Assistant commissioner Gill Marcus, left, chairperson Justice Lex Mpati and assistant commissioner Emmanuel Lediga during the PIC Commission of Inquiry being held at Sammy Marks Square, Pretoria. Picture: Thobile Mathonsi African News Agency (ANA) Assistant commissioner Gill Marcus, left, chairperson Justice Lex Mpati and assistant commissioner Emmanuel Lediga during the PIC Commission of Inquiry being held at Sammy Marks Square, Pretoria. Picture: Thobile Mathonsi African News Agency (ANA)
North Gauteng High Court Judge Cornelius van der Westhuizen’s ruling in favour of the Public Investment Corporation (PIC) and Ayo Technology Solutions has far-reaching implications for corporate governance, democracy and the rule of law in South Africa.
In a landmark ruling on Tuesday, Van der Westhuizen declared the Companies and Intellectual Property Commission’s (CIPC) February 21 compliance notice unlawful, and set it aside as it “lacked legality’’.
“The compliance notice issued by the respondents on February 21, 2019, to the applicants is declared unlawful and of no force or effect. The compliance notice is set aside,” the judge said, in dismissing the case with costs.
The unprecedented notice had demanded that the PIC recoup its R4.3 billion investment in Ayo, with interest, within 15 days.
If successful, the move would have made Ayo the first company in the country’s history to have been forced to repay a PIC investment.
This may appear to have been an ordinary court battle - between the PIC, Ayo and the CIPC - aimed at enforcing corporate governance in the public interest.
But it was more than that. It was part of a wider, behind-the-scenes fight over the economy, state resources and the country’s transformation agenda.
The battle has pitted a powerful group of senior ANC politicians, their business partners and government proxies, on the one side, against another group of businessmen, politicians and civil servants they deem stumbling blocks, and to be on the wrong side of politics.
This is because they are perceived to have not supported President Cyril Ramaphosa’s bid for the ANC presidency ahead of the Nasrec national conference in December 2017.
However, there have been other worrying trends about this matter.
First, the PIC has lost billions of rands of pensioners’ money in companies such as Steinhoff, S&S Refinery, EOH and Lancaster.
The state asset manager lost R20billion in Steinhoff when the share value plummeted overnight due to alleged fraud. Despite this, the CIPC never bothered to issue a compliance notice demanding that the PIC recover the money.
Is it because the owners of these companies have friends in high places, and are on the good side of the politics of the day?
Why is Ayo seemingly targeted?
Second, Ayo requested a meeting with the PIC in February to clarify media allegations that it had inflated its R43 a share price, and that the state asset manager’s R4.3bn investment had already lost value.
The PIC confirmed the meeting, but later unilaterally cancelled it.
Why?
Is it because the PIC had already made up its mind about recouping its investment regardless of Ayo’s balance sheet and the fact that, unlike Steinhoff and others, the technology company had not lost a cent?
Third, why was the PIC under Deputy Finance Minister and PIC chair Mondli Gungubele seemingly so hell-bent on destroying Ayo’s reputation, the value of the company’s shares, and, by extension, cost government pensioners billions of rands?
This is so much for an entity and politicians who are supposedly acting in the best interests of government pensioners.
And last, the speed with which other state regulatory bodies and the Johannesburg Stock Exchange (JSE) entered the fray is suspicious.
Weeks after a Business Day report claimed Ayo had inflated the share price and it was being looted, the PIC, CIPC and JSE all moved in. This is strange given that many other companies have cost the PIC billions in recent years, and these bodies have yet to lift a finger or demand that pensioners’ monies be recovered.
These unsavoury developments, and recent testimony before the Mpati Commission of Inquiry into allegations of impropriety at the PIC, can only point to one thing: powerful political and commercial interests using state-owned regulatory bodies to fight commercial and political battles.
The separate high court cases between PIC, Ayo and the CIPC are a symptom of this bigger plot to control the economy and frustrate the country’s transformation agenda. The open cast - PIC board members, CIPC and JSE officials - are nothing more than proxies in a wider battle.
* Rampedi is Independent Media’s Group Executive Editor for Investigations.