PIC challenges R411 million award to Acapulco, demands halt to payout pending review

Banele Ginindza

The Public Investment Corporation (PIC) has formally launched court proceedings to review and challenge an arbitration award granted in favour of Acapulco Trade and Investment.

The award ordered the State asset manager to pay more than R411 million in compensation following the collapse of a financing arrangement linked to Lanseria Holdings, the operator of Lanseria International Airport.

In legal correspondence between Werksmans Attorneys, representing the PIC, and Mabotja Attorneys, acting for Acapulco, the PIC has demanded that the disbursement of the arbitration award handed down by a panel in arbitration proceedings in September be halted pending the outcome of the review proceedings.

"We note that pursuant to the arbitration award, our client deposited to your firm's Trust Account, an amount of R411 282 264.44, plus interest," stated Werksman Attorneys.

"In anticipation of the impending review proceedings, we have been instructed to demand, as we hereby do, that the disbursement of the amount of R411 282 264.44, plus interest, held by yourselves in trust on behalf of Acapulco Trade and Invest 164(RF) (Pty) Ltd be halted pending the outcome of the review proceedings."

The dispute stems from a 2017 funding arrangement, in which the PIC advanced R333m to Acapulco to acquire a 25% stake in Lanseria Airport.

Acapulco later defaulted on repayments, resulting in an accumulated debt of about R630m and prompting the PIC to perfect its shareholding in Lanseria Holdings.

However, Acapulco's lawyers Mabotja Attorneys has accused the PIC of acting in a manner that favoured Harith General Partners, alleging that its default was “engineered” to benefit the infrastructure investment firm.

Mabotja Attorneys said they had long held reservations about the PIC’s conduct, claiming it appeared to prioritise Harith’s interests, including in a potential FlySafair-related transaction.

Acapulco also demanded full disclosure from PIC's newly-appointed CEO, Patrick Dlamini, and the PIC board regarding any potential conflicts of interest involving Lanseria Holdings, FlySafair, or Harith.

The company pointed to an alleged celebratory gathering involving Dlamini, Lanseria, and FlySafair executives as evidence of possible impropriety.

"Our client considers that the PIC board’s ethics committee should inquire whether Mr. Dlamini should be required to make disclosure under oath regarding any current or prior commercial relationships with Mr. Tshepo Mahloele, the founder of Harith General Partners," Mabotja Attorneys said.

"Our client has reasonable grounds to believe that the PIC’s recent posture in these matters may be influenced by personal alignments rather than by the best interests of the Government Employees Pension Fund (GEPF)."

The PIC is the entity responsible for investing the GEPF's substantial assets, which exceed R2 trillion, to ensure their growth and the security of member benefits.

The attorneys further demanded that the PIC provide records relating to any offers or proposals by Harith or its affiliates to acquire shares in Lanseria Holdings, its restructuring of the Pan-African Infrastructure Development Fund (PAIDF) into a permanent capital vehicle, and Harith’s potential involvement in FlySafair transactions.

"Recent developments merely reinforce concerns that have long been held. The perfection of the Acapulco shares by the PIC was not a spontaneous development but a culmination of a lengthy process which the PIC participated in as was its obligation per a term sheet duly signed in April 2024,"

"The PIC, should be recorded, entered into this term sheet after deliberations of several governance structures." 

Mabotja Attorneys maintained that the PIC had been forewarned that valuation was not going to be the principal issue at arbitration, but continued nonetheless, in its quest to solve for a specific predetermined number.

"This is readily apparent from the record. That resultant conflict is underscored by the PIC’s unorthodox appointment of PSG Capital—who had advised Harith Infraco in the restructuring—to act as its expert in arbitration. PSG’s subsequent perjury in those proceedings is notable," they said.

PIC chairman, Deputy Finance Minister David Masondo, on Friday told Parliament the entity was considering its options on appealing the arbitration.

"And yes, we have a legal opinion that says the chances for success are dimmed at this stage, but we are still having internal conversations to determine whether there are better prospects for success," Masondo said.

BUSINESS REPORT