Late on Monday, finance minister Enoch Godongwana made the critical call to dissolve the board of the Public Investment Corporation (PIC), threatening to plunge it back into a governance crisis with nasty echoes from a decade earlier.
In a letter to the board, Godongwana effectively told the remaining nine non-executive directors that they could either resign or wait for a board meeting next week.
It was no great surprise: the board had been riven by factions. Last week, two directors, Thabi Nkosi and Nosiphiwo Balfour, quit in a bust-up over whether to suspend CEO Patrick Dlamini.
The day after Godongwana’s letter, four more non-executive directors quit: lawyer Lerato Makwetla; the National Treasury’s representative, Lindy Bodewig; former PIC employee Mpumelo Maseko; and capital markets specialist Dorothy Kobe.
It’s yet another unfortunate crisis at the top level of Africa’s largest money manager, an institution that lies at the heart of South Africa’s business sector. The PIC invests R3.7-trillion on behalf of 1.2-million civil servants, accounting for, by some estimates, 20% of all the shares on the JSE. Its decisions shape the market.
This is why, in 2018, President Cyril Ramaphosa commissioned an inquiry into politically motivated investment decisions at the PIC. Judge Lex Mpati’s report produced 308 recommendations meant to fix it and herald an era of clean governance.
Instead, the PIC has become “Hollywood”, according to one insider.
It’s an analogy that doesn’t just speak to the drama, with a board at loggerheads and a cloud of suspicion over almost all investment decisions, but also to the fact that five of the six top executives are now in acting positions.
It has an acting CEO, acting chief financial officer, acting chief investment officer (CIO), acting chief operating officer and acting head of risk. Chief technology officer Makano Mosidi, the only permanent executive, must be nervous.
Persistent questions over investment decisions haven’t helped, like its R1.7bn investment in Daybreak Foods, a poultry operator plagued by gruesome scenes of animal cruelty which led to a mass cull of chickens last year.
But the tinder that lit the fire in the past week was the board’s suspension of Dlamini, barely a year into the job. As one insider tells the FM, this was “200% wrong” — it was punishment for appointing forensic investigators at PwC to examine a R411m payout made to a company called Acapulco.
“Patrick followed the right processes and appointed PwC to investigate what went wrong in the valuation of Lanseria. This is public money, you need to know how it’s spent. But now he is being made a scapegoat,” he says.
The suspension split the board, with nine in favour and two against. But the fault lines went deeper, dividing Godongwana, believed to have wanted Dlamini to remain, and his deputy, David Masondo, who wanted him gone.
Masondo, as chair of the PIC board, was instrumental in this move. Last week, Godongwana stressed that the decision on Dlamini’s suspension was “taken by the board — the government is not involved”, putting further distance between him and his deputy.
One insider says Dlamini only learnt of his suspension from a News24 report, during a scheduled meeting between his executive committee and the Government Employees Pension Fund (GEPF). He had received no formal letter.
Godongwana, sent a series of questions, tells the FM he “will not be commenting further”, having “noted and received communication from the board”. He says he will provide details later on the measures “to ensure a return to stability for the entity”.
The FM has a copy of the confidential PwC report, which sheds new light on Dlamini’s suspension. The report suggests he was justified in asking for that investigation, not least because it exposes flaws in the PIC’s processes.
The R411m payout to Acapulco “reflects a series of decisions and actions in which contractual and governance mechanisms were not consistently applied”, the report says. Moreover, “no single individual within the PIC … assumed clear ownership or accountability”.
A new board will have much on its plate then: filling the vacancies in the C-suite and putting in place a new system where people are held accountable for their decisions.
The Hollywood comparison doesn’t end at the executive level. The PIC also had an acting head of listed investments, an acting head of fixed income, and an acting head of unlisted investments.
Mark Burke, the DA’s spokesperson on finance, describes what has happened in recent days as a “bonfire of governance”, saying there’s “no doubt that the place is highly dysfunctional”.
Private sector managers agree.
Asief Mohamed, CIO at Aeon Investment Management, says the fallout isn’t limited to the PIC. “Investors want to come into a market where they can trust that it’s good governance. If it is perceived that all entities, state-owned or private sector, don’t have good governance, we’re going to chase away capital.”
‘All hell breaking loose’
The FM has spoken to several directors, executives and employees at the PIC in the past week. They’ve painted a picture of a conflict-ridden organisation, with Dlamini at loggerheads with his chair, Masondo.
The point of dispute that led to “all hell breaking loose”, according to one director, was the appointment of the CIO — a key role in any asset manager.
The PIC’s new strategy was to split the single CIO role into three: one overseeing unlisted investments, another listed investments and a third property and infrastructure.
The goal was to improve oversight. Instead, it became the flashpoint in a wider battle over who really runs Africa’s largest asset manager.
Dlamini is understood to have supported the three-CIO structure, to sharpen leadership in the areas where the PIC was most exposed. “The PIC has a number of issues across these portfolios, and you really need the leadership presence to adequately deal with all the issues [to] … sort out what actually is damaging reputation,” one person says.
The problem, several people say, was over who would control the appointments — and bear responsibility for them. “Initially, the process looked orderly,” one board member tells the FM. But when it came to the CIO for unlisted investments — a key portfolio where scandals like Daybreak have long lurked — disagreements emerged.
Dlamini apparently wanted “somebody very high-level, with real expertise”, but Masondo wanted someone “more junior”, according to a source close to the GEPF. “Patrick was saying: ‘No, this is the portfolio that has put us in hot water. We need somebody very seasoned.’ That’s when the red flags went up.”
Dlamini objected to Masondo’s suggestion. “If the CEO is ultimately accountable for performance, he has to own the executive appointments,” another person close to the board says. “Otherwise, you get people who feel more beholden to the chair and the board than to the CEO, and that bends governance out of shape.”
Godongwana then intervened, says one board member, telling Masondo that the board needed to allow the CEO to run the process and recommend candidates. His siding with Dlamini deepened the fallout.
One source says Godongwana was irked that Masondo, as chair, had not intervened earlier when the Daybreak scandal broke.
A new board now seems unavoidable. The resignations in the past week leave a large question mark over the credibility of those who remain. “The entire board structure has been hollowed out and collapsed,” one person says. “There’s no-one with investment experience left.”
Most of the subcommittees no longer meet, says another board member.
The Lanseria problem
If these problems had been bubbling under for some time, it was the fallout over a deal involving Lanseria Airport that ultimately boiled over.
In 2013, 12 years before Dlamini was appointed, the PIC made a R333.2m loan to Acapulco, run by Kagiso Matjila, to buy a 25% stake in Lanseria.
It wasn’t an obvious punt; the airport had been battling financially for some time.
This was also a large sum to lend to Matjila, an otherwise anonymous businessman who seems to have had stakes in an assortment of businesses.
With Lanseria struggling, Matjila never repaid that loan, which grew to more than R600m once interest began compounding. By 2023, when Matjila was meant to have refinanced the loan, Acapulco had defaulted, and the PIC took over those shares in Lanseria.
But Matjila demanded to be paid out for the “deemed licence value and a quantified sweat equity adjustment linked to BEE considerations”.
An arbitration process followed, with a key point of contention being Lanseria’s value. Three different valuations were obtained.
The last one, by a company called Crowe, said the value had risen by more than R1.7bn. Based on this, Matjila initially asked for more than R1bn for his shares. The PIC rejected Crowe’s valuation, but the arbitration award was made in Acapulco’s favour. In October, the PIC reached a settlement to pay R411m, plus R20m in interest, to Acapulco.
The PIC’s lawyers had debated appealing this finding, but ultimately said that any fight had “limited prospects of success” and carried “potential litigation risks”.
After the arbitration finding, Dlamini hired PwC to examine the process that led to the payout — essentially probing whether the PIC had overpaid and, if so, who should be held accountable.
It is clear from that full report that the PIC did overpay, based on a valuation for Lanseria that was “an obvious outlier”. Compared to 10 other valuations, Crowe’s final value of R4.1bn for Lanseria was more than three times the next highest valuation of R1.2bn, by KPMG.
PwC said: “Crowe was introduced to the PIC by Acapulco and … we did not identify the same level of due diligence of Crowe’s suitability to perform the valuation prior to its appointment.”
But the real value in the PwC report is what it reveals of the processes and fault lines in the PIC. PwC said that while the PIC acted within the law, “missteps occurred”. These led to Acapulco being paid nearly R500m “based on a valuation by Crowe that, on the face of it, contains double-counting, and an arbitration award that seemingly did not consider or was not presented with all relevant information”.
These “missteps” included that the PIC failed to properly consider the experience of Crowe’s valuer, that it agreed to an “expedited” arbitration and that it appointed an “apparently unqualified valuation expert” to represent it in the arbitration. “The outcome reflects a series of decisions and actions in which contractual and governance mechanisms were not consistently applied.”
One person with knowledge of the matter tells the FM that Dlamini’s view was straightforward. “Patrick argued that we settled at an amount that was not right. The valuation, the way it was done, was messy, and he blames internal people. He wanted to discipline internal people.”
To suspend or not to suspend
Those close to Dlamini say the Lanseria matter became part of a campaign to remove a CEO who was questioning past settlements and pushing for tougher governance.
In May, the perfect pretext to suspend him arrived: an anonymous 29-page whistleblower report, blaming Dlamini for reopening the Lanseria matter with PwC’s help without disclosing his conflict of interest in the case.
Whether he should have been suspended is debatable.
One director says it’s “only fair” that Dlamini be suspended to allow the whistleblower allegations to be tested — regardless of whether it was someone accused in the PwC report who lodged it. “A whistleblower can be credible or not credible,” this person says. “You don’t decide that in advance; you investigate and then you clear people or you act.”
Others point out that suspending someone simply to “test the claims” risks paralysing organisations.
Notably, the whistleblower claims seem similar to those made against Dlamini by Matjila.
Matjila seems to have scant regard for the suspended CEO. In response to questions from the FM, he says Dlamini was “conflicted” on this matter, since he had been a member of Lanseria’s board for years (which is true) but hadn’t recused himself from the case.
Crowe’s valuation, Matjila says, was produced by jointly appointed independent experts and tested in the arbitration. “Dlamini then commissioned PwC, on his own authority, to review the very valuation his institution had just failed to displace,” he says. “This matter demonstrates the danger and damage a conflicted official can do when permitted to wield institutional power in a matter in which he ought to have recused himself.”
On the issue of Crowe’s “double-counting”, Matjila says this was fully debated during arbitration. “What we are seeing is a restatement of the losing arguments, litigated through the press.”
Meanwhile, Masondo has referred the PwC report to the Special Investigating Unit for a criminal investigation.
Masondo ‘too operational’
The fallout highlights the one glaring problem that has never been fixed: as part of his recommendations for fixing the PIC, Mpati was clear that a politician should not chair the entity.
Khaya Sithole, an independent analyst, says this is the one recommendation “the ANC government pretended never existed at all”.
“You get told to appoint a political deployee as a chair of the board when ideally you could have chosen someone else,” he says. This leads to a situation where “non-commercial considerations” become fundamentally entrenched.
UDM leader Bantu Holomisa, who has been a critic of the PIC, agrees. “Had they implemented the Mpati commission’s findings, the situation would be better today. To clean up this mess, we should not appoint a politician to chair the PIC.”
One insider at the PIC says Masondo is “too operationally involved” and keen to “insert himself into operational matters”. The board member says mistrust at the board deepened after Masondo “began meeting with certain members separately — a kind of shadow board”.
The DA this week suggested a governance overhaul to insulate the PIC from political meddling. It has introduced a new bill, which would bar anyone who has been in political office in the preceding three years from being appointed to the PIC’s board.
The DA’s Burke says this legislation “should have the broad support of MPs”, given that they know that the taxpayer is ultimately on the hook for what happens at the PIC.
For Holomisa, the problem goes deeper. There are unqualified people at all levels at the PIC, which allows poor decisions to be taken, especially when it comes to the Isibaya Fund. This contains R162bn and invests largely in unlisted companies. There have been several wretched deals, including Daybreak and Ayo Technology Solutions.
In Ayo’s case, it ploughed in R4.3bn in 2017 and lost nearly R3.7bn. And who can forget Erin Energy, the politically connected oil firm that had guzzled R4.6bn of PIC funds by the time it went belly-up in 2018?
In 2025, the PIC admitted to parliament that more than 40% of its unlisted investments needed rescuing.
For Holomisa, this has been an expensive embarrassment. “Rather invest that money to develop South Africa’s infrastructure. At least … the PIC would have better investment results than giving it to people who fail to service their loans.”
The Lanseria investment, for one, is an expensive case study in why PIC officials need to be far more diligent about protecting the civil servants’ money they invest.
Any new board which Godongwana convenes will need to be much more rigorous in ensuring fiscal discipline and accountability. The PwC report suggests it has got a long way to go.