The liquidation of Sekunjalo Holdings would be the logical conclusion to an impasse between the company and the Public Investment Corp, PIC chair Reuel Khoza says.
Speaking to Business Times this week, Khoza said the step would help to protect civil servant pensions. The PIC, which says Sekunjalo owes it more than R1bn in loan repayments, has raised concerns that Iqbal Survé's company could be moving its assets offshore.
Sekunjalo has denied this and threatened to sue the PIC, but the government-owned asset manager is following up with law enforcement authorities and the South African Reserve Bank, which controls the movement of funds into and out of the country.
Khoza says: "My sense is that if indeed issues are as [the PIC] has outlined, the logical end state is liquidation because we cannot allow pensioners' money to be frittered away in that way.
"We will follow due process to its logical end. If in the wake of the process it is established that there is no real case, that will be the end of the issue."
Sekunjalo said on Wednesday: "The PIC has never loaned any monies to Sekunjalo Investment Holdings and the Sekunjalo Group, and SIH and the Sekunjalo Group have never asked for any such loan."
It says it does not owe banks any money either and that the business is cash positive. "Sekunjalo has not signed surety nor issued any put options to the PIC. It is therefore bewildering to us that the PIC could consider liquidating Sekunjalo for a debt it is not tied to."
In 2013 the PIC loaned money to a consortium which included Sekunjalo, to buy Independent Media.
The PIC has also lodged a civil claim to recoup R4.3bn it invested in AYO Technology Solutions when it listed on the JSE in December 2017. AYO is a subsidiary of African Equity Empowerment Investments, which is the listed sister company of Sekunjalo.
The PIC is also awaiting the outcome of the commission of inquiry into its own affairs, which heard allegations that AYO's value was overstated at the time it concluded a deal with the PIC. The commission is expected to submit a report to President Cyril Ramaphosa by the end of the month.
Khoza says: "It got our pensioners' money and part of that money has evaporated. The market cap having dropped, it plummeted by half overnight. Something we believe is amiss there and calls for investigation."
He declines to elaborate on the possibility of liquidation, saying it is a legal matter.
But he says liquidation is the "feasible" option for the PIC investment in Sekunjalo's media assets. "There is a thrust that we are not going to throw our hands in the air and say 'that's a loss, please accept it'."
The PIC invests government employees' pensions as well unemployment insurance funds. Earlier this week it reported a 2.3% growth in assets under management to R2.13-trillion for the year to March. It paid a dividend of R80m to the government as a shareholder.
The PIC controls more than 10% of the stock exchange market capitalisation.
With regard to Eskom's R400bn debt crisis, Khoza says the PIC is "looking at permutations of how we could come to the rescue or assist Eskom, because Eskom is everybody's responsibility".
Practical alternatives will be discussed at the PIC strategy session early next month "against the background of making sure that the value for the pensioners does not get frittered away".
The PIC is currently without a permanent CEO, following the resignation of Dan Matjila last year, though a recruitment process is under way and one could be appointed early next year.
The PIC also has plans to recruit a chief investment officer, a chief risk officer and a COO, who will be tasked with running daily operations so the CEO has more time to focus on developing strategy.
Khoza says the separation of the audit and risk committees and the disbanding of fund investment panels are other steps taken to improve governance at the PIC. A whistleblowing policy is being developed.
"You had a few rotten apples, some of whom had been flushed out, and if there are any remaining these too shall be flushed out. But the organisation is quite sound," he says.
Pressure from political parties seeking financial favours has all but stopped.
"I believe there is also a sense in which they would know who would be malleable and adaptable to such influences," Khoza says.
"The board that is in place has very strong characters in terms of professionalism, in terms of ethics, and my sense is that we're not going to be amenable to undue, corruptive influences from whatever quarter."
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