A court case has laid bare allegations that the former chief executive of the Public Investment Corporation (PIC) secretly signed away state pensioners’ claims worth hundreds of millions of rands to help his alleged friend, media mogul Iqbal Survé, according to an amaBhungane report on the Daily Maverick site.

The PIC says it was owed R709 839 328 by Iqbal Survé’s Sekunjalo Independent Media (SIM) as of 31 May 2020.

This debt stems from the PIC’s funding of SIM’s takeover of the Independent Media group in 2013. But SIM claims that the debt does not exist.

And even if it does exist, it ranks so far behind other large debts that in practice it will never have to be repaid.

SIM might very well be right, thanks to the actions of Dr Dan Matjila, the PIC’s former chief executive, outlined in court papers, notes amaBhungane.

The documents show that after dragging SIM to court with a liquidation application in November 2019, the PIC was stumped when Survé surprised them with a secret agreement, signed by Matjila in December 2017.

It was a so-called ‘subordination agreement’ annexed to SIM’s responding papers and it showed Matjila had made astonishing concessions to SIM, which drastically weakened the PIC’s position.

The agreement states: ‘In order to assist the Company the Creditor agrees… to subordinate for the benefit of the other creditors of the Company, both present and future, so much of its claims, liabilities and obligations of whatsoever nature and however arising against the Company as would enable the claims of such other creditors to be paid in full.’

If SIM were ever to be liquidated the PIC ‘will not prove or tender to prove a claim in respect of its subordinated claim, which proof would reduce or diminish any dividend payable to other creditors’.

Due to a roughly R1bn debt owed to Chinese funder Interacom by SIM, a subordination agreement in practice extinguishes the PIC’s claim because the Chinese would be paid out in full before the PIC got a cent, says the amaBhungane report.

Another clause reads: ‘… no shareholder of the Creditor shall take or enforce any action arising from any event of default howsoever arising against the company.’

So, the PIC is effectively banned from taking legal action to protect its rights.

Then there is what amaBhungane describes as ‘the clincher’.

The subordination will in effect be permanent.

‘The Creditor hereby agrees that, until such time as the assets of the Company, as fairly valued, exceed its liabilities as fairly valued … it shall not be entitled to demand or sue for or accept repayment of the whole or any part of the said amount owing to it …’

So if the agreement stands, the PIC has no claim on the money it is owed unless SIM somehow reverses its insolvency.

Full amaBhungane report on the Daily Maverick site