CFOs have ‘greater responsibility’, or do they?

After two days of questioning before the judicial commission of inquiry probing issues of governance at the Public Investment Corporation (PIC), it is unclear what suspended chief financial officer (CFO) Matshepo More is responsible for.

The PIC, which manages over R2 trillion in state pensions and other social assets, has been dogged by allegations of corruption and impropriety over the past few years, prompting the establishment of a judicial inquiry tasked with unearthing its governance failures.

While More occupies the second most powerful position at the biggest asset manager in the country – which has been described as “too big to fail” – based on her testimony, questions arose as to whether More has any real authority. 

Commissioners went around in circles in their attempts to pin down More’s understanding of her role at the PIC and the aspects of the operations she is responsible for. The suspended CFO gave long-winded answers and sidestepped accountability by deferring to other employees and former chief executive Dan Matjila.

More’s long-form approach to answering simple questions frustrated the inquiry, with assistant commissioner Gill Marcus saying at one point: “I want to know ‘yes or no’ because you keep giving background and background and background and you don’t answer the question.”

More controversially signed off the payment memo on the R4.3 billion deal with Ayo Technology, which has been found to have breached the PIC’s governance and investment processes. A number of employees have also accused her of victimisation against those perceived to be against her and Matjila. 

Who is Matshepo More?

More began her career with Deloitte where she served her articles from 2005 to 2007. This was followed by a stint at Deloitte’s New York office, after which she returned to South Africa in 2008 and began work as an audit manager at the firm. 

In 2009 she began her career at the PIC as a financial manager. Just a month into the position she was appointed acting CFO. This was made permanent in 2011. This meant that only four years after qualifying as a chartered account, More took a leading role in managing Africa’s largest asset management company.

When Matjila resigned in November 2018, More was made acting CEO. But merely four months later, she was served with a suspension letter for interfering in the work of the commission, a charge she has called “unfounded and unsubstantiated”. 

How Matjila took control

More’s appointment as CFO preceded what was later to be seen as a move that gave Matjila firm control over the organisation.

In 2015 the PIC changed its structure, removing the position of chief operations officer and combining the chief investment officer role with that of the CEO – a change that has been described as making the CEO position “the most powerful position”. 

Read: ‘Dr Dan didn’t lead, he ruled over the PIC’

Current and former executives have testified that having two executive directors resulted in a concentration of power and authority, complaining about how the two were involved in all the investment decisions of the PIC and placed undue pressure on the deal team to conclude certain investments.

More’s role regarding Ayo

Marcus was bewildered with More’s responses to what her understanding of the gravity of her role as CFO at the PIC is.

Marcus repeatedly probed on this point, saying that this was mainly due to the fact that in parts of More’s testimony, particularly with regards to the Ayo deal, she said that she just “signs off on payment”. 

“What has not come across to me is the question of how you, as a CFO being in a responsible position while all of this is happening, challenged your own appreciation of what you’re doing,” charged Marcus. 

The Ayo deal was flagged by members of the investment team as being overvalued and without investment merit. The PIC paid R43 a share when the company listed on the Johannesburg Stock Exchange (JSE) in December 2017. 

Matjila unilaterally signed the irrevocable subscription agreement to invest in Ayo without due diligence being completed or the deal being approved by the portfolio monitoring committee.

This was a breach of PIC procedure. 

More signed the payment memo for the investment in Ayo, also without the deal being considered and approved by the portfolio committee. 

But More said that her role in the deal had been grossly exaggerated and misrepresented by those who appeared before the commission. 

Disbursement memo

More denied having knowledge of the fact that the irrevocable undertaking had been signed without committee approval saying she “signed the disbursement memo for the sole purpose of confirming that the requisite funds are available”. 

By the time the memo was handed to her for her signature on December 19, 2017, it had already been signed by six other people including Matjila, and was awaiting only her signature.

She said she had scratched out the words “approve or not approved” at the top of her signature to indicate that the power to release funds did not lie with her but with the CEO. 

To substantiate her point More gave an example of how, when she was on maternity leave in 2018, Brian Mavuka, general manager of finance, who was acting as CFO, had done the same for a payment memo involving another company. 

More said this is how the PIC understood and applied the requirements of the delegation of authority for payments and transactions in listed investments: the CFO’s signature confirms availability of funds while the CEO’s signature approves their release. 

In fact, she said she honestly believed that the deal had already been approved by the portfolio management committee. When she realised that that was not the case, More said she immediately stopped all processes meant to disburse the money and called for a committee meeting to correct the procedural breach. The meeting was held the next day, on December 20, 2017.

More testified that Matjila, despite having signed the irrevocable undertaking, had not informed her of this fact when she signed the disbursement memo – and even at the corrective meeting, which she chaired, he made no mention of the irrevocable undertaking.

Delegation of authority

But there is a section of the delegation framework that More conceded was not followed. It would have required her to be aware and carry more authority on an investment as big as the R4.3 billion Ayo deal. 

The board-approved framework expects the CEO and CFO to jointly agree on investments of more than R3 billion and under R10 billion before such deals are taken to the portfolio management committee. 

Asked by chief evidence leader advocate Jannie Lubbe if this had been complied with, More said no. She quickly explained that although this should have happened “the practice was actually not applied”. 

Lubbe asked if Matjila had a moral and ethical duty, as her boss and co-director of the PIC, to inform her of an investment in excess of R4 billion. To which More replied: “It’s difficult to answer questions on someone’s morality but in terms of processes and delegations at the PIC, he had no obligation to tell me.” 

However, despite it not being established practice, the protocols of the delegation were only amended by the board in April 2019 where the involvement of the CFO was removed.

Commissioner Lex Mpati expressed that it was concerning that despite Matjila and More being the two most senior executives at the PIC, he had failed to disclose, even at the December 20 meeting, that the irrevocable undertaking had been signed. 

More agreed that it was “a misrepresentation on the part of Dr Dan and at any given point he had a responsibility to make sure that he empowers us and gives us the necessary information”. 

More went on to say that in order to prevent a situation like this in future the scope of responsibilities for assurance providers involved in the due diligence process needs to be relooked so that they highlight any events that occur before concluding transactions. 

Marcus said there was no disagreement that everybody has a responsibility and accountability. 

“But there are some people who are more accountable than others because of the virtue of the position they hold,” she said. “They hold that office that carried greater responsibility and that’s the part that I find missing in your testimony.”