7 things to know about the Budlender report into the PIC

Suspicious investment decisions by the Public Investment Corporation to companies such as AYO Technology Solutions, S&S Refineries and the now-defunct VBS Mutual Bank are being probed by the judicial commission of inquiry into the PIC.

The PIC controls over R2trn of assets, mostly on behalf of government employees, and wields considerable financial muscle as the largest asset manager in Africa.

As scandals mounted in July 2018, then-finance minister Nhlanhla Nene commissioned a forensic inquiry into specific allegations made by a purported whistleblower under the pseudonym James Nogu in a series of emails.

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He claimed that former PIC CEO Dan Matjila influenced the PIC to lend R21m to a company known as Mobile Satellite Technologies (MST), and give them R5m in corporate social investment spend. Matjila's alleged girlfriend, Pretty Louw, was said to have been linked to MST.

Matjila resigned in November after coming under fire for over a year, and he was removed with immediate effect by the board.

Advocate Geoff Budlender undertook a forensic probe and handed over his report to the PIC’s board in October 2018. It was kept under wraps until it was mentioned at the commission of inquiry on Tuesday and released to the public.

Here is what you need to know from the 72-page report.

No romantic link between Matjila and Louw

The report found no evidence that Matjila and Louw have, or had, a romantic relationship.

Louw did not influence funding to MST

Budlender stated that Louw could not have impacted the R21m loan to MST as this was approved in 2015. She only met Matjila in 2016. He also found no irregularity or impropriety in the R5m in CSI spend given to MST by the PIC to fund mobile health and education units.

Louw’s company, Maison Holdings, was paid a R438 000 consulting fee plus value added tax for "invigorating" this discussion with the asset manager.

Louw was introduced to Matjila by former state security minister David Mahlobo

Louw initially gave a deliberately false explanation as to how this meeting came about, saying she met Matjila casually. She later revealed that Mahlobo had introduced them at OR Tambo International Airport in April 2016 and he was a friend from university as well as being a client at her spa.

Mahlobo’ s version of events untrue

Mahlobo stated that he did not have any relationship with Louw and said they had first met at her spa, contradicting her versions of events about meeting her at university. 

The Budlender report did not believe a Cabinet minister would go to the extent of summoning a CEO of a major public entity to a meeting with a virtual stranger, saying there must be "more to it" and Mahlobo’ s account was "untrue in a number of respects".

Matjila under pressure

When Louw’s business ran in financial difficulties, Matjila called Lawrence Mulaudzi, a businessperson whose consortium the PIC had recently provided substantial funding. Mulaudzi understood this as a request, not an instruction, but felt that under the circumstances he had no alternative but to agree and paid Louw R300 000 in his personal capacity.

Matjila did this as he was "under pressure as a result of the interventions by then Minister Mahlobo", according to the Budlender report.

Perfunctory board investigation

The Budlender report found the board’s investigation of the allegations contained in the anonymous emails was perfunctory. The board was satisfied with an oral report by the Head of Internal Audit on a brief interview he had with Matjila, and a telephonic interview which he had with Mulaudzi, before clearing Matjila of wrongdoing, according to Budlender.

Matjila should have told the other directors he had come under pressure from a Cabinet minister to intervene on Louw’s behalf, the report said.

Protect PIC from favouritism

The Budlender report concluded there was a risk the PIC could be compromised if it exercised its financial muscle in a manner which favoured selected people. The report recommended that the asset manager should develop formal supplier development criteria for investees in the future, and staff and management should be barred from approaching beneficiaries for favours.