It’s up to trustees of the GEPF to take their duties seriously
Apot of R2trillion of other people’s money is always going to attract flies. The Mpati inquiry into the Public Investment Corporation (PIC) has tried to bulletproof the asset manager for the future as best it can.
It has given guidance on a new structure for the PIC, proposed changes to investment decision-making and provided an entirely new framework for the appointment of directors.
In short, these measures split the PIC into divisions, decentralise investment decisions, depoliticise board appointments with criteria for directors, take politicians and parliament out of the picture, and emphasise that directors owe their fiduciary duty to the PIC alone. They cannot be representatives of interest groups, such as labour or the executive arm of government, or of clients such as the Government Employees Pension Fund (GEPF).
The measures will go some way to changing the PIC into the professionally run asset manager it should be, from what it had become: a pot of money a single man, Dan Matjila, had inordinate influence to disburse.
However, while the commission gives a flavour of how things worked, it doesn’t get to all the rot, nor was it asked to in its terms of reference. Missing is the murky relation between politicians, political parties and the PIC, of which only a few glimpses are offered.
On occasion Matjila solicited donations for the ANC and Cosatu from an investee company. On another — the one that has been well publicised — he solicited a donation for a friend of then intelligence minister David Mahlobo from a party deeply indebted to him for swinging deals its way.
It was rumoured in the socalled whistle-blower e-mails from the anonymous James Nogu that the woman who received this generous donation was a girlfriend of Matjila’s. This turned out not to be true, but the Nogu emails, the author of which never came forward, served their purpose.
Though there had been several excellent exposés by investigative reporters amaBhungane between 2013 and April 2018 of dodgy PIC investments, the finance minister, the shareholder minister for the PIC, had not responded. These included Matjila’s repeated and questionable investments in the companies belonging to the owner of Sekunjalo Holdings, Iqbal Survé.
It was only after the Pretty Louw rumours, which started up in August 2017 and then would not go away, that then minister Nhlanhla Nene ordered an investigation into the relationship and what had transpired. In the end, it was the Louw matter, and Matjila’s obvious attempts to whitewash a board report into it and then to personally hunt down the whistle-blowers, that killed his credibility and kick-started a full inquiry. Thankfully, this time Nene asked the president for a full judicial commission.
In his testimony, Matjila made light of the losses that resulted from the problem transactions. These were “only 2%” of the portfolio and amounted to only R30bnR40bn in total. But the commission pointed out that R40bn exceeds the annual contribution to the GEPF by the Treasury. And, since the problem investments were all located in the PIC’s R123bn Isibaya Fund, the reality was that 41% of the assets of the fund were at risk and were on watch, underperforming or non-performing.
SOME PEOPLE WITH FAILING ASSETS, SUCH AS SURVÉ, GOT REPEAT DEALS TO BAIL OUT THE EARLIER FAILURES
The Isibaya Fund and its future governance are crucial. Started in 1999 as an “impact investing fund ”— which translates into infrastructural investments with an economic and social benefit — the fund, which is 5% of GEPF funds, has since morphed into one with a BEE mandate. The way it came to work under Matjila was that deals were opaquely selected. Some people got nothing; others a lot — Jayendra Naidoo got R15bn. Some people with failing assets, such as Survé, got repeat deals to bail out the earlier failures; other deals were rumoured to be for particular politicians through their proxies.
The GEPF mandate for the Isibaya Fund is alarmingly weak. The objective of its developmental investment policy “is to earn good returns … while supporting positive, long-term economic, social and environmental outcomes for society”, it says.
The best way to bulletproof the PIC against corruption is for the GEPF trustees to take seriously their responsibility to members. The fund has hardly said a critical word about the problem transactions, nor made any serious effort over the past five years to tighten its mandate. That is an inexcusable lapse, and members should call on their trustees to explain.