PIC Lost $333 Million Through ‘Poor Investment’ in Erin Energy

(Bloomberg) -- The former head of Africa’s largest money manager said the company lost $333 million after a “poor investment” in Erin Energy Corp., accusing the U.S. oil explorer of deliberately withholding information about its prospects ahead of a listing in Johannesburg.

South Africa’s Public Investment Corp. took part in a private placement in what was then known as Camac Energy ahead of the Houston-based company’s secondary listing in 2014, ex-PIC Chief Executive Officer Daniel Matjila told a commission probing allegations of wrongdoing at the fund manager. However, technical problems at a rig and the falling oil price made the business unviable, he said, and Erin filed for bankruptcy last year.

“You cannot get everything right in investments,” Matjila said. While the $333 million is a “fraction” of the 2.1 trillion rand ($152 billion) overseen by the PIC, “it doesn’t mean it’s insignificant,” he added.

Matjila is in his eighth day of testimony to the commission, which is looking into a number of PIC deals that have been flagged as potentially dubious. The money manager is responsible for the bulk of South African civil-servant pension funds.

Jannie Lubbe, the commission’s evidence leader, asked Matjila if he knew that Erin’s founder, Kase Lawal, was a close friend of former South African President Jacob Zuma, who has been linked to numerous allegations of corruption over his nine-year term. Matjila said he’d read about it in newspapers and seen pictures of them together.

Despite the issues with Erin’s rig and the oil price, the PIC guaranteed a $100 million bank loan Erin took from Mauritius Commercial Bank in 2016. When Erin filed for bankruptcy, it had already drawn down $63 million of that. Matjila said the PIC later realized there was a lot Erin didn’t disclose to the investor or the JSE.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Bowker, Pauline Bax

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