The Public Investment Corporation (PIC) breached the money manager’s own memorandum of incorporation when the positions of chief investment and executive officers were combined under Dan Matjila, a former employee said.

“What could have been the function of the CIO are now sitting with the CEO, and what could have been the functions of the COO are now sitting with the CFO,” Paul Magula, the former executive head of risk and compliance at Africa’s biggest fund manager, told an ongoing commission of inquiry into the PIC on Monday in Pretoria.

“Due to this, all other executives or executive heads became demoted and had no say in decision-making within the PIC. They just have to do as they are told.”

His testimony follows that of several other former PIC employees, who have told the inquiry of long-term friction, division and distrust. The organisation, which has assets of more than R2-trillion and manages South African government-worker pension funds, is increasingly under the spotlight as board members, managers and other employees come to testify at the inquiry. Tensions came to a head last month when nine directors resigned en masse, including chairperson Mondli Gungubele, who is also the country’s deputy Finance Minister.

Executive-committee meetings “were like conversations between the CEO and CFO", with transactions approved in line with their instructions rather than proper investment evaluation, Magula said.

“It is unheard of for the CEO to have interest in every single deal that gets assessed; in most big investment houses, the CEOs only find out about the transactions when required to do final sign-offs and even then, it is on limited cases. The role of the CEO at the PIC showed the paralysis in the investment process as transactions are not deliberated upon for approval.”

The PIC determined that investment rules were flouted when it bought stock in Ayo Technology Solutions stock for R4.3-billion. In 2018, the fund manager’s investment valued Ayo at R14.8-billion even though its assets were estimated at R292-million. Matjila was “so desperate” to have the transaction approved that he returned from leave, Magula said.