‘Workers should run PIC board’
Cosatu says Africa’s largest asset manager cannot be allowed to go the Eskom route
THE Public Investment Corporation (PIC) commission of inquiry into allegations of impropriety continues this week, and Cosatu reiterates its call for more worker representatives at board level in the embattled financial services institution.
Matthew Parks, Cosatu’s parliamentary co-ordinator, says the majority of PIC funds is money belonging to pensioners employed in state institutions.
Over the past few years, the PIC has been racked by numerous allegations of mass looting, as shown in the media and the commission of inquiry.
Organisations such as Steinhoff and the Lancaster Group, under Markus Jooste and Jayendra Naidoo, respectively, have wiped out billions of rand worth of pensioners’ funds in fraud, bad investments and accounting irregularities.
Last week it was revealed that Naidoo’s Lancaster Group received R9.3 billion from the PIC to be the sole beneficiary of a black economic empowerment scheme with Steinhoff. Of that R9.3bn, a staggering R5bn disappeared when Steinhoff collapsed towards the end of 2017.
In addition, the PIC board has been rendered dysfunctional after the entire board resigned en masse following allegations of corruption against several board members.
Information supplied by Cosatu contends that 87% of funds in the PIC are public servants’ pensions. About 7% of this is workers’ unemployment insurance (UIF), while 4% constitutes worker injury on duty insurance.
According to Parks, the Government Employees’ Pension Fund (GEPF) is projected to have a R25bn shortfall in the future, and as it is a defined-benefit fund, the government would have to cover any shortfall.
“There have been many stories of dubious investments, and politicians, their relatives and dodgy businesses reaping billions off it. Workers cannot afford for the PIC to go the route of Eskom. It is the largest investment fund in SA and Africa. It has shares in most companies. It owns 12.5% of the JSE’s shares. It is too large to fail,” he says.
Putting things into context, Parks alleges that the GEPF, UIF and the Compensation for Occupational Injuries and Diseases Act (COIDA) boards, as well as Parliament, have struggled to hold the PIC to account.
“It took former deputy finance minister (Mcebisi) Jonas’s intervention to force the PIC to disclose its unlisted investments to Parliament.
“These are worth R200bn and appear to be where looting is most prominent,” he says.
Parks says the problem is that the PIC Act allows the minister of finance to appoint the board with few checks and balances; no worker representation; no requirements to account to depositors, the public or Parliament; and no investment guidelines.
Most importantly, he says, there have never been any union representatives on the PIC board, and over the last two years, Cosatu has worked closely with ANC MPs in Parliament to draft a PIC Amendment Bill to stem the flow of corruption, stabilise the corporation and force it to be accountable.
The tabled PIC Bill provides for the following five points:
1) Three worker representatives on the board:
· These workers would be selected by unions in proportion to their membership of the Public Service Collective Bargaining Council. This is critical as the minister-appointed representatives could easily be prone to blackmail and intimidation.
· Two of these workers would be from the majority unions and one from the minority unions. This would help to build worker unity and inclusivity.
· The two representatives would be accountable to the unions. They would also have a voice in how worker funds were spent and keep an eye out to help prevent corruption.
2) The PIC would have to account to the minister, Parliament, depositors and the public on all investments (listed and unlisted), ministerial directives in annual reports and as needed.
3) All PIC regulations would have to be tabled at Parliament for scrutiny and comment.
4) The PIC would be required to take its mandate from depositors.
· This, according to Parks, was critical to avoid a scenario where the PIC was used as “petty cash” by the government to fund all sorts of state expenditure and bail out state-owned entities that have been looted into the ground.
5) The PIC, when investing, must do so in a way which protects the interests of depositors, and seek to invest where possible in a manner that promotes job creation, economic growth, sustainable development, and/ or local investments.
Parks says there has been a massive pushback against the bill by those who prefer to see looting and a collapse of good governance continue at the PIC.
“The bill is in the National Council of Provinces now. It is due to be passed by March 28. It must be passed in order to stem the flow of looting and to stabilise the PIC. The commission of inquiry is welcomed. It is shedding badly needed light on what is happening. It is encouraged to make further recommendations to fix the PIC as well as to strengthen the PIC Act,” Parks says.
Cosatu has worked overtime to see the bill passed and the PIC cleaned up.
“We will continue to expose and fight looting. Our members, workers and pensioners are depending on us,” he adds.
He says the union has encouraged the PIC to save companies where jobs are threatened.
“This was done through the PIC and UIF to save Edcon and its 40 000 employees, and 100 000 workers at factories and companies doing business with Edcon. The UIF Act was amended to provide for such interventions. It also makes financial sense and is more cost effective to the UIF,” concludes Parks.