Deputy finance minister David Masondo has referred the Public Investment Corporation’s (PIC) controversial R400m Acapulco settlement to the Special Investigating Unit (SIU) for formal inquiry. The decision follows a forensic probe by PwC, which reportedly identified significant calculation errors in the 2013 empowerment deal that saw the state-owned asset manager pay out millions after a loan default on a stake in Lanseria Airport.
Why is the PIC referring the Acapulco case to the SIU?
The PIC is seeking an independent investigation because new forensic evidence suggests the settlement amount paid to Acapulco may have been incorrectly calculated. According to a statement from Masondo, the PwC report highlights multiple “calculation and application issues” regarding the payment. While previous legal counsel advised that challenging the settlement carried high litigation risks, the current board chair, Masondo, determined that the new findings warrant intervention by the SIU, South Africa’s primary anti-corruption authority.
The PIC manages R3.6-trillion in government pension and social insurance funds. Its investment in Lanseria Airport, initially intended to support black economic empowerment (BEE), became a liability when the borrower defaulted on a R333m loan that had ballooned to R630m with interest.
How did the Acapulco settlement reach R400m?
The dispute centers on the valuation of shares the PIC seized after Acapulco defaulted on its loan. When the PIC took over the company’s 25% stake in Lanseria Airport, an arbitration process was required to determine if the shares held value beyond the outstanding debt. Crowe JHB valued the stake at approximately R1.041bn. After subtracting the R630m debt, the PIC was compelled to pay the difference—roughly R411m—to Acapulco. The PIC board, however, characterized this valuation as “completely unacceptable” at the time.
What are the governance risks facing the PIC leadership?
Beyond the Acapulco dispute, the PIC faces internal volatility regarding its procurement processes. A whistleblower report recently alleged that CEO Patrick Dlamini breached governance mandates by commissioning the PwC forensic investigation without securing proper board approval. Dlamini has publicly denied these allegations, labeling the report as “malicious fiction.” Masondo confirmed that the PIC is conducting an independent investigation into the whistleblower’s claims, separate from the SIU’s probe into the Acapulco transaction.
Comparison: Legal Risks vs. Forensic Findings
| Source of Advice | Assessment of Litigation |
|---|---|
| Previous Legal Opinions | Limited prospects of success; high litigation risk. |
| PwC Forensic Report | Identified specific calculation errors warranting further action. |
Frequently Asked Questions
What is the SIU’s role in this dispute?
The Special Investigating Unit (SIU) is an independent authority tasked with recovering state assets lost through corruption or maladministration. Its involvement allows for a deeper, potentially criminal-focused audit of the Acapulco settlement.
Is the PIC still invested in Lanseria Airport?
Yes. Following the default, the PIC holds a 62% stake in the airport. The organization is currently working to reduce its exposure while navigating ongoing legal challenges related to the asset.
What happens to the whistleblower allegations?
The PIC is conducting an independent inquiry into the claims against CEO Patrick Dlamini. If the investigation uncovers evidence of criminal conduct, the PIC has committed to referring those specific matters to law enforcement.
Have thoughts on how the PIC should manage its unlisted investments? Share your perspective in the comments section below or subscribe to our policy newsletter for updates on this unfolding investigation.
Worth a look