Mpati Commission Report: input from Sekunjalo Group and Mr Maponya

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Finance Standing Committee

17 March 2021
Chairperson: Mr J Maswanganyi (ANC)
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Meeting Summary

Video: Standing Committee on Finance, 17 March 2021

Report of the Judicial Commission of Inquiry into allegations of impropriety at the PIC

02 Dec 2020

Mpati Commission of Inquiry Report: PIC briefing, with Minister and Deputy Minister

The Standing Committee on Finance convened a virtual meeting in response to requests from the Sekunjalo Group and Mr Kholofelo Maponya to briefing the Committee about their concerns about the Mpati Commission of Inquiry Report and the Public Investment Corporation (PIC).

• The attorney of Mr Kholofelo Maponya, Board Chairperson: Matome Maponya Investments, stated what he considered to be a misrepresentation of his client in the Mpati Commission Report. Nowhere in the Report had Mr Maponya, or his entities, been found to have engaged in wrongdoing according to the Commission's terms of reference.

• Dr Iqbal Survé, Board Chairperson: Sekunjalo Group, in his remarks said his primary concern was to explain the relationship between the Group's various entities, including name changes, structures of ownership and changes in ownership. He introduced AYO Technologies and Independent Media who would be briefing the Committee. They would give their presentation first and then make their requests to the Committee at the end of their presentation.

• The AYO Technologies and Independent Media briefings conveyed their importance to IT, journalism and media in South Africa, the history of media as well as their vision for economic and racial transformation. There were assertions that hidden hands were working against them and the Sekunjalo Group, and that due to these hidden hands dire circumstances had befallen them. The request was that the Sekunjalo Group wanted Parliament to issue directives to other branches of government that included access to banking facilities.

• Committee members found that the wide-ranging 90-minute presentation did not address the Mpati Commission’s findings. They largely pushed back against the accusations and claims of hidden hands as conspiracy theories. The Committee said it could not issue such directives due to the doctrine of the separation of powers. The Committee agreed that another meeting would be scheduled to afford PIC sufficient time to draft its response and for AYO Technologies and Independent Media to respond to the PIC prepared response.

Meeting report

The Committee was joined by the following attendees:
- Mr Kholofelo Maponya, Board Chairperson: Matome Maponya Investments
- Mr Bophelo Malapela, Attorney for Mr Maponya
- Dr Iqbal Survé, Board Chairperson: Sekunjalo Group
- Adv Wallace Mgoqi, Chairperson: AYO Technologies Solutions Limited
- Mr Howard Plaatjies, CEO: AYO Technologies Solutions Limited
- Mr Takudzwa Hove, COO: Independent Media
- Mr Sifiso Mahlangu, Editor: The Star
- Mr Ayanda Mdluli, Editor: Daily News
- Mr Aneez Salie, Editor-in-Chief: Independent Media
- Mr Abel Sithole, CEO: PIC.

The Chairperson said that the Committee had received requests from the Sekunjalo Group and Mr Kholofelo Maponya to brief them about certain issues about PIC. These requests were subsequent to the meeting the Committee had with the Finance Minister, Mr Mboweni, and PIC. Although Mr Maponya had sent a request even before the meeting with the Minister. The Chairperson outlined the constitutional oversight role the Committee has over the executive, in particular, National Treasury and its entities. Noting the constitutional responsibility the Committee has to outside interested parties, the Chairperson wanted to put on record why the Committee had entertained these requests: These two entities have a right to access Parliament—we cannot stop them. The Committee wants to see to it that the hard-earned pensions of the workers are safe, and that this money that has been borrowed by different business entities from PIC has to be paid back, that is our interest. The Committee was not going to deal with court issues, because PIC, when we invited them, has written a letter that they will not come because they have court cases with the two entities here today. We are not going to deal with what is contained in the court affidavits. We are more interested in finding a mechanism to explain how the monies borrowed are going to be paid back, and not deal with the merits of the court cases.

Mr Maponya request
Responding to the Chairperson’s question of how long the presentation was expected to be, Mr Kholofelo Maponya, Board Chairperson: Matome Maponya Investments, replied that we have matters that are pending in court. It is an appeal —this week is the one year anniversary of our complaint that we wrote as an urgent complaint to the Committee. We do not want to debate the matters individually but sum up the imbalanced treatment and approach that PIC has adopted towards us. In all the dealings that we have had with them, there was no necessity in going to court had they had the intention and the goodwill and honoured their fiduciary duties to sit with us and understand what is happening. In all the matters until they took us to court, and until they decided that we are going to be treated differently, we had not defaulted on any matters. We had only one matter in the poultry industry, which was a general industry issue. There was an intervention where they said that they need to come in to stabilise the company due to the industry, and also due to certain allegations on which they made their own investigations, which investigations they did not test with us or discuss with us. And so these matters kept on increasing one on top of the other, until a narrative was built to put us in a certain category. We were denied all these things. The agreements we had were reversed in such a manner that could have caused us to default. We have managed to avoid most of those default events. However, in a situation where your funder partner makes the law, administers the law, and tells you when you can come and when you can go, we felt that we need mediation, and we needed to have constructive discussions after having aspersions cast. We also note some of the misinterpretations of the Mpati Commission. He would hand over to attorney, Mr Malapela, to read into record a summation which was made by him in consultation with senior counsel.

Mr Bophelo Malapela said that nowhere in the Report had Mr Maponya, or any of his entities, been found to have engaged in any wrongdoing as far as the terms of reference of the Commission were concerned. He would like to indicate that when the Mpati Commission started, Mr Maponya did submit his affidavit to the Commission and indicated his intention to appear before it. It was decided by the Commission that he would not be called before them. However when Mr Maponya complained, Mr Malapela was called by Judge Mpati in chambers together with counsel because the judge wanted to understand what the complaint entailed. The judge made it clear that as far as he was concerned, there was nothing in the terms of reference that involved, or that required his calling Mr Maponya to testify before the Commission. The Commission Report merely used the transactions of Mr Maponya and his entities as a case study to warn PIC that if they continued on this trajectory of having multiple transactions with a single individual, it could lead to numerous problems should that individual run into problems such as defaulting. But the Commission Report does not make any findings of unlawfulness or illegality on the transactions of Mr Maponya and his entities.

Mr Malapela said that he did not have much in the way of submissions because the Chairperson has already indicated that the Committee was not going to deal with matters that are before the court, save to say that events seem to have overtaken Mr Maponya's complaint to this Committee. To date we are involved in numerous litigation with PIC. What  Mr Maponya wished when he petitioned the Committee was that the Standing Committee would intervene, call the parties, and mediate to avoid a lot of money being spent on lawyers fighting court matters between himself and PIC.

Mr F Shivambu (EFF) asked to make a point. He  was not sure of the context of these deliberations as the first presentation should have been specific about what the disputes or concerns are and identify what the Committee can do. The presentation has not clarified exactly what the area of concern is. It was at a very high level as it assumed that the Committee knows what is happening between Mr Maponya and PIC and all of those issues. There has never been a deliberation in the Committee about that. Although he says that letters were written to the Committee, there has never been any deliberation on the contents. If all these issues are in court and cannot be deliberated on, why are we discussing it if we may not? He did not know what the Committee is seeking to achieve. He wanted clarification on the purpose of these engagements so that we know how to make interventions and inputs and if we should call in PIC.

The Chairperson said Mr Shivambu was right. After we hear both presentations and deliberate, these are some of the questions that we will have to ask Sekunjalo and Mr Maponya.

Mr I Morolong (ANC) agreed. The next presenters must listen to this and avoid an exercise in futility. They should be able to expound on their concerns and say what is their expectation of the Committee so the Committee does not make the same complaint as raised with Mr Maponya and his attorney.

The Chairperson asked Mr Malapela to send the latest documents to which Mr Maponya’s presentation pertained.

Sekunjalo Group Chairperson Introductory Remarks
Dr Iqbal Survé, Board Chairperson: Sekunjalo Group, said that there would be two presentations, the first being by AYO Technology Solutions, led by its chairperson and chief executive; the second would be by Independent Media, led by its chief operating officer and others.

Dr Survé said he wished to point out that the Sekunjalo Group has more than 200 investments. And AYO Technologies and Independent Media are two of the 200 investments. As a group we are an indirect shareholder of AYO Technologies; we are not a direct shareholder. Primarily, we are one of the listed companies called Africa Equity Investments in which the Sekunjalo Group has a share holding, and that company owns 49% of AYO, PIC owns 30% of AYO, and about 200 other shareholders are shareholders in the public company. We have made a formal request to the AYO board and CEO, and they have agreed to come and present to Parliament. He wanted to ensure that the Committee understands that there is a separation between Sekunjalo Investment Holdings and AYO Technologies. They are completely separate entities; AYO has its own board of directors, its own governance, and we have a minority representation on the AYO board. AYO kindly invited him to sit in on their presentation, although he is not a board member of AYO and he is really happy for that. Minister Mboweni invited the Sekunjalo Group to come to the Committee to present.
PIC kept on referring to Sekunjalo when they meant Independent Media or the consortium, a special purpose vehicle which invested into Independent Media. He wanted to put it on record that PIC has never invested in Sekunjalo Investment Holdings ever. We have written to PIC on numerous times, asking them to correct that misrepresentation. PIC has invested directly in Independent Media and it has invested in a special purpose consortium of more than 30 groupings of labour federations, women’s groupings, NGOs, et cetera, which is called the Sekunjalo Independent Media Consortium, which has been renamed Independent Media Consortium. Just for the record, PIC has no investment, no loans, absolutely zero given to Sekunjalo Investment Holding company. It has invested a long time [inaudible] Sekunjalo Independent Media and in AYO Technologies, where Sekunjalo has invested indirectly.

Dr Survé indicated that the two presenters would first give a presentation and then indicate at the end what relevance it had to the Committee.

AYO Technology Solutions Ltd presentation
Adv Wallace Mgoqi, Chairperson: AYO Technologies Solutions Ltd, said that Minister of Finance, Tito Mboweni, invited AYO and PIC to present to Parliament to hear the AYO side of the story in the dispute between AYO and PIC. AYO welcomed the opportunity and sent a formal letter to Chairperson indicating its willingness to present. He thanked the Committee for giving the opportunity to present.

He elaborated on AYO as a company, outlining the following points: AYO has more than 21 subsidiaries and investments in the ICT sector and has built up capacity as a fully-transformed ICT company. It has 2000+ employees and contributed R1.1 billion in taxes. It is at the cutting edge of ICT innovation with technologies in health information systems, applications software, unified communications, and cyber security. AYO has supported black entrepreneurs in the ICT sector and has committed more than R350 million to the development of the sector social development fund, AYO Academy. It is the largest JSE-listed ICT company with largest net asset value and it is black-owned.

Mr Howard Plaatjies, CEO: AYO Technologies Solutions Ltd, gave an overview of five of the 21 subsidiaries: (1) Health System Technologies, (2) Sizwe Africa IT Group, (3) Puleng Technologies, (4) Headset Solutions, and (5) Global Command and Control Technologies. AYO has a diverse large client base situated in all major South African cities and a number of African countries.

Dr Mgoqi outlined the history and growth strategy: AYO existed for more than 20 years and built up a formidable ICT capacity in a largely untransformed industry. Its board composition, executive team and employees are fully transformed and it embarked on a growth strategy to fully transform the ICT sector by 2020. It identified a number of acquisition targets to own and transform private and public sector customers. To execute this strategy, AYO put together a prospectus for investors, including PIC. The PIC committees that evaluated the AYO proposal were uniform in their support and evaluation of AYO. The pre-listing statement was the guide for all investors into AYO. AYO listed in December 2017.

AYO’s commitment to transformation started with inviting COSATU's investment arm Kopano; Popcru investment arm; more than 3000 black women through black women’s groupings and other small black business and community groupings. It used its capital base to support black businesses. The AYO academy committed towards the development of black professionals with a focus on women and on rural communities. AYO had more community-based shareholders on the JSE (before listing).

Dr Mgoqi read out a slide on AYO’s post-listing smear campaign:
• Detractors smear campaign against AYO launched in March 2018
• AYO caught in the battle at PIC between different factions as collateral damage
• Up until March 2018 there was no problem with the AYO listing
• Asset managers and hedge-funds took advantage of the negative publicity against AYO to undermine its value
• Extensive collaboration between journalists/public commentators and private corporate entities designed to do maximum damage
• Unusually in the history of this country the Companies and Intellectual Property Commission (CIPC) has never intervened to overturn a PIC investment. Suddenly CIPC as a result of media and political pressure started litigation. The CIPC case was dismissed by the courts and showed the frivolous nature of its complaint.
• The impact of this and PIC Commission of Inquiry had devastating consequences for AYO.

Dr Mgoqi spoke to AYO's voluntary submission to PIC Commission of Inquiry:
• AYO voluntarily sent executives to be fully transparent in engagement with PIC Commission it was shocked at the intense focus on AYO compared to other companies
• On the PIC Commission outcome, there was no evidence of corruption in the report.
• Hearsay and unsubstantiated claims were made by people at the Commission.
• AYO chose to deal with the facts instead of gossip.
• AYO is confident despite negative publicity to be successful in litigation by PIC.
• AYO position: it has done nothing wrong and is a victim of a smear campaign by hidden hands.

On the material consequences and value destruction, PIC initially insisted that the British Telecom (BT) investment formed part of the AYO listing. Significant capital was earmarked for the BT investment, which was the foundation for multinational customer acquisition strategy. PIC scuppered the British Telecoms investment by relying on negative media. Without PIC support, BT withdrew from engagement with AYO. We fear that that there is a hidden hand that used the Commission to smear AYO and that continues to direct activities to undermine its business and reputation. AYO has lost normal business, which it had prior to listing to the tune of R1,3 billion, in public and private sector. AYO has faced cancellation of banking facilities. AYO has been irrationally censured by the JSE for regular compliance issues and not corruption. 

On the reputational consequences and value destruction, AYO has suffered irreparable harm and reputational damage by actions of PIC and the media landscape. Acquisition targets are adopting a ‘wait and see’ approach. Customers in the private sector are skeptical and are reducing orders. Employees, Executives and Board of Directors are negatively impacted. Management is spending inordinate operational time defending the company on numerous levels. Banks are terminating facilities and closing accounts based purely on media reputation. It should be noted by the Committee that there are companies in the ICT sector who have admitted to fraud in the public sector, that are also listed, and yet there has been no attempt to stop their banking facilities. The lucrative SASOL contract leading to loss of South African jobs, was handed to an Indian company. The loss of a healthcare software contract losing jobs to an US based entity. AYO is a target of a coordinated smear campaign with ominous intentions.

On the institutional consequences and value destruction, he said that in summary AYO is a victim of the following institutional actions: the JSE and FSCA targeted AYO unfairly and censored it with fines which made no sense; CIPC launched a litigation case which it lost against AYO without any rational basis and precedent; and PIC has acted to destroy AYO whereas its engagement with other companies—not transformed—is one of a business, with AYO it is agenda driven and targeted. These actions were unfair and prejudicial.

On present litigation, PIC has instituted litigation against AYO, the matter is sub-judice. The court records are available to the public. AYO is hopeful that PIC will work with it to resolve outstanding matters. Ultimately AYO and PIC have to work together to protect the value of the investment. Litigation is costly, protracted and adversarial and outcome is always win or lose. AYO is not a political opponent of PIC and should not be treated as such. It is a business. It is time for it to be allowed to do its business. What business in the world can operate without banking facilities?

We have demonstrated to the Committee the devastating material, business, institutional, reputational and legal consequences of the barrage of this smear campaign that AYO has had to endure to date. We have also demonstrated that AYO has done nothing wrong, at least nothing proven to this effect. Only the Committee can normalise this relationship between PIC as a shareholder of AYO for the medium to long-term interest of stabilizing the business. The winds of the economy are unstable enough, there is no need to add further instability. Allow AYO to fulfill its potential as a fully transformed ICT business and grow value for the Government Employees Pension Fund (GEPF) and its beneficiaries.

AYO is doing everything possible to ensure that the GEPF, which represent pensioners’ money, is able to realize value from its investment in AYO. If AYO was able to operate as a normal company in SA it would not just retain value for the GEPF, it would be able to grow substantially.

On the steps AYO has taken in a difficult environment and despite enormous external pressure AYO has grown the net asset value of AYO close to R5 billion and continues to grow. It retained its strong cash position; paid PIC R180 million in dividends; contributed R1.1 billion to the tax fiscus; and continues to look at acquisition targets to transform the ICT sector and add value to the investment of PIC in AYO.

To strengthen AYO governance, at the behest of PIC, AYO appointed four additional directors and independent chairperson reducing the influence of the African Equity Empowerment Investments (AEEI) presence on the board. Professionals were appointed to the board committees. The internal audit function was strengthened and there was the appointment of new external auditors. There have been two years of unprecedented audits. There has been active board engagement with management on a regular basis especially during the difficult Covid-19 period. There was the appointment of a 25-year expert in treasury functions and asset management for the AYO treasury.

AYO pleads with the Committee to examine the facts as opposed to the noise and the hearsay. We have shown that since mid 2018 AYO has faced a barrage of litigation, investigations and unwarranted enquiries. The consequences eroded value for shareholders and created job insecurity in the company’s human capital. It is sad that PIC conduct has caused significant erosion to their investment in AYO on behalf of the GEPF and its beneficiaries.

AYO is a business committed to ICT transformation. It is defenseless against the political and media smear campaign it has been subjected to. It is defenseless against the resources of PIC, which is using pensioners money to drive a political agenda against AYO, undermining its business through both overt public and covert actions. South Africa needs greater accountability by officials especially in SOEs and regulatory institutions to ensure that there is no bias, unfairness and victimisation. State organs should not be used to settle political scores or destroy businesses or individuals.

Dr Mgoqi requested a Committee investigation into the conduct of institutions that are undermining democracy and business confidence in our country, that actively engage in destroying AYO and the GEPF value. These should include the JSE, banking institutions, CIPC, Financial Sector Conduct Authority (FSCA), the role of PIC and National Treasury officials that are playing a hidden hand in the cancelation of contracts, banking facilities and support by customers and service providers to AYO. This conduct has huge reputational impact for SA business reputation and business confidence especially as AYO has done nothing wrong and has been transparent about business dealings from inception to date.

Dr Mgoqi said we have given you an overview of AYO the business, its companies, its people, its customers and its commitment to transformation. We have shown you the consequences of the negative material, institutional, legal and reputational campaign against AYO. We have spoken about good governance and prudent executive management to retain and grow value for the GEPF. We plead with you to investigate the conduct of these parties undermining the investment in AYO with highly irregular and possibly criminal conduct on their part. At all times AYO has been transparent, has worked hard to build its business and its commitment to the ICT Sector. If AYO is allowed to do its business without shackles it will realise value for its shareholders including GEPF as outlined in its prospectus. We thank you for this opportunity and welcome questions.

The Chairperson thanked AYO for its presentation.

Independent Media Group presentation
Mr Takudzwa Hove, COO: Independent Media, said that Mr Mboweni suggested that Independent Media appear before the Committee. Independent Media welcomes the opportunity. Prior to 1994 the print media landscape was largely controlled by four major media groupings: the Afrikaans media which today includes Naspers/Media24, Caxton CTP arose directly from the belly of two major Afrikaans aligned political parties and businesses. Naspers arose from the ruling National Party. Naspers was close to PW Botha and their editors sat in on the cabinet meetings. Hendrik Verwoed, the architect of apartheid, was the editor of the Transvaaler incorporated into Naspers. Naspers major publications include Die Burger, Die Beeld, Rapport and City Press which was launched for the black market. They also have the largest online site in South Africa, News24. A Naspers chairman famously wrote to PW Botha pledging support for the National Party in exchange for a printing textbooks contract. Caxton funding and support arose from another Afrikaner media group based in Transvaal (Gauteng) funded by government, and established The Citizen which still exists today. Rembrandt controlled by Johan Rupert and the Rupert family is a significant shareholder in Caxton as well as other media in South Africa such as eTV, eNCA and provides support to the Daily Maverick.

Prior to 1994 the English media was controlled by the Oppenheimer family through Anglo American and its subsidiaries. This resulted in two major media groupings, the Times Media Group (Arena-Sunday Times and Business Day) and The Argus Group (Independent Media). The Oppenheimer family decided to sell their shares in the Times Media business, which was listed, to a consortium led by Cyril Ramaphosa which eventually became the Johnnic Consortium. This changed over time to be known as Johnnic Holdings and Avusa which had a shareholder from Tokyo Sexwale’s Mvelaphanda Group. In both cases because it was a listed company, they were never able to have control and shape the transformation and narrative of these titles. Management and editorial remained  largely untransformed. Just prior to 1994 Oppenheimer did not want The Argus Group to fall into the hands of the ANC and sold it to Tony O’Reilly’s Independent Media from Ireland. Hence  the name changed from The Argus Group to Independent News and Media now being owned by the Irish. From 1993 to 2013, Independent Media was owned by the listed Irish Independent Media Group in which control had changed from Tony O’Reilly to Dennis O’Brien, the telecoms entrepreneur. The Irish Independent fell into serious financial difficulty having made acquisitions globally and it was forced to sell its businesses overseas in South Africa and Australia.

On the sale of Independent Media, in 2012 the Irish announced that they would be selling its South African media assets and appointed corporate advisors to effect the sale. There was a bid process with 30 bidders and eventually it was a short list of five bidders. Dennis O’Brien, the major shareholder of Irish Independent indicated it would accept nothing less than EUR280 million or R3.2 billion for the South African assets. However, as time went, it was forced to sell for a lower amount due to several factors such as the debt which the Irish had to bank in Ireland, the impact of the rand/dollar exchange rate and most importantly the Marikana massacre which created a confidence crisis in the South African economy. The five shortlisted bidders included prominent South African businessman from prominent families and some holding political positions. The Gupta family tried to bid but failed to make the short list. The Sekunjalo Consortium was the successful bidder with a bid just over R2 billion negotiated down from an original R2.6 billion.

Mr Hove said the Sekunjalo Independent Media Consortium (SIM) was set up with Sekunjalo Investment Holdings being the anchor shareholder to provide the necessary support. The broad-based consortium which was negotiated with PIC included labour union investment companies, women’s groupings, community groupings, representatives of the Black Business Council and various NGOs. Importantly employees of Independent Media through an employee trust were given an opportunity to become shareholders. Initially PIC had made a non-binding commitment of over R2 billion when the Irish were demanding R3.2 billion. Sekunjalo appointed the London division of global investment bank, CitiBank, as its corporate advisor to the transaction. The SIM consortium also engaged with former senior black editors to advise on the purchase of Independent Media.

On the rationale for the PIC investment in Independent Media, Mr Hove said that PIC was already a significant investor in media. It had invested in Naspers (when it was almost bankrupt before it changed to a technology/internet company—which was very successful); it had invested in Times Media/Tiso Black Star/Avusa/Arena and Caxton CTP where it has lost billions in equity value of its investment. Many of these PIC investments where there was massive loss in value are a result of the structural shifts in media caused by the rapid shift of audiences to digital and social media platforms. The PIC supported the Independent Media transaction: 1) on a purely commercial basis in that the EBITDA based valuation of 7.5x was in line with global valuations. 2) PIC saw an opportunity to create a new Naspers or black Naspers. 3) It was important to bring this important media asset back in South African hands. 4) It was an opportunity to enable media diversity in terms of ownership and to transform the media landscape in South Africa by having one of the largest print media groups owned by black people. 

An urban myth was that PIC invested R2 billion in Independent Media. This was deliberately propagated by detractors which creates the impression that only PIC funded the transaction. The total PIC exposure to Independent Media and SIM at the time was R850 million. PIC invested R167 million in Independent Media for an equity stake of 25%; R133 million to acquire an existing portion of a shareholders loan; and R285 million bridging loan (prior to preference shares conversion) as part of the leveraged buyout (funds all to the seller). It provided R215 million of the R365 million required to fund Independent Media Consortium 55% equity in Independent Media.

Sekunjalo invited other investors to co invest in Independent Media which provided the remaining capital with approximately R1.15 billion. Since 2013, PIC has not supported Independent Media with a single cent. Only the Sekunjalo Group is providing Independent Media financial support to grow its business and compete in the marketplace. To date, directly and indirectly from the Sekunjalo Group, almost R500 million has been provided, allowing PIC to benefit as a shareholder without providing any additional funds. It is important to note that the Sekunjalo Group negotiated the Irish down from R2.6 billion to just over R2 billion, saving hundreds of millions in value for its shareholders including PIC.

On efforts to derail the transaction, Mr Hove said that at the beginning of 2013, Independent Media Consortium was announced as the preferred bidder. Immediately vigorous attempts were made by SANEF Chair, Mr Nic Dawes, to stop the transaction by threatening that the Competition Commission intervene to break up the Independent Media Group’s 18 regional and national titles. The hypocrisy was that whilst Independent Media was under the Argus Group and the Irish, there was no call to break up the group. It is important to note that this attempt happened before Sekunjalo even owned Independent Media.

Simultaneously, a consortium led by the Mail & Guardian funders, USA based Media Investment Fund at the time, approached Sekunjalo to acquire three major titles, Pretoria News, Cape Times and the Natal Mercury, as a condition for SANEF dropping its objection to the sale of Independent Media to SIM. SIM refused to be threatened and in the end Dawes had to apologise. SANEF continues to play a partisan role against Independent Media as seen by its most recent conduct. On the eve of the transaction, Sekunjalo was approached to walk away from the Independent Media transaction for a payment of R500 million from a consortium linked to a Democratic Alliance funder. This informal offer was made on the basis that Sekunjalo would be R500 million richer without any costs and cede its acquisition that would be acquired by a corporate entity aligned to the DA. This was not unusual as Independent Media under the Irish was fully influenced by the DA and its leadership who would often dictate to senior editors what they wanted written in the newspapers.

Despite all the challenges, the SIM consortium was able to acquire the Independent Media group from the Irish. In summary these constraints included: PIC reneged on its support for the transaction by reducing its support from R2 billion to R850 million; aggressive and public posturing by SANEF and Mr Dawes to stop the transaction; intensive smear campaign by competitive media such as the Times Media Group and Naspers who feared the commercial competition of a black-owned enterprise; and attempts to influence the Irish by senior privileged editorial staff at Independent Media who also attempted to put in their own bid and retain editorial control.

Moving on to the post acquisition period, there was resistance to a black competitor. The first few years Independent Media was faced with a hostile media environment. The detractors especially competitor media houses launched an aggressive campaign to undermine Independent Media and its public reputation by targeting the executive chairman. One of the major media groups had a project which was well funded  and intended to deliver maximum damage. Privileged positions held by executives were changed to a merit-based system which resulted in huge internal resistance to transformation to the extent that many of the privileged executives and editorial people left to join other media houses. No bank facilities were made available to Independent Media and up to today Independent Media has zero banking facilities and has to pay mostly cash for its working capital needs which includes purchasing paper, printing and logistics costs of more than R700 million annually. Other media houses decided to withdraw from partners which included SAPA as well as distribution JVs. The Irish had locked Independent Media into long-term onerous printing, distribution and lease agreements. Some still remain and continue to affect sustainability. The perfect storm for Independent Media arose almost overnight with the rapid shift globally of revenue from print to digital with Google and Facebook now dominating the advertising revenue landscape. Real GDP growth during this period was also negative.

Notwithstanding the challenging environment, SIM was committed to the success of Independent Media and its transformation. The first point of transformation was to ensure our 1500 employees  are selected on merit and there is no special privilege based on race. On the development of young executives and editorial staff, in the 150 year history of the Cape Times, it has its first African editor in Mr Siyavuya Mzantsi, age 28. As much of his appointment was criticised by our detractors he has recently been awarded the INMA Rising Star Award validating his appointment. Similarly there are young editors such as Mr Mahlangu at The Star, Mr Mdluli at the Daily News, and Mr P Makhanya at the Mercury.

The transformation is not only at editorial level but at executive and management level: Independent Media can claim that it is the only fully transformed media company in South Africa. This is a far cry from the Independent Media of the past which was rooted in privilege where the senior editorial and executive base did not reflect the diversity of the country. Independent Media is a non racial organization and mirrors the diversity of the country in its leadership. It has one of the highest representation of women in its leadership positions.

On its excellence in diversity, Independent Media diversity of its editorial and executive, since the ownership of SIM, has made it the most awarded media company on the African continent. It has been the top media company in Africa despite its limited resources by winning the global awards in video, digital, community media, social justice media, innovation and mobile. It is regarded as a highly innovative media company sought after by global media partners. The awards given since 2015 were noted. Its campaigns reflect the demographic reality and diversity of the communities  served and the editorial narrative.

Mr Hove spoke about Sagarmatha Technologies. The former PIC CEO informed Parliament that they want to replicate the success with Naspers and create a new black Naspers. Naspers which was financially struggling in 2001, was saved by its investment in Tencent in China and became one of the most successful PIC investments of all time. Simultaneous to this the Sekunjalo Group had invested significantly in e-commerce, digital media, syndication services, application software and various other technology and media investments and aggregated these separate investments into a company called Sagarmatha Technologies.

In response to Mr Hill-Lewis on a point of order objecting to the length as the Committee had never had a presentation exceed 90 minutes, Mr Hove said 10 minutes remained.

Mr Hove continued that Sagarmatha Technologies applied to the Reserve Bank in November 2018 for a primary listing on the New York and Hong Kong stock exchange. This would result in more than R4 billion coming back to South Africa and the development of  young black software engineers who would grow the e-commerce and digital media footprint on the African continent. Despite SARB initially indicating that approval would take at most a few months, Sagarmatha still awaits approval two years later. SARB has now indicated that a new application has to be made which will be forwarded to National Treasury for approval. This delay has prejudiced Sagarmatha, Independent Media and PIC and is indicative of a hidden hand stopping the listing progress and the unlocking of value for PIC.

In conclusion, Mr Hove said that PIC under new leadership has taken a very hostile approach to Independent Media and Sagarmatha. It is clear that Independent Media is an important voice for media diversity and its narrative of factual based news, truth and diversity has ruffled many feathers. There is now a desperate attempt either to launch a hostile assault on Independent Media for a takeover or failing that destroy the business completely so that there is no competitor narrative to the other mainstream media. This is a direct attack on media freedom and undermines our Constitution. It is not fathomable how PIC has targeted Independent Media but has left all other media alone in its public utterances and legal inquisitions. It is odd that PIC claiming to act for pensioners has instituted summons against SIM and Independent Media and has not offered any support to defend media freedom and journalism. It seems to be operating with an NGO like Sanef (which does not does represent the media) in undermining Independent Media. Not a single Independent Media editor is a Sanef member yet we are the largest print media group in the country. The Committee can be provided with all the letters Independent Media SIM has received from PIC and the gross misrepresentation of the Independent Media position.

We are thankful to Mr Mboweni that we present our side of the story to the Committee. Our country needs media diversity and media freedom and we should together with Parliament resist all attempts to hinder the diversity of media ownership and transformation. We should work together for the future of our stakeholders which include the GEPF pensioners and our 1500 employees and journalists to ensure that media is sustainable and journalism continues in our country.

We know that we have exposed uncomfortable truths including most recently the PPE corruption which robbed our healthcare workers of valuable equipment. We know in doing so and in exposing powerful individuals and their associates we anger powerful people to shut us down and use PIC as a blunt instrument against us. The country will be poorer if all media has a singular narrative and if there is no diversity. We have to prevent our country and those in power from exercising authoritarianism since the consequence of that can be seen by many countries around the world, including north of our border, where media freedom is a rare commodity.

In summary we have explained the media landscape from before 1994 to current; the acquisition of Independent Media from the Irish and the resistance to change of media ownership and diversity. We have explained the transformation journey of Independent Media and its excellence in awards. We have shown that PIC did not invest R2 billion – the Sekunjalo Consortium and its partners had invested more than R1.15 billion. We have shown that it is only the Sekunjalo Group of companies that have funded Independent Media since acquisition for the benefit of PIC. We have shown that PIC conversion of its shares and loans into Sagarmatha is a positive exit strategy which unlocks value for PIC and its pensioners. We await SARB permission to list Sagarmatha on an international stock exchange in line with the content-to-commerce strategy and unlock value for PIC.

The Chairperson asked if PIC or National Treasury had a response.

PIC response
Mr Abel Sithole, CEO: PIC, said that a lot of factual submissions have been made in the three presentations to the Committee. We are currently not in a position to respond to some of the factual information presented but we are more than happy at a later stage—if the Committee so requires—to provide responses to the facts presented, which we do not necessarily support and might not be supported by the information that we have. There are aspects that we do not believe can be answered by us, but the Mpati Commission report is available publicly on the Department of Justice website. We can allude to a number of areas where the information provided does not accord with our understanding of what the Mpati Commission stated.

He provided the Committee with a couple of examples. On page 24 of the Report, there is reference to statements made at the Commission by the CEO of SA Home Loan. That specifically deals with our employee and a reference to Mr Maponya himself. It states: ‘Mr Maponya had approached a colleague, Mr Dlamini, and said that SA Home Loans should irregularise (sic) what were called arising fees.’ This speaks to a specific finding on the SA Home Loans matter. This is a specific reference to Mr Maponya in a recommendation. 

Mr Maponya raised a point of order as he wanted to correct a statement made by Mr Sithole but the Chairperson said it could be raised in the discussion section of the meeting.

Continuing with his examples, Mr Sithole said on page 211 of the Mpati Commission Report, it says ‘Mr Maponya claimed in his affidavit that his company, MMI, was owed an amount of R45 million by PIC. The amount allegedly due, relates to fees for facilitating a transaction concluded between PIC and SA Home Loans, an entity set up to provide affordable housing to members  of the GEPF’. It goes on to say, ‘It is clear that the issues raised by Mr Maponya in his affidavit have no relevance whatsoever to the Commission’s terms of reference. The Commission has no authority to decide on whether or not Mr Maponya or MMI is, is owed any money by PIC. In any event, Mr Maponya avers in his affidavit that on 11 April 2019 a summons was issued by his attorneys out of the Gauteng Division of the High Court, claiming payment of the amount allegedly due to MMI. The defendants cited in the summons are PIC, GEPF and SA Home Loans. The matter is being defended. Clearly, therefore, Mr Maponya’s claim is not covered by the Commission’s terms of reference and the Commission is not empowered to consider it.’

Mr Sithole continued that if PIC had enough time to look at other instances, it be more than happy to indicate where there is specific reference by the Commission itself on these matters. We are not taking up matters solely because we have an agenda against anybody. We taking up matters either through the investigations of PIC, or findings that PIC has been recommended to follow up by the Commission Report. Nobody had to take his word because the Report was publicly available. He repeated that PIC had no agenda against any of the PIC investing companies. The fact that we invested in them indicates that we supported their initial vision as presented, if those visions presented were actually viable. If we had taken action it cannot be action to destroy the very investments that we have made. To the extent that we are taking action here: it is because the terms and conditions, agreed to when the investment was made, have not been adhered to and we are taking action to defend and try to secure the investments that we have made. We have no agenda against anybody.

The Chairperson thanked Mr Sithole for his response. He would allow his request for more time to make substantive responses to the assertions in the presentations.

National Treasury response
The National Treasury representative acknowledged the presentations but said it did not immediately have a substantive response to the assertions. It would consider the presentations. 

Discussion
Mr I Morolong (ANC) suggested that PIC not respond to the presentations in a piecemeal fashion, but rather take time to formulate its responses mindfully, especially in light of the lengthy presentations and the various tendentious assertions they contained. 

Mr Hill-Lewis called the presentations a fantasy novel. The conspiracy theory presented as analysis is that there is this enormous conspiracy involving everyone against these companies: It is the JSE, Naspers, PIC, the government, the media, the DA—everyone is working together to bring down this champion of righteousness and justice, the Sekunjalo Group and all its related investments, including Independent Media. Of course that is just nonsense. That fantasy exists in your mind. It is not a statement of fact. There is no evidence to support that. It is just rubbish. And the truth of the matter is the reason your companies are failing, the reason readers are deserting you and why this once-proud bastion of a media company, of a liberal media company, is now just a smoking wreck of its former self, is because you have no integrity. People can see that. People are not stupid. You might think that it will work, to explain away every fact as racism but no-one is buying that story anymore. It may have worked 10 years ago. It does not work on South Africa anymore. So when facts and integrity and truth are inconvenient, you lean on racism. The truth is, it is your own integrity that is to blame: You have none. Mr Survé has no integrity in the public eye. Your company has no integrity in the public eye, and that is why your companies are failing.

The Committee was invited today to listen to your response to the Mpati Commission. That is why you were given an opportunity—a massive opportunity as we have never witnessed a company make such a long presentation to this Committee. But not once in your report did you actually deal with any factual assertion in the Mpati Commission—not once. You did not deal with the agenda item at all. It was just a tissue of conspiracy and fantasy. The PIC’s response is basically perfect, because what you have here is a legal dispute. If you say that some of the things that you have claimed in your presentation are factual, then present them to the court and let the court determine if they are factual. We are not a court of law; that is not our job. The proper forum for the resolution of a factual dispute in a commercial matter is court, not Parliament. You came here to talk about the Mpati Commission and you did not do that.

The other thing you fundamentally misunderstand is that you would like us to give operation instructions to a separate branch of government. You misunderstand the separation of powers in South Africa. You are now speaking to the legislature. Our primary job is to hold the executive to account. The executive in the person of the Minister and National Treasury. It is not our place to issue operational instructions to separate arms of government. And yet this is what you would have us do. It is extremely concerning that an organisation that calls itself a leading voice in political journalism in South Africa does not understand the basic separation of powers.

Mr Hill-Lewis said one thing he did agree with is that we should have a diversity of media views in South Africa. We do not want to have a complete uniformity of opinion. You say that you are an important voice in that media diversity, but the facts say otherwise. It is not any government conspiracy or corporate conspiracy, or opposition-led conspiracy that has led to the absolute precipitous collapse and ruin of your readership numbers. Rather that is because media consumers, ordinary people, South Africans, have seen through it, have seen through the smoke and mirrors. So, far from an important voice, you have become an utterly irrelevant voice in media diversity and competition. And there is no one else to blame for that decline but yourselves. You must hold up a mirror, and ask yourself what have you done to journalism in South Africa, and the very proud tradition of journalism in your group to destroy it so thorough and completely.

He highlighted again that you were invited here to respond to the Mpati Commission. You did not do that. You did not do that at all. You have not told us what your objection to the Report is. You have not mentioned a single item raised in the Report that you take issue with. So, frankly, the best response for National Treasury and PIC would be to proceed with their court cases and to ignore the fantasy you have spoken here today.

Mr G Skosana (ANC) said he supported Mr Morolong’s suggestion to have PIC respond at a later stage when it was prepared to deal with the voluminous presentations. This would allow PIC to respond fully, and for the Committee to have a better understanding and engagement with all parties.

He wanted to know from Mr Sithole how far along the litigation process was.

The Chairperson noted the support for the suggestion to allow PIC sufficient time to respond and to come back at a later stage to make such response.

Ms P Abraham (ANC) welcomed the presentations but had reservations. The suggestion for a second meeting is acceptable. She referred to the presentations as too general and vague and lacked detail, although the presenters did present their own reasons. Although there was some truth in the presentations you do not get exactly what the ulterior motives are, referring to the allusions to 'hidden hands' and the like. This sounded like a conspiracy theory. While she agreed with the suggestion that PIC be afforded time to prepare a response, she was equally of the view that the companies which presented were unprepared for the Committee meeting. She was not clear what the presenters’ objectives were and neither was she clear what they were doing to help the working class and the poor.

The Chairperson acknowledged Ms Abraham’s support for a second meeting where PIC would respond to the presentations, where stakeholders would be allowed to have a say.

Mr W Wessels (FF+) agreed with Committee members, and especially with Mr Hill-Lewis. The fact of the matter is there are findings, and we did not hear anything today to address any of those findings. We heard a lot of rhetoric but we did not hear facts. We heard a lot of conspiracy theories but we did not hear facts. It is actually disgusting that under the guise of transformation, there is an attempt to shift the attention away—from the failures and the irregularities of especially SIM. What must be remembered, is that we are dealing here with pensioners’ hard-earned money. That is why there was the Mpati Commission of Inquiry and it made recommendations. Some of those recommendations, especially about SIM and Sekunjalo, were that there should be a forensic investigation, a further forensic investigation. He would want to hear from Mr Sithole how far those investigations are, especially on those transactions. The fact is those investigations are there to bring to light the actual facts – it is not a lot of rhetoric and conspiracy theories about people that are against free media, and against this or that, and are politically motivated – that is nonsense. There were irregularities; they were found by the Mpati Commission. We did not hear today anything to say there is no factual basis for them. Liquidity was irregularly created at PIC to fund the relevant share subscription. PIC policies were disregarded. The concentration of risk in one group of companies was found to be irregular. Those are some of the findings of the Mpati Commission. That cannot be derailed or disregarded, just because we are talking about a transformative agenda, about racism, and about going as far back as 1948. That will not solve the situation we are in. He agreed that there should be a further engagement, but the fact of the matter is there are court actions going on. Those court actions should go further. The investigation should go further. However, to engage on matters that are currently before the court and are being forensically investigated will not serve any purpose.

Mr Morolong said he wanted to take a desegregated view of the matters before the court. He wanted to raise a further concern as the breakdown of the trust relationship between Independent Media and PIC was imputed to a lot of other things. Amongst these was its expose of wrongdoing, particularly on PPE scandals which are quite recent. It is unfair that these challenges are ascribed to recent scandals. Independent Media makes an important point that this has been a cumulative breakdown of a trust relationship; it is not something new. He agreed that to strengthen its representation to this Committee, it needs to avoid conspiracy theories that have nothing to do with the Mpati Commission. It cannot raise matters that are unrelated to the Mpati Commission findings and bring them to this forum. He was glad that there was agreement that there must be a session where PIC responds to these allegations.

Mr F Shivambu (EFF) said it was inappropriate for AYO and Independent Media to thank the Minister for inviting them to the Committee, since he was not a member of the Committee. PIC should give a policy briefing on entities to whom it grants multiple loans. This is important to help limit the risk to the Government Employees Pension Fund. It was also necessary to discuss the quantum of how much exactly PIC can invest in any individual entity. He wanted to know what the financial exposure of PIC was, and this does not only relate to the entities before the Committee today. PIC’s broad policies need to be clarified for effective parliamentary oversight.

The Committee also needed to deal with PIC’s role in transformation. That must be a clear agenda that the Committee and PIC must not be apologetic about. It was correct for PIC to invest in entities which would contribute to economic and racial transformation. In almost any industry it is only PIC that can play a meaningful role in transformation.

Mr Shivambu said there was an attempt to suppress alternative views in the media space. But this must be dealt with in another platform. The Committee, however, must deal with: (1) how much did PIC invest in each of the companies associated with Mr Maponya, Independent Media and AYO; (2) what were the terms of investment by PIC, for both loans and equity injections; (3) are these loans being serviced, and if not, why not (4) is litigation necessary for the differences between PIC and these entities? It was wasteful for both sides in most cases, this is because it devalues the asset which is litigated on. He wondered if there was a better way of settling these disputes. The next engagement with PIC should not be postponed by more than a week. He wanted the Committee to draft a template about what it was looking for learn from PIC and the presenting entities. Thereafter the Committee would be able to provide its recommendations about how best to deal with the issues which have been raised.

The Chairperson repeated that there was general agreement to schedule a further engagement with the entities present, after giving PIC sufficient time to draft meaningful responses. The purpose of the Committee is primarily oversight of the executive. The Committee would welcome if the parties could find amicable solutions to their differences. He reminded all Members  that although the stakeholders are not Members  of Parliament, yet the rules of Parliament also pertain to them, so they should also be treated with dignity. The claim that Dr Survé does not have integrity is not right. He wanted the Committee to debate in a manner which respects the dignity of stakeholders.

Dr Survé thanked Members  for their time and indicated that the Sekunjalo Group was not before the Committee at the latter’s invitation, but rather due to its own request on the suggestion of Mr Mboweni. He agreed with Members , especially Mr Shivambu and the Chairperson, that the disputants find amicable solutions, and to ensure that there is value for the pensioners. The Group would continue to engage with PIC. He noted that there had not been a single dispute against any fact in the presentations given to the Committee.

Mr Malapela said that in the next meeting, a more detailed presentation would be provided. He repeated that the Mpati Commission did not make any findings of wrongdoing against Mr Maponya  and his entities, MMI. What Mr Sithole seeks to do is to read selective parts of the Report which are the presentations by the SA Home Loans CEO and Standard Bank, who sought to impugn the integrity of Mr Maponya. That was preceded by Mr Maponya initiating litigation against PIC for an amount of R45 million. That matter is currently in its pleading stages before the Pretoria High Court, so he would not want to go into that. The matter of PIC multiple exposure to a single entity, as considered by the Report, would be dealt with at a later date.

Addressing Mr Shivambu, he replied about the email that was submitted to Mr Shivambu when Mr Maponya was addressing letters to the SCA President – related to Mr Maponya's frustrations. On 23 December 2020, the SCA upheld his appeal against PIC in the matter involving Magae Makhaya, which we deal with in our petition to the Committee. Instead of honouring that SCA judgement, PIC approached the Constitutional Court seeking to appeal the SCA decision. We have opposed that matter. The matter is currently awaiting a Constitutional Court decision on whether it will entertain the PIC appeal of the SCA decision.

Mr Shivambu suggested that the next meeting happens in the recess period. Committees were allowed to request the scheduling of engagements during this period. The Committee also had to consider PIC Act. The composition of PIC board must be implemented in terms of the law.

Mr Hill-Lewis reminded PIC that there was a time when it was considering a preservation of assets court order. The PIC’s excellent legal team briefed the Committee that PIC was preparing an application for that order because it was of the view that Dr Survé was stripping assets out of Independent Media and funneling those assets offshore to fund his personal lifestyle. They then said that they had legal opinion to the effect that the court order would take so long that by the time the order was obtained, the assets would be stripped. He would like an update on that application. He was very concerned that asset stripping is still taking place. This should be interdicted as soon as possible, so no more pensioners’ money is not stolen through this company.

The Chairperson recapped that he would afford PIC time to prepare its responses, and the Committee would look at the parliamentary programme to see if it was possible to meet during recess. The two stakeholders, AYO and Independent Media, would be allowed—again—to respond to the responses from PIC. As we have said, we are not a court of law This is Parliament and it performs oversight over the organs of state, and in this case, it is PIC.

He thanked all present and adjourned the meeting.
 

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