If the Public Investment Corporation (PIC) board had its way, Abel Sithole, the principal executive officer of the Government Employees Pension Fund (GEPF) would have been heading the R2 trillion investment organisation right now.
The PIC board submitted Sithole’s name for approval four months ago after a “lengthy, and thorough process” which began immediately after Dr Reuel Khoza was appointed interim chair in July 2019.
Ideally, the board had intended for Sithole to take over the position in March.
The PIC, which largely manages government employee pensions, has been without a permanent chief executive since the resignation of Dan Matjila in November 2018.
Finally, on Wednesday, Finance Minister Tito Mboweni announced that cabinet had given its approval for the board to proceed with Sithole’s appointment for a term of five years.
In a league of his own
“It took longer than we had envisaged,” PIC chairperson Dr Reuel Khoza told Moneyweb.
Negotiations regarding when Sithole will start in his new role at the PIC have not yet been finalised; it’s expected that Sithole will serve a short handover period to his successor at the GEPF where he has been serving as its PEO since July 2015.
“We want to believe that we can negotiate anywhere between a month or two months before he comes to the PIC full-time,” said Khoza, adding that it was not resolute.
The PIC placed a public advertisement and appointed the services of executive search firm Heirich and Struggles to find its new CEO in a search which garnered “no less than 200 people who understand something about the industry”.
This number was whittled down to 13 and, at last, screened further down to six potential candidates who would be interviewed.
A sub-committee of five board members was responsible for overseeing the appointment and Khoza said they interviewed five “very very good candidates” out of the six that were shortlisted
While he did not provide any names, Khoza said one of the candidates is “a group chief executive of a leading bank who was a serious contender”. The process was also sensitive to issues of gender and one “outstanding” candidate was a woman.
While the other candidates were exceptional, they were “not anywhere near as good as Sithole,” said Khoza.
A seasoned executive with extensive experience, Sithole is also the commissioner of the Financial Sector Conduct Authority (FSCA). Prior to his appointment at the GEPF he was deputy executive director at the Institute of Futures Research at the University of Stellenbosch’s Business School.
Sithole has served two terms as chairman of the Institute of Retirement Funds (IRF) and served on the board of the Financial Planning Institute (FPI) just to name a few. He holds a Master of Arts in International Relations and a Master of Philosophy in Futures Studies from the University of Stellenbosch, an MBA from the University of the Witwatersrand and a Bachelor of Arts from Lawrence University in the United States of America.
Khoza clarified that Sithole’s appointment did not constitute a conflict of interest because the one role is “principal” while the other is “agent”.
“The two work together,” he said. “Right now we are making the final preparations for implementing the recommendations of the Mpati commission and we [PIC and the GEPF] will be working closely together as a good number of the items we are dealing with will overlap”.
While Sithole will not have a difficult time in acquainting himself with the operations of the PIC, one of the grave tasks he faces will be “clarifying the vision and desired end state for the PIC and align everyone in pursuit of that vision,” said Khoza.
“Anyone who has that to do has their job well cut out for them,” he added.
Work has started
The process of implementing the Mpati commission’s recommendations is well under way with PIC individuals who benefited unlawfully from questionable transactions and breached governance and investment policies either being dismissed or undergoing disciplinary processes.
The PIC has also started a process to find a new chief investment officer and chief operations officer – positions that were eliminated when the PIC’s memorandum of incorporation was changed. The Mpati commission found that a result of this amendment weakened the corporate governance structures of the PIC as it created “a concentration of power at the level of the CEO and CFO”, the two roles which had been filled by Matjila and Matshepo respectively.
The commission found that Matjila had virtually collapsed the CIO position into the CEO because he had the final say on investments while More had “enormous authority, responsibility and power” as most of the non-investment departments reported to the CFO, given that the COO department was abolished.
Matjila was found to have acted improperly and in breach of his fiduciary duties in a number of investments and he and More were among the senior executives who “abused their positions of trust and responsibility and victimised employees”.
The applications for these two roles, including those of the chief technology officer and head of risk, closed in April.
“Now that Mr Sithole’s position has been endorsed he will be in charge of the search process because these are the people who will be reporting to him,” said Khoza.
The recruitment agencies that were used had already provided the PIC with long and shortlists. However, they have not yet reached out to anyone.
CFO in limbo
While the board would have wanted to begin the search for a permanent CFO, the chairperson of the disciplinary process against More – who has been on paid suspension for over a year – only submitted his report to the board on Wednesday morning.
Khoza said although the disciplinary had been concluded it had “complexities which make it a work in progress”.
For instance, the chair found More not guilty for her role in the controversial R4.3 billion investment in Ayo, a technology company owned by businessman Dr Iqbal Survé. But Khoza said there were “a number of issues outside of that would behove the board not to get her back into her position in a hurry”.
The interim board’s term ends in July. Khoza said they had not been given an indication on whether they would be appointed permanently.
Asked if he would be willing to accept an extension of his tenure on the board, Khoza was reluctant to respond and instead quoted the words of the late leader of the Minority Front Amichand Rajbansi: “I will double-cross that bridge when I get there.”
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