‘Invisible hands’, ‘loose agreements’ at the PIC, inquiry hears

Former Reserve Bank Governor Gill Marcus was appointed by President Ramaphosa to assist with the PIC Commission. Picture: Moneyweb

Commission of inquiry heard about the ‘external influence’ on investment decisions at the PIC on Wednesday, involving mortgage company SA Home Loan.

The influence of well-connected individuals over the investment decisions of the Public Investment Corporation (PIC) came into focus on Wednesday.

The commission of inquiry set up to look into the state asset manager heard conflicting versions as to why an application for a loan facility had been in limbo for two years.

A R10 billion loan application made in December 2017 to the PIC that would be utilised to fund state employee home loans remains open and in process. The long delay is due to what appears to be one man’s efforts to receive an undue payment from the transaction.

Mortgage company SA Home Loans has been involved in a four-year battle with its empowerment partner Kholofelo Maponya, who is demanding payment of R45 million in “transaction origination” fees for a R9 billion loan the PIC extended to the company in 2015.

The PIC is a 25% shareholder in SA Home Loans and assisted a BEE consortium led by Maponya in acquiring a 25% stake in the mortgage company in 2014. The remaining 50% is held by Standard Bank.

Maponya’s claim

When the R9 billion loan was extended, the agreement between SA Home Loans and the PIC was that the Government Employees Pension Fund (GEPF) would, as the lender, be entitled to 0.5% of R9 billion, or R45 million.

After the loan had been fully drawn down, SA Home Loans made an additional application for a R10 billion facility.

On Wednesday, SA Home Loans business development director Zakheni Dlamini gave his first-hand account of how, in September 2018, Maponya, accompanied by Wellington Masekesa, the PIC’s executive assistant to the chief executive, invited him for drinks in Sandton where they allegedly proposed a way to fraudulently pay the fee.

Both Maponya and Dlamini are non-executive directors of SA Home Loans.

Maponya’s claim to the money is based on what has come to be known as a “loose agreement” between him and then PIC CEO Dan Matjila. He initially tried to lay claim to the money in 2016, even producing a letter signed by Matjila ceding the GEPF’s claim. These attempts were thwarted and the letter rescinded when Standard Bank CEO Sim Tshabalala threatened to report the matter to the regulators.

Improper proposal to ‘regularise’ the fee

According to Dlamini’s testimony, Maponya had informed him over drinks that the “main reason” SA Home Loans had not been able to secure the R10 billion loan was because he had not been paid the R45 million origination fee.

Maponya then said that SA Home Loans needed to find a way of “regularising” the fee into the new facility that the company was applying for. By doing this Maponya would be paid the R45 million he believes is owed to him and, in addition, he would receive a new 0.5% transaction fee on the R10 billion, being R50 million.

Dlamini testified that Maponya indicated that the application for the R10 billion “would not be successful if the issue of fees was not resolved”.

“As we spoke, I came to understand the term ‘regularise’ to mean that SA Home Loans needs to find a means of incorporating R95 million to MMI [Maponya’s company] so that such payment is commercially acceptable to all stakeholders,” said Dlamini.

Dlamini, who worked at SA Home Loans for 12 years, including six years as a risk manager, told the commission he understood that what he was being asked was “improper”.

He said Masekesa had confirmed and agreed with what Maponya was sayin,g and even made an attempt to call Matjila to demonstrate that he was in favour of Maponya’s company being paid R95 million. The call went unanswered and Dlamini said he was not sure if indeed it was Matjila’s number because he had not seen it.

What was even more surprising about Masekesa’s alleged agreement with Maponya is that he was present at a meeting that Kevin Penwarden, the chief executive of SA Home Loans, had with Matjila a few months before. At this meeting, Matjila had clearly stated that Maponya was not entitled to any money and the issue had been closed.

PIC official response

When asked by assistant commissioner Gill Marcus if there has been any formal response by the PIC to SA Home Loans on the R10 billion facility, Dlamini said no.

However, he said he regularly follows up on the progress of the loan and that there has been a “history of reasons” with regards to why there has been a delay.

He said in the first quarter of 2018, the main reason given was that the PIC was making changes to its risk parameters and that certain labour representatives were concerned about the performance of SA Home Loans.

When Penwarden had the meeting with Matjila, the former chief executive told him the reason there had been a delay was due to perceptions that Standard Bank had not been providing SA Home Loans with as much funding as the PIC. But a submission sent by Penwarden to Matjila indicated there were no unequal contributions by the shareholders to the company and that Standard Bank had provided more funding.

There have been further discussions on the funding between the PIC, GEPF and the Government Employees Housing Scheme, said Dlamini, but SA Home Loans has not yet been informed of the outcomes.

“So one can conclude that the delay has nothing to do with whether the R95 million has been paid?” asked commissioner Lex Mpati.

“I would conclude that,” said Dlamini. “At least that is my view.”

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