Who will call the PIC to account?

Pressure is mounting on the Public Investment Corporation following the intense scrutiny some of its investments have come under in recent weeks.

Assurances of due diligence will not be enough to allay fears and the corporation, entrusted with almost R2-trillion in government employee pension money and other state assets, will have to account for the decisions it has taken. But the question is, to whom?

The PIC has had discussion with the Government Employees’ Pension Fund (GEPF) and the Public Servants’ Association about these concerns. The treasury will want to have a word with it, as will Parliament.

But whether the minutes of the PIC meetings in which the investment decisions were made will be made public is likely to be hotly contested.

The investments in question include those in AYO Technology Solutions, Erin Energy, VBS Mutual Bank and Steinhoff International.


The R4.3-billion investment in AYO has been described by critics as risky and speculative. The company has links to the Sekunjalo Independent Media Consortium, which bought Independent Media and in which the PIC also invested.

The corporation heavily backed Erin Energy (formerly Camac Energy), which last week filed for bankruptcy. The rationale for the investment was questioned from the beginning.

The PIC also made large investments in VBS Mutual Bank (it holds a quarter of its shares), which has been placed under curatorship.

The PIC is exposed to Steinhoff International, whose market value has dropped 95% since early December when its chief executive stepped down over an investigation into accounting fraud.

Despite these issues, the PIC says its processes do not need to be overhauled. “The due diligence process sufficiently covers all the important aspects of transactions,” said Deon Botha, its head of corporate affairs.

This week the Democratic Alliance called for the chairperson of the standing committee on finance, Yunus Carrim, to schedule a hearing on the “chaos” at the corporation.

But Carrim said the request was disingenuous because, last week, the committee agreed to exercise oversight and process PIC Bills at the same time. He said the Bills dealt directly with greater parliamentary oversight of the PIC and the need for greater transparency by the corporation on its investments.

“The majority also decided that we should avoid a ‘shopping list’ approach, where every current example of an issue that the committee is addressing anyway is mechanically imposed on our programme without any strategic consideration of where it fits in,” he said.

DA spokesperson on finance David Maynier said he remained concerned.

Carrim said all parties in the committee, not just the DA, were concerned. “We have been persistently preoccupied with this; in fact, we have met the PIC more than any other institution this year, and will meet on PIC issues three times again over the next five weeks, including on May 31 to consider oversight issues more specifically,” he said.

The DA has also said the finance committee should have access to copies of all the relevant minutes of PIC investment committee meetings. This will be contentious because no state-owned entity is required to submit its minutes and, in the PIC’s case, they are likely to contain market-sensitive information.

Carrim said the committee would continue its oversight role of the PIC “but this is workers’ money, and ultimately it is they and their unions who must hold the GEPF and PIC to more rigorous account”.

Ivan Fredericks, the general manager of the Public Servants’ Association, met the PIC last month to discuss these and other issues but there were matters the union was not satisfied with.

“We have asked if they are willing to open up and reveal some of those deals,” Fredericks said, but the PIC had told the union to wait for the annual general meeting, which typically takes place towards the end of each year, when it would provide greater detail on its investments.

“The PIC must be more transparent,” said Fredericks.

“The people, who the money belongs to, should be able to see from the beginning where it is going … the trust is not there yet, it has to be restored, that is the commitment the PIC has given us.”

The union has used the opportunity to revive its demand for a worker representative to sit on the PIC’s board. There are worker representatives on the GEPF board.

GEPF spokesperson Matau Molapo said the fund gives the PIC a mandate on the investments it can make, but the GEPF’s role does not end there. “There are internal processes to hold PIC to account … the GEPF monitors and evaluates the PIC’s performance in totality, focusing on the performance of individual investments as well as the performance of the portfolio as a whole.”

Molapo said the assets continued to be highly profitable, with R532-million in returns for 2017, and the PIC had assured the GEPF that due diligence was done on all investments.

According to its Act, the PIC answers to the shareholder representative, the minister of finance, now Nhlanhla Nene. But traditionally oversight has been performed by the deputy minister of finance, who is a nonexecutive director and chairperson of the PIC board.

The treasury confirmed this week that Deputy Finance Minister Mondli Gungubele has been appointed chairperson. He would appear to be the right man for the job — journalists dubbed him the “lord of corporate governance” because of his tough questioning during the inquiry into the SABC by Parliament’s communications committee.

But the deputy minister has yet to tackle the matter. In a written response, the treasury said Gungubele would raise the pertinent issues, including the investments in question, with the PIC management and board and would then be in a position to comment on them.

But it appears that the PIC is taking action. The PIC executive head of risk has been fired for incompetence and three other executives have been reportedly suspended, according to a report in City Press on Sunday. The newspaper did not name the employees. The report said the dismissal was for subpar paperwork and for not foreseeing problems at VBS. The dismissal and the suspensions were also linked to an alleged campaign to smear PIC chief executive Dan Matjila.

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