Iqbal Survé’s annus horribilis

It’s been a tough year for Sekunjalo chair Iqbal Survé. He has had to sit and watch as the share prices of his three listed vehicles, African Equity Empowerment Investments (AEEI), Premier Fishing and Ayo Technology Solutions, head determinedly towards record lows. Of course, in this he is not alone. Shareholders in many listed companies have had to endure similar white-knuckle experiences during most of 2019 and much of 2018.

But eroding share price values are only part — and a small part at that — of Survé’s annus horribilis.

There are some who contend this is nothing more than just deserts for a business life spent far too close to the edge. Others — though not so many any more — go along with Survé’s version of events, which is essentially that he is being targeted because he is black and is trying to transform SA.

Sitting shtum on the sidelines of this increasingly vexatious and volatile battle are Sekunjalo Holdings’ international business partners. Being the BEE partner for Siemens (where Survé is a director on the African board), SAAB Grintek and British Telecom SA has generated outstandingly attractive returns for Sekunjalo over the years.

While it’s important to stress that neither Survé nor Sekunjalo has been found guilty of anything, the high-profile attacks on pillars of the SA state must make Sekunjalo’s business partners a little nervous.

The FM requested comment from them, but none of these three global players was able, or prepared, to provide a response. Neither was Sekunjalo.

But getting back to Survé’s tough year: it started off on a grim note when, in January, the Mpati commission of inquiry launched its public hearings into "allegations of impropriety" at the Public Investment Corp (PIC). As a recipient of significant funding from the PIC, Survé inevitably found himself in the hot seat, dealing with queries about his relationship with the country’s wealthiest and most powerful investor, and in particular with its former CEO, Dan Matjila.

In 2013 the Matjila-led PIC provided the Sekunjalo consortium with about R1.27bn in funding for the R2bn acquisition of Independent Media. About R500m of the investment was used to buy a 25% equity stake in the media group. Only a small portion of the R1.27bn has been serviced — and on Tuesday the PIC told parliamentarians it would consider liquidating Sekunjalo or freezing some of its assets.

But the main Sekunjalo-related focus of the Mpati commission was the R4.3bn the PIC pumped into Ayo in the dying days of 2017, when most people had gone on holiday or were transfixed by Steinhoff’s meltdown.

The investment bought the PIC a 29% stake and valued each Ayo share at R43. The shares traded erratically and in low volumes for much of 2018. Then, in January 2019, the share price commenced its steady decline towards its current R5.60, which values the PIC’s stake at R551m.

No doubt the attention created by the Mpati commission prompted the Companies & Intellectual Property Commission to check whether the PIC had adhered to the fiduciary obligations required by the Companies Act. After some hesitation, the PIC announced, in line with these obligations, that it was taking legal action against Ayo.

In April, the JSE — apparently spooked by some of the comments made at the Mpati commission by former Ayo executives — promptly told Ayo it had to obtain an audit opinion on its 2018 and 2019 interim results. JSE executives also confirmed to the inquiry that they were concerned about trading patterns in Ayo shares.

That was hardly a surprise, given that a few weeks earlier the Financial Sector Conduct Authority (FSCA), the regulator responsible for overseeing financial markets, had announced it was investigating "possible prohibited trading practices" in AEEI and Ayo shares.

With the Mpati commission an ongoing irritation, the last thing Survé would have expected, or wanted, was the decision by Gupta-backed Oakbay to relaunch its R1bn claim against Sekunjalo for payment for the loss of a pledged stake in Independent Media. Survé dismissed the action, saying the claim was frivolous and without merit and that Sekunjalo would fight it in court.

All in all, it’s safe to say that by the time the FSCA arrived, early and uninvited, at Sekunjalo’s offices in search of information to assist in its investigation of possible market manipulation last week, Survé might have been feeling a bit under pressure. So much under pressure, it seems, that in less than two minutes he had blamed a veritable swath of SA leaders and institutions for this "concerted and organised effort to discredit" him.

The list of those said to be intent on attacking him was headed by public enterprises minister Pravin Gordhan and included President Cyril Ramaphosa, other members of cabinet, the Mpati commission, the FSCA, FSCA commissioner Abel Sithole, the PIC, the courts and the DA.

Remarkably, no-one would be any the wiser about this, the FSCA’s eighth raid of the year, if Survé hadn’t hauled in "his" journalists to cover the event. The FSCA prefers to keep things confidential.

At first, Survé claimed the FSCA had been sent on a fishing expedition to get the information "we have" on Gordhan and Ramaphosa that "my reporters are about to publish this weekend". Left unexplained was why management — Sekunjalo is the controlling shareholder of Independent Media — would be holding onto the information journalists had accumulated for their stories.

A little later, Survé accused the FSCA officials of merely wanting to get information on Sekunjalo’s court battle with the PIC over the return of the R4.3bn. The FSCA, said Survé, was acting at the behest of Sithole, who is commissioner of the FSCA as well as head of the Government Employees Pension Fund (GEPF). The GEPF is the major source of the R2-trillion worth of funds managed by the PIC, and has been an outspoken critic of some of its investment decisions.

Not unnoticed in all of this was Survé’s attack on the judicial system. "I’m aware you went to the first judge and he said no to you ... you went to a second judge, he’s a friend of the DA and of Pravin Gordhan," he said.

But Survé’s information on the judicial process followed by the FSCA was inaccurate. The regulator did indeed have to return to the judge — to get authorisation for the participation of the two new independent attorneys who are always required to accompany the FSCA team on a raid. But on both occasions it was judge Patrick Gamble.

Much of his video-ed response to the FSCA raid was vintage Survé — a lot of bluster, counteraccusation and the promise that all the details proving how this was a conspiracy would soon be revealed. But this time he may have attacked too indiscriminately. While he had been happy to threaten all sorts of legal action against impecunious journalists who do not have the resources to fight back, Survé was now also lashing out against institutions at the very core of SA’s democracy.

In an unprecedented move, the office of chief justice Mogoeng Mogoeng issued a statement responding in detail to Survé’s attack.

The statement set out the facts, including that the matter was handled by Gamble from start to finish. It concluded with the sort of statement no judge should ever have to make: "Judge Gamble does not know minister Pravin Gordhan and has never met him in either his official or personal capacity. Neither the minister nor his department was, in any event, a party to the proceedings."

And just to make absolutely certain, the statement concluded by saying Gamble "has no affiliation nor membership with any political party, nor has he [had] in the past".

Before this unprecedented action, Gordhan — who has been allocated a central role in Survé’s conspiracy theory — issued a stinging rebuke through his lawyer to what he called the "malicious yet nonsensical utterances". The lawyer encouraged Survé to produce proof of his allegations against the judges, and pointed out that Gordhan has no oversight over the FSCA "and could not possibly have directed its operations, including on whom the FSCA must conduct inspections".

Gordhan’s lawyer noted that Survé was a subject of the Mpati commission of inquiry and that his false and defamatory allegations were an attempt to deflect attention but would not protect him from being held accountable "for possible transgressions of the law".

Inevitably, judge Lex Mpati was also put out by Survé’s allegations, carried in an Independent Media article, that Gordhan was trying to influence his commission of inquiry and was pushing for Mpati to make adverse findings. "The commission views the article in a serious light and as part of an ongoing attempt to discredit the work of the commission [and] the integrity of the commissioners and [as] an endeavour to influence its findings," said Mpati.

Deon Botha, head of corporate affairs at the PIC, tells the FM that the PIC was not party to any regulatory dispute or investigation by the FSCA into Survé or his business enterprises. He confirms the PIC issued summons against Ayo in the Western Cape High Court, but says the matter has not yet been heard.

"The PIC’s claim is based on two alternative causes of action, which are misrepresentation on the part of Ayo when the transaction was concluded, and legality."

The PIC wants the R4.3bn back and will return the shares to Ayo.

The raid on Sekunjalo, which is one of several undertaken by the emboldened financial market regulator this year, was a follow-up on the investigation announced in March.

In July, amaBhungane’s Dewald van Rensburg released a comprehensive and seemingly damning analysis of the trading pattern in Ayo since its listing in December 2017, presumably relying on the same publicly available information used by the FSCA. In light of Van Rensburg’s analysis, an early-morning raid on Sekunjalo seemed inevitable.

Two days later, the FSCA team had collected all it needed. But before it can study the documents, Survé has five days in which to persuade a court that it should hand them all back.