Mboweni rejects political chairs for PIC
Yet-to-be signed bill provides for the finance minister to designate any deputy minister in the economic cluster to chair the board
Finance minister Tito Mboweni does not believe the chair of the public investment manager that manages almost R2-trillion in assets should be a deputy minister, as provided for in a bill waiting for President Cyril Ramaphosa’s signature.
The Public Investment Corporation (PIC) Amendment Bill, which was passed by the two houses of parliament in March 2019 and has still not been signed into law, provides that the finance minister must designate the deputy finance minister or any deputy minister in the economic cluster, in consultation with cabinet, to be chair of the PIC board.
But Mboweni told the finance committee during a meeting on Wednesday night he did not agree with this and was in favour of the recommendation made by the Mpati commission of inquiry into the PIC that the chair be an independent person and not a political person, to improve governance.
The minister said the current arrangement where the PIC has an independent chair — Reuel Khoza — had worked very well.
“As we implement the recommendations from the commission of inquiry, we will take that into being,” he said.
The PIC is the largest asset manager in Africa and manages assets on behalf of the Government Employees Pension Fund, the Unemployment Insurance Fund and the Compensation Fund.
The finance committee met to hear from Mboweni and the PIC what progress had been made in implementing the recommendations of the commission of inquiry into the PIC led by retired judge Lex Mpati.
Mboweni rejected a proposal by EFF chief whip Floyd Shivambu that the committee adopt a resolution calling on Ramaphosa to sign the bill into law unless the president has constitutional issues with it.
Mboweni told MPs the Mpati report had highlighted the role of political influence in wrongdoing.
One of the lessons is that there has to be a code of conduct for public representatives and politicians about how to finance investments other than through a public institution such as the PIC. Recommendations must be made on this, Mboweni said.
Mboweni, who has been tasked by Ramaphosa to see that the recommendations are implemented, said there were two tracks for dealing with the Mpati recommendations: one in the Treasury (which presumably will deal with possible legislative amendments to the PIC Act); and one with the PIC board itself.
These two tracks would be brought together in a cabinet memorandum early in 2021. “We have no intention of taking shortcuts. We want to get to the bottom of this and deal with the malfeasance so that going forward we have a proper institution,” Mboweni said.
The committee heard that the PIC has already implemented or is in the process of finalising almost 70% of the actions arising out of the Mpati commission.
A PIC delegation led by Khoza and including CEO Abel Sithole and acting CFO Brian Mavuka attended the meeting. Khoza told the committee that even before the Mpati commission had finished its work, the PIC board had begun making structural changes and instituted a new model that included separating risk from the audit and risk committee and removing the investment committee from control of the CEO.
A lot of the work the board was doing on its own overlapped with the recommendations of the commission. Khoza noted that any wellrun organisation rested on two pillars — competence and ethical conduct, the latter having been neglected over time.
A social, ethics and transformation committee was established and information technology was strengthened.
Khoza said the board had established an advisory committee led by former Constitutional Court judge Yvonne Mokgoro, assisted by legal experts and a financial expert, to advise the board with the implementation of the recommendations.
The PIC was working closely with the Hawks and the National Prosecuting Authority in respect of some of the findings of the commission.
PIC board member and head of the human resources committee Makubalo Ndaba noted that there were 276 recommendations, which had been broken down into 16 themes, and work streams had been established to deal with them.
Board committees also dealt with those in their respective fields, for example risk and audit; and human resources, which constitutes more than 40% of the recommendations.
A dashboard had been developed, which showed that 69% of the actions had been finalised or were in the process of implementation.
Sithole noted that 33% of the recommendations related to areas where further investigations were required. A lot of progress had been made in this regard. The second major item was a review of policies and procedures, which the board had already started working on before the Mpati report was published.
“A lot of work has already been done,” Sithole said. Key appointments had been made or were in process, he added. Information technology was also being introduced in the management of the unlisted portfolio and investment processes had been streamlined.
Legal action was being taken against those involved in the decisions to invest in Ayo Technology and against former staff members involved in the investment in VBS Mutual Bank.