PIC: An end to ‘treating billions like smarties’

After a three-week break, the judicial commission probing issues of governance at the Public Investment Corporation (PIC) resumed with a focus on the PIC Amendment Bill that is waiting for President Cyril Ramaphosa’s signature after it was approved by Parliament in February.

The Bill proposes several changes to the PIC Act with the aim of bolstering accountability, transparency and governance at the PIC, which manages over R2 trillion in state worker pensions and has come under scrutiny in recent the years over questionable investments.

The PIC’s listed investments contribute approximately 12.5% to the market capitalisation on the Johannesburg Stock Exchange (JSE) and is the largest investment fund on the continent.

Read: ‘Dr Dan didn’t lead, he ruled over the PIC’

“We don’t think we can allow the PIC to go the route of Eskom – it will be too big to save, and it will pull the entire economy down,” said Matthew Parks, parliamentary co-ordinator for trade union federation Cosatu.

Parks took the commission through the federation’s rationale in supporting the current Bill which he said has received resistance from certain PIC executives who were “beneficiaries of looting” and National Treasury.

The main proposed amendments include the appointment of three union representatives to the board and a formal stipulation that the deputy finance minister or another deputy minister in the economic cluster be appointed as chair of the PIC board.

What a lot I got

Cosatu also sits on the board of trustees of the Government Employment Pension Fund (GEPF), which is the PIC’s biggest client. Parks said the impression they received from the GEPF is that the PIC had failed to meaningfully account to its clients.

“It’s almost difficult to find an explanation of why the PIC has been allowed to run amok with no accountability,” said Parks.

“There was basically almost a ‘Wild West’ type of scenario at the PIC.”

The Bill also requires that all regulations and ministerial directives to the PIC board be tabled in Parliament and that the asset manager declare its listed and unlisted assets to Parliament.

The commission has heard testimony of how individuals with links to executives, directors or politicians received funding that went up to billions of rands without following proper investment and governance processes.

Prior to the break, a PIC executive revealed that the fund manager had no documentary trace of a R4 billion investment it made into an obscure oil company called Erin Energy that was founded by Nigerian businessman Kase Lawal, who was reportedly an ANC donor with links to former president Jacob Zuma.

Parks said the Bill would help to reinforce the checks and balances and reinforce trust in the fund manager, which has been “treating billions like smarties”.

Political head for PIC board

Cosatu also supports the idea of having a political office bearer at the helm of the PIC board. This is in contrast with the stance taken by the Public Servants Association of South Africa, the biggest public servant union in the country, which previously stated that this would lead to political interference.

Parks said that in the two-year consultative period of establishing the bill Cosatu had made numerous concessions, one being that of a political chair. He said the union was comfortable with the ANC’s argument that it would be easier to hold a deputy minister accountable as opposed to an independent person.

He used the examples of state-owned entities that had independent people on the board but were not better for it. He said Cosatu’s main concern was ensuring that unions and, by extension, workers were represented on the board to keep a close eye on the PIC’s operations.

“Our approach now would be to plan for the worst, not rely on trust, friendship or comradeship, especially when it comes to workers’ money,” said Parks.