President Cyril Ramaphosa on Wednesday, October 17th, published broad-ranging terms of reference for the judicial inquiry into the Public Investment Corporation (PIC), which he said will be headed by retired judge Lex Mpati. Mpati is the former president of the Supreme Court of Appeal and will be assisted by former South African Reserve Bank governor Gill Marcus and prominent investment banker and asset manager Emmanuel Lediga.
The PIC, which manages R2-trillion in government pension and other funds, is the largest asset manager on the continent. However, it has been at the centre of persistent and continued negative reports over the past two years about alleged improprieties regarding investments and the conduct of its office bearers and employees.
The terms of reference have been expected since July when the inquiry was first announced. Of particular significance is their broad reach, beyond matters of governance only to an instruction to the commissioners to probe various controversial transactions. The inquiry is limited to events that took place in 2017 and 2018. David Maynier, who has been campaigning for greater transparency regarding the dealings of the PIC, said the party welcomed the inquiry, even though its limited scope will exclude some questionable investments, such as that in Independent Media in 2013.
“We think there are few things that will terrify the governing party more than a full-scale independent inquiry into the Public Investment Corporation,” said Maynier.
As the PIC is an important funder of empowerment transactions, it is inevitably subject to fierce lobbying, often by politically connected business people. Among the terms of reference is an instruction to probe whether the PIC has adequate measures in place to ensure that investments do not unduly “favour or discriminate against” prominent influential people, their immediate family members or known associates.
The terms of reference say that the commission will inquire and make findings on whether certain “transactions contravened PIC policy or resulted in any undue benefit for any PIC director or employee” and whether “any PIC director or employee used his or her position to improperly benefit another person”.
Transactions that would fall into this ambit include: the PIC’s private placement of R4.3bn in initial public offering of Iqbal Survé’s Ayo Technologies last December at a price that was regarded by the market as grossly overvalued; the PIC’s subsequent enthusiasm to invest in Survé’s Sagarmantha, which did not go ahead; and its investment in the S&S Oil refinery in Mozambique in which the son of former finance minister Nhlahla Nene was involved.