Sygnia CEO Queries Costs at Africa’s Biggest Fund Manager

JOHANNESBURGH (Capital Markets in Africa) – Sygnia Ltd. Chief Executive Officer Magda Wierzycka is questioning fees paid by South Africa’s state-owned money manager, citing an unverified document she says details a “sad litany of plunder” at the Public Investment Corp.

The overseer of 2.1 trillion rand ($157 billion) of mostly civil-servant pension funds spent 960 million rand on advisory and transactional costs between 2014 and 2018, Wierzycka said in an opinion piece published Wednesday by Business Day. By her estimate, more than half of the expenses to various financial firms — some of them little-known — were “unnecessary and unwarranted.”

Mergence Group, one of the companies cited in her article, disputed the figures in the memorandum, saying it has been engaging with PIC for weeks in an attempt to get them corrected. Mergence has two units that do work for the Pretoria-based firm, Mergence Africa Capital, a brokerage and advisory business, and Mergence Investment Managers, the company said in an emailed statement.

Mergence — which manages assets worth a combined 43 billion rand and employs 86 people — said it has a 15-year track record and “a respected client base” that includes Sygnia. Its brokerage business earned 36 million rand in derivatives and advisory fees over the four years and not the 110 million rand cited in the article, and were done at market-related rates, Mergence said.

The company believes the figures from both units were “erroneously combined.”

‘State of Paralysis’
Wierzycka said the document was emailed to her and was marked private and confidential. PIC spokesman Sekgoela Sekgoela said he read the article in the Johannesburg-based newspaper and failed to “understand the argument being advanced,” adding that the CEO “seems to have an issue with the fact that some of the companies whose services the PIC procured are unknown to her.”

The allegations follow the resignation of nine directors at Africa’s biggest money manager after claims of misconduct by some board members and questionable investments. While the board has agreed to stay on until new directors are appointed, they said the PIC was in a “state of paralysis” after its executive was hollowed out.

A commission of inquiry that’s probing allegations of impropriety at the institution resumes later this month.

Source: Bloomberg Business News