How PIC ‘robbed’ Paul for Peter

2019-02-04 16:01

After it promised to invest R4.3bn, the state-owned asset manager liquidated ‘certain positions held by the GEPF as it did not have the agreed amount

The Public Investment Corporation (PIC) agreed to invest R4.3 billion in Ayo Technology Solutions, the IT group in which businessman Iqbal Survé holds a large indirect stake, on behalf of the Government Employees’ Pension Fund (GEPF) – without having the money it needed to do so.

City Press has obtained a copy of a letter, dated December 19 2017, written by then PIC chief executive Daniel Matjila and addressed to Annalie de Bruyn, the JSE’s general manager of corporate finance.

In the letter, Matjila writes that, “due to a liquidity issue”, only R500 million of the subscription consideration of R4.3 billion would be available on the day that Ayo listed on the JSE, which took place on December 21 – two days after the letter was written.

The JSE confirmed to City Press on Saturday that it received the letter.

“Due to a liquidity issue, only R500 000 000 of the subscription consideration will be available on listing. The balance of the subscription consideration will be available on Friday, December 22 2017,” Matjila wrote.

“In this regard, the PIC has today liquidated certain positions held by the GEPF and will have the requisite funds available on December 22 2017 by no later than 2pm.”

In his letter, Matjila did not say which GEPF assets were sold to finance the Ayo deal.

The deal initially cost the PIC R4.3 billion – it bought more than 99 million shares in Ayo at R43 per share.

These shares have since fallen in market value to R20 per share.

However, City Press has previously reported that almost the only person trading these shares is Survé himself. Survé and Ayo denied the allegation.

In another development, City Press established last week that Ayo surreptitiously snatched its only major deal from under the nose of the Industrial Development Corporation (IDC) and a group of black entrepreneurs.

Daniel Matjila Picture: Dean Hutton/ Bloomberg

This is ironic as Ayo has repeatedly denounced its critics as being part of a shadowy campaign “to prevent the transformation of the information and communications technology industry”, most recently in an article last week in Independent Media newspapers, which is controlled by Ayo’s ultimate controlling shareholder, Survé.

The IDC told City Press last week that, as of September 13, it was in the final stages of funding a deal for a small black information and communications technology group to buy 60% of Sizwe Africa IT Group.

Later in the day, Ayo suddenly announced that it had bought 55% of the same company for R300 million.

The IDC was totally in the dark about its deal being taken over by another party and is pursuing the blindsided black partners to the deal for a 1% cancellation fee of R207 000.

A sale and purchase agreement with the IDC-funded group had already been signed and, “prior to September 13, the IDC was quite optimistic that the transaction will be concluded”, said the IDC’s spokesperson, Zama Luthuli.

Ayo did not respond to emailed queries on Friday.

However, the IDC has taken a dim view of the manoeuvre at Ayo and its new subsidiary Sizwe.

“In our view, it is not acceptable practice for a target company to negotiate with another prospective purchaser while having already signed a formal sale of shares agreement with a buyer,” the IDC’s Luthuli told City Press.

The IDC had initially approved funding of R207 million in March, while the black consortium would provide the balance of R67 million to buy out 100% of Sizwe.

Things started going sour in about June, when the 40% owner of Sizwe, JSE-listed Mustek, did an “about turn” and decided not to sell its 40%.

The deal was restructured for the IDC and the black consortium to only buy 60%.


The golden thread connecting Ayo and Sizwe is the ANC’s embattled chaplain-general Vukile Mehana.

Mehana, who landed in trouble last month with his derogatory comments about female clerics, is simultaneously a 10% shareholder in Sizwe, the chairperson of Mustek and the chairperson of African Equity Empowerment Investments (AEEI).

AEEI is the majority owner of Ayo and is controlled by Survé.

The deal to buy 55% of Sizwe would directly benefit Mehana with millions of rands in cash – money drawn from the PIC investment in Ayo.

When contacted on Friday, Mehana declined to comment, and referred questions to Sizwe and Ayo.

City Press has previously reported how the only other major use of these funds was to pay dividends, mostly to AEEI and, ultimately, to Survé.

Read: Who is buying into Ayo?

When asked if Mehana had been identified as a possible conflict, the IDC only said that “Mehana was highlighted as a PEP [politically exposed person] by being the chaplain of the ANC”.

In response to questions on Friday, a Mustek spokesperson said: “Mustek can confirm that it received an offer to sell its 40% stake in Sizwe.

The offer presented was not accepted, and Mustek never signed any sale and purchase agreement.”

Asked whether Mehana played any role in brokering the alternative deal with Ayo, the spokesperson said: “We do not have knowledge of what role, if any, he played.”

The IDC said that Mustek’s initial agreement to sell its shares and its subsequent change of heart “went against the signed sale and purchase agreement of 100%”.

GEPF spokesperson Matau Molapo said the organisation would not be commenting on the Ayo transaction because the details would be part of its presentation to the commission of inquiry into the PIC, which is looking at alleged improprieties at the fund manager.

She said the GEPF was, however, still waiting for the date on which it would appear before the commission.

Deon Botha, head of corporate affairs at the PIC, said: “The PIC’s investment in Ayo Technologies ... is a subject of investigation by the commission of inquiry into the PIC and of a PIC internal investigation. For this reason, the PIC is cautious not to discuss details relating to this transaction and others that the commission will be looking into.”


City Press has previously reported on numerous governance issues at Ayo, starting with the bizarre decision by the PIC to pump R4.3 billion into the company at a meeting in December 2017, mostly attended by acting officials and Matjila.

This money has been spent on little besides paying dividends and for the Sizwe deal.

PIC assistant portfolio manager Victor Seanie last week told the inquiry into the PIC that the Ayo investment was “highly irregular” and that due diligence processes at the PIC were steamrolled to push through the Ayo deal.

Late on Friday, the PIC announced that nine members of its board, which consists of 10 members including Mondli Gungubele, who is PIC chairman and deputy finance minister, had written to Finance Minister Tito Mboweni a letter dated Friday tendering their resignation.

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February 23 2020