commission of inquiry of the public ......29 may 2019 – day 42 page 3 of 69 give will be the...

COMMISSION OF INQUIRY OF THE PUBLIC INVESTMENT CORPORATION

HELD AT

TSHWANE, PRETORIA

10

29 MAY 2019

DAY 42

20

29 MAY 2019 – DAY 42

of 69

PROCEEDINGS HELD ON 29 MAY 2019

CHAIRPERSON: Good morn ing counse l and team.

ADV JANNIE LUBBE SC: Good morn ing Mr Commiss ioner an d

members . I t ’s hard to be l ieve tha t i t ’s the 42 n d day o f th is Commiss ion

in sess ion .

CHAIRPERSON: Did you say 30 or 40 … ( in te rvent ion)

ADV JANNIE LUBBE SC : 42 n d .

CHAIRPERSON: 42 n d .

ADV JANNIE LUBBE SC: And the Commiss ion has dea l t w i th more

than 70 w i tnesses . 10

CHAIRPERSON: Ja .

ADV JANNIE LUBBE SC: But we ’ re ready to p roceed w i th the nex t one

and my co l league, Adv Khooe, w i l l l ead the w i tness Mr Commiss ioner.

CHAIRPERSON: Can you s tand up p lease S i r. I s your name Kev in

Penwarden?

MR KEVIN PENWARDEN: I t i s indeed Mr Commiss ioner.

CHAIRPERSON: And no midd le name?

MR KEVIN PENWARDEN: I do have a midd le name i t ’s L lewe l lyn .

CHAIRPERSON: L lewel lyn .

MS GILL MARCUS: A n ice Welsh name. 20

MR KEVIN PENWARDEN: Indeed.

CHAIRPERSON: Good, do you have any ob jec t ion to tak ing the

prescr ibed oa th?

MR KEVIN PENWARDEN: I do no t .

CHAIRPERSON: Do you then swear tha t the ev idence you ’ re about to

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g ive w i l l be the t ru th , the who le t ru th and no th ing bu t the t ru th , ra ise

your r igh t hand and say so he lp me God.

MR KEVIN PENWARDEN: I do , so he lp me God.

CHAIRPERSON: Thank you very much. You may be seated .

MR KEVIN PENWARDEN: Thank you.

ADV NKAISENG KHOOE: Thank you Commiss ioner. Good morn ing

Commiss ioner, members and everybody. Commiss ioner Mr Penwarden

is go ing to be tes t i f y ing on the SA Home Loans t ransac t ion . Now up to

th is fa r we have had two PIC employees coming to tes t i f y on the mat te r

and the who le i ssue revo lves around a R45 mi l l i on ar rang ing or 10

or ig ina t ion fee reques ted by Mr Maponya ’s MMI . Now apar t f rom Mr

Ra jdhar and Mr Monga lo tes t i f y ing we a lso had Mr Ian S in ton f rom

Standard Bank who a lso came to tes t i f y and g ive the vers ion o f events

inc lud ing the cess ion and every th ing tha t was invo lved in the

or ig ina t ion fee . What Mr Ian as we l l tes t i f ied on was how the dea l

ac tua l l y o r ig ina ted , he d idn ’ t have documenta t ion a t tha t par t i cu la r

po in t in t ime but Mr Penwarden has the documenta t ion and the

Commiss ion w i l l rea l i se tha t there ’s two bund les tha t have been

prepared inasmuch as the s ta tement doesn ’ t sp ec i f i ca l l y re fe r to each

and every annexure Mr Penwarden w i l l re fe r the Commiss ion to the 20

re levant por t ion or annexure as he goes a long. The o ther i ssue tha t

was ra ised was the two ind iv idua ls who have been repor ted to the

Hawks . There was a le t te r tha t was a t tached to Mr Ra jdhar ’s s ta tement

i n tha t regard and Mr Penwarden was the au thor o f tha t document and

he is here and he w i l l a lso c la r i f y tha t . And in Mr Ian ’s tes t imony as

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wel l when the issue o f the or ig ina t ion o f the dea l was dea l t w i th I

re fe r red h im to the PIC in te rna l document and in the appra isa l repor t

wh ich in the document wh ich was s igned by Dr Dan and a few o ther

i nd iv idua ls ou t l ined how Mr Maponya ’s BHC was ac tua l l y the one wh ich

approached the PIC fo r tha t par t i cu la r t ransac t ion . Mr Penwa rden w i l l

a lso dea l w i th tha t in h is s ta tement , thank you. Mr Penwarden am I

cor rec t tha t you are the CEO of SA Home Loans?

MR KEVIN PENWARDEN : Yes I am, I ’m the CEO of SA Home Loans

there ’s a lso a ho ld ing company ca l led SAHL Inves tment Ho ld ings and

I ’m the CEO of tha t company as we l l . 10

ADV NKAISENG KHOOE: How long have you been the CEO?

MR KEVIN PENWARDEN: 15 years .

ADV NKAISENG KHOOE: Okay am I cor rec t tha t you prepared a

s ta tement fo r the Commiss ion?

MR KEVIN PENWARDEN: I have indeed.

ADV NKAISENG KHOOE: And tha t s ta tement in f ron t o f you s igned

and in i t ia l led on each and every page, do you conf i rm tha t i t ’s your

s ta tement?

MR KEVIN PENWARDEN: I con f i rm tha t i t ’s my s ta tement , indeed I

have in i t ia l led and s igned i t . 20

ADV NKAISENG KHOOE: Do you conf i rm tha t you were no t coerced to

make tha t s ta tement and each and every fac t in tha t s ta tement i s yours

and yours on ly?

MR KEVIN PENWARDEN: Mine and mine on ly to the bes t o f my

knowledge and be l ie f .

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ADV NKAISENG KHOOE: Thank you. You can s ta r t a t paragr aph 2 o f

your s ta tement .

MR EMMANUEL LEDIGA: Ms Khooe can I jus t ask someth ing here ,

normal ly the w i tnesses te l l us who they are and the i r career and a l l

tha t , you know l i ke I ’m not see ing i t here .

ADV NKAISENG KHOOE: Mr Commiss ioner i f the Commiss ion re ques ts

Mr Penwarden ’s CV or any th ing re la t ing to h is employment he can

prov ide the Commiss ion w i th tha t and i f the Commiss ion ins is ts tha t he

te l l s tha t a t the beg inn ing i t i s a lso f ine , I am in your hands .

CHAIRPERSON: That ’s f ine he has tes t i f ied tha t h e ’s CEO of the 10

company fo r so long . I don ’ t know i f we need to know what t ype o f

work he does as a CEO, you ’ re in charge o f v i r tua l l y the bus iness as i t

were?

MR KEVIN PENWARDEN: That ’s r igh t Mr Commiss ioner so I have

ord inary opera t iona l respons ib i l i t i e s f rom end to end .

CHAIRPERSON: Yes.

MR KEVIN PENWARDEN: I ’m happy to g ive a br ie f CV i f the

Commiss ion wants to hear any th ing?

CHAIRPERSON: And when d id you s ta r t work ing a f te r qua l i f y ing a t

un ivers i t y? 20

MR KEVIN PENWARDEN: Yes so I d idn ’ t go to un iver s i t y I ac tua l l y

s tud ied par t - t ime th rough UNISA and I d id an honours degree. I then

qua l i f ied as a char te red accountant and then I was work ing in the

insurance indus t ry f i r s t , l i f e assurance indus t ry a t O ld Mutua l then as

an execut ive genera l manager a t M utua l & Federa l Insurance now

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ca l led O ld Mutua l Insure , f rom there I was the CEO of the South A f r i can

opera t ions o f the Br i t i sh Bank the Rober t F leming Group and f rom the

Rober t F leming Group I moved to SA Home Loans .

CHAIRPERSON: Thank you. You may pro ceed then w i th

… ( in te rvent ion)

MR KEVIN PENWARDEN: Thank you Mr Commiss ioner. So th is i s in

paragraph 2 jus t summar ises what SA Home Loans does , p r imar i l y we

access fund ing in the debt cap i ta l marke ts th rough issuances o f

commerc ia l paper by spec ia l pur pose veh ic les and we manage those

spec ia l pu rpose veh ic les and we a lso ge t d i rec t fund ing l ines f rom la rge 10

i ns t i tu t iona l inves tors and tha t ’s obv ious ly to enab le us to p rov ide home

l oans to our c l ien ts .

The nex t sec t ion o f my s ta tement dea ls w i th some issu es re la t ing to the

d isposa l o f JP Morgan ’s shareho ld ing in SA Home Loans . So in 2014, i t

was in fac t June 2014 the Government Employees Pens ion Fund

represented by the P IC and the Bo la t ja H logo Consor t ium, we ca l l tha t

the BHC, they each acqu i red a 25% sh are in SA Home Loans f rom JP

Morgan. The remain ing 50% of the shares were he ld a t the t ime o f the

acqu is i t ion by S tandard Bank and they cont inue to ho ld those shares .

The process however to rep lace JP Morgan as a shareho lder was 20

i n i t ia ted by SA Home Loa ns la te in the year 2011 and tha t was a d i rec t

consequence o f the l iqu id i t y shor tage resu l t ing f rom the f inanc ia l c r i s is

years o f 2008 to 2010 and JP Morgan ’s a t tha t s tage inab i l i t y to s tand

shou lder - to -shou lder w i th S tandard Bank to ass is t SA Home Loans w i th

our fund ing .

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I t was apparent to us tha t we needed to have a second fund ing

shareho lder who wou ld be ab le to fund SA Home Loans i f there was

such a need aga in in the fu tu re , in o ther words another c r i s is and tha t

wou ld enab le us to cont inue to conduc t our bus iness . I unders tand tha t

S tandard Bank had s imi la r d iscuss ions w i th JP Morgan but I am go ing

back to 2011.

Fo l low ing those in i t ia l d iscuss ions w i th JP Morgan to d ispose o f the i r

shareho ld ing JP Morgan mandated us , SA Home Loans , to ident i f y and

approach po ten t ia l and su i tab le acqu i re rs o f the i r shareho ld ing . To th is

end we dec ided we needed some ass is tance and so we approached the 10

Standard Bank M &A d iv is ion to search fo r what we ca l led a St ra teg ic

Equ i ty Par tner to rep lace JP Morgan.

The f i r s t w orkshop we had w i th the Standard Bank M&A team was on

the 14 t h March 2012, so i t does go back a few years , and they

presented to us a s t ra teg ic document to take the search fo rward and

what they d id a t the t ime was they tab led a un iverse o f po ten t ia l

inves tors and amongs t a l l o f tha t un iverse o f course the PIC was

ident i f ied as a po ten t ia l inves tor.

I ’ ve made the comment tha t I ’m ab le to p rov ide a bund le o f a l l o f the

documents , a l l o f the presenta t ions , m inu tes etce tera as needed, I d id 20

supp ly some las t n igh t and there may very we l l be o thers wh ich the

Commiss ion w ishes to have. A l l the Commiss ion needs to do is ask

and I w i l l supp ly. Every th ing in my s ta tement can be backed up by

documents and presenta t ions .

ADV NKAISENG KHOOE: At th is po in t in t ime I jus t need to b r ing i t to

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the Commiss ion ’s a t ten t ion tha t the bund les have been prepared and

tha t the documents tha t he ’s re fe r r ing to a re a l ready be fore the

Commiss ion i f they have been prov ided. Because the s ta tement

doesn ’ t spec i f i ca l l y po in t to a par t i cu lar annexure I w i l l ask Mr

Penwarden to jus t look th rough h is f i l e and jus t po in t ou t wh ich

paragraph , wh ich document re la tes to wh ich paragraph sor ry.

MR KEVIN PENWARDEN: Thank you yes so there were ac tua l l y two

bund les and I hope I ’ ve go t bo th o f th em here . So my po in t 8 where I

ta lk about the 14 t h March meet ing w i th the Standard Bank M&A team

tha t i s in the bund le i t i s a c lear document headed SA Home Loans 10

St ra teg ic Equ i ty Par tner d iscuss ion mater ia ls on the 14 t h March 2012

and I ’ ve wr i t ten on i t f i r s workshop w i th S tandard Bank M&A team

paragraph 8. So tha t document I d id p rov ide las t n igh t , as I say i t ’s no t

spec i f i ca l l y cor re la ted in o rder to my s ta tement because I b rought tha t

a long has t i l y w i th me when I f lew out o f Durban las t n igh t .

CHAIRPERSON: Ms Khooe I don ’ t know i f you have a s im i la r f i l e as

the ones tha t we have because I ’d l i ke to ask you is the document tha t

i s be ing re fe r red to in th is f i l e and i f so what exh ib i t number o r

annexure number.

MR EMMANUEL LEDIGA: Ja we do have the 14 t h March i t ’s a S tandard 20

Bank document . Yes tha t ’s the one the 14 t h March I th ink?

MR KEVIN PENWARDEN: Yes tha t ’s cor rec t Mr Commiss ioner.

MR EMMANUEL LEDIGA: We do have tha t .

MR KEVIN PENWARDEN: I t ’s the one I ’m re fer r ing to in paragraph

… ( in te rvent ion)

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MR EMMANUEL LEDIGA: Ja we do have tha t , i t ’s a S tandard Bank ,

how do we mark i t?

ADV NKAISENG KHOOE: Please mark i t as annexure 1 .

MR EMMANUEL LEDIGA: Annexure 1?

ADV NKAISENG KHOOE: Yes p lease.

MR EMMANUEL LEDIGA: Al r igh t .

MR KEVIN PENWARDEN: And then I cou ld po in t ou t , a l though i t ’s

qu i te a fo rmidab le document , many, many s l ides , tha t somewhere in the

midd le o f the document there ’s a s l ide , i t ’s page 8 ac tua l l y tha t i s

headed ‘Un iverse o f Poten t ia l Inves tors ’ and one can see in the midd le 10

b lock the PIC is ident i f ied as a par ty tha t we wou ld have wanted to ta l k

to .

MR EMMANUEL LEDIGA: Page 8 o f the S tandard Bank document?

MR KEVIN PENWARDEN: Page 8 o f the S tandard Bank document .

MR EMMANUEL LEDIGA: Ja a l r igh t okay tha t ’s f ine .

MR KEVIN PENWARDEN: So fo l low ing th is workshop var ious po ten t ia l

inves tors were then in t roduced to SA Home Loans by bo th S tandard

Bank on the one s ide and JP Morgan and a l though severa l p rospec t ive

inves tors conduc ted the i r due d i l igences none eventua l l y made a f ina l

o f fe r fo r the JP Morgan shares , i t was a long and pro t rac ted process o f 20

course .

Dur ing the process tha t I ’m ta lk ing about , JP Morgan in i t ia ted and

fac i l i t a ted a meet ing be tween SA Home Loans and the PIC to p resent a

bus iness case to the PIC cover ing two m at te rs ; f i r s t l y, the ra t iona le fo r

the GEPF to p rov ide Home Loan fund ing fo r the i r members and the

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broader A f fo rdab le Hous ing Marke t and; (b ) to acqu i re the JP Morgan

shareho ld ing in SA Home Loans . The meet ing took p lace on the 21 s t

June 2012 , wh ich meet i ng was he ld a t the PIC ’s o f f i ces in Sandton. SA

Home Loans was represented by a co l league o f m ine , Rob Ke lso and

myse l f obv ious ly, and the PIC was represented by Dr Dan, the then

Ch ie f Execut ive Of f i cer o f the PIC. JP Morgan was represented by Mr

John Cou l te r, who was the CEO of JP Morgan Southern A f r i ca and I

th ink he a lso had add i t iona l in te rna t iona l respons ib i l i t i es because he

was cer ta in ly the CEO loca l l y here and two o f h is co l leagues .

Now I do have, aga in as par t o f my submiss ion , I do have a copy o f tha t 10

document , i t ’s headed ‘SA Home Loans Overv iew’ w i th a da te June

2012 under i t and i t ’s go t bo th a JP Morgan and an SA Home Loans

brand ing on i t and tha t I guess wou ld be annexure B.

MR EMMANUEL LEDIGA: Which document i s th is? Oh the f i r s t one ,

i t ’s June 2012 nè?

MR KEVIN PENWARDEN: June 2012 tha t ’s r igh t Mr Commiss ioner.

MR EMMANUEL LEDIGA: That ’s annexure 2?

MR KEVIN PENWARDEN: B I thought I heard .

MR EMMANUEL LEDIGA: Annexure 2 .

MR KEVIN PENWARDEN: So th is annexure 2 was the presen ta t i on tha t 20

we de l i vered to Dr Dan and Mr Ke lso and I dea l t w i th the home loan

fund ing aspec ts ex tens ive ly and in fac t f rom th is document one can see

tha t we presented dra f t te rm sheets a l ready a t tha t s tage in June 2012.

A t the conc lus ion o f the presen ta t io n we broke up in to a smal le r g roup

compr is ing Dr Dan, John Cou l te r, Rob Ke lso and myse l f . I t was Mr

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Coul te r who p i t ched the added benef i t s o f and the y ie ld p ick -up fo r the

P IC i f , i n add i t ion to home loan fund ing , the P IC a lso acqu i red the JP

Morgan share ho ld ing in SA Home Loans . He d id tha t p i t ch , there were

severa l ques t ions asked by Dr Dan but he cer ta in ly appeared

in te res ted .

MS GILL MARCUS: In tha t , jus t fo r emphas is perhaps , wha t becomes

c lear th rough your s ta tement i s tha t the c lear p layer in the in i t ia t ion

here was JP Morgan?

MR KEVIN PENWARDEN: Cor rec t Madam Commiss ioner, they worked

in concer t w i th us bu t they led the way. 10

MR EMMANUEL LEDIGA: Jus t to add a lso so the f i r s t meet ing was i t

about the P IC inves t ing in SA Home Loans or i t was fo r th e y ie ld p ick -

up in the funds themse lves?

MR KEVIN PENWARDEN: I t was fo r bo th Mr Commiss ioner. Our

in ten t ion be fore we went to the PIC was to dea l w i th bo th and the way

in wh ich we s t ruc tured the presenta t ion was tha t Rob Ke lso and myse l f

wou ld ta lk about the fund ing aspec ts , the s t ra teg ic f i t fo r the GEPF to

p rov ide home loan fund ing fo r the i r members as we l l as fo r the

shor tage wh ich we had in the South A f r i can marke t o f fund ing fo r

a f fo rdab le hous ing and then a lso to dea l w i th a c r i t i ca l aspec t o f the 20

y ie ld p ick -up shou ld the PIC a lso acqu i re JP Morgan ’s shares so i t was

a twofo ld ob jec t i ve .

MR EMMANUEL LEDIGA: Yes, thank you .

MR KEVIN PENWARDEN: So fo l low ing the 2012 meet ing and

presenta t ion w i th Dr Dan in response to a reques t fo r Dr Dan fo r a

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concep t document se t t ing ou t the fund ing and equ i t y p roposa ls we had

presented, we compi led a document t i t l ed ‘P IC Fund ing / Equ i t y

concept document ’ wh ich we sent to JP Morgan and, wh ich we were

in fo rmed , was used fo r the i r ongo ing conversa t ions w i th the PIC. Th is

document se t ou t the s t ra teg ic benef i t s fo r the P IC o f a fund ing l ine fo r,

and an equ i t y s take in SA Home Loans , in par t i cu la r w i th respec t to the

prov is ion o f home f inance to the GEPF members and in the a f fo rdab le

hous ing sec tor.

Th is document e f f ec t ive ly d is t i l l ed f rom the b ig p resenta t ion tha t we ’d

g iven to Dr Dan, i t d is t i l l ed i t in to a concept document and took a l l the 10

pr inc ip les in to tha t document . Now I have prov ided tha t as we l l , I

wou ld th ink tha t wou ld be annexure , tha t m ig h t be in my sec ond bund le

here … ( in te rvent ion )

MR EMMANUEL LEDIGA: The document ’s head ing?

MS GILL MARCUS: I s i t the one ca l led ‘SA Home Loans PIC Fund ing /

Equ i t y Concept Document ’?

MR KEVIN PENWARDEN: Yes i t i s indeed.

MS GILL MARCUS: That ’s th i s one.

MR EMMANUEL LEDIGA: That ’s annexure 3 then.

MR KEVIN PENWARDEN: Annexure 3 yes . 20

MR EMMANUEL LEDIGA: So i t ’s ca l led P IC Inves tment Oppor tun i t y in

SA Home Loans is tha t the one?

MR KEVIN PENWARDEN: I t ’s ca l l ed ‘P IC Fund ing / Equ i t y Concept

Document ’ .

MR EMMANUEL LEDIGA: Okay.

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MR KEVIN PENWARDEN: So tha t we know was onward sent to Dr Dan

by JP Morgan demonst ra t ing Dr Dan ’s in te res t in the proposa ls wh ich

we had presented to h im a t the 21 s t June 2012 meet ing , .

There were fu r ther reques ts f rom Dr Dan so in Sep tember 2012 we pu t

together another p resenta t ion and tha t one was the one ca l led ‘P IC

Inves tment Oppor tun i t y in SA Home Loans ’ . So tha t wou ld be annexure

4. So tha t was a four th document wh ich we prepared and we a lso sent

tha t to JP Morgan and aga in we w ere in fo rmed they used tha t fo r

fu r ther ongo ing conversa t ions w i th the PIC. And I po in t ou t tha t the

open ing s l ide s ta tes the purpose o f the presenta t ion as be ing th ree fo ld 10

but two o f those cer ta in l y was the fund ing f rom the GEPF and the

equ i t y acqu is i t io n o f JP Morgan ’s shareho ld ing in SA Home Loans .

So f rom our perspec t ive i t was c lear, to us a t leas t , tha t the

combinat ion o f JP Morgan and SA Home Loans were the f i r s t par t ies to

p resent a c lear bus iness case to the PIC fo r bo th fund ing oppor tun i t ies

to p rov ide home f inance to GEPF members and the SAHL equ i ty

acqu is i t ion .

So I need to po in t ou t tha t the re was then a h ia tus , cer ta in l y no t f rom a

SA Home Loans h ia tus perspec t ive , we had severa l peop le coming

th rough to do due d i l igences , we spoke to severa l o ther par t ies , s im i la r 20

presenta t ions to the ones tha t I have submi t ted t hey were made to

o ther po ten t ia l inves tors .

JP Morgan remained obv ious ly as a shareho lder o f SA Home Loans , we

had board meet ings , they kept us appra ised o f what was happen ing and

we were to ld tha t the P IC re ta ined an in te res t in bo th s ides o f the

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presenta t ions and documents tha t we pu t fo rward . In o ther words they

cer ta in ly re ta ined an in te res t in the fund ing s ide as we l l as the

acqu is i t ion a l though noth ing spec i f i c happened unt i l June 2013. So

f rom September 2012 to June 2013 I cannot say exac t ly what happened

in the background and who was approached and why bu t what we do

know tha t in June 2013 we were , SA Home Loans was reques ted by the

PIC to en ter in to severa l non -d isc losure agreements , one was w i th the

PIC and then fo r the f i r s t t ime we came across the Matome Maponya

Inves tments MMI , we cer ta in ly d idn ’ t know who they were or who

represented bu t we d id a NDA wi th them and then there were vary ing 10

other adv isory f i rms re la t ing t o the shar ing o f con f ident ia l in fo rmat ion

or the NDA re la ted to the shar ing o f conf ident ia l in fo rmat ion concern ing

the acqu is i t ion o f a shareho ld ing in te res t in SA Home Loans .

MS GILL MARCUS: At th is s tage your in te rac t ion w i th Dr Mat j i l a was

when he was in the pos i t ion o f be ing the CIO?

MR KEVIN PENWARDEN: My reco l lec t ion Madam Commiss ioner i s tha t

when we f i r s t spoke to h im he was ac tua l l y the CIO and there was no

Ch ie f Execut ive tha t we cou ld unders tand and tha t h is pos i t ion changed

f rom CIO to CEO dur ing tha t t ime.

MS GILL MARCUS: A la te r per iod ja . 20

MR KEVIN PENWARDEN: Yes a la te r per iod .

MS GILL MARCUS: Okay thank you.

MR KEVIN PENWARDEN: So fo l low ing the non -d isc losure agreements

tha t were s igned we then s ta r ted to share in fo rmat ion and documents

as reques ted and tha t was fo r the purpose o f conduc t ing a due

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d i l igence inqu i ry. As par t o f tha t p rocess on the 25 t h September SA

Home Loans made a presenta t ion to a g roup o f peop le a t the P IC ’s

of f i ces in Pre tor ia , i t was qu i te a b ig g roup and p resent a t th is meet ing

was Mr Kho lo fe lo Maponya and th is was the f i r s t t ime tha t my

co l league, Mr Ke lso and I had met Mr Maponya.

MS GILL MARCUS: Do you reca l l who was there f rom the PIC?

MR KEVIN PENWARDEN : There were a lo t o f peop le there Madam

Commiss ioner … ( in te rvent ion)

MS GILL MARCUS: At leas t the main person?

MR KEVIN PENWARDEN: Yes we l l we do know tha t Mr Masekes a was 10

there and my reco l lec t ion i s tha t Mr Ra jdhar was there as we l l .

MR EMMANUEL LEDIGA: Jus t a ques t ion here , so f rom September

2012 to Jun e 2013 d id you ta lk to the PIC, was there cor respondence or

some d iscuss ions?

MR KEVIN PENWARDEN: Noth ing f rom our s ide Mr Commiss ioner so

a l l we knew was the in fo rmat ion coming to us f rom our shareho lder and

co l leagues on the board o f JP Morgan tha t the P IC remained in te res ted

in our p roposa l .

MR EMMANUEL LEDIGA: Oh I see so there cou ld have been ta lks w i th

JP Morgan and the P IC? 20

MR KEVIN PENWARDEN: Undoubted ly there were .

MR EMMANUEL LEDIGA: Ja a l r igh t , okay.

MR KEVIN PENWARDEN : So what I do say is t h is , to the bes t o f my

knowledge at a l l mater ia l t imes JP Morgan was the in i t ia to r and

fac i l i t a to r o f the meet ings w i th the PIC wh ich subsequent ly resu l ted in

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the GEPF and the BHC each acqu i r ing a 25% share in SA Home Loans

f rom JP Morgan. A t no po in t d id Mr Maponya in i t ia te o r fac i l i t a te a

meet ing be tween SA Home Loans and the PIC nor be tween SA Home

Loans and JP Morgan.

Dur ing the due d i l igence we were in fo rmed by the PIC, and here we

have some documenta t ion on tha t , th is was when the due d i l igence

s ta r ted in June, we were in fo rmed by the PIC tha t i t cou ld no t pursue

equ i t y in i t ia t i ves in un l i s ted en t i t ies such as SA Home Loans un less

they brought a long a BBBEE empowerment par tner and u l t imate ly then

i t was Mr Maponya ’s consor t ium the BHC. 10

MS GILL MARCUS: Does your documenta t ion , i s i t in the pack?

MR KEVIN PENWARDEN: Madam Commiss ioner i t i sn ’ t bu t I can

obv ious ly fo rward tha t to the Commiss ion once I ’m back in o f f i ce .

MS GILL MARCUS: I wou ld apprec ia te tha t and i f I cou ld ask our

ev idence team to ob t a in the au thor i t y board dec is ion in te rms o f a

mandate tha t they can ’ t inves t w i thout a BEE par tner so we cou ld ge t

tha t o r ig ina l documenta t ion and au thor i t y to do tha t f rom the PIC.

MR EMMANUEL LEDIGA: Jus t another ques t ion here , so be tween

September 2012 and June 2013 i t cou ld we l l be tha t JP Morgan the PIC

and MMI cou ld have been ta lk ing? 20

MR KEVIN PENWARDEN: Yes abso lu te ly.

MR EMMANUEL LEDIGA: I s tha t poss ib le?

MR KEVIN PENWARDEN: That i s indeed poss ib le .

MR EMMANUEL LEDIGA: We are no t su re whethe r they were ta lk ing or

no t bu t the MMI group cou ld have been par t o f the ta lks then?

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MR KEVIN PENWARDEN: Indeed so .

MR EMMANUEL LEDIGA: Al r igh t .

MR KEVIN PENWARDEN: I w i l l j us t po in t ou t tha t you know the f ina l

t ransac t ion was conc luded even we l l a f te r tha t because these th ings do

take a long t ime so i t was conc luded in June 2014. Bu t the f ina l

conc lus ion o f tha t t ransac t ion a lmost rep l i ca ted what we had proposed

in June 2012 in te rms o f the s t ra teg ic f i t , the in ten t ion fo r the GEPF to

p rov ide home f ina nce fo r the i r members and fo r the a f fo rdab le hous ing

marke t , the y ie ld up l i f t fo r the P IC etce tera , e tce tera so i t m i r ro red

what we had presented back in June 2012 and tha t was the f ina l 10

t ransac t ion two years la te r.

ADV NKAISENG KHOOE: Jus t one more que s t ion , you sa id SA Home

Loans had entered in to a non -d isc losure agreements w i th MMI and then

l a te r you say here BHC be ing PIC ’s empowerment par tner, can you jus t

exp la in what i s go ing on here , i s i t BHC or was i t MMI?

MR KEVIN PENWARDEN: To the bes t o f my knowledge we d id no t

know o f the BHC. So a t the t ime, and I ’ ve looked a t the NDA’s , a t the

t ime we were s ign ing NDA’s the BHC was not par t o f i t , i t was MMI . We

on ly became aware o f the BHC a t a la te r s tage. So we un for tunate ly

don ’ t know a t what s tage the BHC s tar ted to represent the consor t ium 20

or was the consor t ium.

MR EMMANUEL LEDIGA: Ja cou ld i t be tha t BHC was go ing to be the

inves tment veh ic le and MMI are the adv isors to tha t veh ic le?

MR KEVIN PENWARDEN: Indeed tha t cou ld have been the case.

MR EMMANUEL LEDIGA: I t cou ld be?

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MR KEVIN PENWARDEN: Yes .

MR EMMANUEL LEDIGA: Okay, a l r i gh t .

MR KEVIN PENWARDEN: So I ’ l l move then f rom the JP Morgan

t ransac t ion to ta lk ing about a r rang ing fees and the f i r s t par t o f my

s ta tement dea ls w i th the R45 mi l l i on ar rang ing fees . So as I ment ioned

ear l ie r the bus iness ob jec t i ve or one o f the bus iness ob jec t i ves o f the

change in shareho ld ing was to enab le a complementary re la t ionsh ip

be tween SA Home Loans and i t s o ther en t i t ies to access funds f rom the

second incom ing shareho lder, in o ther words the PIC, fo r the purposes

o f conduc t ing i t s bus iness . So upon the conc lus ion and c los ing o f the 10

equ i ty sa le t ransac t ion we moved rap id ly in to the nex t par t o f th is

wh ich was fo r SA Home Loans to seek fund ing f rom the PIC/GE PF fo r

such loan fac i l i t i es .

The PIC indeed then ind ica ted tha t fac i l i t i es cou ld be made ava i lab le

wh ich wou ld inc lude a fac i l i t y fo r lend ing to the GEPF members and a

fac i l i t y fo r lend ing in the a f fo rdab le hous ing and t rad i t iona l home loan

segments and th a t te rm sheets wou ld be proposed.

MS GILL MARCUS: I f I unders tand tha t cor rec t l y the fac t tha t the P IC

then had a 25% equ i ty s take and not a 50% equ i ty s take or i t had sp l i t

be tween MMI d id no t a f fec t tha t , the PIC wou ld car ry tha t second 20

shareho lder respons ib i l i t y in fu l l?

MR KEVIN PENWARDEN: Indeed so Madam Commiss ioner.

MS GILL MARCUS: I t was no t expec ted fo r the empowerment par tner

to p lay any ro le in tha t?

MR KEVIN PENWARDEN: And tha t was exp l i c i t , i t was the PIC tha t

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s tood beh ind e f fec t i ve ly the 5 0% of the … ( in te rvent ion)

MS GILL MARCUS: So the P IC s tood beh ind the 50% even though i t s

equ i t y share was 25?

MR KEVIN PENWARDEN: Correc t Madam Commiss ioner. Before the

te rm shee ts were rece ived f rom the PIC, on 18 December 2014, Mr

Maponya, who had b een appo in ted on to the board o f d i rec tors a f te r

be ing nominated by the BHC he ca l led my o f f i ce to seek an

appo in tment w i th me on a mat te r wh ich he sa id te lephon ica l l y he cou ld

no t d iscuss w i th me. A br ie f meet ing was he ld be tween us on Fr iday

the 19 t h December. I t was a shor t meet ing and very in fo rmal because 10

Mr Maponya was accompan ied by h is two young daughters . A t th is

meet ing , Mr Maponya to ld me tha t he and Dr Dan had agreed tha t he

was en t i t led to a ra is ing fee on the GEPF fund ing l ines a t a ra te o f

0 .5%. He d id no t imp ly a t tha t s tage, and nor d id I unders tand tha t

such a wou ld be fo r the account o f SA Home Loans . Ins tead of course I

unders tood tha t he was coming te l l me, because i t was a mater ia l th ing ,

and i f the P IC wou ld pay such a fee to h im I wou ld ge t to know about i t .

So tha t was my unders tand ing o f why he came to te l l me.

MS GILL MARCUS: Did you a t any po in t in t ime ask or ques t ion the

re la t ionsh ip o f MMI to BHC? 20

MR KEVIN PENWARDEN: Not a t tha t s tage and I th ink a t tha t s tage i t

was so b lu r red fo r us , the t ransac t ion had happened, we were unc lear

o f exac t ly what MMI was , who they were and what the i r re la t ionsh ip

was w i th the BHC. These th ings eventua l l y emerged but no t a t tha t

t ime.

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MR EMMANUEL LEDIGA: Let ’s jus t check someth ing here . So I th ink

i t was Mr Maseko or Ra jdhar say ing tha t the .5% was fo r the adv isory

par t o f BHC adv is ing the company to take a s take . So was th is

d i f fe ren t? I mean, the po in t 5 was i t fo r the fund ing or fo r the adv isory

o f tak ing the s take?

MR KEVIN PENWARDEN: So tha t ’s an in te res t ing ques t ion , Mr

Commiss ioner.

MR EMMANUEL LEDIGA: Yes .

MR KEVIN PENWARDEN: Which I ’m af ra id I can ’ t answer because

both s ides has e f fec t i ve ly been presented . Our unders tand ing f rom the 10

way in wh ich th is was mot iva ted and over t he per iod o f t ime was tha t i t

was an adv isory fee on the bas is tha t MMI had p layed a ro le in the

d isposa l o f the J P Morgan shareho ld ing to combinat ion o f BHC and the

PIC. So I dea l la te r on in my s ta tement because tha t has a lways vexed

me, I ’ ve never und ers tood tha t an adv isory fee shou ld then be

conver ted in to a fee on the fund ing . I t d idn ’ t make any sense .

MR EMMANUEL LEDIGA: Yes , because the f i r s t pa r t when I heard was

the adv iso ry fee fo r the equ i t y s take .

MR KEVIN PENWARDEN: Yes , yes .

MR EMMANUEL LEDIGA: Bu t I th ink f rom the Standard Bank and the – 20

you guys tha t you are say ing is the adv isory fo r the fund ing is the

underwr i t ing fee .


MR EMMANUEL LEDIGA: So I ’m not sure now wh ich is wh ich .

MR KEVIN PENWARDEN: Wel l , as I say, bo th th ings have

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unfor tunate ly been in te rchanged in the way in wh ich i t ’s been

presented. Fundamenta l l y though, our unders tand ing was tha t the

reason ing fo r any fee be ing pa id to MMI was because they had brought

the t ransac t ion to the PIC, purpor ted l y so . So we ’ve a lways had some

d i f f i cu l t y tha t a r rang ing fees have been based or underwr i t ing fees

c la imed by Mr Maponya has been based on the GEPF fund ing l ines .

There ’s no re la t ionsh ip there .

MR EMMANUEL LEDIGA: I th ink cont inue and then we see how i t

goes .

MR KEVIN PENWARDEN: Thank you, Mr Commiss ioner. So I was 10

taken aback a t the sugges t ion tha t ha l f a percent ra is ing fee shou ld be

pa id . I cou ldn ’ t unders tand the commerc ia l log ic o r the ra t iona le fo r

such a payment to Mr Maponya as a th i rd par ty. A f te r the meet ing I had

a d iscuss ion w i th my co l league, Mr Ke lso , he was a t tha t s tage the

CFO. I ind ica ted to Mr Ke lso tha t I d id no t be l ieve tha t there ex is ted a

bas is fo r such payment , ne i ther f rom the PIC nor f rom SA Home Loans .

The mat te r was no t ra ised aga in ne i ther verba l l y o r in wr i t ing w i th me

by Mr Maponya unt i l about 14 months la te r, February 2016. Lo ts

happened in the in te rven ing per iod .

In tha t in te rven ing per iod the te rm sheets fo r the GEPF 20

fund ing l ines tha t I ’ ve spoken o f were prov id ed to us by the PIC, they

were tab led to the SA Home Loans board o f d i rec tors on the 22 Apr i l

2015, a meet ing a t wh ich Mr Maponya was present .

MS GILL MARCUS: Was Mr Masekesa a lso present a t tha t meet ing /

MR KEVIN PENWARDEN: Indeed he was .

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MS GILL MARCUS: They were bo th non -exec board members?


“They inc luded a requ i rement…”

The te rm sheet d id .

“They inc luded a requ i rement fo r an ar rang ing fo r underwr i t ing

fee equa l to ha l f percent on the fund ing l ines to be pa id to the

GEPF. ”

That was s tandard prac t i ce . I want to s t ress there was no ment ion a t

a l l o f a poss ib le payment to a th i rd par ty nor was i t sugges ted a t tha t

board meet ing by Mr Maponya tha t the fee in fac t was due to h im or 10

MMI.

MR EMMANUEL LEDIGA: And typ ica l l y tha t f ee is fo r the GEPF, i sn ’ t

i t ?

MR KEVIN PENWARDEN: The fees shou ld be GEPF and ( inaud ib le –

speak ing s imu l taneous ly )

MR EMMANUEL LEDIGA: The adv iso ry fee fo r the tak ing o f s take

cou ld be a d i f fe ren t mat te r bu t the underwr i t ing fee is to the GEPF.

I sn ’ t i t ?

MR KEVIN PENWARDEN: That ’s r igh t , tha t i s indeed so .

MR EMMANUEL LEDIGA: Okay. 20

MR KEVIN PENWARDEN: And adv isory fee cou ld be to any th i rd par ty

tha t indeed prov ided adv isory serv ices .

MR EMMANUEL LEDIGA: Ja , okay.

MR KEVIN PENWARDEN: “So hav ing ha d the PIC tab le a requ i rement

fo r

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a ha l f percent fund ing l ines even though tha t was s tandard

marke t p rac t i ce , I s t i l l reques ted the SA Home Loans t reasury

team to appea l aga ins t the fee to have i t wa ived e i ther in fu l l

o r in par t on the bas is tha t SA Home Loans had to recover th i s

th rough p roduc t p r i c ing thus f inanc ia l l y to a ce r ta in ex ten t

d isadvantag ing the GEPF members who approached SA Home

Loans fo r home loans . Wi thou t such a fee we cou ld make a

home loan pr ic ing keener. So tha t was the bas is fo r us

appea l ing to see i f we cou ld f ind a mechan ism fo r i t to be

waived in fu l l o r in par t . ” 10

Then Mr Monga lo , who I know has been here be fore the

Commiss ion , he responded by ind ica t ing in an emai l tha t our appea l

had been cons idered by the PIC execut ives who co nc luded tha t we

cannot dev ia te and I ’m quot ing here :

“We cannot dev ia te f rom our normal up f ron t fee requ i rement

espec ia l l y fo r th is quantum o f fac i l i t i es . ”

And so we had to accept tha t .

“The f ina l te rm sheets then embod ied the requ i rement to pay

an underwr i t ing fee a t the ra te o f ha l f percent to the GEPF.

And tha t was approved a f te r a r igorous p rocess by the ex terna l 20

i nves tment commi t tee o f the P IC and by the SA Home Loans

board o f d i rec tors aga in a t wh ich Mr Maponya was present and

Mr Masekesa was p resent . Accord ing ly, the GEPF approved

fac i l i t i es to the va lue o f R9 b i l l i on to SA Home Loans th rough

vary ing en t i t ies tha t I ca l l SAMF ent i t ies wh ich we se t up to

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manage the f inanc ing s t ruc tures . The t ransac t ion documents

re la t ing to these en t i t ies were app roved by the SA Home Loans

board o f d i rec tors aga in a t wh ich Mr Maponya was present and

de f in i te ly Mr Masekesa as we l l and they were approved by the

board s t r i c t l y in accordance w i th the te rm sheets wh ich the

board had a lso approved. These t ransac t ions do cuments were

executed on the 24 December 2015 and as fa r as SA Home

Loans was concerned the ar rang ing fee requ i rements ended

there . We c lear ly were requ i red to pay those ar rang ing fees

once we ’ve accessed the fac i l i t i es to GEPF. The t ransac t ion 10

documents d id inc lude vary ing cond i t ions precedent wh ich

meant tha t we cou ldn ’ t immedia te ly access the fund ing . Those

cond i t ions precedent were on ly eventua l l y reso lved once the

ar rang ing fee mat te r had been dea l t w i th . ”

And tha t was a t the end o f 2016. I come ba ck to tha t , though, because

a lo t happened dur ing 2016. None o f the par t ies a t the end o f 2016

were aware tha t the mat te r o f a r rang ing fees wou ld resur face a t a la te r

t ime and s t i l l i ndeed be a top ic now.

“On the 2 February 2016 Mr Maponya in i t ia ted an ur gent

meet ing w i th me a t wh ich he ind ica ted tha t MMI wou ld be 20

i ssu ing an invo ice o f 52 .5 mi l l i on p lus VAT to SA Home Loans

fo r a ra is ing fee o f 50 bas is po in ts o r ha l f a percent o f the

fund ing l ines prov ided by the GEPF to the SAMF ent i t ies , in

o ther words 45 mi l l i on p lus VAT and then he in t roduced an

add i t iona l requ i rement fo r 7 .5 mi l l i on to be pa id by another

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ent i t y. I t was a hous ing deve lopment fund en t i t y. Th is was a

separa te en t i t y owned by the PIC, th is i s the Hous ing

Deve lopment Fund, and tha t had b een es tab l i shed fo r the

purposes o f advanc ing fund ing to a f fo rdab le hous ing

deve lopers . That had cer ta in ly been conce ived f rom a

bus iness case wh ich Mr Maponya had put fo rward to the P IC

predat ing the SA Home Loans equ i t y acqu is i t ion by the PIC

and BHC. SA Home Loans had been reques ted to ac t as the

admin is t ra to r o f th is deve lopment fund. That there was mer i t

…[in tervenes ] 10

MS GILL MARCUS: So when you were asked to be the admin is t ra to r o f

the fund and tha t had occur red pr io r to the SA Home Loans in ac t in g

d id you in any way meet Mr Maponya a t tha t t ime or d id you know o f

MMI?

MR KEVIN PENWARDEN: So no , we were appo in ted to ac t as the

admin is t ra to rs ac tua l l y a f te r the equ i t y acqu is i t ion . What had

happened was , Mr Maponya had taken h is ideas fo r the c rea t ion o f a

deve lopment fund to the PIC be fore the i r acqu is i t ion in SA Home Loans .

We were unaware o f tha t . I t was on ly a f te r the PIC ’s acqu is i t ion o f

the i r shareho ld ing SA Home Loans tha t the approached us on the bas is 20

tha t they wanted an en t i t y tha t had g overnance cont ro ls , a serv ice t rack

record , e t ce tera , to admin is te r th is fund. We thought about i t , the

board approved i t and we agreed to do tha t bu t tha t on ly happened

subsequent to the equ i t y t ransac t ion .

MS GILL MARCUS: What ’s the s ize o f the fund i f you know o f fhand?

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MR KEVIN PENWARDEN: I t ’s a b i l l i on and a ha l f d rawdown fac i l i t y.

MR EMMANUEL LEDIGA: Th is b i l l i on and a ha l f , was i t funded by the

PIC, do you know?

MR KEVIN PENWARDEN: En t i re ly funded by the P IC, yes .

MR EMMANUEL LEDIGA: En t i re ly funded by the P IC.

MR KEVIN PENWARDEN: Yes and not ye t fu l l y d rawn down.

MR EMMANUEL LEDIGA: Ja .

MR KEVIN PENWARDEN: So i t ’s a fac i l i t y tha t i s ava i lab le to be

drawn down over a per iod o f – I th ink i t ’s 12 years .

MR EMMANUEL LEDIGA: And i t ’s owned by w hom? Who owns i t? 10

MR KEVIN PENWARDEN: The ent i t y ’s owned 100% by the PIC.

MR EMMANUEL LEDIGA: Oh, I see . Okay, a l r igh t . And then tha t R7.5

mi l l i on fee p lus VAT and a l l tha t , tha t i s jus t i f iab le because there was

work be ing done there , ja? Th is i sn ’ t an underwr i t ing fee or there were

no fund ing l ines , you know, a round tha t .

MR KEVIN PENWARDEN: I t was an adv isory fee , Mr Commiss ioner.

And I was sa t is f ied , I was ab le to a t tes t to the work done. A lo t o f work

was done. I rece ived an enormous bund le o f papers f rom the PIC

authored by Mr Maponya and a team o f peop le , research tha t they ’ve

done put t ing fo rward a s t ra teg ic bus iness case. So I was happy to 20

at tes t to the work car r ied by Mr Maponya to the board o f d i rec tors o f

the deve lopment fund and they co nc luded tha t the adv isory fee in the

7 .5 mi l l i on cou ld in fac t be d isbursed to MMI based on the ev idence o f

such adv isory work .

MR EMMANUEL LEDIGA: Jus t to check another th ing , paragraph 30 ,

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the fee there be ing asked fo r was fo r fund ing l ine 2 wh ich is th e R10

b i l l i on , i s tha t cor rec t o r i s s t i l l f o r the fund ing l ine . . .

MR KEVIN PENWARDEN: Fund ing l ine one(?) 9 b i l l i on .

MR EMMANUEL LEDIGA: Ja , a l r igh t .

MR KEVIN PENWARDEN: So our in i t ia l fund ing l ine f rom the GEPF 9

b i l l i on .

MR EMMANUEL LEDIGA: Okay.

MR KEVIN PENWARDEN: And the 50 bas is po in ts o f 9 b i l l i on der ived

the 45 mi l l i on fee .

MR EMMANUEL LEDIGA: Okay. So tha t fee sor t o f comes back aga in . 10

MR KEVIN PENWARDEN: t ime and t ime aga in .

MR EMMANUEL LEDIGA: Okay, a l r i gh t .

MR KEVIN PENWARDEN: So hav ing had tha t u rgent meet ing w i th Mr

Maponya on the 2 February, he fo l l owed i t up and I rece ived an invo ice

by emai l f rom MMI fo r the fu l l amount o f 52 .5 mi l l i on p lus VAT and the

invo ice recorded i t as a t ransac t ion or ig ina t ion fee . So jus t remember

we now had s igned cont rac ts , documenta t ion te rm sheets , th is was a

tu rn up fo r the books because we had cont rac ts wh ich requ i red us to

pay and ar rang ing fee to the GEPF. So I d iscussed th is i nvo ice w i th my

CFO, Mr Ke lso , who had been aware o f the fac t tha t Mr Ma ponya and I 20

had met . Our common v iew was tha t such a payment to MMI ins tead of

to the PIC wou ld never be sanc t ioned by the PIC because o f these

t ransac t ions and cont rac ts , t ransac t ion documents and cont rac ts and

they themse lves , the P IC, wou ld invo ice us in accordance w i th the

t ransac t ion documents . Never the less , I asked Mr Ke lso to enqu i re f rom

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Mr Monga lo a t the PIC whether there were any changes to the

cont rac tua l a r rangements tha t were be ing contemp la te . Mr M onga lo d id

respond in an emai l , he conf i rme d, and I quote ;

“The PIC, on beha l f o f the GEPF, w i l l i nvo ice the bor rower, in

other words SA Home Loans and any ar rangement made

between the PIC and th i rd par t ies on the fee shar ing

ar rangement i s ou ts ide the f inanc ing agreement . ”

So he was say ing no chan ge to the f inanc ing agreements , i f there are

any ar rangements to pay a th i rd par ty the PIC wou ld so do . Mr Ke lso

and I were no t to ta l l y comfor tab le w i th th is response, I ind ica ted to h im 10

…[in tervenes ]

MS GILL MARCUS: Sor ry, jus t fo r c la r i ty, so i f you ha d agreed to pay

the invo ice you wou ld have been pay ing a s im i la r – an equa l amount ,

one fo r the P IC in te rms o f i t s .5% tha t you had agreed to as the fee

and then an add i t iona l – so i t wou ld have been 1% payment no t 50

bas is po in ts .

MR KEVIN PENWARDEN: Not a t tha t s tage, Madame Commiss ioner.

Eventua l l y in te rms o f some amendments to the documenta t ion tha t

they pu t fo rward i t cou ld have led to tha t bu t a t th is s tage we had c lear

cont rac tua l a r rangements . In inc luded a payment o f on ly one ha l f a 20

percent . In o ther words ha l f a percent to the GEPF.

MS GILL MARCUS: Ja , tha t I unders tand, i t was a ha l f a percent to the

GEPF but th is p roposa l…

MR KEVIN PENWARDEN: Th is p roposa l we thought was ins tead o f

pay ing the PIC, we shou ld pay …[in tervenes ]

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MS GILL MARCUS: Oh okay, so you thought i t was ins tead o f no t in

add i t ion to a t th is s tage.

MR KEVIN PENWARDEN: Cor rec t , a t tha t s tage, ja . So you know, we

thought we needed to c la r i f y who the th i rd par t ies were tha t the P IC

contempla te shar ing the 45 mi l l i on w i th a nd tha t a t c lose d id come la te r

f rom Mr Monga lo , I dea l w i th tha t ac tua l l y in paragraph 39. I

cor responded a f te r rece iv ing the emai l f rom Mr Monga lo , I

cor responded w i th Mr Maponya ind ica t ing tha t SA Home Loans was

go ing to be b i l led by the PIC in te rms o f con t rac t , tha t ’s what Mr

Monga lo to ld us and hence SA Home Loans wou ld no t pay any th ing to 10

MMI.

“A few days la te r Mr Maponya contac ted me and sa id tha t the

agreements had a m is take in them because they d id no t fu l l y

capture the ac tua l agreement wh ich he had w i th the PIC wh ich

was tha t ra is ing fees o f 1% were due and payab le , ha l f a

percent to the PIC/GEPF but a lso ha l f a percent to MMI . In

ind ica ted to Mr Maponya tha t I had no t knowledge o f th is and

as fa r as I was concerned th is was no t a mis take and th a t SA

Home Loans cou ld on ly adhere to the te rms o f the agreements

tha t had been s igned and wh ich o f course had been tab led and 20

approved by the SA Home Loans board o f d i rec tors . ”

MS GILL MARCUS: In wh ich Mr Maponya and Mr Masekesa were

present and approved those documents .

MR KEVIN PENWARDEN: A t a l l o f those meet ings , Madame

Commiss ioner, yes .

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MS GILL MARCUS: And d id no t ra ise any issue a t tha t t ime.

MR KEVIN PENWARDEN: Not once.

“ I was p laced under immense pressure by Mr Maponya. He

i nd ica ted to me t ha t the mis take was go ing to be f i xed by the

PIC and the SA Home Loans wou ld have to honour the invo ice .

He even asked i f SA Home Loans cou ld prov ide MMI w i th an

SA Home Loans le t te r conf i rm ing tha t we were process ing the

invo ice wh ich wou ld be pa id in du e course . ”

MS GILL MARCUS: Sor ry to in te r rup t you, I jus t want to come back to

the board ques t ion because th is behav iour wou ld have been to ta l 10

unacceptab le fo r a non -execut i ve d i rec tor on the SA Home Loans board

g iven, i f you ’ re bo th s ides o f the equat ion and i t ’s the pressure be ing

put on by a non -execut ive - a t any po in t in t ime d id Mr Maponya

d isc lose to the board th is con f l i c t? Was i t ever ra ised in the board o f

inappropr ia te behav iour by h im as a non -execu t ive d i rec tor in the

func t ion ing o f SA Home L oans?

MR KEVIN PENWARDEN : So Mr Maponya d idn ’ t ra ise i t w i th the board

bu t cer ta in ly a t a la te r s tage a f te rwards I ind ica ted to the board tha t I ’d

been p laced under in to le rab le p ressure and I th ink , you know, the board

agreed th i s was no t su i tab le behav io ur. I need to say though, Madame 20

Commiss ioner, tha t tha t hasn ’ t s topped, the in to le rab le p ressure

because th is i ssue o f the ar rang ing fees has been ongo ing and the

pressure on i t has been ongo ing .

MS GILL MARCUS: Have there been any ac t ion by the board t o the

PIC and in te rms o f them hav ing brought them on as BEE par tner about

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the behav iour on the board and what measures need to be taken g iven

tha t f rom th is ind ica t ion and subsequent tha t Mr Masekesa, who is

there fo r the P IC, as a nonexecut ive d i rec tor h as a lso conduc ted

h imse l f in a par t i cu la r way as we ’ve heard f rom o ther ev idence. Was

th is ra ised w i th the P IC as a mat te r o f concern by the board?

MR KEVIN PENWARDEN: I t was no t ra ised by the board , Madame

Commiss ioner. I do unders tand, however, tha t a s a shareho lder, tha t

Standard Bank have recent ly ra ised such issues w i th the P IC. I ’m not

aware tha t those issues were ra ised dur ing 2016, the t ime per iod tha t

I ’m re fe r r ing to a t th is s tage in my s ta tements , i t ’s a recent th ing tha t 10

I ’ ve become aware o f . Le t me move on then to p rogress th rough the

year, 2016 .

“On the 19 February 2016 I rece ived a phone ca l l f rom another

nonexecut ive d i rec to r, Mr Wel l i ng ton Masekesa. ”

And we ’ve spoken o f , as you know he ’s an employee a t the P IC.

“…and he in fo rmed tha t there had in fac t been wh ich he ca l led

a loose ar rangement o f a 1% ra is ing fee wh ich was to be sp l i t

be tween the GEPF and MMI as sugges ted by Mr Maponya. I

ind ica ted to Mr Masekesa tha t SA Home Loans was no t a par ty

to such an ar rangement and tha t SA Home Loans cou ld on ly 20

comply w i th the cont rac tua l a r rangements in p lace . ”

He d id agree, he agree w i th tha t .

“And he sa id tha t i f any th ing was to change the PIC wou ld

prov ide SA Home Loans w i th what he ca l led a s ide le t te r. ”

That ’s why I ’ ve pu t i t in quota t io ns .

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“ I d id surp r ise me tha t there cou ld be any c la im tha t there was

a such a loose ar rangement as the te rm sheets had been

tab led to the board o f d i rec tors and th is was never ra ised. The

ar rang ing fee , te rms sheets had a lways been ha l f a percent

payab le t o the lender, 1% had never been ment ioned to us .

The nex t event re la t ing to the payment o f the ar rang ing fees

was an emai l f rom Mr Monga lo on the even ing o f the 4 March

2016 and I w i l l quote aga in :

“We have d iscussed the mechan ics o f the ar rang ing fees

payment and have dec ided MMI shou ld invo ice SA Home 10

Loans . Th is wou ld necess i ta te the amendment in the lega l

agreement . We wou ld in th is regard ins t ruc t DM5, those were

a t to rneys , to p repare an addendum which wou ld a l l ow the

ar rang ing fees to be drawn. In th is regard we env isaged

in t roduc ing the to ta l ob l iga t ion concept wh ich wou ld inc lude

the pr inc ipa l amount and the ar rang ing fees wh ich sha l l be

drawn and be repayab le as par t o f the fac i l i t y. ”

In a nu tshe l l he was say ing we were go ing to change the a l rea dy s igned

cont rac ts to dea l w i th a r rang ing fees tha t cou ld then become payab le

i ns tead o f to the GEPF to MMI . That ’s e f fec t i ve ly what he was say ing . 20

“And then proposed addenda to the SAMF. ”

There were two fac i l i t i es so we had two addenda presented to us .

They were rece ived on the a f f idav i t o f the 11 March 2016 and

they d id seek to amend the de f in i t ion o f a r rang ing fees wh ich

we had in our cont rac tua l documents . I t was , i f I may say,

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a larming ly vague w i th no re fe rence to when the ar rang ing fee

was due, to whom the payment wou ld be made and what the

process fo r payment au thor isa t ion wou ld be . A lso i t wasn ’ t

c lear tha t the tha t the prev ious ly exp l i c i t requ i rement to pay

the ar rang ing fees to the GEPF had fa l len away. ”

And th is comes to your po in t , Madame Com miss ioner.

“ In fac t , lega l l y, w i th these addenda tha t had been prov ided to

us , i t looked as i f SA Home Loans wou ld have been compel led

to pay the ar rang ing fees , the fu l l amount o f 45 m i l l i on tw ice ,

once to the GEPF and a second t ime to MMI . ” 10

So tha t was the – i f you looked a t the p roposed word ing changes , tha t

was the e f fec t .

“The addenda had a fu r ther e lement o f d iscomfor t fo r me in

tha t i t cou ld eas i l y be conc luded tha t i t was SA Home Loans

tha t had appo in ted a th i rd par ty, in o ther words MMI , as an

ar ranger to the t ransac t ion to whom fees cou ld be pa id . ”

And tha t c lear ly was no t in accordance w i th the fac ts and the resu l t ing

agreements .

“Fur thermore on the 16 …[ in te rvenes ]

MR EMMANUEL LEDIGA: Jus t a ques t ion . So in te rms o f the fees 20

be ing asked fo r, I mean, the re was no mandate s igned by, you know,

par t ies and a l l tha t , any adv iso ry mandate , o r ig ina t ion mandates and a l l

tha t?

MR KEVIN PENWARDEN: None whatsoever.

MR EMMANUEL LEDIGA: Ja .

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MR KEVIN PENWARDEN: As I ’ ve ind ica ted , we on ly met Mr Maponya

l a te in September 2015. So, no , we abso lu te ly no ar rangements w i th

h im, no cont rac ts , no t serv ices were prov ided, e tce tera .

“On the 16 March Mr Monga lo responded to Mr Ke lso tha t the

or ig ina l agreement env isaged pay ing a fee to the GEPF and

the addenda, ad dendum is spec i f i ca l l y to amend tha t and he

a lso sa id there i s no in ten t ion to i ssue a le t te r au thor is ing

payment . For every d rawdown tha t SA Home Loan. . . ”

And I ’m quot ing .

“ . . .SA Home Loan send to P IC there i s documentary p roo f 10

requ i red in suppor t o f a d rawdown. The PIC wou ld need to

agree w i th the invo ice amount when presented. The ar rang ing

fees invo ice was no t inc luded as par t o f the documentary p roo f

in the cur ren t d ra f t bu t we w i l l now inc lude i t as an amendment

to paragraph 5 .1 . ”

So we in te rpre t t hat as qu i te a lo t o f gobb ledygook , i t d idn ’ t make any

sense to us , you know, we were to ld tha t we cou ld ac tua l l y d rawdown

inc lus ive o f any ar rang ing fee invo ice tha t had been pa id and tha t

wou ld be approved on ly a f te rwards by the PIC.

“So tha t i s what w e were to ld was the ob jec t i ve o f the addenda 20

and in the weeks tha t fo l lowed both Mr Ke lso , my CFO, and the

company secre tary a t tempted most unsuccess fu l l y to ensure

tha t p roposed addenda were c lear and unambiguous .

Eventua l l y on the 6 Apr i l we rece ived f rom the PIC a t to rneys a

document wh ich they descr ibed as an execut ion vers ion o f the

29 MAY 2019 – DAY 42

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addenda to the t ransac t ion documents and they had not

addressed the concerns tha t we had ra ised. So on my

ins t ruc t ion the company secre tary adv ised the PIC a t to rneys

and the PIC tha t the addenda d id no t re f lec t to whom, when or

a t whose ins tance the ar rang ing fees were payab le and

there fore we cou ld no t accept the addenda. ”

MS GILL MARCUS: A t th is po in t in t ime o ther than the PIC lega l you

were s t i l l dea l ing w i th Mr Monga l o?

MR KEVIN PENWARDEN: Yes , we were dea l ing pr imar i l y w i th Mr

Monga lo , in fac t on ly w i th h im a t th is s tage. 10

“ I a lso po in t ou t tha t i f an ob jec t i ve th i rd par ty had to rev iew

these addenda, i f they ’d been executed in tha t fo rm, the

ques t ion wou ld na tura l l y a r ise why SA Home Loans had been

so inept and conc luded such vague agreements and there fo re

the company secre ta r ia t adv ised tha t she cou ld no t tab le the

addenda before the SA Home Loans cont rac ts commi t tee fo r

cons idera t ion . We jus t weren ’ t p repared to ta ke i t fu r ther a t

a l l . We were to ld many t imes tha t the P IC had in fac t had an

ar rangement w i th MMI . ”

MS GILL MARCUS: By who? 20

MR KEVIN PENWARDEN: We l l , Mr Monga lo was one o f those bu t

cer ta in ly We l l ing ton Masekesa in ta lk ing to me and Roy i th Ra jdhar in

ta lk ing to me. So we unders tood even a t board leve l , as I w i l l po in t

ou t , we unders tood tha t there was in fac t an ar rangement be tween the

PIC and MMI . We hadn ’ t seen i t , we d idn ’ t see documenta t ion , bu t they

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cer ta in ly ind ica ted tha t to us .

“So on the bas i s tha t the P IC had th is a r rangement and w ished

fo r i t s a r rang ing fee to be pa id ins tead to MMI and g iven o f

course tha t we d id no t ge t con t rac tua l documents tha t we were

sa t is f ied w i th , the company secre tary sugges ted to them tha t

they may w ish to ava i l th emse lves o f the i r con t rac tua l r igh ts to

cede the ar rang ing fees payab le to i t , to MMI . Th is was

communica ted to the PIC a t to rneys c lear ly s ta t ing tha t th is

was on the abso lu te unders tand ing o f a va l id a r rangement . ”

And o f course a cess ion wou ld then ind ic a te the par t ies concerned. 10

MS GILL MARCUS: Bu t in re la t ion to the comments about Mr Ra jdhar,

Masekesa and Monga lo , i f there had been such a fee o ther than be ing a

loose ar rangement there wou ld have been a document to tha t e f fec t and

we never rece ived a do cument to tha t e f fec t o f such a commi tment to

MMI .

MR KEVIN PENWARDEN: No, we never rece ived i t , Madame

Commiss ioner, I th ink I can po in t ou t tha t i f we were to execute the

cess ion , tha t i s exac t ly what we wou ld have wanted to see and the

board o f SA Home Loans spec i f i ca l l y sa id tha t as we l l .

“So wh i ls t the cess ion eventua l l y a r r i ved we cer ta in ly wou ld 20

not s imp ly have executed i t w i thout mak ing sure tha t we had

the documentary ev idence and proof fo r the requ i rement to

make such payment . ”

MS GILL MARCUS: And such documenta t ion was never p roduced.

MR KEVIN PENWARDEN: No, i t ’s never been produced and I say la te r

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on in fac t tha t Dr Dan in fo rmed me tha t there was no such

documenta t ion bu t tha t was a t a meet ing I had w i th h im in Ju ly 2018 but

a t tha t s tage we cer ta in ly be l ieved tha t there was a va l id a r rangement .

“SA Home Loans management had a l ready in te rna l l y conc luded

tha t be fore any payment cou ld be made, as I ’ ve ind ica ted , i t

would requ i re the approva l o f the board o f d i rec tors and

ra t i f i ca t ion a lso by sha reho lders because such a t ransac t ion

invo lved re la ted par t ies . I con t inued to be p ressured to

coopera te in g iv ing e f fec t to the changes wh ich the PIC had

reques ted . Eventua l l y on the 13 Apr i l 2016 i t was c lear to me 10

tha t th is mat te r cou ld no t be reso lved , no t be tween ourse lves

and the PIC or w i th the PIC ’s a t to rneys and in accordance w i th

our MOI I reques ted the company secre ta ry in wr i t ing to ca l l a

board meet ing o f the board o f d i rec tors o f SA Home Loans to

t ry and sor t th is mat te r ou t wh ich he d id . We fa i l ed to secure

consent to ho ld the board meet ing on shor t no t i ce so i t was

eventua l l y schedu led fo r the 9 May 2016. Before the board

meet ing , however, I rece ived a le t te r da ted the 29 Apr i l s igned

by Dr Dan f rom the PIC and the re fe rence on tha t was Mr

Ra jdhar, nonexecut ive d i rec tor o f SA Home Loans bu t a lso an 20

execut ive head o f the P IC and in te rms o f tha t le t te r SA Home

Loans was no t i f ied o f a cess ion o f the P IC ’s r igh ts and

ob l iga t ions under a par t i cu la r c lause of the Master Loan

Fac i l i t y Agreement . So tha t cess ion or the requ i rement fo r us

to execute tha t cess ion was rece ived on the 29 Apr i l .

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And I do unders tand tha t tha t paperwork i s be fore the Commiss ion , i t

was tab led by Mr S in ton .

“The board meet ing was then he ld on the 9 May 2016. ”

Now unbeknow n to me and cer ta in l y poss ib ly most o f the board un t i l

more recent ly i s tha t Standard Bank had been to v is i t Dr Dan at the P IC

tak ing the cess ion tha t had been sent to me on the 29 Apr i l and

ind ica t ing tha t tha t they cons idered to be i r regu lar and as a d i r ec t

resu l t o f tha t Dr Dan w i thdrew the cess ion bu t a t the t ime o f the board

meet ing on the 9 May we d id no t know o f tha t .

So the board de l ibe ra ted a t length on the concerns ra i sed in 10

my repor t and on the cess ion wh ich had been rece ived and i t

was dur ing tha t meet ing tha t the board was in fo rmed by Mr

Ra jdhar, c lear ly as a resu l t o f tha t S tandard Bank in te rvent ion ,

the board was in fo rmed o f th ree th ings .

F i rs t l y, tha t the cess ion by the PIC o f i t s r igh ts to rece ive the

ar rang ing fees wou ld be w i thdrawn, t ha t the invo ices rendered

by MMI to SA Home Loans shou ld be w i thdrawn, the fund ing

cont rac ts , as we had them, wou ld cont inue w i thout any

amendment , in o ther words a l l those sugges t ions o f addenda

cou ld be sc rapped and f ina l l y, tha t the mat te r o f MMI fees i n 20

respec t o f the fac i l i t i es wou ld be reso lved be tween the PIC

and MMI and thereaf te r, a day la te r, a le t te r was sent to me by

the PIC, aga in s igned by Dr Dan, da ted the 10 May, no t i f y ing

SA Home Loans and o thers tha t the cess ion had been

wi thdrawn. ”

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But I need to po in t ou t , o f course , tha t Mr Maponya sa id a t a la te r

s tage tha t he d id no t accept th is w i thdrawal o f the cess ion as lega l l y i t

cou ldn ’ t s imp ly be w i thdrawn i t was requ i red fo r h im to recede the c la im

back to the PIC.

“A ser ies o f d iscuss ions a t SA Home Loans board happened

thereaf te r dur ing the second ha l f o f 2016, severa l o f them, a t

wh ich the issue o f a r rang ing fees were d iscussed t ime and

aga in and the board o f d i rec tors conc luded tha t…”

And th is i s very impor tan t .

“…i f an agreement ex is ted be tw een MMI and PIC…” 10

That i s inc luded in the minutes o f the d iscuss ion o f the board .

“…i f an agreement ex is ted be tween MMI and PIC and GEPF

then f i r s t l y, the P IC shou ld conf i rm tha t an agreement had

been executed be tween MMI /Mr Maponya and the PIC in te rms

o f wh ich serv ices had been rendered and a fee was due and

spec i f ied the amount o f the fee wh ich was payab le .

And second ly, the t ransac t ions be tween, amongs t o thers , the

company, GEPF, SA Home Loans be re fe r red to the

shareho lders fo r ra t i f i ca t ion by way o f a n ord inary reso lu t ion o f

the shareho lders , fo l low ing the d isc losure by Mr Maponya of 20

h is persona l f inanc ia l in te res t in the con t rac ts , and tha t was

requ i red in te rms o f the Compan ies Ac t . ”

MS JILL MARCUS: Sor ry. I am not qu i te sure i f I unders tand tha t .

Does tha t imp ly in te rms o f be tha t Mr Maponya had then dec la red h is

in te res t?

29 MAY 2019 – DAY 42

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MR KEVIN PENWARDEN: Yes , he on ly dec la red h is in te res ts way

a f te r these events . So he submi t ted h is invo ices to me. He requ i red

payment to be made to MMI and i t was on ly a t a la te r s tage – I th ink i t

was probab ly a t tha t f i r s t board meet ing tha t I ca l led in Apr i l .

In fac t , I am c lear. I t was a t tha t board meet ing in Apr i l . That

was he ld on the 9 t h o f May, I shou ld say. That he , fo r the f i r s t t ime,

dec la red h is in te res ts in cont rac ts .

MS JILL MARCUS: I s tha t in i t se l f , g iven tha t i t i s la te – a v io la t ion o f

the Compan ies Ac t? Or i s i t condoned by the board tha t there was a

la te d isc losure? 10

MR KEVIN PENWARDEN: I t cou ld be condoned. However, what i t d id

requ i re then w as fo r the shareho lders to approve such t ransac t ions ,

because the board had approved those t ransac t ions a t a s tage where

they were unaware o f such a conf l i c t .

MS JILL MARCUS: So , in essence, the shareho lders wou ld ra t i f y tha t

there was a subsequent d isc l osure and i t was s t i l l okay, even i t has no t

been d isc losed a t the t ime?

MR KEVIN PENWARDEN: Indeed so , Madam Commiss ioner.

MS JILL MARCUS: And a t th is po in t in t ime, what was the ro le

be tween MMI or BHC or had BHC d isappeared a l together a t th is po in t? 20

MR KEVIN PENWARDEN: So BCH was the 25% shareho lder, bu t Mr

Maponya represented on these ins tances MMI and h imse l f .

MS JILL MARCUS: Bu t how does he do tha t i f he represent ing BHC

on the board?

MR KEVIN PENWARDEN: We l l , there was a c lear conf l i c t .

29 MAY 2019 – DAY 42

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MS JILL MARCUS: Ja .

MR KEVIN PENWARDEN: So , he was do ing bo th . He cer ta in ly was on

the board a t the ins tance o f the BHC. Our MOI bas ica l l y says tha t fo r

every 12 .5% shareho ld ing tha t shareho lder i s ab le to e lec t o r nominate

a d i rec tor to the board .

MS J ILL MARCUS: Anyone e lse tha t in these in te rac t ions? Was there

anyone e lse f rom e i ther BHC or MMI tha t SA Home Loans in te rac ted

w i th o r was aware o f?

MR KEVIN PENWARDEN: No , i t was Mr Maponya.

MS JILL MARCUS: Ja . 10

MR KEVIN PENWARDEN: So , to d raw an end to the saga. Not qu i te

an end. An end cer ta in to the saga in 2016. Eventua l l y, a le t te r was

rece ived on the 4 t h o f November 2016. We rece ived the le t te r f rom MMI

wh ich adv ised tha t :

“The sess ion fo r the payment o f a r rang ing fees to MMI has

been re turned to the PIC w i th the reques t tha t payment shou ld

no longer be e f fec ted…”

And conf i rm ing tha t :

“The in tended l i t i ga t ion regard ing the sa id payment had been

wi thdrawn and as such, the fac i l i t i es were beyond reproach 20

and cou ld be cont inued w i th ”

So tha t seemed, f rom my perspec t ive , to d raw a l ine under the mat te r.

The board o f d i rec to rs was no t i f ied o f the le t te r and i t was ready to be

recorded by a l l tha t persona l in te res t had a l l fa l l en away…”

So I may come back then to a po in t , Mr Deputy -Commiss ioner

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tha t you ra ised about th is adv isory fee was computed.

“So I have been s t ruck , as I have sa id ear l i e r, by the lack o f

commerc ia l reason ing assoc ia ted w i th the payment based on

the quantum o f the GEPF fund ing l ines . ”

Those fund ing l i nes cou ld have been f r om R 1 b i l l i on to R 20 b i l l i on .

So i t cou ld have been any number.

We had learned f rom Mr Maponya and o thers a t the P IC tha t a

payment was due to MMI on the bas is o f i t s purpor ted invo lvement .

As an adv isor, in the J & P Morgan Equ i t y Transac t ion . The re

i s thus an absence o f log ic in app ly ing a fo rmula to the GEPF fund ing 10

l i nes .

I f MMI was invo lved as purpor ted , the commerc ia l nexus wou ld

be to the purchase pr ice fo r the J & P Morgan shares , wh ich our

numbers re f lec t as R 854 mi l l i on , made up o f R 419 ,7 mi l l i on on beha l f

o f the BHC a f te r the i r B -BBEE pr ice reduc t ion and R 434.7 mi l l i on f rom

the PIC. Thus , R 854 mi l l i on .

A fee then cou ld be computed a t 0 .5% o f R 854 mi l l i on , as

R 4 .27 mi l l i on a fa r c ry f rom R 45 mi l l i on .

So tha t i s someth ing w i th wh ich we a lways grapp led w i th .

Th is lack o f log ic in app ly ing fo r adv iso ry serv ices a fee to 20

fund ing fac i l i t i es…”

MR EMANNUEL LEDIGA: Yes , yes . Which is why I asked the ques t ion

tha t , ac tua l l y, what i s the fee fo r? I s tha t fo r the adv isory o r fo r t he ,

you know, to o r ig ina te the fund ing l ines , you know? And now you can

see tha t there i s so much c lu t te r ing .

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MR KEVIN PENWARDEN: Yes , cor rec t .

MR EMANNUEL LEDIGA: Ja , okay. A l l r igh t .

MR KEVIN PENWARDEN: So , we get back , however, because the

. . . [ in te rvenes ]

MS JILL MARCUS: Sor ry. Jus t on tha t though. You are s t i l l –

whatever the amount i s , i t i s s t i l l c lear tha t , tha t was no t due.

MR KEVIN PENWARDEN: Cor rec t . Not us . No. I t cou ld no t be pa id

by any s t re tch o f the imag ina t ion by SA Home L oans .

“ In March 2017, Mr Maponya verba l l y ment ioned to the company ’s

secre tary tha t the mat te r o f a r rang ing fees was in fac t no t conc luded 10

and tha t he wou ld ra ise i t aga in .

La ter in 2017, SA Home Loans approached the PIC fo r a fu r ther

R 10 b i l l i on in fund i ng to the re levant en t i t ies , and fo r the be t te r par t o f

the 2018 year, we were in regu lar contac t w i th the PIC in th is regard ,

on the unders tand ing tha t some in te rna l approva ls were requ i red…”

The reason why we app l ied fo r a renewal was because o f the

R 9 b i l l i on was a lmost exhaus ted .

MS JILL MARCUS: Can I ask you jus t in re la t ion to the in te rna l

approva ls tha t a re requ i red , because obv ious ly, tha t i s requ i red . Was

th is s t re tch ing o f the t ime very d i f fe ren t f rom when you app l ied fo r the 20

R9 b i l l i on .

MR KEVIN PENWARDEN: As i t tu rned ou t , yes , Madam Commiss ioner

bu t no t in i t ia l l y because we s ta r ted to work on the R 9 b i l l i on

immedia te ly a f te r the equ i t y t ransac t ion wh ich was – we s ta r ted work ing

on i t in Ju ly 2015.

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They then conc luded to do due d i l i genc e, e t ce tera . M ind

you… Sor ry, I jus t need to p roper ly add th is . I t took about s ix months .

This was cer ta in ly tak ing a lo t longer. We app l ied in 2017 and we

expec ted by mid -2018 tha t we wou ld in fac t rece ive such sum approva l .

MS JILL MARCUS: And to da te , you s t i l l have no t rece ived approva l?

MR KEVIN PENWARDEN: No , we have no t .

MS JILL MARCUS: So f rom what da te in 2017?

MR KEVIN PENWARDEN: In December 2017.

MS JILL MARCUS: In December 2017 to mid -2019.

MR KEVIN PENWARDEN: Yes . 10

MS JILL MARCUS: In te rna l p rocesses .

MR KEVIN PENWARDEN: In te rna l p rocesses Ja , so i t has been

th rough lo ts o f ups and downs. There are many s takeho lders . We have

been rece iv ing lo ts o f encourag ing no ises . Lo ts o f pos i t i ve in fo rmat ion

has been fed back to us , i nc lud ing , you know, fa i r l y recent ly, bu t

no th ing has ye t been conc luded on the R 10 b i l l i on renewal .

So we got to ourse lves in to pos i t ion in m id -2017 tha t we may in fac t no t

get renewal . We spoke d i rec t l y… That i s a co l league o f m ine , Mr

Zakene Xh la lene and I v is i ted the GEPF and spoke to a coup le o f the i r

t rus tees . 20

And they have ind ica ted to us tha t in fac t the GEPF might becoming

f rom a pos i t ion o f say ing tha t the R 9 b i l l i on was a once -o f f fac i l i t y.

We l l , i t was news to us bu t they d id pu t i t ac ross us . They d id no t say

tha t was abso lu te ly the case. They sa id tha t was someth ing wh ich they

were cons ider ing and a renewal wou ld be someth ing d i f fe ren t

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a l together.

“On the 26 t h Ju ly 2018, Mr Maponya in fo rmed the board o f d i rec tors o f

SA Home Loans tha t the i ssue o f a r rang ing fees on the in i t ia l fac i l i t i es

back to the R 45 mi l l i on was no t ye t reso lved w i th the PIC and

there fore , i t was in h is in ten t ion to ins t i tu te lega l p roceed ings aga ins t

the P IC in respec t o f the ba lance o f the fees and tha t SA Home Loans

and myse l f , wou ld be c i ted in such l i t i ga t ion , wh ich is now made good

on…”

MR EMANNUEL LEDIGA: Jus t an issue here . I mean, th is th ing is

go ing on and on. I mean, d id th is no t a f fec t the func t ion ing o f the 10

board and the company, the re la t ionsh ips and a l l tha t?

MR KEVIN PENWARDEN: Cer ta in l y i t was an in te rna l focus tha t we

d id no t need. I was the one, however, I was the po in t man on th is . So

I a l lowed my team to con t inue to focuss ing on the opera t iona l

func t ions .

I d id u t i l i se the CFO qu i te ex tens ive ly to ass is t me, bu t I was

the ind iv idua l tha t dea l t w i th a l l o f th is , ra ther than t ry ing to de focus

the SA Home Loans team.

From a board perspec t ive . Ja , our board meets f i ve t imes a

year and I was keep ing the board up to speed, as was Mr Maponya, as I 20

have ment ioned, tha t the i ssue was no t in fac t dead, as we have

thought a t the end o f 2016. I t d id no t a f fec t the func t ion ing o f the

board though.

I know want to move to a d i f fe ren t sec t ion wh ich is to in fac t

add to the R 45 mi l l i on . So, R 45 mi l l i on never d isappeared. I t was a

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cont inuum. I t s t i l l has no t gone away, bu t then an add i t iona l e lement

was added to i t in September 2018. So tha t was an inc ident tha t

occur red in the la te a f te rnoon.

“Fo l low ing a SA Home Loans Board meet ing , I rece ived a

Whatsapp tex t f rom Mr Maponya, reques t ing tha t I ca l l h im

ASAP. H is words .

I had been away f rom my phone fo r some t ime and I f i r s t read

the tex t , bu t be fore I cou ld contac t Mr Maponya, I rece ived a

ca l l f rom my co l league, Mr Zakene D lamin i .

Mr D lamin i adv is ed me tha t he needed urgent ly to ta lk to me 10

and reques ted tha t we meet up soones t .

I obv ious ly agreed and he jo ined myse l f and Mr Ke lso and we

went ou t to d inner.

Mr D lamin i in fo rmed me tha t he had been contac ted by Mr

Maponya, reques t ing a meet ing and tha t he had met up w i th Mr

Maponya and Mr Masekesa a t a res taurant in Ne lson Mande la

Square in Sandton.

The purpose o f the meet ing was to fo rward a p roposa l to

re lease th is fu r ther fund ing l ine o f R 10 b i l l i on tha t we had

app l ied fo r, wh ich SA Home Loans had reques ted , as I say in 20

December 2017, bu t we fa i l ed to secure i t a t tha t s tage.

Mr D lamin i p rov ided an account o f h i s d iscuss ion w i th Mr

Maponya and Mr Masekesa a t g rea t leng th .

On the spec i f i cs o f what was sa id and what was proposed, he

was c lear, he was ca tegor ica l and he was unequ ivoca l .

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Reasser t ing what was sa id a t tha t meet ing many t imes

th roughout the even ing .

Mr D lamin i repor ted to me tha t Mr Maponya and Mr Masekesa

had in fo rmed in – and th is comes in a fo rm o f a s ta tement

wh ich I had f rom Mr D lamin i …

MS JILL MARCUS: Sor ry. I s your . . . [ in te rvenes ]

ADV NKAISENG KHOOE: I jus t . . . [ in te rvenes ]

MS JILL MARCUS: I s your s ta tement under – w i th a Commiss ioner o f

Oaths or an a f f idav i t?

MR KEVIN PENWARDEN: No , i t was jus t a s ta tement tha t he has pu t 10

f o rward a t my reques t a t the t ime wh ich he s igned and not in f ron t o f a

Commiss ioner o f Oaths and no t an a f f idav i t .

ADV NKAISENG KHOOE: Sor ry. Can I . . . [ in te rvenes ]

MS JILL MARCUS: Can we sugges t tha t , tha t be done as an a f f idav i t?

MR KEVIN PENWARDEN: Indeed. I . . . [ in te rvenes ]

MS JILL MARCUS: Mr Dlamin i ’s s ta tement be submi t ted as an

af f idav i t?

MR KEVIN PENWARDEN: Yes . So, Mr D lamin i was cer ta in l y p repared

to pu t i t in a fo rm o f an a f f idav i t . We d id take some lega l adv ice . The

sugges t ion was tha t , tha t was no t necessary, un less i t was requ i red , i t 20

shou ld been done.

But , Madame Commiss ioner, you are ment ion ing tha t you

wou ld l i ke to see i t in a fo rm o f an a f f idav i t and I have no doubt tha t ,

tha t can happen.

CHAIRPERSON: We l l , i f he , h imse l f , i s no t go ing to come and tes t i fy,

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then we wou ld requ i re an a f f idav i t .

ADV NKAISENG KHOOE: Jus t to le t you know, Commiss ioner. That

Mr Dh lamin i was prepar ing a s ta tement to come and tes t i f y as we l l . I t

i s jus t tha t i t came in - a t the t ime l ines tha t w e were g iven to b r ing the

w i tnesses , we cou ld no t b r ing them both a t the same t ime.

MR KEVIN PENWARDEN: So , Madam Commiss ioner, maybe tha t

changes your sugges t ion o f an a f f idav i t , because I do unders tand f rom

the ev idence leaders , they have been in conta c t w i th Mr Dh lamin i and I

unders tand tha t he is go ing to be appear ing be fore the Commiss ion

shor t l y. 10

CHAIRPERSON: Yes , then i t w i l l no t be necessary to hand up the

s ta tement a t th is s tage.

MR KEVIN PENWARDEN: Thank you, Mr Commiss ioner.

“So, these are the th ings wh ich Mr Dh lamin i pu t fo rward to me tha t they

had a d iscuss ion about . Th is i s Mr Maponya and Mr Masekesa.

- They sa id they had a d i scuss ion w i th Dr Dan,

regard ing the payment o f an ar rang ing fee , amount

to 0 .5% on the PIC fund ing l ines to SA Home

Loans .

- That the i ssue o f the absence o f a r rang ing fees 20

was the main reason SA Home Loans had been

unab le to secure such fund ing l ines .

- That Dr Dan was open to suppor t ing the payment

o f the ar rang ing fees , i f a way cou ld be found to

regu lar ise .

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And I have pu t regu lar ise in inver ted commas, because i t was a word

tha t Mr Maponya used. To regu lar ise such fees . That i s desp i te Dr

Dan’s comments to me dur ing a meet ing tha t I had w i th h im in Ju ly

2018.

In wh ich Dr Dan had express ly re jec ted the payment o f

a r rang ing fees to any th i rd par t ies , e i the r on pas t fund ing or any fu tu re

fund ing . I w i l l come back to tha t po in t a l i t t l e la te r on , Mr

Commiss ioner.

“The four th po in t :

- That the SA Home Loans Management Team had to 10

app ly the i r m inds on how to regu lar ise two th ings .

F i rs t l y, the ar rang ing fees fo r the new fund ing l ines , be ing

0 .5% o f the R 10 b i l l i on . In o ther words , R 50 mi l l i on in a r rang ing fees .

And second ly, to enab le the a r rang ing fees tha t had been re jec ted on

the prev ious 2016 fund ing l ines , the R 45 mi l l i on , to a lso be

incorpora ted in to the ar rang ing fee on the new fund ing l ine , by

ad jus t ing the bas is po in t percentage to 0 .95%.

0 .95% of R 10 b i l l i on wou ld g i ve R 95 m i l l i on . In o ther words ,

R 50 mi l l i on p lus the R 45 mi l l i on .

A l l such ar rang ing fees were to be pa id to MMI . 20

That fund ing l ines renewals wh ich were cr i t i ca l fo r SA Home

Loans wou ld no t be success fu l i f the mat te r o f a r rang ing fees is no t

reso lved…”

MR EMANNUEL LEDIGA: Jus t another ques t ion here . I f the – i f say

MMI sa id tha t the y ar ranged the R 10 b i l l i on fund ing fac i l i t y and they

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want a fee , wou ld tha t be proper o r tha t fee wou ld s t i l l go to the GEPF?

MR KEVIN PENWARDEN: I th ink i t wou ld be very improper, Mr

Commiss ioner. I t wou ld be improper, because no work was done.

There was no cont rac t . There was no serv ices .

The in i t ia to r fo r the R 10 b i l l i on fund ing l ine renewal was SA

Home Loans . I t was a de ta i l ed document wh ich we presented. We had

presenta t ions . We had workshops , e t ce tera .

MR EMANNUEL LEDIGA: Oh, yes . Bec ause you were there be fore .

MR KEVIN PENWARDEN: Yes , yes .

MR EMANNUEL LEDIGA: And you sor t o f p resented every th ing there . 10

MR KEVIN PENWARDEN: Yes . So, the on ly poss ib i l i t y o f a fee wou ld

be aga in be to the GEPF, in te rms o f the sor t o f s tandard mark e t

p rac t i ce . Not to any th i rd par ty.

MR EMANNUEL LEDIGA: You d id no t need any th i rd par ty to f ina l i se

th is ac t ion?

MR KEVIN PENWARDEN: Abso lu te l y. We needed no adv isory

serv ices .

MR EMANNUEL LEDIGA: Ja , ja . Okay.

MR KEVIN PENWARDEN: And I m igh t a lso po in t ou t . You know, tha t

i f any o f our d i rec tors , whether they wou ld be Mr Maponya or anybody 20

e lse had connec t ions and cou ld he lp us and ass is t us .

We l l , I wou ld expec ted tha t , tha t i s par t o f the du t ies o f a non -

execut ive d i rec tor to he lp the comp any tha t they are represen t ing , and I

do no t know whether he d id o r he d id no t , bu t I am jus t say ing tha t i f he

d id , tha t wou ld be cer ta in ly be someth ing what I wou ld ca l l , abso lu te l y

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normal .

MS JILL MARCUS: I wou ld agree tha t , tha t i s the respons ib i l i t y. You

are there to p lay a ro le bu t i s there no t a d i f fe ren t ques t ion in re la t ion –

and I am coming back to the cont inued presence on the board o f two

non-execs ac t ing in th is manner.

I s i t no t a ques t ion o f f iduc ia ry du t ies and ins ide in fo rmat ion?

As board member, they wou ld have known tha t you were p lann ing as SA

Home Loans - there are board members to ge t the add i t iona l

R 10 b i l l i on fund ing?

And there fore , tha t i s in fo rmat ion pr iv i leged to them as board 10

members as par t o f the i r du t ies and to u t i l i se t ha t in fo rmat ion to , in

essence, ex tor t . Because tha t i s what i t wou ld look l i ke to me.

I f you do no t pay th is , you are no t go ing to ge t the R 10 b i l l i on .

The du ty o f a board member i s to advance the in te res t o f the company

tha t you a re there represent in g .

And there fore , to pu t i t as an obs tac le , un less there are fees .

How is tha t in te rpre ted by the board and were any s teps taken in

re la t ion to the i r f iduc ia ry du t ies , the e th ics and va lues o f a board

member in re la t ion to th is behav iour?

And aga in , tak ing i t back to the PIC as the sponsor o f the BEE 20

t ransac t ion and br ing ing them on board and Mr Masekesa represent ing

the PIC because, you know, tha t i s the person.

I f one look a t th is , Mr Masekesa ’s behav iour i s on beha l f o f the P IC.

So what was the boa rd ’s response to tha t?

MR KEVIN PENWARDEN: Madam Commiss ioner. So, I mean, the f i r s t

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par t o f your ques t ion . I t cer ta in ly i s a b reach o f the Compan ies Ac t . A

c lear cu t b reach. U t i l i s ing ins ide in fo rmat ion tha t they had to benef i t

themse lves . C lear ly a lso a breach o f f iduc ia ry du t ies and many o ther

th ings .

So , the board i s de l ibera t ing on th is even as we speak . So,

th is i s a more recent event . There are a ser ies o f th ings wh ich led up

to my repor t ing th is to the board f i r s t , wh ich I w i l l dea l w i th in a

moment , and we have now had an emergency board meet ing w i th more

to fo l l ow and these are spec i f i c th ings tha t w i l l be and are be ing

addressed , w i th conc lus ions wh ich a t th i s s tage, I am obv ious ly unab le 10

to pu t fo rward because we have no t go t there .

And the shareho lders as we l l because th is was a mat te r I f i r s t

repor ted to the shareho lders , fo r reasons I w i l l exp la in in a few

moments .

The f ina l po in t , and I am quo t ing a l l o f th is f rom Mr Zak ie ’s

s ta tement . So these are no t my words . These are h is w ords . And the

f ina l po in t tha t he made was :

“That S tandard Bank wou ld suppor t the payment o f a r rang ing

fees the fund ing l ines , i f the i r payment has been regu lar ised…”

So , jus t to be c lear My unders tand ing f rom th is comment 20

which came f rom Mr Maponya and Mr Masekesa, i s no t tha t they had

obta ined conf i rmat ion o f suppor t f rom S tandard Bank , bu t ra ther tha t

they fough t tha t S tandard Bank wou ld suppor t such a payment i f the SA

Home Loans Management Team mot iva ted to regu lar ise i t in some fo rm.

“Mr Dh lamin i c ont inued to in fo rm me tha t they had requ i red cer ta in

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ac t ion i tems and these ac t ion i tems were f i r s t , tha t he , Mr Dh lamin i

in fo rmed me o f the d iscuss ion and tha t the two o f us together exp lo re

so lu t ions fo r regu lar is ing the ar rang ing fees .

That i f necessar y, tha t he and I meet w i th Mr Maponya and Mr

Masekesa to d iscuss the mat te r fu r ther on Thursday, the 6 t h o f

September.

That we deve loped a proposa l bu t on ly share i t w i th Mr

Maponya and Mr Masekesa…”

And I do no t l i ke sec re t i ve th ings . So tha t rea l l y wou ld a lways

have wor r ied me, as ide fo r every th ing e lse in any event . 10

“And i f a l l was in o rder, the p roposa l we wou ld be present ing

to Dr Dan by Mr Masekesa.

The fo l l ow ing day on the 6 t h o f September, I spoke br ie f l y w i th Mr

Masekesa. We were bo th prese nt a t a Hous ing Deve lopment Fund

St ra tegy Workshop.

Mr Masekesa conf i rmed the subs tance o f the meet ing , as

ou t l ined above and in response to a ques t ion f rom me, he d i rec ted tha t

SA Home Loans shou ld no t approach Dr Dan on the mat te r, as he wou ld

persona l l y do so once – o r I shou ld ra ther say – i f a p roposa l to

regu lar ise the fees was rece ived. 20

I want to be c lear. SA Home Loans wou ld never exceed to

such a reques t .

“A mat te r o f concern fo r me, however, was how to respond in a

way tha t wou ld min imise the n egat ive reac t ion f rom Mr

Maponya, g iven my pas t exper ience on such mat te rs and the

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pressure b rought to bed dur ing 2016.

I repor ted the inc ident as soon as I cou ld to the company ’s secre tary,

which was on Monday, the 10 t h o f September. I t wou ld cer ta in ly h ave

been ear l i e r, bu t she was on annua l leave.

The company ’s sec re tary ’s adv ice was – and I knew i t o f

course tha t th is was a ser ious inc ident and requ i red repor t ing

– tha t the board o f d i rec tors shou ld be in fo rmed and tha t lega l

adv ise shou ld be sought on the repor t ing ob l iga t ions , wh ich

she be l ieved had ar isen. I , o f course , agreed w i th a l l o f tha t .

On the 20 t h o f September – so jus t tak ing the mat te r a l i t t l e b i t fo rward 10

on how we cou ld respond to Mr Maponya – a t my reques t , fo l l ow ing

var ious d iscuss ion s be tween myse l f , Mr Ke lso , whom I b rought in on

th is and Mr Domin ium on how bes t to answer – Mr Dh lamin i i n fo rmed Mr

Maponya te lephon ica l l y, tha t we had g iven the mat te r due

cons idera t ion , bu t tha t we cou ld no t imp lement h is p roposa l , as we

were unab le to ident i f y a commerc ia l l y jus t i f iab le reason fo r the

payment o f a r rang ing fees , tha t wou ld pass the sc ru t iny o f our board ,

our shareho lders , the aud i to rs and any o ther s takeho lders .

That was our de l i ca te way o f say ing no .

Hav ing d iscussed w i th the compan y ’s secre tary the repor t ing 20

ob l iga t ions , wh ich inc luded repor t ing the mat te r to the board , i t was my

determinat ion tha t the be t te r immedia te channe l o f repor t ing was to the

shareho lders .

Th is i s no t a re f lec t ion on the board , bu t i t i s a d i rec t

consequence o f our memorandum of incorpora t ion wh ich requ i res to ta l

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unan imi ty amongs t the shareho lder appo in ted non -execut ive d i rec tors

on any mater ia l dec is ions or reso lu t ions .

That i s what i s requ i red .

There was a lso . . . [ in te rvenes ]…”

MS JILL MARCUS: Was the ques t ion there…? Wel l , ac tua l l y you

d id…

MR KEVIN PENWARDEN: Ja .

“There i s a lso c lear conf l i c t , g iven the invo lvement o f the two

non-execu t ive d i rec tors . So, in my v iew, these two ind iv idua ls

cou ld no t ac t as the i r own prosecutor, de fence, judge and j u ry. 10

I be l i eve tha t on ly the shareho lders can convene.

I be l ieve tha t s t i l l . Can convene the appropr ia te fo rum to

d iscuss the inc ident , p rov ide the non -execut ive d i rec tors w i th the r igh t

to respond and take the appropr ia te ac t ion .

So the fo l low ing s te ps were taken.

F i rs t l y, Mr Dh lamin i was reques ted a document o f the

d iscuss ions o f the meet ing and he d id so .

I b r ie fed the cha i rman o f our Aud i t R isk and Compl iance

Commi t tee .

I sought a meet ing w i th the S tandard Bank Group shareho lder 20

representa t i ve .

S tandard Bank a t th is s tage were the on ly shareho lder tha t

had no t a re la ted par ty a t the d iscuss ions .

That meet ing was subsequent ly he ld on the 12 t h o f November

and present a t tha t meet ing was Ian S in ton , the Cha i rman o f our Aud i t

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Risk and Compl iance Commi t tee , the company ’s secre tary and myse l f .

We br ie fed sen ior counse l , reques t ing lega l adv ise on vary ing p ieces o f

leg is la t ion ob l iga t ions and I , o f course , reques ted Mr Dh lamin i to pu t

th is in to a s ta tement wh ich he d id .

A t tha t meet ing w i th the cha i rman o f Arc wh ich I was ab le to

have w i th me on the 29 t h o f Oc tober, I b r ie fed h im in fu l l and I

exp la ined why I be l ieved tha t th is was no t a mat te r wh ich cou ld be

reso lved by the SA Home Loans Board , g iven the cons t ruc t o f our MOI

wh ich requ i res board res o lu t ion to be suppor t by a l l o f them, and tha t i t

shou ld there fore be repor ted to the shareho lders , as contempla ted in 10

our MOI , and as I sa id , I d id tha t w i th Mr S in ton and o thers on the 12 t h

o f November.

So, jus t to compl ica te mat te rs even fu r ther. Towa rds the end

o f Oc tober 2018, the new CFO, Mr Mat thew Much and I were asked by

our ex terna l aud i to rs , De lo i t te , to answer a ques t ion on whether any

event o f any na ture had occur red in the bus iness wh ich caused us to be

uncomfor tab le .

C lear ly, I was uncomfo r tab le .

I gave a b r ie f verba l synopses o f the inc ident to De lo i t te and

the nex t day they in fo rmed me and the CFO tha t they may need to 20

abandoned the aud i t , un less appropr ia te ac t ion cou ld be

demonst ra ted…”

They d id no t jus t s imp ly say tha t . They obv io us ly pu t

reason ing beh ind i t . They were uncomfor tab le , no t necessar i l y w i th

th is as a spec i f i c inc ident , bu t compounded by what had happened in

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2016, where an env i ronment where non -execu t ive d i rec tors were

p lac ing such pressure on management and tha t i s w hat they were

concerned about and they were concerned about cont inu ing w i th an

aud i t under those sor ts o f c i rcumstances .

I in fo rmed them tha t I was to repor t th is to the shareho lders

and ob ta in lega l adv ice and they remain on the i r aud i t a t the s tage.

Wh i le these ta lks were happen ing – so another in te rvent ion – in

Oc tober 2018, SA Home Loans was reques ted by Mr Maponya to ass is t

in suppor t ing and mot iva t ing payment o f the R 45 m i l l i on ar rang ing fees

by the PIC to h im, in respec t o f the or ig ina l mas ter fac i l i t y 10

agreement…”

So , th is R 45 mi l l i on came back .

“On the 7 t h o f November 2018, jus t a few minutes be fore SA

Home Loans ’ Board meet ing , Mr Maponya reques ted o f the

company secre tary tha t h is reques t be p laced on the agenda

fo r d iscuss ion by the board .

The mat te r was ra ised fo r d iscuss ion as fo l lows :

“Management has rece ived a reques t f rom – d i rec t to Mr

Maponya in respec t o f the GEPF fac i l i t i es wh ich were gran ted

in 2016 to reopen the issues o f ra i s ing fees on these 20

t ransac t ions and fo r management to ass i s t h im to the ex ten t

permiss ib le and poss ib le w i th h is mot iva t ion to the PIC in th i s

regard…”

The ou tcome o f the d iscuss ion o f the board meet ing was tha t the mat te r

had been cons idered in de ta i l p rev ious ly.

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That there was no new in fo rmat ion wh ich needed to be cons idered and

there fore there was no reason fo r the mat te r to be reopened.

Management was mandated to respond to the le t te r we

rece ived we MMI , wh ich o f course we d id…”

So , ge t t ing back now a f te r those in te r ludes to the 5 t h o f

September inc ident .

“A f te r meet ing w i th S tandard Bank as shareho lder

representa t i ve , I p lanned a lso to meet w i th Dr Dan in i t s

capac i t y as the PIC shareho lder now or as a shareho lder

representa t i ve and to in fo rm h im o f the inc ident in exac t ly the 10

same way I had taken i t to S tan dard Bank .

However, he le f t the employ o f the P IC on 23 November be fo re

I cou ld do so .

I d id no t in tend to check w i th Dr Dan whether he had authored

or was beh ind the reques t fo r the payment o f a r rang ing fees on

the new fac i l i t i es fo r two reasons .

The f i r s t reason is tha t I had met w i th Dr Dan as recent ly as

Ju ly 2018, shor t l y be fore the inc ident in ques t ion , where Mr

Masekesa was a lso present , where Dr Dan had round ly

re jec ted the payment o f fees on GEPF fac i l i t i es to any th i rd 20

par t ies . Not fo r the pas t n o t the fu tu re .

He was abundant ly c lear on th i s po in t wh ich led me to be l ieve

tha t h is name had l i ke ly been brough t in as par t o f th i s

concoc ted proposa l .

I had ra ised the issues o f fees w i th Dr Dan in Ju ly, to le t h im

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know tha t Mr Maponya was th rea ten ing l ega l ac t ion on the

R 45 mi l l i on ar rang ing fees .

Dr Dan was v igorous in h i s response and a t tha t s tage he to ld

me tha t Mr Maponya /MMI had not de l i ve red any serv ices and

tha t there was no cont rac t and tha t I shou ld go back to Mr

Maponya and te l l h im to “b r in g i t on” .

Those were Dr Dan ’s words…”

So I had no reason to ask Dr Dan whether o r no t he au thored th is . He

a l ready c lear ly to ld me tha t he was no t go ing to be par t ied to those

sor ts o f th ings…” 10

MS JILL MARCUS: Can I ask whether Mr Masekesa was present

dur ing tha t d iscuss ion?

MR KEVIN PENWARDEN: He was p resent dur ing tha t d iscuss ion ,

Madam Commiss ioner.

MS JILL MARCUS: And d id you ever ques t ion h im as a non -execut ive

d i rec tor be ing the Ch ie f o f S ta f f in Dr Mat j i l a ’s o f f i ce , how he cou ld

have a v iew so d i f fe ren t f rom what h is CEO was say ing?

MR KEVIN PENWARDEN: Wel l , I d id no t d iscuss th is par t i cu la r

inc ident w i th h im, because he was invo lved, Madam Commiss ioner. So,

no I have no t addressed tha t w i th Mr Masekesa. 20

“The second reason why I was no t go i ng to ta l k to Dr Dan

about the proposa l , was tha t I had re jec ted the proposa l ou t o f

hand.

No mat te r who may have been invo lved and I d id no t need

conf i rmat ion or den ia l f rom any par t ies o f the i r invo lvement . I t

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was never go ing to happen.

My des i re to speak to Dr Dan was on ly in h is capac i t y as a

shareho lder representa t i ve…”

Fo l low ing the meet ing w i th the representa t i ve shareho lder

S tandard Bank and my feedback to them tha t I have been unab le to

contac t Doc tor Dan . And fu r thermore tha t I was unc lear t o whom I

cou ld repor t the mat te r a t the P IC, they were in some d isar ray a t tha t

s tage, boards a l l res ign ing e tce tera . And tha t S tandard Bank wou ld

l i ke ly have contac ts a t P IC board leve l wh ich I d id no t have. I be l i eved

tha t the mat te r wou ld in shor t t im e be reso lved a t shareho lder leve l 10

which was as I ' ve ind ica ted ear l ie r the on ly poss ib le fo rum to reach

reso lu t ion . We even tua l l y rece ived the necessary lega l op in ions f rom a

sen ior counc i l wh ich adv ised on our requ i red course o f ac t ion and

fo l low ing th is I ' ve prepared fu l l y to repor t the mat te r to the aud i to rs ,

our aud i t r i sk and compl iance commi t tee and the board o f SA Home

Loans a l l o f wh ich I have done. I can add Mr Commiss ioner tha t I ' ve

supp l ied a l l o f those lega l op in ions to the Commiss ion . So I p roduced

f i ve o f them because we got d isc ree t op in ions on every b i t o f

leg is la t ion . The board o f SA Home Loans met . . . [ in te rvent ion ]

MS GILL MARCUS: Sor ry, jus t in re la t ion to tab l ing a t the board . I 'm 20

assuming tha t bo th Non Execu t ive D i rec tors in th is m at te r were present

a t those board meet ing .

MR KEVIN PENWARDEN: They indeed were .

MS GILL MARCUS: And I 'm assuming tha t you may or may not be ab le

to te l l us what the i r reac t ion was to a l l o f th is?

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MR KEVIN PENWARDEN: I th ink I 'm ab le to te l l Madam Commi ss ioner.

So v igorous I guess rebut ta l and den ia l . One o f the D i rec tors

concerned accused me o f l y ing , accused me o f mak ing up the en t i re

event and au thor ing i t o f pu t t ing pressure on Mr Zakhen i D lamin i to

s ign th is document . Wh ich I had au thored and put t ing h is name beh ind

i t and o ther th ings l i ke tha t . The second D i rec to r was no t qu i te as

v igorous in tha t sor t o f rebut ta l ind ica ted tha t the meet ing d id happen

but he was en t i t led to the fees . That ' s e f fec t i ve ly, i t was a long board

meet ing and I dea l w i th tha t in my nex t po in t . The D i rec tors concerned

were to p resent the i r s ta tements o f response. The inc iden t and any 10

ac t ions f low ing there f rom were no t reso lved. Ins tead the board agreed

to l ibera te on and aga in shor t l y a f te r the conc lus ion o f cer ta in

regu lar i t y aspec ts p r imar i l y re la t ing to the aud i to rs and the approva l o f

the annua l f inanc ia l s ta tement , so fu r ther board meet ings or a t leas t

one fu r ther board meet ing needs to be he ld . So tha t i s the feedback

tha t I can g ive . My f ina l po in t i s tha t t h is i nc ident in September

t r iggered my corpora te governance f iduc ia ry du t ies and repor t ing

ob l iga t ions . I t wasn ' t a persona l cho ice , these are ob l iga t ions in law by

wh ich I have ab ided tha t and on ly tha t has been the subs tance on the

repor t ing to a l l the par t ies concerned. 20

ADV NKAISENG KHOOE: Las t week Mr Ian S in ton had tes t i f ied tha t

th is mat te r was repor ted to the Hawks . Do you have a case number

and on wh ich da te you repor ted the and who d id you repor t?

MR KEVIN PENWARDEN: Yes , I repor ted the mat te r to the Hawks the

D i rec tora te fo r Pr io r i t y Cr ime Inves t iga t ion . I repor ted the mat te r on

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the 2nd o f Apr i l . I sen t a de ta i l ed repor t to them in te rms o f the

Cor rup t ion Watch l ine or the ac tua l fo rmal s i te . So tha t was sent on

the 2nd o f Apr i l and I do n ow have a response f rom the DPCI and a

case number.

MS GILL MARCUS: What was the response?

MR KEVIN PENWARDEN: The response was acknowledg ing tha t I have

repor ted th is in te rms o f Sec t ion 34 o f PRECCA and adv is ing me o f a

spec i f i c un ique case number.

MS GILL MARCUS: Sor ry, Sec t ion 44?

MR KEVIN PENWARDEN: Sec t ion 34 o f PRECCA, the Prevent ion and 10

Combat ing o f Cor rup t Ac t iv i t ies Act .

MR EMMANUEL LEDIGA: PCCA because Mr S in ton sa id the break ing

o f the law or the purpor ted break ing o f the law was the PC CA not the

PRECCA.

MR KEVIN PENWARDEN: I 'm no t sure tha t I unders tand the PCCA.

MR EMMANUEL LEDIGA: The Prevent ion PCCA. . . [ in te rvent ion ]

MR KEVIN PENWARDEN: Yes , no tha t i s de f in i te l y - we ' re ta lk ing abou t

the same th ing . I ca l l i t PRECCA, tha t ' s the P revent ion and Combat ing

o f Cor rup t Act iv i t ies Ac t . Yes , PCCA is one way o f ca l l i ng i t , I ca l l i t P -

R-E-C-C-A PRECCA. 20

MR EMMANUEL LEDIGA: Okay because judge I th ink there were two

laws. There 's a PRECCA and the PCCA or i s the same th ing . I s i t the

same th ing?

MR KEVIN PENWARDEN: I be l ieve i t ' s the same th ing Mr

Commiss ioner, Sec t ion 34 o f the Cor rup t ion Ac t .

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MR EMMANUEL LEDIGA: I t ' s the same th ing . Okay a l r igh t .

ADV NKAISENG KHOOE: One las t ques t ion . There 's an in te rna l

document f rom the PIC wh ich w as added as an add i t iona l annexure to

Mr S in ton s ta tement las t week . Which I 'd asked h im to read las t week

and I 'm go ing to read i t to you and i t ' s ca l led the Appra isa l Repor t f rom

the PIC. And accord ing to the pro jec t descr ip t ion , Namasec (P ty ) ta BH

Consor t ium approached PIC to jo in t l y acqu i re JP Morgan 's 50%

shareho ld ing in SA Home Loan inves tment ho ld ings . P IC w i l l acqu i re

d i rec t 25% equ i ty s take in SA Home Loans fo r 469 mi l l i on and f inance

the BH Consor t ium to acqu i re 25% shareho ld ing fo r 469 mi l l i o n . And 10

th is document was s igned by Doc tor Mat j i l a and Roy i th Ra jdhar on the

1s t November 2013. What i s your comment a f te r a l l you 've shared, th is

i s the document tha t was tab led in the PIC and by the looks o f th ings

BHS was the or ig ina tor o f the t ransac t ion?

MR KEVIN PENWARDEN: So my s ta tement has shown is tha t I do no t

agree tha t tha t i s fac tua l l y cor rec t . I can go back to 2012 and the

presenta t ions where ourse lves in consu l t w i th JP Morgan made the f i r s t

over tu res to Doc to r Dan and the PIC. I have ta b led the ac tua l

p resenta t ions , the ra t iona l , the fu r ther documents tha t we ac tua l l y

deve loped at the reques t o f Doc tor Dan wh ich demonst ra tes tha t we 20

were the o r ig ina tors o f th is t ransac t ion . So I cannot agree tha t tha t i s

cor rec t . What I have sa id ear l i e r on is tha t we put our documents

together and had our d iscuss ions f rom June 2012 to September 2012 .

And the nex t t ime we got invo lved as ide f rom hear ing f rom JP Morgan

tha t the P IC remained in te res ted , was in June 2013 when NDA's was

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s igned. So we don ' t know what happened as I ' ve sa id ear l ie r in tha t

in te rven ing t ime and i t ' s qu i te poss ib le tha t MMI s t roke the BHC i t s Mr

Maponya were invo lved. But I am c lear tha t f rom the f i r s t approach to

Doc tor Dan and in te rms o f the presenta t ions tha t we put fo rwa rd i t was

SA Home Loans , our ideas p i t ched a lso by JP Morgan. And I can a lso

po in t ou t as I sa id ear l ie r tha t the f ina l dea l resembled exac t ly what we

had presented in 2012.

ADV NKAISENG KHOOE: I don ' t have any o ther ques t ions ,

Commiss ioner.

MR EMMANUEL LEDIGA: Jus t two ques t ions to fo l low up. Where were 10

you read ing f rom what you 've jus t read?

ADV NKAISENG KHOOE: I t ' s the Appra isa l Repor t tha t was submi t ted

as an add i t iona l annexure to Mr S in ton 's s ta tement las t week .

MR EMMANUEL LEDIGA: Yes , okay. We d id ge t i t? We d id . The

ques t ion i s th is i s tha t i f the P IC had an ar rangement w i th the o ther

g roup, I th ink i t s BCH or the MMI group. Wou ldn ' t tha t be a payment

separa te f rom the fee to ra ise the fund in l ines wh ich goes to the

GEPF? Wouldn ' t th i s b e two separa te payments , two separa te i ssues?

MR KEVIN PENWARDEN: Yes to ta l l y, s i r. That wou ld cer ta in ly be our

v iew. Tha t as we d iscussed ear l ie r wou ld be around adv isory t ype fees , 20

adv isory fees are de termined in a d i f fe ren t way bu t to ta l l y separa te

f rom the fund ing ar rangements .

MR EMMANUEL LEDIGA: Yes and the ques t ion i s tha t i f there a re

such fees , who adv ised who? Sor t o f who adv ised wh ich company and

was there mandate? And what charges were they? And because you

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ment ion tha t even i f you ca lcu l a te the fee i t ' s abou t 4 .2 mi l l i on i f there

was adv isory fee fo r the t ransac t ion i t se l f . I sn ' t i t , am I cor rec t?

MR KEVIN PENWARDEN: Yes . I 'm sugges t ing tha t tha t cou ld be

another mechan ism fo r de term in ing i t 50 bas is po in ts on the va lue o f

the share t r ansac t ion . Yes .

MR EMMANUEL LEDIGA: Yes . Advocate Khooe was there a bas is

po in t fee on tha t par t i cu la r repor t? Was there some pr ic ing fo r tha t

t ransac t ion? Or i t was jus t say they w i l l pay a fee? Sure ly there must

be some k ind o f bas is po in ts w i l l be 1%.

ADV NKAISENG KHOOE: We ' l l ge t back to you jus t now. 10

MR EMMANUEL LEDIGA: Yeah. Okay a l r igh t .

MR KEVIN PENWARDEN: I do make the po in t i f I may Mr

Commiss ioner tha t what has jus t been read ou t i s very much a t odds

w i th what Doc tor Dan to ld me when I met up w i th h im in Ju ly 2018. And

he was c lear and unambiguous , he sa id there were no cont rac t , the re

was no cont rac t be tween the PIC and Mr Maponya s t roke MMI and tha t

no serv i ces had been rendered. So I 'm in te res ted to hear tha t because

he s igned tha t document as we l l . And tha t i s very much a 180 degree

oppos i te what he to ld me wh ich is there were no such th ings , no

cont rac ts , no serv ices , no fees due. 20

ADV NKAISENG KHOOE: Commiss ioner, can we p rov ide the

Commiss ion w i th the in fo rmat ion la te r on when w e go th rough the lega l

documents and a l l tha t was s igned? Thank you.

MR EMMANUEL LEDIGA: Sure , no i t ' s f ine . And then the f ina l

ques t ion f rom me is on the 10 b i l l i on rand fund ing l ines . You sa id tha t

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the P IC sa id tha t the GEPF is no longer - doesn ' t wan t to par t i c ipa te in

a second l ine or you sa id tha t the t rus tees sa id tha t . I jus t want t o

because we need to check th is w i th the GEPF. What i s your po in t on

tha t i ssue, on the 10 b i l l i on?

MR KEVIN PENWARDEN: S i r, we 've been th rough d i f fe ren t s tages on

th is one. So a t one s tage deep in to 2018 once our fund ing renewals

hadn ' t happened. Mr D lamin i and I met up w i th the GEPF a t the i r

o f f i ces w i th two o f the i r t rus tees where we d id our own p i t ch t ry ing to

es tab l i sh i f there were any concerns tha t they had i n te rms o f the

renewal o f the fund ing l ines . I t was a t tha t meet ing tha t i t was 10

sugges ted to us by the two t rus tees concerned tha t there had been th is

thought tha t the 9 b i l l i on g i ven to us in 2016 was in fac t a once o f f .

Now tha t has been rev ised s ince then wh i ls t we haven ' t met up d i rec t l y

w i th the GEPF t rus tees . We have in fo rmat ion coming to us f rom a l l the

vary ing s takeho lder ou t f rom the DPSA, The Government Employee

Hous ing Scheme wi th in the PIC e tce tera i t se l f tha t they have rev ised

tha t v iew and are very much keen fo r the renewal , the 10 b i l l i on

renewal . So we 've been fed a lo t o f pos i t i ve in fo rmat ion subsequent to t

tha t o r ig ina l meet ing w i th the GEPF.

MR EMMANUEL LEDIGA: Yes . Because we do have the concern i s 20

tha t peop le need houses and i f the y can be funded then i t needs to

move on.

MR KEVIN PENWARDEN: Yes , we are us ing a l te rna t ive fund ing l ines .

We ' re very d ivers i f ied in te rms of our fund ing , i t ' s no t an abso lu te need

fo r us . We are s t i l l g ran t ing home loans to government employee

29 MAY 2019 – DAY 42

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pens ion fund members bu t u t i l i s ing o ther fac i l i t i es . I t ' s a l l together

eas ie r fo r the fund ing l ine to come f rom the GEPF where we can have a

bespoke produc t de termined by ourse lves in con junc t ion w i th them.

Not necessar i l y someth ing wh ich f i t s in to the sor t o f f und ing suppor t

tha t we ge t f rom our o ther inves tors a d i f fe ren t t ype o f p roduc t . Bu t we

are s t i l l se rv ic ing them Mr Commiss ioner.

MS GILL MARCUS: One wou ld assume tha t i t wou ld have a pr ic ing

d i f fe rence i f you go t i t d i rec t l y f rom the GEPF fo r your loans ?

MR KEVIN PENWARDEN: The answer i s we hope so .

MS GILL MARCUS: I t wou ld be . And second ly when d id th is meet ing 10

take p lace w i th the two t rus tees?

MR KEVIN PENWARDEN: I need to ge t back to you Madam

Commiss ioner. I th ink i t was probab ly a round Augus t b u t I w i l l ge t back

to you on tha t .

MS GILL MARCUS: Las t year?

MR KEVIN PENWARDEN: Yes , las t year.

MS GILL MARCUS: So tha t ' s near ly a year ago?

MR KEVIN PENWARDEN: Yes . I w i l l ge t back to you on tha t .

CHAIRPERSON: I s tha t the ev idence fo r the day?

ADV NKAISENG KHOOE: Sor ry, tha t i s the ev idence fo r the day Mr 20

Commiss ioner.

CHAIRPERSON: Mr Penwarden, i t ' s le f t fo r us to say to you thank you

so much fo r your t ime. Thank you fo r be ing prepared to come and

tes t i f y be fore us . Cer ta in l y you 've g iven us q u i te a b i t o f in fo rmat ion

and we ' re g ra te fu l fo r tha t .

29 MAY 2019 – DAY 42

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CHAIRPERSON: S ince there i s fu r ther in fo rmat ion tha t i s requ i red i t

may we l l be tha t you wou ld be requ i red to come aga in and I hope you ' l l

ava i l your se l f aga in i f tha t happens .

MR KEVIN PENWARDEN: I w i l l i ndeed do so , Mr Commiss ioner.

CHAIRPERSON: Thank you very much. You ' re excused.


CHAIRPERSON: What ' s the pos i t ion?

ADV JANNIE LUBBE SC: Mr Commiss ioner tha t i s the bus iness fo r the

day. As exp la ined to the Commiss ion ear l ie r th is morn ing a t a meet ing 10

wi th the Commiss ion . The inves t iga t ing teams are in need o f a b reak

because o f the vo lume o f work and o ther reasons tha t I don ' t have to

go in to de t a i l a t th is moment . And we reques t an ad journment o f the

Commiss ion t i l l t he 18 th o f June, when hopefu l l y we ' l l be ready then to

p recede p resent ing ev idence a t the Commiss ion bu t fo r now we need

t ime.

CHAIRPERSON: I d id tha t on purpose to ge t you on your fee t so tha t

the pub l i c may hear i t d i rec t l y f rom you. We [ inaud ib le exceed] to the

reques t and we sha l l then ad journ un t i l Tuesday, the 18 th o f June.

ADV JANNIE LUBBE SC: I t i s g rea t ly apprec ia ted , thank you Mr 20

Commiss ioner.

MS GILL MARCUS: Jus t fo r t he sake o f c la r i t y advocate Lubbe i t ' s a

ques t ion tha t we ' re hav ing no hear ings dur ing tha t per iod . They are no t

on break , they are do ing work prepar ing the documenta t ion and do ing

the i r inves t iga t ions . A break cou ld be mis in te rpre ted .

29 MAY 2019 – DAY 42

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ADV JANNIE LUBBE SC: Thank you very much fo r tha t [ inaud ib le ] Mr

Commiss ioner. The lega l and fo rens ic teams wi l l be go ing a t 150% to

be ready on the 18 th o f June. There 's no break fo r us . Thank you very

much.

CHAIRPERSON: On tha t no te we sha l l then ad journ .

INQUIRY ADJOURNS TO 18 JUNE 2019

10

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