PIC in a pickle over Ghanaian investment
THE Public Investment Corporation (PIC), South Africa’s largest investor, is scratching its head over a nasty boardroom battle at its Nigerian bank investment, Ecobank Transnational.
The PIC’s headache comes a week after FirstRand’s plan to buy the Merchant Bank of Ghana fell flat, underscoring the difficulty that South African firms face doing business on the rest of the continent.
Last year, the PIC bought 20% of Ecobank for $250-million as part of its bid to expand outside South Africa. But a boardroom battle has broken out over debts owed by Ecobank — a matter flagged by Nigeria’s central bank as a major governance concern.
The PIC apparently sent a letter to Ecobank’s board, warning that the bank and its board “may be at risk if the matter is not given the attention and urgency it deserves”.
The root of the dispute stems from a deal in which Ecobank’s Nigerian arm bought assets from Asset Management Corporation of Nigeria a while ago — and Ecobank still apparently owes Amcon 1.2-billion naira (R73-million), according to the Financial Times. Ecobank, however, argues that it reached an agreement with Amcon to settle the debt, so it doesn’t owe that amount.
The Financial Times said that Nigeria’s central bank told Ecobank some weeks ago that chairman Kolapo Lawson had failed to ‘‘make good his promise to pay” what it called “huge outstanding non-performing facilities” owed to Amcon.
The PIC, run by Elias Masilela, is used to being respected and feared by South African boards it has interests in, but it clearly isn’t accorded the same respect outside the country’s borders. In its letter to Ecobank, the PIC also lamented that Lawson failed to keep the board fully informed. While Ecobank’s new CEO, Thierry Tanoh, rebuffed this complaint, the PIC has called for an urgent board meeting to address the matters engulfing Ecobank.
Local analysts expect a shakeup. Daniel Matjila, the PIC’s chief investment officer and an Ecobank board member, said the urgent board meeting was scheduled for
We want the board to discuss this matter so we can understand whether there is a problem
next month. “We want the board to discuss this matter properly so we can understand whether there is a problem. If there is a problem, we need to sort it out. We cannot ignore the letter written by the Central Bank of Nigeria,” he said.
He expects the matter to be “cleared” by the end of August. PIC worries that by not resolving the issue promptly, it may be seen as being in contravention of its good corporate governance policies.
Matjila would not be drawn into discussing whether the PIC will demand a management shake-up at the meeting. He said the remedies for the matter would be “determined by the board”. He declined to comment on whether the PIC had lost confidence in the lender’s leadership.
Ecobank has an ‘‘alliance” with Nedbank to do business on the continent — but Nedbank refused to discuss the matter. Nedbank has an option to buy 20% of Ecobank towards the end of the year, but if these governance issues persist, the South African bank might be loath to take up this option.