Moleketi refutes empire-building-with-state-pensions claims

Jabu Moleketi, who from 2004 to 2008 was both deputy finance minister and chair of the Public Investment Corporation (PIC), has rejected claims that he endeavoured to create an empire using money from the PIC through his involvement with Harith General Partners and Lebashe Investments. 

Moleketi told the PIC commission of inquiry on Tuesday that allegations made against him by United Democratic Movement leader Bantu Holomisa have been hurtful and damaging to his reputation.

Holomisa accused Moleketi and other executives of being part of a “cartel of PIC beneficiaries” that used its links to the state asset manager to loot government pension money.

Read: Former PIC exec slams cartel allegations

“I don’t mean to sound arrogant, but I am a respected former minister, having served my party and my country,” he said. “I am now a businessman, using my acquired skills and talents to the best of my ability as I am fairly and constitutionally entitled to do.”

Moleketi was appointed chair of Harith Fund Managers, which was established in 2006 to manage the Pan African Infrastructure Fund (PAIDF). The fund was initially given R17 million in seed funding by the PIC but was closed in 2007 after raising $630 million from various investors; the Government Employees Pension Fund, whose assets are managed by the PIC, invested the lion’s share, contributing $250 million to the fund.

The PIC’s then chief executive, Tshepo Mahloele, who was also head of corporate finance and the Isibaya Fund at the PIC, resigned from the state asset manager for the sole purpose of forming PAIDF. He left the PIC in 2008.

Mahloele explained to the commission that he was not party to the decision to provide the seed funding to the PAIDF because he did not sit in on meetings with the PIC’s executive committee, which sanctioned the loan.

Beneficial involvement

However, he stressed that the R17 million loan was repaid with interest within two years and the PIC, as opposed to being looted, had significantly benefited from its involvement with Harith because it also received R96 million in returns by virtue of its 46% shareholding in the company. The stake was given to the PIC without it having any risk or exposure beyond the seed capital, he said.

Further to that, Mahloele outlined how the GEPF had made gains on its investment with gross returns of 6.2% in dollar terms and 11.7% in rands. The GEPF’s investment of $350 million in a second fund with a similar mandate, however, earned gross returns of 44.4% and 40% in dollar and rand terms respectively.

Moleketi said that when he resigned as deputy minister and, by extension, as PIC chair in 2008 he was asked to remain as chair of Harith by the shareholders “who obviously had the necessary confidence in me and who were probably motivated by considerations of continuity and stability”.

The ‘only commonalities’

Moleketi distanced Lebashe Investments from the PIC and the Harith companies, saying the company was established eight years after he resigned as deputy finance minister.

The only commonalities, he said, were that he and Mahloele were executives in the entities.

Moleketi is chair of Harith General Partners and a non-executive director of Lebashe Investments.

Mahloele is chair of Lebashe Investments and CEO of Harith General Partners.

Holomisa, in his submission to the inquiry dated March 18, stated that: “There is little distinction between the companies and they appear to operate from the same premises and share a website. Employees and key exco members also place little distinction between the entities on their LinkedIn profiles, with Harith Fund Managers and Harith General Partners used interchangeably”.

“There is no cross-pollination in terms of funds and transactions,” Moleketi told the inquiry on Tuesday, adding that the only transaction the company had worked on with the PIC involved the sale of Capitec shares.

No restrictions on business engagement of former public servants

Moleketi reminded the commission that there is no regulation in place that restricts or prevents public office bearers from getting involved in entrepreneurial activities after leaving office.

Asked if there should be a cooling off period or restrictions of trade after public officials resign, Moleketi said that while it could be considered, it would not come without cost.

“Garden leaves and restraints of trade are paid for,” he said. “It will [depend on] whether or not the taxpayer is prepared to remunerate, at the same level, a former public servant to ensure they don’t engage in any activity.”