State owned company, Transnet, says it intends to sue Futuregrowth Asset Management for damages after it publicly announced last month that it had pulled the plug on lending to state owned enterprises.
South Africa’s largest private fixed-income money manager, cited governance and transparency concerns, which was unsurprisingly met with outcry from the state companies involved.
“We’ve observed recent reports that strongly hint of conflict between branches of South Africa’s government, the possible machinations of patronage networks and a seeming challenge to the National Treasury’s independence,” the group originally said.
The funding suspension applies to Eskom, rail and ports operator Transnet, South African National Roads Agency, the Land Bank of South Africa, the Industrial Development Corporation of South Africa and the Development Bank of Southern Africa.
Futuregrowth has since conceded that its public announcement attracted ‘unanticipated attention’, and led to a range of unfortunate and possibly damaging misinterpretations.
“Notwithstanding a range of good reasons for a speedy dissemination of our view, in light of the fallout we must frankly concede that a more measured approach of direct consultation with each SOE, before contemplating public comment, would have been a fairer process,” it said last week.
Briefing Parliament’s portfolio committee on public enterprises, Transnet CEO, Siyabonga Gamasaid he had written to Futuregrowth calling for an apology.
“We have engaged with Futuregrowth, who have made those utterances, playing I think to the public gallery, instead of engaging us directly and probably also bending client confidentiality matters between a bank or a funder and a client,” said Gama.
“We have engaged with them in writing in terms of indicating that indeed what they said had the ability of moving the market and has had cost implications and we are preparing our statement of claim in terms of that.”
Gama said that Futuregrowth ‘in our lives, is not a very significant player’ – contributing less than 3%.