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Biggest Africa Money Manager Axes Whistle-Blower, Faces Backlash

Janice Kew and Antony Sguazzin

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Africa’s biggest fund manager has been thrown into further turmoil after firing an assistant portfolio manager who warned that the Public Investment Corp. moved too quickly when investing in a little-known technology company.

The PIC, which oversees 2.13 trillion rand ($146 billion) of mainly South African government worker pensions, has been the subject of a commission of inquiry and has faced allegations of misconduct, political interference and breaches of corporate governance. The commission’s findings are expected to be released by mid-December.

Victor Seanie is the first staff member to be dismissed because of the fallout around the alleged overvaluation of Ayo Technology Solutions Ltd. ahead of an investment. He told the commission earlier this year that the money manager had a culture of intimidation and coercion and that its investment in Ayo was an example of how sound investment advice was often ignored. The PIC took all of Ayo’s 4.3 billion-rand private placement of shares in December 2017, valuing the company at 14.8 billion rand even though its assets were estimated as being worth 292 million rand. Its current market value is less than 2 billion rand.

“It looks like the PIC is trying to recover what it can from investments that appear to not have followed proper process,” said Asief Mohamed, chief investment officer at Cape Town-based Aeon Investment Management. “This decision to fire Victor Seanie does leave me wondering why it didn’t wait for the commission’s final findings before making this move.”

The PIC said its board and the commission are aware that it’s proceeding with a number of disciplinary cases.

“Seanie was found guilty of the disciplinary charges proffered against him, which included charges of breaching the PIC’s internal policies in investment decisions,” the PIC said in a response to questions. “Seanie is one of several senior investment professionals who went through, or are undergoing, internal disciplinary proceedings.”

The firing has damaged morale within the PIC as staff feel that he is being punished for speaking out about what he saw as governance transgressions, an employee familiar with the situation said.

Seanie said by phone on Saturday he was the most junior person on the investment team that was involved in the transaction and yet is “the only person who has been fired because of the Ayo deal.”

“I plan to challenge my dismissal,” Seanie said. “I’ve had calls from several colleagues who are very unhappy about this decision to fire me as it highlights the ongoing victimization of staff” and the ignoring of investment recommendations, he said.

He has the support of his labor union, which said he is being scapegoated.

“The Ayo transactions, which he is charged with, are unjust as the masterminds who played the vital role in orchestrating” the deal are still employed by the fund manager, the National Union of Public Service & Allied Workers said in a statement on Friday.

Poor Timing

The PIC can ill afford further upheaval. Of its 15-member executive committee, eight were listed as being in an acting capacity, two were suspended and two others have left, according to its most recent annual report.

The PIC’s senior ranks have been characterized by infighting. Last year an organizational chart seen by Bloomberg was passed between some executives showing who was to be ousted and who they would be replaced with.

Still, the company is trying to take steps to stabilize leadership and fill all vacant positions at senior level, interim Chairman Reuel Khoza said earlier this month. He also said the PIC will separate the roles of chief executive officer and chief investment officer after criticism that too much power was concentrated in the role of CEO.

The CEO of four years, Daniel Matjila, left in November and his replacement was suspended in March for allegedly interfering with the commission’s investigation.

(Updates with comment from Seanie in sixth paragraph and former CEO departure under sub-head Poor Timing)

--With assistance from Ana Monteiro.

To contact the reporters on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net;Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Jacqueline Mackenzie, Jon Menon

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