An Exec At S.A’s Biggest Fund Manager—Fired Even After Resigning—Says He’s Been Scapegoated In An Investment Scandal

By  |  March 9, 2020

Two years ago, Fidelis Madavo (featured image) was the executive head of listed investments at the Public Investment Corporation (PIC), which happens to be the biggest fund manager in South Africa.

But thanks to a corruption scandal in the USD 136 Bn fund, the Zimbabwean has gone through suspension, he tendered his resignation letter and still ended up being fired by the organization after 13 years of picking stocks.

The scandal began when the PIC made a ZAR 4.3 Bn investment in Ayo Technologies—a group that technologically empowers African organizations.

An internal audit done by the corporation, Fidelis Madavo was found wanting for his role in an approval which was termed controversial.

According to the PIC, he was found guilty of gross misconduct after it was found that governance and approval processes for the Ayo investment were disregarded in the run-up.

His dismissal is “an important step towards efforts to restore ethical behavior and good corporate governance,” it said.

In 2017, the PIC decided to underwrite Ayo’s entire private share placement before its listing on the Johannesburg Stock Exchange (JSE), an action that was carried on with despite the company’s overvaluation. This made Fidelis Madavo to distance himself from the deal to avoid irregular conduct.

After being suspended for 14 months, much more controversy over the investment made him take the step of tendering a resignation letter. Though he was cleared on the very two charges for which he was initially suspended, the resignation seemed to have feel on hollow PIC desks.

On March 2nd, he was officially fired for the same gross misconduct he was supposedly called out for.

“An independent report cleared me of any wrongdoing in the matter, as it established that I could not be held liable for signing off on the deal as I was out of the country at the time,” he said.

In Madavo’s absence, the then Chief Executive Officer Dan Matjila, oversaw the deal.

However, reports say the chairman of a disciplinary process found him guilty and recommended that he must be dismissed, which the PIC upheld. The PIC head of corporate affairs, Deon Botha, said given that Madavo was notified well in advance about the outcome of the disciplinary process, his resignation had no effect.

Now, what Fidelis Madavo says is that he being used as a scapegoat, presumably in an investment scandal where he has no real fault—especially as there are no documents to prove that he is guilty of anything.

The assistant portfolio manager Victor Seanie has been given the boot as well. But something fishy could be going as the general manager for the listed equities who took part in the Ayo transaction approval is still with the company alongside equally involved Sunil Varghese, a PIC portfolio manager.

The PIC however said appropriate disciplinary action has or is being taken against all those implicated in the Ayo transaction.

Matjila testified to the commission that he believed that he was pushed out because he resisted political interference in investment decisions. I

In 2018, an organizational chart was passed among some executives showing who was to be ousted Bloomberg reports. This included Matjila and Madavo, and who they were to be replaced by, even months before the suspensions and departures took place.

Fidelis’ bonuses are also being withheld for 2 years, in what is cited as a need for approval from stakeholders and the National Treasury.

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