By Loni Prinsloo.
Finance minister said the board of the continent’s biggest money manager briefed the government on a decision to suspend its chief executive officer over alleged governance issues and that it will assess the information after talks with those involved.
The state-owned Public Investment, which oversees $219 billion in South African government pensions, on Monday suspended CEO Patrick Dlamini amid a probe into allegations of impropriety raised in a whistleblower report. The nation’s financial regulator has announced an investigation into governance issues at the fund.
“We have received a briefing from the board and we are evaluating the information and will respond after consultation with relevant stakeholders,” Godongwana said late Wednesday. “The decision to put the CEO on precautionary suspension was taken by the board — the government is not involved.”
Deputy Finance Minister David Masondo, whose portfolio includes the chairmanship of the PIC, announced Dlamini’s removal earlier this week.
Dlamini’s suspension deepens a sense of crisis at the fund, which has had a revolving door of senior executives over the past decade. The PIC named Chief Financial Officer Batandwa Damoyi as acting CEO on Wednesday.
Godongwana and Masondo — the top two officials in the finance ministry — are at odds over the decision to suspend Dlamini, the handling of a report that he ordered into a controversial investment in a Johannesburg airport, and a whistleblower tip-off that followed, according to people familiar with the matter who asked not to be identified.
There’s also increasing disquiet within the PIC about the number of executives in acting roles and the lack of a CEO, another person with knowledge of the matter said. In addition to suspending Dlamini this week, the PIC board also appointed Leon Smit to replace August van Heerden as acting chief investment officer.
South Africa’s Financial Sector Conduct Authority has become “increasingly concerned” by developments at the PIC and plans to conduct an investigation, it said in a statement late Tuesday.
The PIC welcomed the announcement.
“The board believes that strong regulatory oversight is a hallmark of a healthy democracy and resilient financial system,” it said in a statement on Wednesday.
Dlamini was suspended eight months after ordering an investigation by PwC into a Black economic-empowerment deal linked to an investment in Lanseria, an airport on the northern outskirts of Johannesburg. The report exposed alleged wrongdoing by members of the PIC’s staff, the people said.
A whistleblower report later accused Dlamini of breaching governance limits by ordering the investigation, which led the board to suspend him. Dlamini couldn’t be reached for comment.
The PIC said its board has prioritised strengthening governance and implementing the recommendations of a judicial commission of inquiry in 2020 that recommended sweeping changes to laws governing the PIC after it found senior management flouted internal procedures.
Among the commission’s proposals were that the PIC appoint an independent, non-executive chairperson with expertise in financial markets, rather than the deputy finance minister. Some stakeholders are concerned that this specific recommendation hasn’t been implemented, said the people.
The PIC has made progress in strengthening governance and oversight and remains “fully committed to cooperating with all regulators and ensuring that governance matters are addressed through independent, credible and transparent processes,” according to its statement on Tuesday.