{"id":14841,"date":"2021-08-30T03:59:44","date_gmt":"2021-08-30T03:59:44","guid":{"rendered":"https:\/\/amabhungane.org\/?post_type=stories&p=14841"},"modified":"2024-09-15T13:42:42","modified_gmt":"2024-09-15T13:42:42","slug":"210830-dr-dan-matjilas-secret-deal-to-make-surves-r700m-debt-to-pensioners-disappear","status":"publish","type":"post","link":"https:\/\/further.co.za\/amabwp\/210830-dr-dan-matjilas-secret-deal-to-make-surves-r700m-debt-to-pensioners-disappear\/","title":{"rendered":"\u201cDr Dan\u201d Matjila\u2019s secret deal to make Surv\u00e9\u2019s R700m debt to pensioners \u2018disappear\u2019"},"content":{"rendered":"

The Public Investment Corporation (PIC) says it was owed R709 839\u00a0328.45 by Iqbal Surv\u00e9\u2019s Sekunjalo Independent Media (SIM) as at 31 May last year.\u00a0<\/span><\/p>\n

This debt stems from the PIC\u2019s funding of SIM\u2019s takeover of the Independent Media group in 2013.<\/p>\n

With punitive interest that would easily be over R800-million by now, which really belongs to the Government Employees Pension Fund, managed by the PIC.<\/p>\n

There is only one problem: SIM claims that the debt does not exist. And even if it does exist, it ranks so far behind other large debts that in practice it will never have to be repaid.<\/p>\n

SIM might very well be right thanks to the actions of Dr Dan Matjila, the PIC\u2019s former chief executive, outlined in court papers recently obtained by amaBhungane.<\/p>\n

The documents show that after dragging SIM to court with a liquidation application in November 2019, the PIC was stumped when Surv\u00e9 surprised them with a secret agreement signed by Matjila in December 2017.<\/p>\n

It was a so-called \u201csubordination agreement\u201d annexed to SIM\u2019s responding papers and it showed Matjila had made astonishing concessions to SIM which drastically weakened the PIC\u2019s position.\u00a0<\/span><\/p>\n

The agreement states:\u00a0<\/span><\/p>\n

\u201cIn order to assist the Company the Creditor agrees \u2026 to subordinate for the benefit of the other creditors of the Company, both present and future, so much of its claims liabilities and obligations of whatsoever nature and however arising against the Company as would enable the claims of such other creditors to be paid in full\u201d<\/p>\n

If SIM were ever to be liquidated the PIC \u201cwill not prove or tender to prove a claim in respect of its subordinated claim, which proof would reduce or diminish any dividend payable to other creditors\u201d.<\/p>\n

Due to a roughly R1-billion debt owed to Chinese funder Interacom by SIM \u2013 which is effectively broke \u2013 a subordination agreement in practice extinguishes the PIC\u2019s claim because the Chinese would be paid out in full before the PIC got a cent.\u00a0<\/span><\/p>\n

Another clause reads:<\/p>\n

\u201c\u2026no shareholder of the Creditor shall take or enforce any action arising from any event of default howsoever arising against the company.\u201d<\/p>\n

In other words, the PIC is effectively banned from taking legal action to protect its rights.<\/p>\n

Then there is the clincher. The subordination will in effect be permanent.<\/p>\n

\u201cThe Creditor hereby agrees that, until such time as the assets of the Company, as fairly valued, exceed its liabilities as fairly valued \u2026 it shall not be entitled to demand or sue for or accept repayment of the whole or any part of the said amount owing to it \u2026\u201d<\/p>\n

So if the agreement stands the PIC has no claim on the money it is owed unless SIM somehow reverses its hopeless insolvency.<\/p>\n

The papers also claim the existence of this agreement came as a shock to the PIC.<\/p>\n

In June last year the PIC, under new leadership, launched another court application to claim back the money from SIM \u2013 this time including an attempt to quash the Matjila agreement.\u00a0<\/span><\/p>\n

We’re a non-profit newsroom that exposes wrongdoing, empowering people to hold power to account. But we cannot do it without <\/em>your support<\/a><\/u><\/em>.<\/em><\/p>\n

In its particulars of claim the PIC states:<\/p>\n

\u201cBefore SIM annexed the Subordination Agreement to an answering affidavit delivered relating to an application issued by the GEPF against SIM to place the latter in winding-up \u2026the PIC (alternatively. the GEPF) had no knowledge of the existence of this Subordination Agreement\u201d<\/p>\n

The subordination agreement adds to the litany of claims that Matjila repeatedly prejudiced the pension fund to make deals that favoured Surv\u00e9.\u00a0<\/span><\/p>\n

This agreement accompanied an equally hard-to-justify \u201cShare and Claims Sale Agreement\u201d that amaBhungane has previously reported on here<\/span><\/a>.\u00a0<\/span><\/p>\n

Both these agreements were tied to the failed listing on the JSE of Surv\u00e9\u2019s \u201cAfrican unicorn\u201d, Sagarmatha Technologies, in which the PIC was set to sink billions of rands.<\/p>\n

AmaBhungane has also recently reported<\/span><\/a> on how the South African Clothing and Textile Workers Union (Sactwu), another funder of the 2013 SIM takeover of Independent, finds itself in the same bind as the PIC.\u00a0<\/span><\/p>\n

Like Matjila, Sactwu general secretary Andre Kriel was persuaded to sign the same subordination and claim sale agreements.<\/p>\n

A rush to sign off<\/b><\/p>\n

The PIC court papers show how Matjila rushed to sign off on the Sagarmatha deal alongside the share-and-claims and subordination deals with Surv\u00e9 before the PIC\u2019s relevant investment committee could even formally consider it.\u00a0<\/span><\/p>\n

As it turns out the committee rejected the deal \u2013 not knowing Matjila had already signed it, endangering hundreds of millions of rands belonging to government pensioners.<\/p>\n

A major chunk of the debt related to the 2013 Independent deal was due for repayment in August 2018, but it was clear much earlier that there would be a default.<\/p>\n

According to the court papers, between August and September 2017 SIM started having meetings with the PIC about \u201cthe GEPF’s exit strategy from its investments in SIM and Independent Media; and\/or a potential investment opportunity in the subsidiary company [i.e. Sagarmatha] that Sekunjalo Holdings intended to list on a recognised stock exchange\u201d.<\/p>\n

The deal Surv\u00e9 had in mind was that the PIC would give up its loan claims, as well as its shares in SIM and in Independent itself, in exchange for Sagarmatha shares.\u00a0<\/span><\/p>\n

These Sagarmatha shares would allegedly be worth R1.5-billion, but this figure was based on a valuation provided by Surv\u00e9\u2019s own company.<\/p>\n

This neat escape trick was captured in a Surv\u00e9 letter to Matjila dated 14 September 2017 asking him to simply personally sign off on the deal: \u201cPlease accept this offer by countersigning in the space provided below upon which a binding agreement will come into existence\u201d.<\/p>\n

At this point Surv\u00e9 was already making outlandish claims about the international interest in his supposed technology venture which largely consisted of a bailout for Independent:\u00a0<\/span><\/p>\n

\u201cWe are pleased to announce that Sagarmatha has also attracted to its advisory board and as shareholders, technology billionaires from the USA. Holland, China, Singapore and India.<\/p>\n

Sagarmatha will more than likely have at its listing some of the world’s prominent technology billionaire investors as shareholders and as members of its international advisory board signalling a significant vote of confidence in Sagarmatha.\u201d<\/p>\n

AmaBhungane has previously reported<\/span><\/a> on how Surv\u00e9\u2019s claims about his company were about as real as the African unicorn. (Unicorn is colloquialism\u00a0 <\/span>for a technology start up worth more than a billion dollars.)<\/p>\n

Following Surv\u00e9\u2019s daring gambit to have Matjila sign off without further ado, the Johannesburg Stock Exchange apparently raised unspecified concerns (it would later be the JSE itself that scuppered the Sagarmatha listing months later).<\/p>\n

A second letter dated 1 December 2017 was sent by Surv\u00e9 to Matjila.\u00a0<\/span><\/p>\n

\u201cSubsequent to comments received from the Johannesburg Stock Exchange (JSE) in relation to the Original Offer Letter, we hereby substitute and replace the Original Offer Letter with this offer letter and the contents hereof in order to address the concerns of the JSE\u201d.<\/p>\n

This time around the offer at least contained some of the normal checks and balances one would expect in a deal purportedly worth R1.5-billion.\u00a0<\/span><\/p>\n

This included the condition that \u201ceach party acquires the necessary approvals for them to enter into the Sale Agreement\u201d.<\/p>\n

For the PIC that condition would be the consideration of the proposal by its Private Equity, Priority Sector and Small Medium Enterprise Fund Investment Panel (PEPPSFIP).\u00a0<\/span><\/p>\n

This panel did meet to consider the Sekunjalo proposal a few days after Surv\u00e9\u2019s letter \u2013 on 6 December.<\/p>\n

It roundly rejected the core basis of the deal: getting paid in Sagarmatha shares of doubtful value. Sekunjalo claimed the shares were worth R39.62 each. The PIC\u2019s internal research came up with a value of R7.06.<\/p>\n

Instead of these shares, the panel insisted on a cash payment for the GEPF\u2019s \u201cexit\u201d from Independent. The panel would also not make a commitment to investing in Sagarmatha.<\/p>\n

For all practical purposes, these conditions amounted to a wholesale rejection of the deal.<\/p>\n

But not for Dr Dan.<\/p>\n

Unbeknownst to his colleagues Matjila had already signed Sekunjalo\u2019s offer on 1 December, the day it arrived in the mail.<\/p>\n

Still acting alone and, according to the court papers, \u201cwithout any authority, unlawfully alleging to represent the GEPF\u201d Matjila signed the full Share and Claims Sale Agreement on 13 December, heedless of the committee\u2019s decision.<\/p>\n

The secret subordination agreement, which cut off exit from the Sagarmatha pipedream, is not properly dated but a signed copy is included in the court papers.<\/p>\n

The PIC\u2019s arguments to repudiate the subordination deal are based on Matjila\u2019s alleged lack of authority to make investment decisions of this magnitude without jumping through any number of hoops involving the PEPPSFIP and other executives. None of that happened and no due diligence was done, claims the PIC.<\/p>\n

Matjila told amaBhungane that he was unaware of this latest litigation between the PIC and SIM until we brought it to his attention.\u00a0<\/span><\/p>\n

\u201cFor the record though it is important for me to record that I have never acted outside the Company mandate and delegated authority whilst I was the Chief Executive of the PIC [and that] I had no pre-existing relationship with Dr Surve, whom I have only met in the course my work at PIC like many other Investors and PIC clients.\u201d<\/p>\n

See Matjila\u2019s full response here<\/span><\/a>.<\/p>\n

In testimony before the Mpati commission of inquiry in July 2019 Matjila had said that \u201cthere was a continuous engagement with Dr Surve and the reason for this was not because of friendship per se but I and my colleagues were worried that the PIC was increasingly exposed to high risk\u201d.<\/p>\n

Surv\u00e9 told other PIC employees that he considers Matjila a \u201cgood friend\u201d, according to other testimony at the commission.<\/p>\n

No escape?<\/b><\/p>\n

The PIC is trying to wriggle out of the Share and Claims Sale Agreement on two bases. One is that Matjila had no power to sign it. The agreement should also not be read to force the PIC into trading its claims on and shares in Independent and SIM for useless Sagarmatha shares.<\/p>\n

The agreement was explicitly tied to the Sagarmatha listing. The \u201ceffective date\u201d at which the share swop was deemed to happen was, according to the agreement, the day that an announcement was made on the JSE\u2019s SENS news service indicating how many shares are getting listed on the exchange.<\/p>\n

That announcement went out on 28 March 2018 even though the listing ultimately failed.<\/p>\n

Nothing in the agreement however said that it was conditional on the listing succeeding \u2013 even if that seems like an obvious inference.\u00a0<\/span><\/p>\n

The PIC is arguing the agreement must be read to imply \u201cthat the sale and exchange \u2026would only be implemented upon the successful listing of Sagarmatha’s ordinary shares on the JSE (“Listing”) within a reasonable time after the signing of the [agreement]\u201d.<\/p>\n

The subordination agreement is different. It makes no explicit reference to the Sagarmatha listing at all.\u00a0<\/span><\/p>\n

After the listing fell away the subordination agreement appears to remain in force, unless SIM\u2019s hopeless financial state is dramatically reversed and \u201cthe assets of the Company, as fairly valued, exceed its liabilities as fairly valued\u201d.<\/p>\n

Here the PIC\u2019s argument is that Matjila had no authority to sign the deal without going through the PIC\u2019s checks and balances.<\/p>\n

Same old story<\/b><\/p>\n

The listing of Sagarmatha was a transparent attempt to bail out SIM and Independent Media by having the PIC forgive its debt and in addition invest several billion rands more.<\/p>\n

It would have been the culmination of a series of increasingly generous PIC investments in Surv\u00e9 companies that started with the listing on the JSE of Premier Fishing in March 2017.<\/p>\n

The fishing company was 100%-owned by African Equity Empowerment Investments (AEEI) which is Surv\u00e9\u2019s main investment vehicle. For the listing it sold 45% of the company with 23.75% going to the PIC for R278-million.<\/p>\n

The manoeuvres to help SIM escape its debt obligations in December 2017 coincided with Matjila\u2019s even more damaging actions in relation to the listings of Surv\u00e9\u2019s Ayo Technology Solutions that same month.\u00a0<\/span><\/p>\n

Subscribe to amaBhungane\u2019s newsletter<\/a> <\/em><\/strong>and get world-class, award-winning investigative journalism delivered right to your inbox.<\/em><\/p>\n

Once again he allegedly circumvented the PIC\u2019s internal processes in order to invest a staggering R4.3-billion in Ayo. As with Sagarmatha, the Ayo shares Matjila made the PIC buy were grossly overvalued. \u00a0<\/span><\/p>\n

In the Ayo case the investment was forced through with Matjila allegedly signing an \u201cirrevocable agreement\u201d to make the investment on 14 December, two weeks after sealing the irregular SIM deal and a mere day after signing the share-and-claims agreement. This signature again predated a formal consideration of the deal by the PIC a week later.\u00a0<\/span><\/p>\n

The PIC is also trying to get its money back from Ayo, again relying on the argument that Matjila had gone rogue.<\/p>\n","protected":false},"excerpt":{"rendered":"

Yet another court case has laid bare allegations the former chief executive of the Public Investment Corporation secretly signed away state pensioners\u2019 claims worth hundreds of millions of rands to help his alleged friend, media mogul Iqbal Surv\u00e9.<\/p>\n","protected":false},"author":8,"featured_media":21027,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[231,3,51,115,460,52,49],"class_list":["post-14841","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories","tag-amab","tag-amabhungane","tag-ayo-technology-solutions","tag-dan-matjila","tag-dewald-van-rensburg","tag-iqbal-surve","tag-pic"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/14841","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=14841"}],"version-history":[{"count":1,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/14841\/revisions"}],"predecessor-version":[{"id":29968,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/14841\/revisions\/29968"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/21027"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=14841"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=14841"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=14841"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}