ABSA, Sekunjalo and the PIC

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Hill-Lewis wanted to know what stage the PIC’s various court actions against Sekunjalo are at, and whether the country’s largest fund manager intends relaunching the preservation-of-assets order against Sekunjalo. When Moneyweb later questioned the PIC on this matter, a spokesperson replied: “We’re attending to this query.”

Ann Crotty Moneyweb 18/3/2021

In August 2020, ABSA took the considered business decision that its continued association with customers in the Sekunjalo Group (including all of the applicants) posed intolerable reputational, commercial, and legal risks.

Dewald van Rensburg amaBhungane 1/4/2021

On April 1 this year Dewald van Rensburg of amaBhungane broke the news that, in August last year, ABSA bank had ‘cut ties with 24 companies directly or indirectly controlled by Iqbal Survé’s Sekunjalo Investment Holdings. The move is reminiscent of the beginning of the end of the Gupta empire.’

The motivation for this move by ABSA was the reputational harm it believed it was suffering as a result of its association with these companies and the person controlling them.

Here is a relevant extract from the court papers appended to Van Rensburg’s article:

  1. The Sekunjalo Group and Dr Survé have for at least the past two years been the subject of serious allegations of disreputable and unlawful conduct that has featured extensively in the public domain. The allegations centre on the relationship and transactions between companies in the Sekunjalo Group on the one hand, principally AYO Technology Solutions Ltd (“AYO”), and the Public Investment Corporation (“PIC”) on the other hand, from December 2017 to date.
  2. All the major news organisations in South Africa have reported on several of the Sekunjalo Group companies, covering in particular the AYO-PIC relationship, over at least this period. Such reporting has consistently included negative and critical allegations of a serious nature. Annexure “AA3” is a table summarising some of the media’s negative reporting. The list of newspaper and magazine articles cited in annexure “AA3” is only a sample.
  3. A notable exception to this consistent trend of negative reporting is Independent Media (Pty) Limited (“Independent Media”), publisher of Cape Times, The Star and iol.co.za, among others. Independent Media, through its various newspapers and websites, generally only has good things to say about the Sekunjalo Group and Dr Survé. As far as I am aware, Independent Media and Sekunjalo are “related” companies in terms of section 2 of the Companies Act, 71 of 2008.
  4. The allegations against the Sekunjalo Groupp are newsworthy and widely reported. The allegations have also been the subject of a Commission of Enquiry, chaired by the Honourable Mr Justice Lex Mpati, and called into being by President Ramaphosa in terms of section 84 of the Constitution.
  5. The Mpati Commission has reported the allegations to be well-founded and deeply troubling. It has recommended further legal investigation and action against the PIC, Sekunjalo, AEEI and several of its subsidiaries, and many implicated individuals. The Mpati Commission’s report and recommendations have generated much further adverse publicity for the Sekunjalo Group, including Premier, and the individuals responsible for their management (including Dr Survé).
  6. ABSA took note of these serious allegations when they first surfaced. It monitored and assessed this publicity carefully since at least the middle of 2018. It is obliged to monitor bad publicity about its customers under its risk-management obligations.
  7. In August 2020, ABSA took the considered business decision that its continued association with customers in the Sekunjalo Group (including all of the applicants) posed intolerable reputational, commercial, and legal risks.
  8. ABSA was not the only company that made this decision. Other well-known and reputable service providers, such as accountants BDO, law firm Webber Wentzel, and corporate sponsor and finance house PSG Capital, also earlier publicly terminated their relationships with the Sekunjalo Group. The JSE also censured and fined AYO, an AEEI subsidiary and a company within the Sekunjalo Group, for delivering incorrect 2018 financial statements.
  9. In terms of its established policy and settled practice, ABSA decided in August 2020 to terminate its bank-customer relationship with all its customers who are part of the Sekunjalo Group.
  10. ABSA was legally entitled to do so in terms of the contracts with the applicants. ABSA was obliged to do so in terms of the international and domestic law regulating its business as a bank, and in terms of its own risk-management policies and protocols.

I have little doubt that amaBhugane’s reporting – see here and here and here and here – played a role in the decision by ABSA that it could no longer tolerate the reputational harm it was suffering through its association with ‘the other Mandela doctor’.

It is the latter amaBhungane article headlined ‘PIC looks on while ‘Survé Inc’ burns through state pensioners’ billions’ that will be of most concern to government employees and current civil service pensioners whose monthly stop order pension fund deductions are invested on behalf of the Government Employees Pension Fund (GEPF) by the Public Investment Corporation(PIC).

What I personally glean from this amaBhungane article is that Survé is frenetically reducing the R4.3 billion that the PIC irregularly invested in AYO Technology Solutions in case the PIC’s civil suit to recoup this money succeeds. This has included moving the staff of the African News Agency (ANA) from the Sekunjalo Independent Media (SIM) payroll onto the AYO payroll resulting in the management and senior reporters cutting their ties with Survé. The ANA salary-change tactic happened despite the R20 million secret police slush fund backhander received by ANA from Arthur Fraser. In my opinion, this staff payroll transfer emphasises what I believe is already common cause – that Sekunjalo Independent Media is technically insolvent and is clearly not trading at a profit.

This is also manifest, I believe, in a single chilling sentence contained in a letter to staff  a year ago by Takudzwa Hove, COO of Independent Media, about the salary cuts that were imposed on them at the time and have not been lifted since then:

50% reduction for all post-retirement medical aid contributions for retired employees that are still receiving income from us;

I was put in touch with one such retiree who told me that to provide the same level of medical cover as he had previously had, required a further expenditure of R2000 a month which had adversely impacted on his quality of life.

This effective insolvency, I believe, is also emphasised by Survé’s failure as a claimed philanthropist to contribute to the Covid-19 Solidarity fund while his newspapers relentlessly attack – see here and here – those who have.

In the PIC court application to liquidate SIM – something PIC interim chairman Reuel Khoza says is logical in order to protect state pensions – the acting CEO of the PIC, Vuyani Hako, submitted in November 2019 that:

‘The Respondent continues to trade notwithstanding the fact that they remain indebted to the Applicant for payment of the outstanding loan amount. In the circumstances, I respectfully submit that the only conclusion to be drawn from the Respondents failure to pay the Applicant is the fact that the Respondent is commercially, if not factually insolvent and unable to pay its debts when they become due.’

Six months earlier, in May 2019, the PIC and GEPF filed court papers seeking to recoup the R4.3 billion irregularly invested in AYO Technology Solutions.

The Association for Monitoring and Advocacy of Government Pensions (AMAGP) monitors the solvency of the Government Employees Pension Fund, and it has 50 000 members whose monthly stop order pension fund deductions are invested by the Public Investment Corporation.

Prior to the ABSA decision, the online media release by AMAGP, headlined Mboweni favours AYO, not protecting pensions relating to the appearance by Iqbal Survé and his senior executives before the parliamentary Standing Committee on Finance (SCoF) on 17 March this year, was read by more than 2000 people. This gives an idea of the extent of public concern about what is happening to the monies invested by the PIC in Survé-linked companies.

As AMAGP pointed out in that media release, Survé and his team made no attempt to address the concerns raised by the Mpati Commission of Inquiry – see here and here and here – about his business practices when they testified at a virtual meeting of parliament’s financial oversight committee on 17 March this year.

Instead, it used the occasion for self-promotion – see here and here and here – and to perpetuate Survé’s incredible persecution claims about ‘dark forces’ and ‘white substances’ which no other media company in the country has experienced.

This victimisation assertion at the virtual SCoF meeting was questioned by MPs across the political spectrum, the majority dismissing these claims as conspiracy theories – see  here and here and here  and here.

During this meeting, Geordin Hill-Lewis of the Democratic Alliance provided a trenchant summary of where Sekunjalo Independent Media now finds itself:

“You use conspiracies and allegations of racism to explain away everything but it doesn’t work.

“The reason your media company is failing is because your readers are deserting you.”

This assertion is cogent. Recently-released figures by the Audit Bureau of Circulation (ABC) show that the Cape Times is selling less than 10 000 copies a day in a city that is home to three and a half million people – see here and here. Prior to the Sekunjalo takeover in 2013, when Alide Dasnois was editor, it was selling 30 000 copies a day. Declining circulation was the reason given by Survé for his abusive dismissal of Dasnois, but Aneez Salie, the former editor of the Cape Times  who has been responsible for the subsequent circulation decline of more than 60%, has been rewarded with promotion to head of news overall in Sekunjalo Independent Media.

Hill-Lewis then asked for a progress report on the PIC’s proposed attempt to liquidate Sekunjalo and to recoup the R4.3 billion invested in AYO Technology Solutions.

The question was justified since the AYO court papers were filed two years ago and the civil suit against Sekunjalo 18 months ago.

There was no response but, subsequent to that meeting, one of the country’s leading financial journalists, Ann Crotty of Moneyweb, approached the PIC and asked for the court dates for these civil suits, a question that the PIC again declined to answer:

When Moneyweb later questioned the PIC on this matter, a spokesperson replied: “We’re attending to this query.”

Why is the PIC declining to answer this absolutely relevant question posed by Hill-Lewis and Crotty about court proceedings launched, in the one case, two years ago?

Has the PIC come to the realisation that the R5 billion in Government Employee Pension Fund money advanced to Sekunjalo Independent Media and AYO Technology Solutions has been so effectively ring-fenced by Iqbal Survé and Dan Matjila, that the chances of ever getting it repaid are remote?

The extent of the harm caused to the Government Employees Pension Fund by the close collaboration between Survé and Matjila becomes obvious when one notes with concern that the AYO shares which the PIC, at Matjila’s behest, were bought for R43 each to a total value of R4.3 billion, are now trading on the Johannesburg Stock Exchange at less than ten rand each.

As ABSA points out in its court application, the following companies have also, for fear of reputational harm or financial loss, severed ties with Iqbal Survé-linked companies, his auditors – BDO; his lawyers – Webber Wentzel; SASOL – AYO’s major client and his corporate sponsor – PSG Capital.

Defamation threat

When Survé took control of the Independent newspapers in 2013, his lawyers were Edward Nathan Sonnenbergs, the largest legal firm in South Africa. His immediate brief to them was to write a threatening letter to two of the country’s most respected journalists, Chris Whitfield and Melanie Gosling about an entirely factual article the latter had written relating to the subsequently-cancelled Sekunjalo contract to police our marine resources. This was without precedent in local newspaper history and was a prelude to the subsequent loss of ethical news staff. Thereafter Webber Wentzel became his lawyers. I am told, however, that when he threatened to sue Terry Bell and Naspers for R100 million in June 2019, the correspondence came from Abraham Kiewitz Incorporated, a ‘boutique law firm’. This confirms ABSA’s claim that Webber Wentzel no longer represents Survé. Nothing further has been heard of this defamation threat which, like so many of his other SLAPP-litigation threats to sue for ‘billions’ has come to nothing – see here and here and here and here and here.

Furthermore, his copycat attacks on the judiciary are not surprising when one looks at his political allies – see here and here – but they are disturbing.

What ABSA could also have mentioned in this context was Survé’s  appalling proxy war waged by the Cape Times against the former Vice Chancellor of UCT, Dr Max Price and Survé’s encouragement of the Fallist protestors who went on to cause so much infrastructural and other damage at our universities. This anarchic campaign of destruction culminated in the death by his own hand of revered and renowned UCT cardiologist, Professor Bongani Mayosi

What do Tito Mboweni in particular and the ANC in general make of the fact that so many major institutions are distancing themselves from Iqbal Survé – the man involved in the Leisurenet scandal and someone who was a business associate of Brett Kebble – for fear of reputational harm and potential financial loss?

An even more important question is what the PIC intends to do as a consequence of the ABSA decision to remove itself from the ambit of someone who, in a 2013 Daily Maverick interview told Mandy de Waal… “If you know anything about me you know that I operate with incredible integrity.”

On the same day that Dewald van Rensburg’s article was published, Iqbal Survé obliquely responded with an article headlined ‘Media Freedom and Democracy under Siege’.

I would argue that a significant threat to media freedom in this country is Iqbal Survé himself. As described in the book, Paper Tiger – see here and here and here – he has decimated Independent Media and done similar harm to the African News Agency.

At the behest of his ANC cronies he dismissed Sunday Independent editor Wally Mbhele and, at the behest of his Chinese funders, he terminated the column of Azad Essa who had written about China’s  genocidal persecution of its Uyghur Muslim population. African journalist Tatenda Gwaambuka described this step by Survé as an attack on the continent’s media freedom.

The Zondo Commission evidence that a media company linked to him has been the recipient of clandestine SSA funding has done immense harm to media credibility in this country and will be seen by ABSA as further vindication of the step it has taken.

According to Van Rensburg, the media arm of Iqbal Survé’s group of companies uses Standard Bank and it remains to be seen whether Standard follows the example of ABSA.

Does the ABSA move revealed by amaBhungane not, however, place a moral imperative upon Tito Mboweni to now focus on the long term wellbeing of the two million people who, like himself are, or have been, employed in the service of the country?

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Ed Herbst started his news career as a photographer with the Natal Witness in 1968 but quickly switched to reporting while retaining an interest in photography. He joined the SABC in its Pretoria news office as a camera reporter in 1977, one year after television was introduced in South Africa. In 1978 he was seconded to the SABC’s Windhoek office for six months to cover the run-up to the country’s UN-monitored election and was then posted to the SABC’s Sea Point news office. He asked for early retirement in 2005 because of pervasive SABC corruption, news censorship and unaddressed abusive treatment of staff. From 2007 to 2009 he was employed as a consultant in the media department of the Cape Town municipality but became a pensioner when personal circumstances forced him to retire. He now writes without remuneration for local websites about the interface between media and politics. He is writing a book on media capture after 1994.