The de facto owner of Ayo Technology Solutions, Iqbal Survé, will almost certainly have to return to the commission of inquiry into the affairs of the Public Investment Corp (PIC) to respond to serious allegations levelled at him in testimony from two previous executives of the company.
The inquiry, which is being chaired by retired Supreme Court of Appeal judge Lex Mpati, heard testimony this week from Siphiwe Nodwele, Ayo's one-time chief investment officer, and Kevin Hardy, its previous CEO. The two executives were hired shortly before Ayo Technologies listed on the JSE, in December 2017.
Survé controls the company through ownership of related entities, most notably African Equity Empowerment Investments (AEEI), which holds 49% of the shares.
The state-owned PIC was the only asset manager to subscribe for shares at Ayo's listing, investing R4.3bn at R43 a share to buy a 29% stake.
The PIC is the largest single investor in Africa, with funds in excess of R2-trillion. Most of the funds comprise the retirement savings of SA's public servants, which are invested on behalf of the Government Employees Pension Fund.
Because this is a defined benefit fund, taxpayers are responsible for meeting any shortfall in the benefits provided to pensioners.
Nodwele and Hardy's allegations appeared to support testimony from executives at the PIC concerning irregularities around the investment into Ayo, including the rushed deadline imposed by the company on the PIC to conduct its due diligence and the exorbitant price paid for the shares.
Nodwele shed more light on the reason the listing was rushed in December 2017, which coincided with the ANC elective conference at Nasrec.
"There was apprehension within the group, I imagine from Iqbal himself, that any changes to the leadership of the ANC would lead to changes in the PIC management and would thus remove whatever influence he had over the likes of [the PIC's previous CEO] Dan Matjila," said Nodwele .
The manner in which political connections have been used to gain access to PIC funds has been a common theme in testimony at the inquiry.Many of the controversial transactions being scrutinised have involved deals introduced or proposed to Matjila by people with connections to the ANC.They included a R9bn loan extended to a consortium led by former trade unionist Jayendra Naidoo to buy Steinhoff shares, which led the PIC to writing off over R4bn. The PIC also made a disastrous foray into Mozambique to develop a palm oil refinery, an investment introduced by a son of former finance minister Nhlanhla Nene.Matjila resigned last year and is yet to appear before the commission.That Survé could even attempt to persuade the PIC to invest in Ayo when PIC loans to another of his companies, Independent Media, were in default, has focused attention on his relationship with Matjila.But perhaps the most damning part of Nodwele's testimony was his opinion on Ayo's valuation. He said he thought Ayo was worth only 5% of what the PIC paid for it at the time of its listing.So far, the investment has been a disaster for the PIC. The share price has fallen 66% since listing at R43 to a last-traded price of R14.50.Hardy also made references to the defective standards of corporate governance applied at the company, something that ultimately contributed to him resigning in August last year.In one instance, in March 2018, he was informed by Khalid Abdulla, the CEO of AEEI, that he urgently needed to approve a loan of R400m to 3 Laws Capital, a registered investment manager in which Survé has a stake."What I did not realise at the time was that the money could be transferred from the Ayo bank account without my authority and the money had been transferred before the resolution had actually been fully signed by the board," said Hardy.After having enough of the interference by Survé and other executives at AEEI, Hardy communicated his intention to resign at the end of August.He received a message from Survé the following day asking to meet with him when he was next in Johannesburg in order to put to Hardy "an innovative idea which is very lateral thinking".The pair met for lunch the following week, when Survé "proceeded to offer that he would move my family to an all-expenses-paid [V&A] Waterfront apartment in Cape Town. All our expenses would be covered, including school fees, a chauffeur at our beck and call, etcetera. I respectfully declined the offer which was an outright bribe," said Hardy.Survé, in a statement, later denied he had attempted to bribe Hardy to stay, saying that Hardy had "misinterpreted" his intentions.The commission resumes tomorrow with the cross-examination of United Democratic Movement leader Bantu Holomisa by lawyers representing the Harith and Lebashe investment companies. The commission must provide its final report to President Cyril Ramaphosa by the end of July.thompsonw@businesslive.co.za..