The former head of Africa’s largest money manager said the company lost $333-million after a “poor investment” in Erin Energy Corporation, accusing the US oil explorer of deliberately withholding information about its prospects ahead of a listing in Johannesburg.
South Africa’s Public Investment Corporation (PIC) took part in a private placement in what was then known as Camac Energy ahead of the Houston-based company’s secondary listing in 2014, former PIC CEO Daniel Matjila told a commission probing allegations of wrongdoing at the fund manager. However, technical problems at a rig and the falling oil price made the business unviable, he said, and Erin filed for bankruptcy last year.
“You cannot get everything right in investments,” Matjila said. While the $333-million is a “fraction” of the R2.1-trillion overseen by the PIC, “it doesn’t mean it’s insignificant,” he added.
Matjila is in his eighth day of testimony to the commission, which is looking into a number of PIC deals that have been flagged as potentially dubious. The money manager is responsible for the bulk of South African civil-servant pension funds.
Jannie Lubbe, the commission’s evidence leader, asked Matjila if he knew that Erin’s founder, Kase Lawal, was a close friend of former South African President Jacob Zuma, who has been linked to numerous allegations of corruption over his nine-year term. Matjila said he’d read about it in newspapers and seen pictures of them together.
Despite the issues with Erin’s rig and the oil price, the PIC guaranteed a $100-million bank loan Erin took from Mauritius Commercial Bank in 2016. When Erin filed for bankruptcy, it had already drawn down $63-million of that. Matjila said the PIC later realized there was a lot Erin didn’t disclose to the investor or the JSE.