Ayo Ex-CIO Says South African Company Is Partly Illegitimate

Ayo Ex-CIO Says South African Company Is Partly Illegitimate

(Bloomberg) -- Ayo Technology Solutions Ltd. is at least partly an illegitimate business and has fabricated financial statements even while securing a 4.3 billion-rand ($304 million) investment by Africa’s biggest money manager, according to Ayo’s former chief investment officer.

A decision by the Public Investment Corp., which manages South African government-worker pension funds, to buy shares in Ayo is at the heart of an ongoing inquiry into how the state-owned company makes financial decisions. The purchase in December 2017 valued Ayo at 14.8 billion-rand, even though its assets were estimated at 292 million rand at the time.

In a statement prior to listing in Johannesburg a year ago, Ayo set a “very high revenue target” but showed “no urgency to conclude transactions,” ex-CIO Siphiwe Nodwele told the PIC inquiry Monday in Pretoria. He and former Chief Executive Officer Kevin Hardy quit with immediate effect in August, after the board didn’t address governance concerns raised by the executives.

The funds generated by Ayo from its initial public offering were mainly used on related-party transactions, Nodwele said, and even its financial statements “are manufactured.” The ex-CIO added that parts of the company are above reproach, such as the Puleng Technologies division, and described how he and Hardy hired people to secure a contract with petrochemicals company Sasol Ltd.

In July, the board proposed a resolution to invest 1.5 billion rand of the company’s cash, about one third of what Ayo held, with asset managers, which Hardy, who also gave testimony Monday, labelled a “blatant attempt” to move money out of the company. The resolution was eventually withdrawn.

Executives Quit

In the past year, half of the PIC’s executive committee have been suspended or resigned. That includes then-CEO Daniel Matjila, who quit in November. Victor Seanie, who was an assistant portfolio manager at the PIC before he was suspended in January, told the inquiry earlier this year that the organization moved too quickly to invest in Ayo, and that Matjila was key to signing off on the deal before the PIC’s portfolio management committee had met to discuss it properly.

Ayo is linked to Iqbal Surve, a South African businessman who was forced to cancel a listing of media group Sagarmatha Technologies in April. Ayo is a viable investment, the media tycoon told the inquiry last week. The company didn’t immediately respond to questions seeking comment after asking for them in email form.

Surve has also been accused of interfering in the editorial process of newspaper owner Independent Media, which his Sekunjalo Investments Ltd. acquired in 2013. Ayo’s original board included three non-executive directors who were employed by the media group, Nodwele said.

Ayo’s current CEO, Howard Plaatjes, was chief operations officer at Independent while corporate affairs director Vanessa Govender was the company’s executive for human resources, according to the technology firm’s website.

The close relationship between Ayo and Independent meant it was “easy” for Surve to ask for favorable articles to be published, Nodwele said. “Editorial independence of Independent Media does not exist,” he said.

Surve told the commission he doesn’t have undue influence at Independent Media.

To contact the reporter on this story: Ana Monteiro in Johannesburg at

To contact the editors responsible for this story: Rene Vollgraaff at, John Bowker, Hilton Shone

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