JOHANNESBURG (Reuters) - South Africa’s state asset manager needs a major overhaul, a judicial inquiry told President Cyril Ramaphosa, after finding that some executives had repeatedly violated legislation and acted dishonestly and that there was ineffective governance.
The findings, contained in a report published by Ramaphosa’s office on Thursday, deal another blow to the reputation of the Public Investment Corporation (PIC), one of Africa’s largest fund managers.
The PIC oversees more than 2 trillion rand (£95.8 billion) of investments on behalf of clients including the Government Employees Pension Fund, holding large stakes in blue-chip companies on the Johannesburg Stock Exchange and bonds of prominent state firms like struggling power utility Eskom.
It has been mired in controversy for several years after news reports alleging that former executives had misused funds and made careless investment decisions.
Ramaphosa said the inquiry’s report required the urgent attention of the criminal justice system, finance ministry and PIC’s board of directors.
“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,” the report said.
Among the most damning findings, the inquiry found that two PIC directors had acted in collusion to unduly enrich themselves from a transaction to invest in VBS Mutual Bank. In a deal to invest in technology company Ayo it found that former CEO Dan Matjila had acted without integrity.
Matjila, who resigned soon after the inquiry was set up, has denied the allegations against him. He was not available for comment on Thursday.
The inquiry said the PIC’s operating model needed to evolve for it to operate more effectively.
“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,” it said.
A PIC spokesman could not immediately comment on the inquiry’s report.
Ramaphosa appointed the inquiry into the PIC in 2018. It held hearings over eight months in 2019 and delivered its report to Ramaphosa in December.
Ramaphosa said the PIC must recover all money that was used irregularly or unlawfully paid out. “Potential criminal behaviour has also been highlighted, which should be followed up by law enforcement agencies,” he added.
Reporting by Alexander Winning; Editing by Gareth Jones, Kirsten Donovan