Vavi lashes PIC bail-out of the SOES
COSATU’S rival federation union, the South African Federation of Trade Unions (Saftu), wants a moratorium on government employee pension funds so that they cannot be used to bail out state entities.
The move comes after reports that Treasury wants the Public Investment Corporation (PIC), which manages government employee pensions, to bail out SAA by more than R10 billion.
Finance Minister Malusi Gigaba’s spokesperson Mayihlome Tshwete denied reports that the PIC would be used as the government’s piggy bank.
“It’s not a bail-out, it’s a capital injection,” said Tshwete.
He said Gigaba meant all options were being explored by government to ensure SAA remained a going concern.
“There’s no statement that the PIC would bail out stateowned enterprises... the SABC had asked for a R3bn guarantee from government. That’s not a bail-out,” said Tshwete.
But Saftu general secretary Zwelinzima Vavi said some state entities earmarked for huge bail-outs were allegedly involved in the state capture activities by the Gupta family.
Saftu wants the alleged culprits to be charged and those guilty of corruption and mismanagement forced to repay the money they have stolen.
“These are the SOES which have been at the centre of allegations of corruption and mismanagement by the network of looters around the Gupta family. This was one of the reasons cited by rating agencies when they cut South Africa to junk status in April.
“They are exactly the sort of dodgy investments which the PIC’S mandate to invest responsibly ought to exclude,” Vavi said.
He said the federation viewed with alarm the latest reports that Treasury was pushing the PIC to come up with as much as R100bn to fund struggling state companies.
“A total 88.2% of the R1.857 trillion which the PIC manages is in the GEPS, which exists to ensure retired workers get a decent retirement income; and a further 6.7% of the PIC’S money is the Unemployment Insurance Fund (UIF), which provides short-term relief for retrenched workers.
“Thus 94.9% of the PIC’S funds is workers’ money. And it should be used in the workers’ interests,” he said.
Vavi said “while the funds should be invested in socially desirable enterprises which benefit society as a whole, they must also be invested in a wide spread of companies which are most likely to be profitable and provide the best return to the PIC and ultimately to the workers”.
He said the use of workers’ money for a R12bn bailout of SAA would be bad enough but the reports were that after bailing out of SAA, the government would be looking for more cash for similar bail-outs for Eskom, Petrosa and Denel.
“If the PIC keeps paying out GEPF funds to bail out loss-making SOES, which cannot raise loans on the market because the government was downgraded by the ratings agencies, the GEPF itself will eventually become unsustainable.
“But if this happens, because the GEPF is a guaranteed benefit fund, which legally must pay out the guaranteed level of pensions and benefits, the government, which means the taxpayers, will then have to bail out the GEPF,” Vavi said.
He said the huge diversion of public funds would then inevitably lead to tax increases and public spending cuts, causing further delays in implementing the national health insurance scheme, free education and cuts in essential services.
Vavi also said that it would “be an assault of the living standards of the poor”.
The federation, however, rejected a call by the Federation of Unions of South Africa (Fedusa) that workers’ pension funds should be handed over to privately owned money managers.
“This would put the management of workers’ pensions into the hands of private companies motivated by the search for maximum profits, with still no guarantee that they will make any better returns than the PIC and will be even less accountable to the public.
“The PIC itself also needs to be made more democratic and accountable, so employees have representatives to take decisions on how their money should be invested,” Vavi said.