Jayendra Naidoo’s company, Lancaster, received R9.3 billion from the Public Investment Corporation (PIC) to buy shares in Steinhoff, which later collapsed, the PIC Commission heard yesterday. Paul Magula, former executive head of risk at the PIC said the loan to Lancaster was riddled with irregularities which caused “mayhem” in the boardroom when the transaction was discussed.
He told the Commission it was approved without input of credit risk opinion or the risk department. When Lancaster initially approached the PIC for the loan, the shareholding of Lancaster was 100% Jayendra Naidoo. He was asking for a non-recourse loan of R9.3bn, Magula said. The shareholding then changed to GEPF 50%, Jayendra Naidoo 25% and a community trust 25%.
When the Steinhoff shares collapsed the PIC was forced to write-off more than R5bn just in relation to this loan.
Naidoo is the first executive director of the National Economic Development and Labour Council (Nedlac) in the mid-1990s and co-founder of investment holding company the J&J Group which he co-founded with Jay Naidoo. Public Enterprises Minister Pravin Gordan’s nephew, Ketso Gordhan, is also a director of the J&J Group.
According to the J&J Group website Ketso Gordhan is former CEO of Pretoria Portland Cement (PPC) and has previously served as director general of the Department of Transport, city manager of the City of Johannesburg, Head of RMB Private Equity team, and most recently adviser to the minister in the presidency responsible for performance monitoring and evaluation. He has been a member of the J&J Group Board since 2011.
Interestingly, the Commission heard a couple of weeks ago from a board member, Sandra Beswick, how Pravin had warned the PIC board in 2017 of possible state capture. The term state capture refers to the use of political connections to appoint allies to influential positions in government and state owned enterprises with the goal of securing multi-million rand tenders. Beswick said she had been extremely concerned of the possibility of state capture when former President Jacob Zuma sacked Gordhan and his deputy Mcebisi Jonas.
The Commission was set up by President Cyril Ramaphosa following allegations by an anonymous whistleblower of corruption and maladministration at the PIC. The whistleblower alleged that several directors were beneficiaries of PIC transactions and accused the Deputy Finance Minister Mondli Gungubele, who’s also the Chairman of the PIC.
Eight board members, including Gungubele, then decided to resign but would remain until a new board was convened.
The PIC oversees an investment portfolio worth more than R2-trillion mostly on behalf of the Government Employees Pension Fund.