CAPE TOWN (CONVERSEER) – During a Parliamentary Standing Committee on Finance meeting on Friday, allegations of irregularity surfaced concerning a major transaction involving the Public Investment Corporation (PIC).
ATM party leader and Member of Parliament, Vuyo Zungula, alleged that Lindiwe Masina Dlamini, the PIC’s Head of Legal, granted a R1.4 billion legal indemnity to a private company, Metrofibre, without formal PIC board approval.
According to Zungula, this indemnity was a prerequisite for the PIC to issue a breach notice to its investee company, Levoca 805. The breach notice was reportedly over legal costs of R1,125 related to stamp duties and transactional fees from the law firm Bowmans.
“This is for a company that has generated R100 million for South African pensioners in the last year; the rationale does not make sense,” Zungula stated.
He further questioned whether the PIC would proceed with the disposal of Levoca 805’s shares, noting that the company had since remedied all issues raised in the breach notice.
In response, PIC CEO Patrick Dlamini clarified that Levoca 805 had owed approximately R129,000 in legal fees, which had since been settled in full. Regarding Metrofibre, he stated the PIC was reviewing a draft valuation report and awaiting the final version to determine its course of action.
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Lindiwe Dlamini defended the indemnity, explaining it was a general comfort letter to Metrofibre which was not a party to the PIC-Levoca agreements and did not specify a monetary amount.
The controversy deepens with details from a leaked draft valuation report. It reveals the PIC initially loaned Levoca 805 roughly R697 million. Just over a year later, the same draft valuation suggests the PIC is now considering buying out the investment for R1.18 billion a difference of over R480 million. This represents a substantial increase in value in a short period.
If accurate, this valuation underscores significant growth in Levoca’s digital investment in Metrofibre, which reportedly generated over R100 million for the Government Employees Pension Fund (GEPF) in one year.
The transaction structure also appears unusual. Typically, a Broad-Based Black Economic Empowerment (B-BBEE) partner would owe the PIC in such deals. However, based on the leaked draft valuation of Metrofibre at R5.5 billion, the PIC would be liable to pay Levoca 805 for the 20% stake it held in Metrofibre. This follows a July whistleblower incident that exposed suspended PIC official Thabiso Moshikara for allegedly attempting to solicit a bribe after funding approval.
The PIC has not confirmed the final valuation, and the allegations remain under parliamentary scrutiny.
(MDN)
