“Just because we are a black managed and owned business, there is an insinuation that we have done something wrong and we are corrupt.”
Tshepo Mahloele, CEO of infrastructure investor Harith General Partners, is fuming at the damning suggestion by United Democratic Movement (UDM) president Bantu Holomisa that he is one of three prominent businessmen who are allegedly benefitting from shady dealings at the Public Investment Corporation (PIC).
“We are being bullied to get out of investment opportunities,” he tells Moneyweb. “There are commercial and political interests at play. It’s malicious and defamatory to accuse businessmen of corruption without evidence.”
The battle between business and politics has intensified after Holomisa penned a letter to President Cyril Ramaphosa on Tuesday accusing Mahloele and two other businessmen of peddling influence to secure millions in funding from PIC CEO Dr Daniel Matjila.
Holomisa’s letter follows his filing of a lawsuit at the North Gauteng High Court last week demanding that finance minister Nhlanhla Nene suspend Matjila from the PIC, which manages R2 trillion worth of investments on behalf of the Government Employees Pension Fund and other government funds.
The lawsuit relates to the decision in September 2017 by the board to clear Matjila of any wrongdoing after he was accused by a whistleblower of channeling PIC funds to his alleged girlfriend. Matjila has denied all allegations of wrongdoing.
In his latest letter, Holomisa accuses Matjila of personally releasing funding worth R2 billion without approval from the PIC’s board, over an unspecified period, to Mahloele and two other businessmen with strong ties to the PIC itself and government.
The other two businessmen are Jabu Moleketi, former deputy finance minister in Thabo Mbeki’s administration, and Warren Wheatley, an executive director of financial services group Lebashe Investment Group. Mahloele himself is a former PIC executive; he was corporate head of finance between 2003 and 2006 when Brian Molefe was at the helm of Africa’s largest money manager.
Matjila powers and complex ownership
The big question is whether Matjila can unilaterally approve investments of up to R2 billion, as alleged. This is a material amount, even when one considers it in relation to the PIC’s R2 trillion fire-power.
Deon Botha, the PIC’s head of corporate affairs, strongly rejects this, saying its mandate and investment processes don’t allow for Matjila to be “vested with all the powers to unilaterally make investment decisions.” He adds: “We wish to reiterate our stance that the PIC follows a rigorous investment process in all its dealings and investments.”
Holomisa says his letter unveils a “complex web” of ownership by the three businessmen, who are either founders or top directors of companies that received funding from Matjila under the guise of black economic empowerment transactions.
Among the companies that allegedly benefitted from PIC funding are Harith General Partners (linked to Mahloele and Moleketi, who serves as board chairperson), online lender RainFin (linked to Mahloele, Moleketi and Wheatley who are all directors), Lebashe Investment Group (founded by Wheatley) and investment management firm Aluwani Capital Partners (linked to Moleketi who serves as a chairperson and Wheatley who sits on the board).
“Mr President [Ramaphosa], instead of being a giant machinery that creates wealth opportunities for South Africans, it is clear that individuals such as Mahloele, Matjila, Moleketi, and Wheatley are at least double or triple dipping in the PIC’s funds,” reads Holomisa’s letter.
Mahloele dismisses Holomisa’s allegations as “nonsense” as the only funding he received from the PIC was in 2006 when he left the organisation to establish Harith, which would later have investments in Gauteng’s Lanseria International Airport and energy projects in Ghana and Nigeria. Back then, he says, the PIC offered Harith seed funding of R21 million in exchange for a 30% stake while the remaining 70% is held by management and staff.
Harith repaid the PIC funding in 2008 with a 25% interest rate, says Mahloele.
“We have been in business for a very long time and built infrastructure investments in excess of $1 billion in SA and in the continent,” he adds. “All PIC transactions were awarded on commercial grounds and process. There is nothing untoward about this.”
Holomisa’s accusations have been rejected in a similar vein by Moleketi and Wheatley. In a joint statement, they say Holomisa’s allegations are “unfounded and vexatious” in his attempt to link “irregular relationships” between Lebashe Investment Group and Harith General Partners.
Lebashe and Harith are separate entities and only have common directors in Mahloele and Moleketi, says Wheatley. He adds that Lebashe has funding relationships with a number of financial institutions and that “only 20% of its total funding is from the PIC.”
“The motive behind the letter is for Mr Holomisa, at the expense of both our entities [and] professional reputations … to attract public attention for his own political gain,” says Wheatley, speaking for himself and on behalf of Moleketi.
All three businessmen are considering taking legal action by laying crimen injuria charges against Holomisa, as his “reckless” letter has caused “reputational and economic harm”. They have also offered to unveil their business dealings at the long-awaited state capture inquiry as Holomisa called on Ramaphosa to urgently broaden the inquiry’s terms of reference to investigate the PIC before “the paper trail is shredded in dark back rooms”.