Gigaba: state may dip into PIC funds

• • Minister informs Cosatu of possibility Nehawu opposes abuse of workers’ retirement funds

Finance Minister Malusi Gigaba has told Cosatu’s central executive committee meeting that he cannot guarantee that the government will not attempt to make use of the Public Investment Corporation’s (PIC’s) funds to capitalise state-owned companies and other projects.

This comes as the government scrambles to raise money for struggling state-owned companies, notably airline SAA, which has lenders and creditors breathing down its neck.

Business Day understands that Cosatu leaders took the minister to task after his presentation on Monday, demanding the assurance that the crisis of the country’s burdened fiscus would not affect workers’ “hardearned” pensions and savings.

Cosatu’s biggest and most influential affiliate, the National Education Health and Allied Workers’ Union (Nehawu) has already stated its opposition to a potential bail-out of SAA by the PIC. The union said such a move would be an abuse of employees’ retirement funds, to rescue SAA, which was a “mismanaged and corrupt” entity.

“We will not stand idle while workers hard-earned money is used to fund the looting spree currently taking place at SAA,” the union said last week.

Gigaba’s spokesman Mayihlome Tshwete confirmed that the minister had told Cosatu that the government could not “take anything off the table”.

He said Gigaba had appealed to the federation’s leadership, saying all options should be reviewed. “The minister was saying we should not have an assumption that this is something [the PIC] that can never be used and can never be touched because some of the benefits of what we are trying to target are national economic matters that

affect everyone, including the people who are pension holders,” he said.

This was said despite Gigaba telling Parliament in June, through a written response to a question posed by the DA’s Alf Lees, that he had not investigated the possibility of SAA seeking funding from the PIC.

Delegates to the central executive committee meeting were expected to debate the minister’s presentation on Tuesday night. The federation’s spokesman, Sizwe Pamla, told Business Day the question of the use of PIC funds was still at the debating stage in Cosatu, and that they were caught in a delicate situation.

While the federation had always been clear about its expectation that PIC funds would be used only for jobstimulating investments, it would also be unbecoming if it fought against the rescue of SAA without weighing up the detrimental effect that would have on workers at the airline.

“We have to be reflective, honest and sober when we deal with this issue and balance the two evils, to say who are we giving this money to and what are the implications of this money not being given,” he said.

The PIC manages assets worth more than R1.8-trillion and invests funds on behalf of the Government Employees Pension Fund and other social funds. Cosatu affiliates are in the majority in the public sector, representing more than 1-million state employees, whose pensions are invested by the PIC.

The Federation of Unions of SA (Fedusa), which also represents a significant number of workers in the public sector, said that it would never agree that PIC funds could be used to bail out “mismanaged” government entities.

Fedusa general secretary Dennis George said the federation would “never” support a motion if they were aware that it would result in the wasting of workers’ investments.

“For us, the most important thing is you can’t take workers’ money and spend it on adventures that tend to not get a return on investment.

“The reason SOEs [stateowned enterprises] are in the state they are in is because they do not have good corporate governance and boards are corrupt,” George said.

Last month, Cosatu president Sdumo Dlamini told Business Day in an exclusive interview that the federation had invited Gigaba to the meeting as it sought to understand the rationale behind his 14-point plan for economic growth as well as other worrying developments at the Treasury.

The federation rejected the plan meant to stimulate the economy, saying it was a repetition of old resolutions that hardly benefited workers and the economy.

While Gigaba’s presentation to the central executive committee did not dwell on the plan and details of how it would ignite the country’s growth, the minister blamed the current situation on “past mistakes”.

Sources attending the ordinary meeting told Business Day his address was “evasive”.

Tshwete said the minister had been referring to “structural issues” in the South African socioeconomic environment when he spoke of historical errors.

“He said we have made past mistakes in the sense that we have deindustrialised our economy and we have not done key structural reforms and, all of this, has led to the situation of the economy deteriorating to a point that it’s at right now.

“We need to arrest these issues to turn SA around and begin to achieve a high-growth economy,” Tshwete said.

“We need to address all the structural issues ... and focus on the race, gender and class issues,” he said.