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.