Iqbal Survé's R4.3bn PIC piggy bank
How media mogul raided public-funded tech investment to prop up his empire - and pay his bills
Controversial media owner Iqbal Survé has been using the bank account of one of his companies, which received billions of rands of government pension money, as his personal piggy bank.
Ayo Technology, in which Survé is a shareholder through African Equity Empowerment Investments (AEEI), formerly Sekunjalo Investment Holdings, has been courting controversy since the Public Investment Corporation (PIC) announced it would invest R4.3bn in it to create the largest black-owned ICT company in December 2017.
The PIC paid R4.3bn for a 29% stake at R43 a share, when the company's real value at the time was said to be hovering around 15c a share.
The PIC also partly funded Survé's acquisition of Independent Newspapers, publishers of The Star, the Cape Times and The Mercury, in 2013. The Sunday Times last week reported on an explosive leaked recording of an Ayo board meeting in which Survé is heard plotting with other board members to mislead the PIC about why a key deal involving British Telecoms SA collapsed.
Survé has repeatedly denied allegations of financial mismanagement at Ayo, citing the company as a model of good governance and a model for empowering black people, trade unions and smaller groupings.
But documents - including e-mails, board meeting resolutions and voice recordings seen and heard by the Sunday Times - as well as interviews with former Ayo CEO Kevin Hardy and ex-chief investment officer Siphiwe Nodwele, have laid bare a company with scant regard for good corporate governance and financial probity.
The reckless manner in which Ayo has handled the billions of rands invested by the PIC could be in contravention of the agreement the company signed with the public asset manager. It is also the subject of a commission of inquiry into the PIC, Africa's largest asset manager.
The Sunday Times can today reveal that immediately after the PIC deposited the billions into Ayo's bank account, attempts were made to transfer huge sums of money to companies linked to Survé.
The company secretary twice took board members by surprise by sending out e-mails asking them to approve two resolutions to move R1.9bn out of the Ayo account.
The documents also reveal that, though Survé was not supposed to play any role in Ayo as he is not a director, he would at times get personally involved in structuring deals and acquiring stakes in companies he would benefit from. He also paid millions in membership fees to international professional associations.
Speaking out for the first time, Hardy and Nodwele said that though they had been the two most senior executives at Ayo, they actually had no power as their every decision had to be ratified by AEEI chief investment officer Malik Salie.
The two resigned in frustration after writing a letter to the Ayo board complaining of constant interference by AEEI. They said they were willing to testify before the commission of inquiry into the PIC.
They said that taking away decision-making powers from the CEO was a ploy to ensure Survé got what he wanted from the company. This included: Approval of a R400m loan to an investment company of which Survé is a director, earning a handsome R80m interest in under six months;
An attempt to invest an additional R1.5bn with other investments to "manage risk" and avoid "ending up like the Guptas when their bank accounts were frozen".
Getting Ayo to pay R1.8m to the World Economic Forum for Survé's membership fees.
Trying to transfer 20 IT professionals from Independent Media onto the Ayo payroll. An urgent resolution was drafted in March last year, three months after the PIC invested R4.3bn in Ayo, authorising the investment of R400m into 3 Laws Capital Investments. A company search shows that Survé is one of four directors of the company. Survé's sister, Aziza Begum Amod, is also a director.
The money was to be "invested" for a period of six months at an interest rate of 8.7%. The resolution was approved without a board meeting being held, and the money was transferred to 3 Laws Capital.
Hardy said "we were very uncomfortable" about this decision. "The resolution was eventually passed only on the condition that the money would be paid back by the end of August 2018 and with interest."
Nodwele said they were specifically told by former Ayo CFO Naahied Gamaldien that Survé had instructed his brother-in-law, AEEI CEO Khalid Abdulla, to ensure the transfer was made urgently.
"She [Gamaldien] quoted Khalid as saying that 'Doc [a reference to Survé] wants this transfer to be done before the weekend!'. To her credit, she fought back and required that a resolution be drawn up before any such transaction could take place," said Nodwele.
3 Laws Capital CEO Arthur Johnson on Friday confirmed that the money had been invested with the company. He said it had been returned to Ayo with interest. He could not say, however, why an investment company of which Survé is a director had been the chosen vehicle for this huge investment.
Though the annual financial statements of Ayo reflect the investment into 3 Laws Capital, they state that the board resolution authorising this was obtained in November last year. This, however, is contradicted by e-mail exchanges and a board resolution to this effect dated March last year. No board meeting was held to draft the earlier resolution.
When City Press first reported that Ayo had made a R400m investment in 3 Laws Capital, Ayo board chair Wallace Mgoqi vehemently denied it.
In another board resolution, drafted in July last year, the board of Ayo decided it would use PIC money to invest an additional R1.5bn with various asset managers. "To manage the investments, it was decided the company maximises its returns and manages its risk by deploying its cash on hand. The company agreed to invest R1.5bn with various asset managers," read the resolution dated July 11.
"Khalid's reasoning behind the request to move the funds out was that 'Doc's view is we need to learn from the Guptas' - in this he meant the freezing of bank accounts and therefore not being able to move money out. I couldn't believe that he said that with a straight face," said Nodwele.
The two former executives said they were surprised to receive an e-mail from the company secretary asking them to authorise the resolution, which had already been drafted without their knowledge.
"They were trying to move money into 3 Laws and other institutions," said Hardy. He and Nodwele blocked this move as there was no basis to reinvest PIC money externally.
Hardy said he also blocked another attempt to settle Survé's fees to participate at the World Economic Forum in Davos, Switzerland, to the tune of R1.8m.
He also told of how he blocked attempts to move 20 IT and digital staff from Independent to the Ayo payroll, effectively an attempt to use PIC funds to pay employees of his media company, which is struggling financially. "Takudzwa [Hove], the CFO of Independent, was asking me whether we can transfer the payroll of the 20 staff from next month. I said no, I'm not gonna do that," Hardy said.
Repeated attempts were made to contact Survé for comment. After an initial meeting on Thursday, when he declined to comment on the record, Survé promised to give his side of the story yesterday but did not.
The PIC declined to comment, saying its investment in Ayo was subject to an investigation by the commission of inquiry.
Last week the PIC board resigned amid damning testimony at the Mpati commission of inquiry. The inquiry has been tasked with investigating allegations of malfeasance involving specific investments, as well as reviewing the PIC's structure and practices.
Before the second day of proceedings, the board announced it was immediately suspending PIC head of listed investments Fidelis Madavo and assistant portfolio manager Victor Seanie for "blatant flouting of governance and approval processes" relating to the Ayo transaction.
Economist Iraj Abedian said the problem with the PIC's Ayo deal was that the PIC is not allowed to invest in venture-capital projects as they are high-risk. "They can invest in existing companies with established track records and profitability."