Controversy surrounding Ayo Technology, the company that has been at the centre of alleged governance failures being investigated at the commission of inquiry into the Public Investment Corporation (PIC), took a new twist on Monday with allegations of bribery and doctored financial statements.
Kevin Hardy, a former head of British Telecom SA who Iqbal Survé recruited to run the technology business, told the Mpati commission on Monday that the owner of Independent Media Group had offered him a bribe to prevent his resignation from the company.
That followed testimony from Ayo’s former chief investment officer, Siphiwe Nodwele, that the company had exaggerated its value at the time when it was seeking an investment from the PIC and had given the market misleading information on its revenue prospects.
Hardy and Nodwele quit in August 2018, joining four other executives who left that week, saying the company’s leadership had failed to address their governance concerns.
The PIC’s decision in December 2017 to buy 29% of Ayo at a price that valued the company at almost R15bn was considered suspicious because in the months before financial statements had shown Ayo as having assets of just R292m and a book value of R67m. Since then the shares have traded far below that valuation and were at a record low on Monday, valuing the company at R4.8bn.
Hardy testified on Monday that he had met Survé in Johannesburg on August 16 2018 after he had told an executive at Survé’s African Equity Empowerment Investments (AEEI) that he wanted to resign from Ayo.
"He proceeded to offer that he would move my family to an all expenses paid waterfront apartment in Cape Town. All our expenses would be covered, including school fees, a chauffeur at our beck and call, etc," the former CEO said.
"I respectfully declined the offer, which was an outright bribe, and said that I would not be able to convince my wife to move to Cape Town and that she wanted me to have nothing to do with him."
Survé did not respond to Business Day’s request for comment on Monday.
Hardy described how the relationship broke down in less than a year following the persistent interference by Survé and other executives from AEEI. He was told that Ayo was a family business and he needed to understand that Survé "made all the decisions or was at least consulted on all the decisions and determined the strategy of the group", Hardy said.
The PIC, which manages about R2-trillion, mostly for government employees and pensioners, has vowed to recover its investment in Ayo.
Nodwele told the commission that even a R1bn valuation of Ayo "would have been extreme". A maximum R700m was probably more realistic.
There was "no real intention" by the company to deliver on its pre-listing statement, including its ambitious revenue targets, Nodwele said. "That would be deliberately misleading to the market," he said.
The bid price for Ayo’s stock, which reflects the level at which investors are prepared to buy, was just R1.14. If a single trade goes through at this level, the PIC will have lost 97% of its R4.3bn investment.
Last week, Ayo’s financial statements showed that more than half of its pre-tax profits in the six months to February came from interest earned on the PIC’s funds.
Survé told the commission last week the PIC’s investment in Ayo was "very legitimate".
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