Controversial R1.5bn Investment Puts Public Investment Corporation in the Spotlight

Public Investment Corporation (PIC) has once again spurred controversy, this time by secretly allocating an additional R1.5 billion of civil servants' pension savings to controversial Houston-based oilman, Kase Lawal. This move, along with earlier investments, sums up to almost R3-billion given to Lawal's business, Camac Energy, causing considerable alarm amidst stakeholders.

Earlier this year, the PIC's first tranche of investment in Camac Energy, under the supervision of the corporation's chief investment officer Daniel Matjila, successfully averted the possible liquidation of the Houston-based company. This second sizeable contribution to the company, despite the PIC's assertions that further funds would only be allocated should Camac tap into new Nigerian oil and show its profitability, is drawing criticism. The timing - the day before national elections - has only heightened concerns over potential political manipulation, particularly given Lawal's well-established political connections in both South Africa and the United States.

The recent unexpected departure of the corporation's chief executive, Elias Masilela, following reported disagreements surrounding the Camac deal, only adds fuel to the fire. Perceptions grow that the public servants' pension savings managed by the PIC are heavily influenced by political considerations rather than primarily being managed in the interest of the contributors.

Indeed, Lawal, as the largest shareholder and chief executive of Camac Energy, is no stranger to controversy with recurrent probe about his business methods. His cordial relationship with the ANC and President Jacob Zuma, in addition to his general tendency for political donations, even calls into question whether such hefty contributions from the PIC may stem from the ANC's need for election funding.

Despite this, Camac Oil remains a risky bet for the corporation. With oil production marginal and its stock listed upon a New York youth exchange, the company's financials are far from reassuring. With the investment continuing to be undervalued, it is yet to be seen whether the gamble will pay off. As for the corporation, the PIC’s reticence to comment further on such 'baseless allegations' against it continues.