​Holomisa: BEE not worth risking state worker pensions

Bantu Holomisa, the leader of the United Democratic Movement, has called for the suspension of all unlisted investments at the Public Investment Corporation (PIC) with immediate effect pending the conclusion of the commission of inquiry into the state asset manager.

Holomisa was making his submission before the Mpati commission where he suggested that the commission — which is looking into allegations of impropriety at the corporation — should proactively investigate the PIC’s unlisted investments in order to determine if they are above board and generating adequate returns.

The commission is headed by Justice Lex Mpati who is assisted by former Reserve Bank governor Gil Marcus and investment expert Emmanuel Lediga.

There has been a massive push by opposition parties for greater transparency into the PIC’s private equity investments over the past year as the secrecy surrounding the identities and performance of the investments has led many to believe that the portfolio was being used for transformation at the expense of investment merit.

“Transformation is not a good reason for losing pensioners money, it goes against any moral standard to continue writing off billions in the name of BEE,” Holomisa said.

The PIC manages over R2-trillion in state employee pensions and social welfare funds. The Government Employment Pension Fund (GEPF) is the PIC’s biggest client and constitutes 87.12% of the funds that the PIC manages. The GEPF is a defined benefit fund, underwritten by the state, which means that the government guarantees all state worker pensions, in the event GEPF cannot meet its commitments.

Holomisa said BEE transactions funded by the PIC, and other poorly structured unlisted investments which have lost money, such as the Steinhoff empowerment deal, were “a sophisticated way of looting from the state”.

One other area of concern for Holomisa was the issue of individuals or companies who have received repeated funding from the PIC without stringent conditions similar to commercial banks.

He described this as a “sophisticated capture” of the PIC involving advisers, BEE firms and asset managers. “This could be the crux of PIC dealings and alleged corruption”.

“Why do we have the same persons or companies being empowered continuously? Could it be that there is a cartel of PIC beneficiaries?” Holomisa asked.

Last year, the GEPF declared significant impairments in its unlisted portfolio, the first being Dr Iqbal Surve’s Independent Media where it invested more than R1-billion. The GEPF also announced a R4.3-billion impairment on a loan made to the Lancaster Group which was an equity vehicle formed to buy shares in embattled retail giant Steinhoff and R374-million in VBS Mutual Bank.

READ MORE: Sagarmatha listing push linked to Survé’s ego, PIC commission hears

Holomisa suggested that the PIC should “participate” alongside commercial banks in focusing on strong investment terms.

“BEE can be done on a commercial basis and the banks have been doing it for decades,” Holomisa added.

In May 2018, Holomisa wrote to President Cyril Ramaphosa calling for a judicial commission of inquiry into the PIC after media reports revealed issues of impropriety and irregular transactions where members of the board and the executive were implicated.

READ MORE: Former PIC officials implicated in VBS heist banned from financial services sector

In the same year he led a court application to have the former chief executive Dan Matjila suspended pending an investigation into allegations of whether he had corruptly channelled funds to his alleged girlfriend, Pretty Louw.

Holomisa told the commission that because of his vocal stance against corruption at the state asset manager, he had received additional information about questionable deals at the PIC.

One example involves various conflicts of interests that Holomisa identified between the PIC and companies with links to former PIC employees and directors, namely former PIC chair Jabu Moleketi and former head of corporate investment Tshepo Mahloele .

In July 2018, Holomisa was gagged by the Pretoria high court, when it ordered him to stop making corruption allegations that Lebashe Investment Group‚ Harith General Partners and Fund Managers were, among other things, used as front companies to loot money from the PIC.

Holomisa reiterated these claims before the PIC commission, recommending that they needed to be investigated.

At the time the PIC, which was not a party to the legal proceedings, welcomed the ruling. 

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Tebogo Tshwane
Tebogo Tshwane

Tebogo Tshwane is an Adamela Trust financial journalism trainee at the Mail & Guardian. She was previously a general news intern at Eyewitness News and a current affairs show presenter at the Voice of Wits FM. Tshwane is passionate about socioeconomic issues and understanding how macroeconomic activities affect ordinary people. She holds a journalism honours degree from Wits University. 


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