Today's Labour News

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picFin24 reports that testimony was given on Monday at the inquiry probing the affairs of the Public Investment Corporation (PIC) that government pension fund holders were subsidising BEE deals entered into by the corporation in the absence of a strong investment rationale.  

According to Paul Magula, former head of risk and compliance at the PIC, the company had to write off vast amounts of money as a result a meltdown in Steinhoff shares.  Magula further testified that focus on the Steinhoff financial loss had been focused on the listed entity, but not on the unlisted vehicle where the PIC had invested R9.3bn – namely the Lancaster Group, an empowerment partner led Jayendra Naidoo.  According to Magula, Naidoo held a 100% shareholding in Lancaster when he approached the PIC, but it was later restructured, with the Government Employees Pension Fund (GEPF) taking 50%, Naidoo holding 25% and the other 25% controlled by a community trust.  According to Magula, there was no strong investment rationale for the deal.  "For GEPF, the debt funded exposure never made commercial sense.  No commercial bank would have funded the same structure," he asserted.  Turning to the AYO Technology Solutions investment of R4.3bn in late 2017, Magula said "due diligence was waived", which he described as "unheard of", given that the PIC was underwriting the investment.

  • Read the full original of Sibongile Khumalo’s report in the above regard at Fin24
  • Read too, PIC's R9.3bn loan to Jayendra Naidoo was 'reckless', says former executive, at BusinessLive (paywall access only)


Get other news reports at the SA Labour News home page