Finance MPs take softer approach to PIC draft bill

The differences between the ANC and the DA over the proposed Public Investment Corporation Amendment Bill have narrowed now that the finance committee has softened its previous stance on how the PIC should invest. Both the committee and DA MP David Maynier have proposed draft legislation aimed at strengthening corporate governance, accountability and transparency of the PIC which manages more than R2-trillion on behalf of the Government Employees Pension Fund and other funds.

The differences between the ANC and the DA over the proposed Public Investment Corporation Amendment Bill have narrowed now that the finance committee has softened its previous stance on how the PIC should invest.

Both the committee and DA MP David Maynier have proposed draft legislation aimed at strengthening corporate governance, accountability and transparency of the PIC which manages more than R2-trillion on behalf of the Government Employees Pension Fund (GEPF) and other funds.

The DA’s bill has been rejected by the ANC-dominated committee, which will now proceed with its own.

The PIC is the largest asset manager in Africa and the largest single investor on the JSE, so any framework imposed on its investment strategy would have ripple effects throughout the economy.

The need to strengthen corporate governance, accountability and transparency has been highlighted over the last year by the disclosure of suspect investments. These are being investigated by a commission of inquiry under retired judge Lex Mpati and led to the resignation of the PIC board last week.

The finance committee decided to proceed with its bill despite the work of the commission because otherwise it would lapse with the termination of the current parliamentary term ahead of the elections.

The DA opposed the initial draft of the committee’s bill, which prescribed that in following the instructions of depositors the PIC would have to take several factors into account. These included securing the PIC’ s financial sustainability and security; creating and protecting local jobs; industrialising the economy, building the manufacturing sector and boosting exports and sustainable development.

The DA opposed these prescriptions on the grounds that only the depositors could mandate the PIC what to do with their funds.

In terms of the latest version presented to the finance committee on Wednesday, the PIC must invest in projects that will benefit depositors and must act in accordance with their instructions while it “must seek” to invest in projects that further developmental objectives.

Committee chair Yunus Carrim said the final version had tried to achieve a balance with those wanting very specific investment criteria and those arguing that the interests of depositors should be overriding.

There were no longer prescriptions, only guidelines, which he said was consistent with what the PIC was doing.

“We think it is important to have these guidelines because of all the allegations that money has been invested in projects that don’t serve the interests of either the depositors or the needs of the country as a whole,” Carrim said. “This is another way of reducing the prospect of wrongdoing by the PIC.”