The much-awaited report that President Cyril Ramaphosa has released on the Public Investment Corporation has recommended that steps must be taken to recover all monies due to the PIC with interest. Justice Lex Mpati headed the Judicial Commission of Inquiry into allegations of impropriety at the PIC which handed the report to Ramaphosa in December last year.

1. Release of the Report of the Judicial Commission of Inquiry into
Public Investment Corporation
PresidentCyril Ramaphosaistodayreleasingtothe publicthe reportof the Judicial Commissionof
Inquiryintothe allegationsof improprietyatthe PublicInvestmentCorporation,whichhe received
inDecemberlastyear.
“I wishto expressmygratitude toretiredJudge Lex Mpati,ablysupportedbyMrEmmanuel Lediga
and Ms Gill Marcus, and the entire teamfortheirdetailedandvoluminousreport,”President
Ramaphosasaid.
“One of the prioritiesof thisadministrationistobuildacapable,ethical anddevelopmental state.All
publicinstitutionsneedtobe heldtothe higheststandardsof integrityandaccountability,andmust
effectivelyandefficientlyfulfil theirmandates.Itwasfor thisreasonthat I establishedthe Judicial
Commissionof Inquiryintothe allegationsof improprietyatthe PublicInvestmentCorporation(PIC).
“The Commissionhasmade detailedfindingsagainstsome currentandformermembersof the PIC
SeniorManagementandBoardmembers.
“The Commissionlargelyattributesimproprietiestothe PICSeniorManagementforfailure to
manage decision-makinginaprofessionalandhonestmanner,andfailure toabide bydue processes
and relevantprescripts.
“The Commissionshowsthatthe improprietywasworsenedbythe factthat the PIC Board wasnot
functioningwell,andBoardinvolvementininvestmentdecisionscompromisedtheirabilityto
exercise oversightoverthe PIC.
“The Commissionmakesrecommendationswhichrequireurgentattentionandactionbydifferent
state institutions,includingthe criminal justice system,NationalTreasuryandthe reconstitutedPIC
Board.
“To thisendand in keepingwiththe recommendationsinthe reportwe will be forwardingittothe
National ProsecutingAuthorityandall relevantregulatoryauthoritiesfortheirconsideration.
“I am releasingthisreporttothe publictogetherwiththishighlevel roadmaponthe wayforward.
Differentstate institutions,includingthe Board,willfurthercommunicate the detailsof the
implementationplans.
“National Treasuryhasbeentaskedwithdevelopingadetailedplanof actionforitself andthe Board
of the PIC,and withmonitoringthe implementationof thisplan.Itwill reporttomy office on
progressinimplementationstepsatregularintervals.
“The Commissionimplicatesanumberof individualsinwrongdoing.The Commissiongave relevant

2. personsthe opportunitytobe heardat the hearingsitheld.Anyfollow-upinvestigations,basedon
the recommendationsmade,willfollow due processandtherefore givethemfurtheropportunityto
be heard before anystepsare takenagainstthem.”
PresidentRamaphosaappointedthe Mpati Commissiontoinquire into(a) whetherthere wasany
improprietyinthe investmentdecisionsatthe PICand associatedimproperpersonalgainbyparties;
(b) the governance andoperational model of the PIC;(c) the allegationscontainedininformationon
the PIC by“JamesNogu’’(andothers) andthe ramificationsthereof;(d) humanresources-related
matterssuch as victimisationandremunerationincludingperformance awards;(e) possible political
interference inthe operationsof the PIC;and(f) the mannerin whichthe PIChandledregulatory
aspectswithregardsto keylegislationsuchasthe Financial AdvisoryandIntermediaryServices
(FAIS) Actand otherlegislation.
Improprietyininvestmentdecisionsandpersonalgain
In the Report,the Commissionof Inquiryhasmade adverse findingsonnumeroustransactionsand
on actionsof variousindividualsininvestmentdecisions.The Commissionhighlights widespread
disregardof PICpoliciesandprocessesonthe transactionsbyPICManagementandcertainBoard
members.Involvementof employeesandnon-executiveBoardmembersininvestee companies
mustbe reviewed.The Commissionrecommendsthatthe relevantDelegationsof Authoritybe
reviewedbynolaterthanJune 2020.
The managementof conflictsof interestalsorequire review.
Potential criminalbehaviourhasalsobeenhighlighted,whichshouldfollowedupbylaw
enforcementagencies.These practiceshave ledtosituationsinwhichthe PIClostalot of funds,
whichmustbe urgentlyrecovered.Civil actionswill be institutedinthisregard.
It isalso worryingthatthe Inquiryshowsthatthe PIC hasnot shownthe urgencyto salvage
whatevermoney itcanrecover.
The PIC mustrecoverall the moniesutilisedinirregulartransactionsorunlawfullypaidout.The
National Treasurywill be trackingdevelopmentsinthisregard.
Where relevant,the PICandGEPF shouldjointlyinvestigate whethermonieswerepaidandproperly
accountedfor,and whetheranyof these moniesshouldbe recovered –the Commission
recommendsthisbe done within6monthsof the Report’spublication.
The Commissionrecommendsthatcertainstepsbe takenatthe GEPF to secure itsown position
such as a reviewof the role,relationships,nature andfrequencyof meetingsbetweenthe GEPFand
PIC,and ensuringappropriate interactionatthe requiredlevel actuallytakesplace.
Additionally,the Reportshowsthatthere are a large numberof assetsthat are indistressandthe
PICshouldurgentlydevise astrongermechanismtodeal withthisandrecoverwhateveritcan.

3. The report hasalso foundthatit ishighlylikelythatsome sectionsof the FAISActhave been
contravened.The Commissionsuggeststhatpartiesorformerpartiescouldhave contravenedlaws
dealingwithissuessuchascorruptionand bribery,protecteddisclosures,electronicinterceptions
and sectionsof the CompaniesAct.Criminalmatterswillbe referredtothe relevantauthorities.
The Commissionalsorecommendedthatthe PICensure thatall pre andpost conditionsforall
investmentsmade have beenfullymetandimplementedandthateffective processesandsystems
are inplace to properlymonitorthe investmentpostdisbursement.Inthisregardthose responsible
for failingtoimplementconditionsprecedenttoinvestmentsoughttobe heldtoaccount.
The Commissionrecommendsthataforensicauditonsome transactionsbe undertakenand,if
necessarythereafter,the matterbe referredtoregulatoryandlaw enforcementagencies.
The criminal justice systemshouldurgentlyact,includingforensicinvestigationandpossible
prosecutions.Civil caseswill have tobe institutedaswell where relevant.
The National ProsecutingAuthority(NPA) hasbeenworkingwiththe Commissiontodetermine any
mattersthat may be investigatedfurther.
Managementneedstomonitor the performance of investmentsheldbythe PIC.The capacityand
role of post investmentmonitoringandvaluationneedstobe strengthened.
Anotherissue thatloomslarge inthe Reportisthe feespaidbythe PICon transactions.Some
appearedtobe excessive,othersnotdeservedandattimeswithoutproperinvoicing.The
Commissionhasrecommendedthatnumerouspaymentsshouldbe furtherinvestigatedandany
malfeasance thatmayhave arisentobe penalised.
The Report furtherrecommendedthatthe workandappointmentof advisorstoinvesteesfor
potential transactionsalsorequiresreview,includingareview of all advisorcontractsoverthe past5
years.
Specifictransactionsare highlightedinthe Reportforfurtherinvestigationandreview,including
reportingmatterstothe relevantauthorities.
Governance,operatingmodelandPIClegislation
The PIC isgovernedthroughthe PICAct of 2004 (the Act),itsShareholderCompact,its
Memorandumof Incorporation(MoI) andinternal corporate governance processes.
The Commissionhasmade substantial findingsandrecommendationsinthisregard.The PIC’s
internal corporate governance mustbe urgentlyimproved.
The Commissionhasrecommendedthatthe skillssetof the PICBoardshouldensure thatBoard
membersandseniormanagementhave the requisite knowledgeof expertiseinrelevantfields.
Appointmentprocesseswillhave tobe reviewedtoensure thisisthe case throughoutthe

4. organisation.
The Inquiryhas alsostronglyrecommendedthatthe delegationsof authoritybe comprehensively
reviewed.
Significantly,the Commissionfoundthat the Boardhasbeenimproperlyinvolvedinoperationaland
investmentdecisions.Itoughtnottodo so infuture,andinsteadfocusonexercisinganoversight
role.
The Commissionalsorecommendschangestolawsgoverningthe PIC,takingintoaccountthe PIC
AmendmentBillof 2017 and theirrecommendations.
Thiswill be the taskof National Treasuryandwill be finalisedsoon.The National Treasury,the PIC
and itsboard will ensure thatall the above changesare effectedintermsof legislation,the
shareholdercompact,MOIand corporate governance processes.
Careful considerationwill needtobe giventorecommendationsmade oncompositionof the Board
and selectionof Boardmembers.
PIC’soperatingmodel
The Commissionhasalsorecommendedfar-reachingchangesinthe PIC’soperatingmodel.Itsays
the model isno longerfit-for-purposeandneedsrestructuring.
The operatingmodel,whichdevelopedorganicallyoverthe years,istoocentralisedandnolongerfit
for a R2 trillionassetmanagerandnotinkeepingwithinternational bestpractice.
In thisregard,the Commissionhasrecommendedamuchmore decentralisedmodeltoaccelerate
decision-makingandtoimprove efficiencyandtransparency.
The neworganisational designwillbe undertakenbythe PICandits Boardof Directorswiththe
concurrence of and oversightfromthe National Treasury.
It will include changestoBoardcomposition,includingforexampledevelopmentof risk
managementcapacityaswell asinvestmentvaluationandmonitoringcapacity.The PICshouldalso
keepitscustomersandotherstakeholdersinformedof the restructuring.
Recommendedchangesincluderevisingthe wayinwhichBoardmeetingsare recordedand
decisionstakenatBoardlevel.
The Commissionrecommendsthatacompliance coordinatormustbe establishedbynolaterthan
June 2020, includingdevelopmentof acompliance charter.
Lastlythe Commissiontouchedonprocessoptimisationanduse of technology.The Commissionalso
recommendsmeasurestoensure thatthe informationtechnologyenvironmentisappropriate for

5. the scale and sophisticationof the PIC.
Leakage of PIC informationanditsramifications
In the past fewyears,especiallyfrom2017, the PICsuffereddebilitatingleakageof itsinternal
confidentialinformation.
Confidential investmentandoperatinginformationwasleakedtothe public,mainlybyapersonwith
the name of “JamesNogu”.
Thisthrewthe PIC intoturmoil,andresultedinseriousreputational harmtothe corporationand
precipitatedmajorchangestoitsexecutive ranksandthe Board.
Disputesarose onwhetherthose wholeakedthe informationweregenuine whistle-blowersornot,
withthe Commissionholdingthattheydidnotfollow laidoutprocesses,andthuscouldnotbe
regardedas such.In thisregardthe Commissionrecommendedthatwhistle-blowerpoliciesneedto
be in line withthe ProtectedDisclosure Act.
The PIC’stechnologyandinformationsecuritysystemswere unable toadequatelydeal withthe
leaksandthere were gapsthat made it vulnerable.Thesetherefore needtobe drastically
overhauled.The PICshouldstrengthenitssystemstoensure suchbreachesdonotoccur inthe
future.
Human Resource andremunerationissues
There were widespreadreportsinthe mediaaboutthe victimisationanddismissal of employeesby
top managementandextensive testimonies.
In termsof implementationactionsthe Boardof the PICwill have toinvestigatethese furtherand
bringdisciplinaryactionagainstexecutivesthatvictimisedemployeesordidnotfollow PICpoliciesin
the appointmentof senioremployees.
Withregards to remunerationtherewere concernsaboutperformance awards(bonuses)thatwere
to be paidby the PIC to employees.The policiesgoverningremunerationdecisions,including
bonusesanddisciplinaryprocesses,needtobe reviewed.
The Commissionexpresslystatedthatgreatertransparency,fairnessandinclusivenesswithregard
to salaries,grading,performance criteriaandbalancedscorecardassessment were required.
It isrecommendedthatanindependentprofessionalbodybe commissionedtoreview the regrading
processand itsoutcomes,tobe appointedbythe Board andto finalise itsreportbyendApril 2020.
Political interferenceatthe PIC
The Commissioninvestigatedthe allegationsrelatedtopolitical interference inthe PIC.

6. The PIC has a PoliticallyExposedPerson(PEP)policy(thiscanalsomeana domesticprominent
influential person) whichinsome instancesactedasa bulwarkagainstPEPsandtheirassociated
parties.Insome instancesthe policywastotallydisregardedbyemployeesinthe PIC.
The Commissionrecommendedthatweaknesseswere foundinthe PEPpolicyanditneedstobe
strengthened.The Boardshouldundertake acomprehensive review of the policyincorporating
deliberationsarisingatthe Commission.
Conductof the PICwithregardsto FAISand otherlegislation
The PIC is,amongstothers,regulatedunderthe Financial AdvisoryandIntermediaryServicesAct,
whichmainlygovernsthe relationshipbetweenthe PICanditscustomers,suchas the GEPF. A key
requirementof the Actis forinvestmentprofessionalsatthe PICto be “fit andproper"by acting
withhonestyandintegrityatall times.
The investmentmandate agreementbetweenthe PICanditsmainclient,the GEPF,emphasisesthat
the PIC mustmake “prudent”investmentdecisions.
In the lightof the above-mentionedimproprietiesandquestionableinvestmentsdecisionstakenthe
PIChas, insome instances,notactedincompliance withFAISActandlegal agreementswiththe
GEPF.
The Commissionfoundthatthe relationshipbetweenthe GEPFandthe PICis strainedandthat
effortsshouldbe made bybothpartiestorestore trust anda goodworkingrelationship.
There shouldbe a reviewbythe PICandits customeronthe variousinvestmentstrategiesadopted
by the PICin meetingthe clients’requirements,includingthe non-domesticandunlisted
investmentsstrategies,whichare areasthat have sustainedmassive losses.
The PIC and GEPF,and itsother clients,shouldsupportmaximumtransparencyontransactionsand
disclose asmuchas possible.Thiswilllessenpotential improprieties.
In conclusion,PresidentRamaphosasaid:
“I trust that the implementation of the actionsabove andthe detailedstepssetoutinthe Report
shall putthe PIC ina muchstrongerpositiontoface the future and be an institutionwe canall be
proudof.
“Giventhe substantial workaccomplished,Iwouldlike,once more,tothankthose whoparticipated
inthisimportantworkof the Commission,includingthe Commissioners,the Secretary,staff andthe
relevantgovernmentdepartments.
“Thisalso includesthe Cityof Tshwane forthe venue andsecurityservicesprovided.We wouldalso
like tothankthose whocame forwardto offertheirtestimoniesandthusimmenselyenhancedthe

7. workof the Commission.
“Finallythe mediaisthankedforkeepingourpeopleinformedonaregularbasis.”
The report can be accessedfromthe home page of the The Presidency'swebsite:
www.thepresidency.gov.za
Mediaenquiries:KhuselaDiko,Spokespersontothe Presidenton072 854 5707
Issuedby: The Presidency
Pretoria