan Mahlangu (Mr Mahlangu)

46. Mr Mahlangu is the CEO of BNP Capital (Pty) Ltd, which changed its name to Pholisani Mahlangu.

47. Mr Mahlangu was appointed by KiliCap as its financial advisor after BNP Capital was specifically nominated by the PIC. Mr Mahlangu is a former employee of the PIC.

48. The mandate letter BNP signed with KiliCap required BNP to run with the entire management of the share purchase for a fee of 2%, excluding VAT, of the capital raised, i.e. R1,7 billion. In turn, BNP engaged other service providers to assist with both legal and financial due diligences.

49. In his affidavit, Mr Mahlangu states that ‘the introduction of the new consortium [Kilicap] and advisor meant that BNP Capital fees were reduced…’.74 After the successful fund raising, Mr Mulaudzi advised BNP to send an invoice for R1 million, VAT inclusive, to a company named AVACAP.

50. BNP has since been unsuccessful in its efforts to get the balance of the fees owed, being paid only around 6% of the expected fee as per the mandate letter.75


51. Nedbank was the transaction advisor for the Tosaco transaction as Calulo, the main shareholder of Tosaco1, appointed Nedbank Capital to act as its exclusive investment bank and corporate advisor.

52. The Commission issued a subpoena to Nedbank after receiving unsolicited WhatsApp messages between Mr Tapiwa Shamu, a Nedbank employee responsible for the Tosaco transaction, and Mr Lawrence Mulaudzi. In the messages, Mr Shamu requests a R400 000 loan from Mr Mulaudzi. There is also evidence of Mr Shamu passing on various other transactions that were presented for consideration to Nedbank to Mr Mulaudzi, and that the R400 000 was transferred from Mr Mulaudzi’s account to Mr Shamu’s wife.

53. This appears to be a highly irregular relationship given that KiliCap was a bidder for the purchase of the shares in Tosaco.

54. Circumstantial evidence shows that Mr Shamu played a significant role in ensuring that Mr Mulaudzi and the KiliCap/Sakhumnotho Consortium won the Tosaco bid. He had a personal and professional relationship with Mr Mulaudzi, Mr Mseleku and others. Mr Shamu also participated in the bidding process as a member of the selection team and would have been in a position to influence the decisions taken by the team.

Kingdom Mugadza

55. Kingdom Mugadza’s started Tirisano in 2011.

56. Tirisano was in discussion with the PIC about a supply chain empowerment fund and was well placed to facilitate the acquisition of Distell shares from AB Inbev by the PIC, where it originated, structured and executed the sale of Distell to the PIC in a closed bidding process.

57. Before the Distell deal went public, Mr Mulaudzi requested an urgent meeting with Mr Mugadzi. Mr Mulaudzi wanted information regarding the Distell deal, the situation deteriorated, Mr Sello Motau became involved and Mr Mugadzi felt his life was in danger.

58. One of the conditions set by the Competition Commission before its approval of the acquisition of Distell was that the PIC would sell at least 10% of its acquired Distell shares to a BEE entity. Tirisano, however, recommended that the PIC delay the said BEE deal.

59. At the beginning of September 2015, Mr Sello Motau, an Executive Director of Theko Capital, discussed with Dr Matjila a possible investment in the Export Trading Group (ETG).

60. The local ETG team requested that Mr Motau provide them with a letter of support for the funding proposal from the PIC. Mr Motau advised the Commission that, in the second half of 2015 he was considering an equity investment in Profert Holdings76, and that ETG was also interested in an investment in Profert.

61. Mr Motau submitted a proposal to Dr Matjila on 7 September 2015 regarding ETG. On 10 September 2015, Mr Motau received a non-binding Expression of Interest signed by Dr Matjila. The potential investment in ETG was presented to the Portfolio Management Committee (PMC1) for approval to commence with the due diligence review processes.

62. In October 2015, the PIC deal team introduced Theko Capital to Tirisano Partners as a transaction advisor to work with the teams from the PIC in order to coordinate the investment process on behalf of all parties. On 19 October 2015 they received an Engagement Letter from the PIC.

63. According to Tirisano, they are not on the PIC database, and no transactional advisor internal process as per the PIC policy was followed.

64. Mr Motau states that, ‘the PIC team stopped responding to Theko’s correspondence … …[I was told] that the deal had been approved …with the condition from PMC2 to remove Theko from the deal…’.77

65. Mr Motau concludes that ‘It is concerning that the PIC can express an interest in a transaction, go as far as conducting FICA processes and getting the necessary internal approvals, and then at a later stage at their own discretion decide to remove a sponsor to include their preferred sponsor … this opens the door to favouritism and gate keeping’.78

66. However, there were conflicting reports of what actually took place.


67. The Commission finds that the PIC processes to appoint advisors were not followed in respect of Kingdom Mugadza.

68. The PIC reportedly introduced a specific transaction advisor, namely Tirisano Partners, to the parties involved.

69. Conflicting accounts of events and commitments prevail, without a clear record of meetings held and decisions taken.

70. There is a consistent pattern of a lack of clarity of the terms of engagement and non-compliance with PIC procurement processes.

71. Imposing/recommending specific advisors for potential investees to use is highly questionable and inappropriate.

72. The PIC recommending and/or appointing certain advisors for multiple transactions is improper and inappropriate.


73. The Commission recommends that a detailed investigation should be initiated by PIC management (potentially with the support of appropriate governmental prosecuting bodies) to create an exhaustive list of all fees paid over R5 million since 2014. This list must then be interrogated to aggressively initiate legal processes of recovery where appropriate.

74. The PIC Board must ensure transparent processes are in place that prevent arbitrary changes and decisions that can lead to perceptions, real or otherwise, of abuse, gate keeping and favouritism.

75. The Board must ensure that there is a comprehensive, inclusive and fair process to appoint advisors for different transactions according to their relevant skills and expertise.

76. The Board must ensure that an effective monitoring and reporting system is in place with regard to the appointment, role, fees and accountability of advisors.

77. Where advisors are appointed or recommended by the PIC, an appropriate assessment should be made of the work performed prior to any subsequent/repeat appointment.

Dividend Policy

78. In the 2018 financial year, the PIC paid R80 million to government in the form of dividends. The Government Employees Pension Fund (the GEPF / the Fund) Statutory Actuarial Valuation, conducted by Alexander Forbes, as at 31 March 2018, shows that the minimum funding level and the long-term funding level declined.

79. The primary funding objective of the GEPF is to ensure that employer contributions should be sufficient to ensure that the Fund is able to meet its obligations at all times, subject to a minimum funding level of 90%, at which point government would be obliged to increase its contributions to the Fund. At present, this is well funded and the minimum funding level stands at 108,3%. However, the Funding Policy of the GEPF also stipulates that the Board of Trustees should strive to maintain the long-term funding level at or above 100%. Thus, standing as it does at present at 75,5% means that the GEPF does not meet its long-term funding objective as at the valuation date of 31 March 2018.

80. Paragraph 5 of the Dividend Policy considers the Companies Act and sets out the process required for payment of a dividend and for the requirements of the Companies Act to be met. In essence, the PIC “…must pass the Solvency and Liquidity test, as set out in section 4 of the Companies Act, before a dividend can be declared.”

81. The Board of the PIC proceeded to pay dividends to the Shareholder in keeping with the Dividend Policy (other relevant provisions of the Dividend Policy can be seen in the Main Report) and as approved on an annual basis by resolution of the Board. In May 2017, the Board Resolution of 29 May 2017 confirms that the PIC paid an interim dividend of R20 million for the financial year ended 31 March 2017, and declared a final dividend of R60 million to the Shareholder for the financial year 2016/17. The resolution authorising the payment of a R20 million interim dividend was approved at a shareholder meeting on 10 March 2017, in terms of Section 60 of the Companies Act, and signed by the Shareholder representative, Minister of Finance, Mr Pravin Gordhan.

82. The final dividend of R60 million was approved by the Board of Directors, at a meeting held on 29 May 2017, and signed by Deputy Minister Sifiso Buthelezi as Chairman of the Board of Directors.

83. The Commission finds that the PIC has a Dividend Policy in place and has paid dividends in keeping with the requirements of the Companies Act. However, noting the continued decline in the short term funding level, and taking account of the Funding Policy of GEPF, which also stipulates that the Board of Trustees should strive to maintain the long term funding level at or above 100%, and that this currently stands at 75,5% which means that this does not meet its long term funding objective of the PIC as at the valuation date.

84. In view of the above, the quantum of dividend payments in March 2017 and May 2017 by the PIC to the Shareholder is questionable.

85. The mandate of the PIC is to act in the best interests of its clients; it is not to maximise profits. Essentially, by paying dividends from management fees charged to the GEPF and other clients, an indirect tax is imposed on the PIC’s clients.

86. The payment of a dividend raises the question as to whether this is being done to convey to the Shareholder that the PIC is in fact functioning extremely well and is thus able to afford to pay a dividend?

87. The Commission therefore recommends that the Board of Directors of the PIC should review the Dividend Policy, which has not been reviewed since it was adopted in 2016.

88. The Board of Directors of the PIC should also review the budget, including the required capital expenditure and the staff complement and remuneration, to ensure the funding requirements are adequate.

89. The Commission further recommends that the Board of Directors should discuss an appropriate policy to comply with Section 46 of the Companies Act with the Shareholder, taking into account that the PIC mandate is not driven by profitability as an objective, but the imperative to maintain funding levels of the GEPF and other Funds under management of the PIC.

90. If the fees charged to PIC clients, particularly the GEPF which has the responsibility of managing civil service pension funds, result in profits such that a dividend can be paid to the Shareholder, then the Commission recommends that the budget of the PIC is reviewed to see that the PIC is functioning optimally with adequate funding. Alternatively, the management fees charged to clients should be the subject of assessment and review.


91. As a result of the allegations of corrupt activities made in the James Nogu emails, the Commission engaged PwC to conduct lifestyle audits and background checks on the following Directors of the PIC:

91.1 Mr Mondli Gungubele Non-executive and Chairman;

91.2 Ms Sibusisiwe Zulu Non-executive;

91.3 Ms Dudu Hlatshwayo Non-executive;

91.4 Dr Dan Matjila Executive; and

91.5 Ms Matshepo More Executive.

92. The findings and conclusions of the lifestyle audits are contained in the individual reports on the five Directors, which are annexed to the affidavit of Mr Lionel van Tonder, a director of PwC.

93. The Evidence Leader, Adv. Jannie Lubbe SC, placed the following on record in relation to the findings of the lifestyle audit:

‘In general Mr Commissioner and members the finding was that there was no indication of any criminal conduct regarding any of these individuals and he [Mr van Tonder] couldn’t find any substance and you will recall that one of the main reasons for… requesting these lifestyle audits was the allegations contained in the Nogu emails implicating some of these people [as] receiving exorbitant amounts of money from transactions within the PIC. So what he can state and what I can place on record is there is no evidence of any criminal conduct and there’s no evidence of any substantiating the implications in the emails by Nogu.’79

94. Although the Commissioners had sight of the contents of the reports of the lifestyle audits, the reports remain confidential. The reports, therefore, do not form part of the Commission’s final report.

95. With regard to the report on Ms Zulu, PwC noted what appears to the Commission to be some serious discrepancies, particularly relating to the purchase of certain fixed property. After she had testified before the Commission, Ms Zulu was invited to the Commissioners’ chambers where she was requested to explain the discrepancies. She undertook to provide the Commission with a written explanation but failed to submit the explanation. The legal team, according to a verbal report to the Commissioner, subsequently invited her on more than one occasion to provide the Commission with the explanation, but she still failed to do so.

96. In this respect, it also needs to be placed on record that R100 000 was paid by Mr Mulaudzi into the account of Ms Zulu on a monthly basis between 30 August and 5 December 2018. This emerged as a result of subsequent investigations by the Commission.

97. In view of the serious nature of the discrepancies alluded to above, coupled with the results of further investigations conducted by the Commission’s legal team, the Commission feels obliged to recommend that the discrepancies indicated in Ms Zulu’s lifestyle audit be further investigated.


1. The government, as the guarantor of last resort for the obligations to the GEPF, recognises that a failure of the PIC or any significant investments for the GEPF exposes it to substantial financial vulnerability.

2. The Commission has concluded that, among other things, there has been substantial impropriety at the PIC, poor and ineffective governance, inadequate oversight, confusion regarding the role and function of the Board and its various sub-committees, victimisation of employees and a disregard for due process..

3. The report outlines the above through the 17 terms of reference addressed in this report as well as specific illustrative case studies. The findings show that:

4. While the PIC has, in many instances, sound policies, processes and frameworks, in many instances these were not adhered to, deliberately by- passed and/or manipulated to achieve certain outcomes. There is a need to review existing policies.

5. Legislation, mandates and standard operating procedures were repeatedly violated.

6. The GEPF mandate relating to addressing economic developmental goals was not always adhered to. There must be a clear definition of what success looks like when investing in unlisted entities.

7. The Board was found to be divided and conflicted. The involvement of non- executive directors in transaction/investment decision making structures of the PIC rendered their oversight responsibilities ineffective, if not absent. Their independence is questionable.

8. The Commission found that there was both impropriety and ineffective governance in a number of investments.

9. The lack of diligence to ensure that conditions precedent (and post) were enforced or adhered to has resulted in considerable losses for the PIC.

10. There are clear instances where the Commission found that directors and/or employees benefited unduly from the positions of trust that they held.

11. Repeat investments with a small number of entities, frequently represented by a single individual, (for instance the Lancaster/Steinhoff transactions), reflects poor risk assessments, particularly with regard to cumulative exposure, and the repeat opportunity for enrichment of single individuals.

12. Fees reportedly paid to advisors, who, in a number of instances were recommended to investee companies by the PIC, were on a number of instances found to be well above the industry norm.

13. There were discrepancies in a number of instances where committed investment amounts were increased during the approval process, and where conditions for the investment were altered to weaken or subordinate the interests of the PIC.

14. The lifestyle audits conducted by PWC at the request of the Commission found, in the instance of Ms Zulu, questionable behaviour and a significant flow of funds to her account. This should be the subject of further investigation.

15. Dr Matjila’s requests to provide financial assistance or make contributions to individuals, organisations and political parties reflects his abuse of office and the ability to exert undue influence over investee companies.

16. The role of the Shareholder, coupled with the frequent changes to the Minister, Deputy Minister and consequently the Chairperson of the PIC, created instability and a vacuum of leadership at the helm of the PIC.

17. The Commission found that the CFO and the Executive Head: HR used various means to give effect to victimisation of staff, many of whom were in very senior positions

18. Of critical importance for remedial action is the urgent requirement to ensure that the IT systems covering all unlisted investments are automated.

19. The Commission expresses its sincere appreciation to the Evidence Leader, Advocate Jannie Lubbe (SA), for his sterling work in enabling the Commission conduct its investigations fairly in a particularly challenging environment. We extend our thanks to the investigators, legal team and support staff for their tireless efforts, professionalism and diligence. Special mention must be made of two members of staff, namely Ms Lizzy Sibi and Ms Gcobisa Mdlatu, A big thank you goes to Mr Daniel Buntman, who was released by Absa at no cost to the Commission, for his sterling work and contribution in the preparation of this report.

20. We also extend our appreciation to all those who bore witness and gave testimony at the hearings of the Commission.

21. We also express our appreciation to the management of Armscor and to the Tshwane Metropolitan Municipality. Our appreciation also goes to the media houses who ensured that their journalists attended the hearings of the Commission and thereby keeping the nation informed about the process.

22. It is with all humility that we present this Report, and trust that the work we have done will contribute to resolution of what has been an extremely difficult period not only for PIC staff, but also for the members and pensioners of the GEPF and other clients of the PIC, whose assets they manage.

The full report can be accessed here - PDF. 


1 Section 4 of the FAIS Act provides that the main object of the Corporation is to be a financial services provider in terms of the FAIS Act.

2 See section 8(1) of the FAIS Act. A ‘key individual’ is defined, in relation to an authorised financial services provider (licenced in terms of section 7 of the FAIS Act), or a representative, carrying on business as a corporate body, as ‘any natural person responsible for managing or overseeing, either alone or together with other so responsible persons, the activities of the corporate body relating to the rendering of any financial service.’

3 Section 6(3) of the FAIS Act.

4 A copy of the letter is annexure ‘DD 30’ of Dr Matjila’s statement.

5 Extract from approved minutes of Board meeting held on 29 March 2017 attached as ‘Appendix 3’.

6 The ditching of the position of CIO was in line with an organisational restructuring that took place, according to Dr Matjila’s testimony (para 102 of his statement) in 2014 and 2015, resulting in the CIO position being split into four Executive Heads of investments, namely of Listed Investments, Private Equity & Structured Investments, Developmental Investments, and Properties.

7 Copies of the resolution passed at a shareholders meeting on 29 March 2017 and of the amended MOI are attached as ‘Appendix 4’ and ‘Appendix 5’ respectively.

8 A copy of letter dated 19 April 2017 attached as ‘Appendix 6’.

9 Para 520 of Dr Matjila’s statement signed on 17 July 2019.

10 Para 59-70 of Mr Penwarden’s statement signed on 28 May 2019.

11 The PEPSSME FIP of 20 October 2014 reflects a reduced investment from the original US$ 62,5 million to US$

12 At page 14 of the Transcript for day 63 of the hearings held on 14 August 2019.

13 Ibid. page 23.

14 At page 98 of the Transcript for day 55 of the hearings held on 16 July 2019.

15 Ibid, para 2.

16 Paras 52-58 of Mr Mulaudzi’s statement signed on 26 March 2019.

17 Para 360 of Dr Matjila’s statement signed on 17 July 2019.

18 Para 69 of Mr Mulaudzi’s statement signed on 26 March 2019.

19 Paras 28 – 41 of Mr Motau’s statement signed on 21 May 2019.

20 At page 27-28 of the Transcript for day 55 of the hearings held on 16 July 2019.

21 Ibid. page 33.

22 At page 8 of the Transcript for day 20 of the hearings held on 26 March 2019.

23 A copy of the revised proposal is attached as annexure ‘D’ to Mr Royith Rajdhar’ statement of 18 March 2019. See para 10.4.

24 Para 35 of the Budlender Report.

25 At page 70 of the Transcript for day 53 of the hearings held on 11 July 2019.

26 The Fit and Proper requirements are addressed in detail in Chapter V of the report.

27 Reference is made to these case studies throughout the report however detailed reference is made to each transaction as a case study, in Term of Reference 1.1 and elsewhere in the report.

28 Para 69 of Mr Mulaudzi’s statement signed on 26 March 2019.

29 Para 499 of Dr Matjila’s statement signed on 17 July 2019.

30 Page 69 of the Transcript for day 20 of the hearings held on 26 March 2019.

31 At page 6 of the Transcript for day 23 of the hearings held on 2 April 2019.

32 Para 21.5 of the Motau report.

33 A copy of the legal opinion is annexure ‘CP15’ to Mr Christopher Pholwane’s statement.

34 At page 104 of the Transcript on day 45 of the hearings held on 24 June 2019.

35 Page 10 of Mr Mayisela’s statement signed on 27 February 2019.

36 Para 3.3.4 of Ms Sandra Beswick’s statement signed on 27 February 2019.

37 At page 46 of the Transcript for day 5 of the hearings held on 29 January 2019.

38 Para 24 of Ms Menye’s statement signed on 6 March 2019.

39 At pages 4-5 of the Transcript for day 53 of the hearing held on 11 July 2019.

40 Ibid at page 72.

41 At page 26 of the Transcript for day 1 of the hearings held on 21 January 2019.

42 At page 105 of the Transcript for day 51 of the hearings held on 9 July 2019.

43 See ‘Definitions’ at page 7 of the PEPs Policy.

44 Ibid. See definition of ‘domestic PEPs’ at pages 7-8.

45 At 15 of the PEPs policy.

46 See the ‘Scope’ of the policy at 5.

47 See ‘Purpose of the policy’ at 5.

48 See ‘Objectives’ of the policy at 5.

49 See application of the policy and exclusions at 5-6.

50 At page 201 of the Transcript for day 61 of the hearings held on 12 August 2019.

51 Paras 24-25 of Mr Vuyo Jack’s statement signed on 4 March 2019.

52 Paras 58.1-58.3 of Mr Paul Magula’s statement signed on 11 March 2019.

53 Para 2.2.2. of Mr Christopher Pholwane’s statement signed on 22 January 2019; for additional detail, see also ToR 1.13.

54 Para 80 of Dr Matjila’s statement signed on 15 July 2019.

55 At page 86 of the Transcript for day 59 of the hearings held on 24 July 2019.

56 Ibid. page 68.

57 At page 73 of the Transcript for day 26 of the hearings held on 9 April 2019.

58 At pages 103-105 of the Transcript for day 55 of the hearings held on 16 July 2019.

59 For details see the Sekunjalo Case Study in Chapter III of the report.

60 A copy of the investment strategy is attached as annexure ‘A2’ to Mr Abel Sithole’s statement.

61 A copy of the memorandum is attached as annexure ‘B4’ to Mr Abel Sithole’s statement.

62 It should be noted that the standard of materiality, especially from an auditing point of view, comprises of issues that are material by amount and material by nature. Often the latter is not intrinsically considered by people when assessing ‘materiality’. For example, the information about activities within the DoA but not within reasonable fiduciary duty is equally material to amounts over R2 billion or R10 billion. Thus, information about material activities known by the PIC but not disclosed to the GEPF would fall foul of this element.

63 Section 8(10)(a)

64 At pages 78 and 80 of the Transcript for day 58 of the hearings held on 23 July 2019.

65 Paras 416-417 of Dr Matjila’s statement.

66 Ibid.

67At page 37 of the Transcript for day 60 of the hearings held on 25 July 2019.

68 Para 484 of Dr Matjila’s written statement signed on 17 July 2019.

69 Para 407 of Dr Matjila’s statement.

70 At page 24 of the Transcript for day 14 of the hearings held on 12 March 2019.

71 Para 33 of Mr Makuti’s statement signed on 18 March 2019.

72 At page 29 of the Transcript for day 55 of the hearings held on 16 July 2019.

73 See the TOSACO case study in Chapter III.

74 Para 4.1.11 – 4.1.12 of Mr Mahlangu’s statement signed on 1 October 2019.

75 Ibid. para 4.1.18.

76 Para 50 of Mr Motau’s statement signed on 21 May 2019.

77 At pages 101-102 of the Transcript for day 38 held on 21 May 2019.

78 Para 118 of Mr Motau’s statement signed on 21 May 2019.

79 At page 5 of the Transcript for day 62 of the hearings held on 13 August 2019.