Fin24.com | PIC hits back at City Press, UDM

The Public Investment Corporation (PIC) has hit back at both media reports about its investment processes and the United Democratic Movement‘s (UDM) allegations of corruption, saying the allegations are potentially causing “unnecessary panic”. 

The UDM has called the PIC of an “iceberg of corruption”, while City Press published reports regarding the PIC‘s relationship with VBS Mutual Bank, as well as claims by a former PIC executive that there had been .

Africa‘s largest asset manager on Wednesday issued a statement addressing recent reports by City Press which implied that it had been “reckless” in carrying out its duties, it said. 

“Sensational headlines, poor news analysis and impaired logic by some journalists have the potential to cause unnecessary panic among pensioners, beneficiaries and pension contributors about the security of their money,” the statement read.

“Such reporting has the potential to cause a systematic risk to the South African economy, given the size of the PIC’s portfolio, the fact that it is the largest investor on the JSE, and given the role the institution plays in the broader financial services eco-system.”

In the statement, PIC addresses several allegations linked to VBS Mutual Bank, among other things.

VBS ‘catastrophe‘

On Sunday, City Press reported on how the “catastrophe” at VBS Mutual Bank occurred. In the report, the paper questioned why the PIC – which has a 27% interest in VBS – did not provide the R1.5bn needed to ease its liquidity crisis. 

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The paper further stated that instead, “powerful proxies with close links to PIC” had approached the bank‘s curator, implying that the PIC had engineered VBS Bank‘s collapse.

According to the PIC‘s statement, it had not bailed out VBS Mutual Bank because “[the PIC] has no business, and indeed no investment mandate, to bail-out poorly run banks and, in particular, one that has been placed under curatorship by the South African Reserve Bank.”

The PIC further called allegations that it was behind the collapse of VBS “absurd”. 

“It is insidious and irrational to argue that the biggest asset manager in this country would allow a bank, one in which it itself is invested, to collapse,” the statement read. 

The PIC said its role as an asset manager required it to invest in different asset classes and companies across several sectors of the economy, and it distanced itself from the operations of investee companies.

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“The PIC is not directly involved in how investee companies are run on a daily basis. Investee companies are governed by their own independent boards of directors and operated by their own management teams.”

The PIC does not engage in a “policing function” of the daily operations of investee companies, but will, however, engage with management and boards of companies on proposals to address shortcomings in governance, such as those related to empowerment and transformation, it added.

UDM allegations

The UDM, led by Holomisa, has in recent weeks written to President Cyril Ramaphosa to intervene at the PIC, . Mail & Guardian has since reported that Lebashe Investment Group and Harith General Partners have taken legal action against the UDM in response.  

For its part, the PIC said the allegations of corruption were “unfortunate and lack substance”.

The UDM had also brought forward an urgent application to the North Gauteng High Court to have PIC CEO Dan Matjila suspended. “The PIC intends to oppose this application and is seeking appropriate legal advice to this effect,” the PIC said.

It added that the letters sent to the president would not deter it from defending itself in court.

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The PIC further promoted its track record of being a “professionally run public institution”,  adding that the Auditor-General had not released adverse findings on audits of its investments.

“Journalists may disagree with the PIC‘s investment decisions, but they are not investment specialists. They cannot prescribe how the PIC conducts its affairs as an asset manager, particularly in light of the PIC’s investment performance,” the PIC said.

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