Sekunjalo group asks parliament's finance committee to probe disputes with PIC, other institutions

17 March 2021 - 20:31
The Star newspaper building in the Johannesburg CBD.
The Star newspaper building in the Johannesburg CBD.
Image: KATHERINE MUICK-MERE

The Sekunjalo group has turned to parliament to intervene in a dispute between itself and associated companies and the Public Investment Corporation (PIC), accusing the corporation's new leadership of being hostile towards the group.

Senior leaders of Ayo Technology Solutions and the Independent Media Consortium called on parliament's standing committee on finance to investigate the conduct of institutions which they claimed were undermining democracy and business confidence in SA by actively engaging in destroying their businesses and the Government Employees Pension Fund (GEPF) value, as it relates to Ayo.

They also complained about negative media campaigns, claiming there were desperate attempts to either launch a hostile assault on Independent Media for a takeover of the business or, failing that, to destroy the business so that there are no competitors to the other mainstream media.

They were appearing before parliament's standing committee on finance (Scof) to talk about concerns it previously raised about the Mpati commission's final report.

But, in presentations to parliament, senior managers lamented what they said was a smear campaign and attacks by a number of institutions.

“We have no intention to talk about the outcome of the PIC commission except to say that there was no evidence of corruption in the report,” said Dr Wallace Mgoqi, chairperson of Ayo.

We have no intention to talk about the outcome of the PIC commission except to say that there was no evidence of corruption in the report.
Wallace Mgoqi, Ayo chairperson

Mgoqi accused the PIC of driving a political agenda against the company and undermining the business through both overt public and covert actions.

He requested that Scof investigate the conduct of institutions which he said were undermining democracy and business confidence in SA by actively engaging in destroying Ayo's and the GEPF's value.

These included the JSE, banking institutions, the Companies and Intellectual Property Commissionand the Financial Sector Conduct Authority, the PIC and National Treasury officials, who were all part of a hidden hand in the cancellation of contracts, banking facilities and support by customers and service providers to Ayo.

No bank facilities were available to them and Independent Media had to pay mostly cash for its working capital needs, including purchasing paper, printing and logistics costs of more than R700m annually.

“This conduct has huge reputational impact for SA business reputation and business confidence especially as Ayo has done nothing wrong and has been transparent about business dealings from inception to date,” said Mgoqi.

Mgoqi said the smear campaign against Ayo started in March 2018.

The company had also found itself caught in a battle at the PIC between different factions as collateral damage.

Mgoqi said up until March 2018 there was no problem with the Ayo listing but asset managers and hedge-funds took advantage of the negative publicity against Ayo to undermine its value.

Mgoqi spoke of an extensive collaboration between journalists and public commentators and private corporate entities which was designed to do maximum damage.

“Unusually in the history of this country CIPC has never intervened to overturn a PIC investment, [but] suddenly CIPC as a result of media and political pressure started litigation,” he said.

He said that the CIPC case was dismissed by the courts showed the frivolous nature of its complaint. But, the impact of this and the PIC commission of inquiry had devastating consequences for Ayo, he said.

This conduct has huge reputational impact for SA business reputation and business confidence especially as Ayo has done nothing wrong

Tafadzwa Hove, the chief operating officer of Independent Media, sought to explain the PIC investment transaction with the company.

He dismissed as myths that the PIC had invested R2bn in Independent Media, saying this was deliberately propagated by detractors of the company to create an impression that only the PIC funded the transaction.

The reality, Hove said, was that the PIC has invested, for its own account, in Independent Media an amount of R167m for an equity stake of 25%; R133m to acquire an existing portion of a shareholders' loan and R285m bridging loan (prior to preference shares conversation) as part of the leveraged buyout (funds all to the seller).

It provided R215m of the R365m required to fund Independent Media Consortium (SIM) 55% equity into Independent Media.

“The total PIC exposure across to Independent Media and SIM at the time was R850m in total, all of which was paid over to the Irish [previous owners]as part of the purchase consideration.

He said since 2013, the PIC has not supported Independent Media with a single cent.

Hove then focused on what he said were attempts by Sanef to stop the transaction which later became an intensive smear campaign by competitive media houses who feared the commercial competition of a black-owned enterprise as well as a competitor and diverse narrative now in the public space.

He said the PIC also reneged on its support for the transaction by reducing its support from R2bn to R850m.

PIC CEO Abel Sithole requested time to prepare a response to the allegations.

MPs were concerned that the presentations had nothing to do with the Mpati commission.

The PIC commission found that the Sekunjalo Group investments showed a marked disregard for PIC policy and standard operating procedures.

Among its findings were that:

  • Proper governance was absent or poor, and risk identification processes were downplayed by looking for risk mitigants to make sure the deals were approved,
  • 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 and that the “close relationship” between then PIC CEO Dan Matjila and Iqbal Survé (chair of Sekunjalo and executive chair of Independent Media) created top-down pressures that the deal teams experienced to get the requisite approvals.
  • The commission also found that board members within the Sekunjalo Group of companies were not independent.

In his closing remarks, Surve said they would do everything possible to find amicable solutions and to make sure there is value for pensions and GEPF and the PIC.

“We will continue to engage with the PIC to find a solution not withstanding the difficulties that we have presented today,” he said.

He was adamant that there was no disputable fact on the part of Ayo or Independent Media. “No one can dispute any singular facts in these presentations,” he said.

As far as Sekunjalo was concerned, there is absolutely no loan from the PIC to either Ayo or Independent Media, and that the PIC invested in those companies, he said.

DA MP Geordin Hill-Lewis said the presentations sounded like a fairytale or fantasy. He had mocked Surve by referring to him as "a champion of righteousness" that everybody else was out to get.

Surve said: “During apartheid, the architects of media from Naspers to Caxton and others were people that were lauded for integrity for defending the brutal apartheid system which was a crime against humanity, so I'm not surprised when people like myself defend our people across the nation, suddenly that's not integrity.

“You see, integrity is when you defend apartheid and its brutality, integrity is not, according to certain people when you defend the people of this country. I am extremely proud that I defend the people of this country."

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