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.

State cap­ture

“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.

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