President Cyril Ramaphosa has called for the implementation of the various recommendations contained in the damning report into alleged improprieties at the Public Investment Corporation (PIC).
The release of the Judicial Commission of Inquiry report on Thursday comes after President Cyril Ramaphosa received the document in December 2019. The commission was chaired by retired Judge Lex Mpati, supported by Emmanuel Lediga and Gill Marcus.
In the report, the Commission details findings against some current and former members of the PIC Senior Management and Board.
“The Commission largely attributes improprieties to the PIC Senior Management for failure to manage decision-making in a professional and honest manner, and failure to abide by due processes and relevant prescripts,” the President said in a statement issued on Thursday.
The Commission showed that the impropriety was worsened by the fact that the PIC Board was not functioning well, and Board involvement in investment decisions compromised their ability to exercise oversight over the PIC.
The Commission’s report makes recommendations that require urgent attention and action by different State institutions, including the criminal justice system, National Treasury and the reconstituted PIC Board.
“To this end, and in keeping with the recommendations in the report, we will be forwarding it to the National Prosecuting Authority and all relevant regulatory authorities for their consideration,” said President Ramaphosa.
The President released the report, together with a high level roadmap on the way forward. Different State institutions, including the Board, will further communicate the details of the implementation plans.
National Treasury, the Presidency said in the statement, has been tasked with developing a detailed plan of action for itself and the Board of the PIC, and with monitoring the implementation of this plan.
It will report to the President’s office on progress in implementation steps at regular intervals.
Said President Ramaphosa: “The Commission implicates a number of individuals in wrongdoing. The Commission gave relevant persons the opportunity to be heard at the hearings it held. Any follow-up investigations, based on the recommendations made, will follow due process and therefore give them further opportunity to be heard before any steps are taken against them.”
President Ramaphosa appointed the Mpati Commission to inquire into:
- Whether there was any impropriety in the investment decisions at the PIC and associated improper personal gain by parties;
- The governance and operational model of the PIC;
- The allegations contained in information on the PIC by “James Nogu’’ (and others) and the ramifications thereof;
- Human resources-related matters such as victimisation and remuneration including performance awards;
- Possible political interference in the operations of the PIC; and
- The manner in which the PIC handled regulatory aspects with regards to key legislation such as the Financial Advisory and Intermediary Services (FAIS) Act and other legislation.
Disregard of policies
In the report, the Commission of Inquiry has made adverse findings on numerous transactions and on actions of various individuals in investment decisions.
The Commission highlights widespread disregard of PIC policies and processes on the transactions by PIC Management and certain Board members. Involvement of employees and non-executive Board members in investee companies must be reviewed.
The Commission recommends that the relevant Delegations of Authority be reviewed by no later than June 2020.
The management of conflicts of interest also require review.
Potential criminal behaviour has also been highlighted, which should followed up by law enforcement agencies.
These practices have led to situations in which the PIC lost a lot of funds, which must be urgently recovered. Civil actions will be instituted in this regard.
The Presidency said it is also worrying that the Inquiry shows that the PIC has not shown the urgency to salvage whatever money it can recover.
“The PIC must recover all the monies utilised in irregular transactions or unlawfully paid out. The National Treasury will be tracking developments in this regard,” the Presidency said.
Where relevant, the statement said, the PIC and Government Employees Pension Fund (GEPF) should jointly investigate whether monies were paid and properly accounted for, and whether any of these monies should be recovered. The Commission recommends this be done within 6 months of the report’s publication.
Straightening out the GEPF
The Commission recommends that certain steps be taken at the GEPF to secure its own position such as a review of the role, relationships, nature and frequency of meetings between the GEPF and PIC, and ensuring appropriate interaction at the required level actually takes place.
Additionally, the report shows that there is a large number of assets that are in distress, and the PIC should urgently devise a stronger mechanism to deal with this and recover whatever it can.
The report has also found that it is highly likely that some sections of the FAIS Act have been contravened. The Commission suggests that parties or former parties could have contravened laws dealing with issues such as corruption and bribery, protected disclosures, electronic interceptions and sections of the Companies Act.
Criminal matters will be referred to the relevant authorities.
The Commission also recommended that the PIC ensure that all pre- and post-conditions for all investments made have been fully met and implemented, and that effective processes and systems are in place to properly monitor the investment post disbursement.
In this regard, those responsible for failing to implement conditions precedent to investments ought to be held to account.
President Ramaphosa said: “I trust that the implementation of the actions above and the detailed steps set out in the report shall put the PIC in a much stronger position to face the future and be an institution we can all be proud of.” – SAnews.gov.za
