Vavi lashes raid on PIC ‘piggy bank’

Work­ers’money can’t bail out SAA, says Saftu


COSATU’s ri­val fed­er­a­tion union, the South African Fed­er­a­tion of Trade Unions (Saftu), wants a mo­ra­to­rium on gov­ern­ment em­ployee pen­sions funds so they can­not bail out state en­ti­ties.

This comes af­ter re­ports that the Trea­sury wanted the Pub­lic In­vest­ment Cor­po­ra­tion (PIC), which man­ages gov­ern­ment em­ployee pen­sions, to bail out SAA with more than R10 bil­lion.

Fi­nance Min­is­ter Malusi Gi­gaba’s spokesper­son, May­ihlome, Tsh­wete how­ever de­nied re­ports that PIC would be used as gov­ern­ment’s piggy bank.

“It’s not a bail-out, it’s a cap­i­tal in­jec­tion. A bud­get-neu­tral op­tion is go­ing to be ex­plored for that (SAA re-cap­i­tal­i­sa­tion),” said Tsh­wete.

He said Gi­gaba had sim­ply meant that all op­tions were be­ing ex­plored to en­sure that SAA re­mained a go­ing con­cern.

“There’s no state­ment that the PIC would bail out SOEs... the SABC had asked for a R3 bil­lion guar­an­tee from gov­ern­ment. That’s not a bailout,” said Tsh­wete.

But Saftu gen­eral sec­re­tary Zwelinz­ima Vavi said some of these state en­ti­ties ear­marked for huge bail-outs were al­legedly in­volved in state cap­ture ac­tiv­i­ties by the Gupta fam­ily. Saftu wants the al­leged cul­prits charged and those guilty to re­pay the money stolen.

“These are the state-owned en­ter­prises 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 the rat­ing agen­cies gave when they down­graded 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 new fed­er­a­tion viewed with alarm the lat­est re­ports that Na­tional Trea­sury was pushing the PIC to come up with as much as R100 bil­lion to fund strug­gling state com­pa­nies.

“A to­tal 88.2% of the R1.857 tril­lion which the PIC man­ages is in the Gov­ern­ment Em­ploy­ees Pen­sions Fund (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.

He fur­ther 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 R12 bil­lion bailout of SAA would be bad enough but the re­ports were that af­ter bail­ing out SAA, the gov­ern­ment would be look­ing for more cash for sim­i­lar bailouts 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 both tax in­creases and pub­lic spend­ing cuts, fur­ther de­lays in 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) work­ers’ pen­sion funds to be handed over to pri­vate money man­agers.

“This would put the man­age­ment of work­ers’ pen­sions into the hands of pri­vate com­pa­nies mo­ti­vated by prof­its, re­gard­less of the ethics of the com­pa­nies in which they bought stakes, with still no guar­an­tee that they will make any bet­ter re­turns than the PIC and will be even less ac­count­able.

“The PIC also needs to be made more demo­cratic and ac­count­able, so em­ploy­ees have rep­re­sen­ta­tives to take de­ci­sions on how their money should be in­vested and man­date the PIC to im­ple­ment these poli­cies,” Vavi said.

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