PIC crisis deepens as four more directors quit

The Public Investment Corporation (PIC) has been left in tatters after four more non-executive directors resigned on Tuesday, according to three well-placed sources. It comes a day after finance minister Enoch Godongwana sent them a notice for a July 27 meeting threatening to dissolve the board, and leaves just five of the 11-member board standing.

The four are Lerato Makwetla, an admitted attorney and Government Employees Pension Fund (GEPF) representative; Lindy Bodewig, National Treasury’s representative and a public sector accounting specialist; Mpumelo Maseko, the former head of the PIC’s Isibaya Fund; and Dorothy Kobe, a treasury and capital-markets specialist formerly at the Land Bank.

They joined two earlier non-executive departures: Thabi Nkosi, an agricultural economist, development-finance professional and chair of the Land Bank; and Nosiphiwo Balfour, a property and investment executive who represented the GEPF alongside Makwetla. Both resigned on July 15, two days after CEO Patrick Dlamini’s suspension.

That leaves David Masondo, the deputy finance minister and PIC chair; Stephen Boikanyo, a finance and banking lawyer; Mugwena Maluleke, the PIC’s deputy chair and representative from the South African Democratic Teachers Union (Sadtu); Matimba Justice Shiburi, the Public Servants Association president and its PIC representative; and Lindiwe Motshwane, Sadtu’s national treasurer and its PIC representative.

‘All hell broke loose’

“The entire board structure has been hollowed out and collapsed,” a person familiar with what has happened says, asking to remain anonymous. “The chair of listed [investments] has resigned, the chair of the unlisted subcommittee has resigned, and the chair of the risk subcommittee has resigned as well, plus the members. There’s none – not a single one – with investment experience left.”

The collapse of the PIC, which oversees R3.7-trillion in assets – mostly that of civil servants – is the culmination of a battle over the appointment of three new chief investment officers (CIOs), a fight that became, in the words of one board member, the moment “all hell broke loose”, and that reopened a deeper question over who really runs Africa’s largest asset manager.

The single CIO role was to be split into three: one overseeing unlisted investments, another listed investments, and a third property and infrastructure. The aim was to sharpen oversight of each portfolio, with one of the CIOs eventually selected as the investment division’s overall executive director.

People familiar with Dlamini’s thinking say he supported the three-CIO structure because he wanted greater leadership focus in the areas where the PIC is most exposed.

The problem, several people say, was over who would control the appointments – and bear responsibility for them.

“Initially, the process looked orderly,” the board member says. “A panel would draw up shortlists, candidates would be assessed, and the panel would reconvene to make recommendations to the full board.”

Lines of accountability

For the listed CIO role, directors were unanimous. There was only one objection to the preferred property and infrastructure candidate. It was the unlisted portfolio – long the PIC’s most troubled investment area – where the split emerged.

A person familiar with Dlamini’s position said he wanted “somebody very seasoned, very high-level, with real expertise” to run unlisted investments. Masondo, according to a source linked to the GEPF, “wanted a junior”.

The same person said Dlamini resisted being left with executives he had not selected or could not direct, but for whose performance he would ultimately be accountable, a position Godongwana supported.

“If the CEO is ultimately accountable for performance, he has to own the executive appointments,” another person close to the board said. “Otherwise, you get people who feel more beholden to the chair and the board than to the CEO, and that bends governance out of shape.”

Masondo relied on a resolution adopted by the previous PIC board in 2023, which had taken the lead on an earlier CIO recruitment process, to justify making this round of appointments board-led. A board member said some new directors were unhappy that the earlier mandate was being used without being returned to the new board for ratification.

Minister Godongwana also questioned the creation of three CIO posts, arguing that the PIC’s memorandum of incorporation refers to only one CIO. The counterargument, one person says, was that the role could be unbundled while retaining a single executive director in the investment division.

Nosedive

The CIO fight was not the only one. It ran with another: the fallout from a R411m settlement paid to a company called Acapulco and a forensic investigation by PwC into how that payment came about.

The dispute traces back to 2013, more than a decade before Dlamini’s appointment, when the PIC lent R333.2m to Acapulco, a company controlled by businessman Kagiso Matjila, to buy a 25% stake in Lanseria airport. The loan was never repaid and, as interest compounded, it grew to more than R600m. When Acapulco defaulted in 2023, the PIC enforced its security and took over the shares.

Matjila demanded to be paid out for his stake, and an arbitration followed in which the central battleground was Lanseria’s valuation. A valuation was done by accounting firm Crowe, which was hired by the PIC and Acapulco after both sides rejected a previous BDO draft. The award went Acapulco’s way, and in October, the PIC settled at R411m plus R20m in interest. The PIC’s lawyers had weighed an appeal but advised that a challenge carried “limited prospects of success”.

Matjila, responding to questions from Currency’s sister title, the Financial Mail, rejected any suggestion the settlement was improper, saying Crowe’s valuation was produced by jointly appointed independent experts and tested in the arbitration. What is now being aired, he said, is “a restatement of the losing arguments, litigated through the press”. His full response appears in this week’s FM.

Dlamini is understood to argue that the airport itself was never part of the fight: Lanseria was not a party to the arbitration or the valuation, had no dispute with the PIC, and received no payment – the settlement went to Acapulco. He is also understood to have pointed out that the process that led to the payment began long before he joined the PIC and that he arrived “at the tail end”, when the payment was effected.

His concern, according to a person with knowledge of the matter and ties to the GEPF, was with how the number was reached: “Patrick is arguing that we settled [with] somebody at an amount that was not right. The valuation of that property, the way it was done, was messy, and he blames internal people. He wanted to discipline internal people.”

That prompted the PwC investigation. The firm’s draft report questioned how the settlement figure was calculated and how Lanseria was valued. It examined the sacking of a joint expert, Crowe’s appointment, a compressed arbitration timetable, and who – if anyone – was accountable for a payout to a borrower that had defaulted.

Instead, those close to Dlamini say, the matter became part of a campaign to remove a CEO who was questioning past settlements and pushing for tougher governance, a lot of which could’ve been avoided had there been less political meddling in the PIC’s affairs and investments.

The Mpati commission said as much, and it was the one recommendation the government never implemented. “Had parliamentarians upheld that,” says the person tied to the GEPF, “we would not be in this place.”

This story was updated with information about the Acapulco deal.

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_{Top image collage: Gallo Images/Brenton Geach (David Masondo); Ashraf Hendricks/GroundUp (Enoch Godongwana ); Rawpixel; Currency.}