SA union challenge to govt investment body

Posted on May 25, 2018


South Africa’s Public Investment Corporation (PIC), the government-owned manager of nearly R2 trillion of public sector workers’ pension funds has until month end to “come clean” or face formal legal action. That is the latest chapter in a long-running row between the PIC and the PSA (Public Servants Association).

It results from the finance ministry, the state Treasury and the PIC continuing to block PSA demands for transparency. A result, the PSA’s legal team has now set a time limit and has prepared court action to force compliance.

This comes at the same time that the government and public sector unions, so far with the exception of Cosatu-affiliated police and prisons union, Popcru, are at loggerheads over much delayed pay and benefits negotiations. Cosatu is allied with the governing ANC.  But the battle with the PIC over transparency began last year when the PSA expressed concern about some of the investment decisions and loans made by the PIC.

Because of the size of the Government Employee Pension Fund (GEPF), fears were expressed among union members that it might be difficult for a cash strapped government to keep its hands out of such large financial cookie jar. At the same time, there had been reports of some investment decisions and loans that appeared to be motivated more by political than financial considerations.

The question of control was central, with the PSA, backed by smaller public sector unions, demanding worker representation on the PIC board. The union also wants to know how board members are appointed to a body effectively owned by the finance minister — and who made the decisions taken, ranging from investment in Steihoff and Independent News Media to loans to Eskom.

After several delays a meeting between the PSA and the PIC finally took place. The PSA subsequently announced that assurances had been given that all the information would be forthcoming. However, nothing happened.

In November last year, feeling that the union had been “fobbed off”, and with the three-year wage talks heading to deadlock, the PSA launched an action under the Promotion of Access to Information Act (PAIA) to which the PIC responded. But the response avoided several of what the union considers “crucial issues”, especially regarding a government guarantee for a R5 billion loan to Eskom..

So the PSA appealed on February 20 and again on April 10, seeking clarification. The response from the present finance minister, Nhlanhla Nene, arrived on May 7 and stated: “I have also been advised that NT (National Treasury) does not have guarantee documentation for the R5 billion loan….”

However, in April this year, in response to the PAIA request regarding the Eskom loan, the PIC noted: ““This facility will be government guaranteed”. It also referred to the loan being “on the back of a government guarantee”.
There also appears to be some confusion about records relating to the appointment of PIC board members. The union wanted records from 2013 until this year.

Nene’s letter states that since there were “no nominations from [union/worker] depositors”, no records exist. He also noted that consultations between himself and cabinet are excluded from PAIA.

However, since the PIC Act states that members of the board must be appointed “on the grounds of their knowledge and experience” the union feels there must have been discussions — and, therefore, records. There is also evidence that records do exist and were sent from the PIC to the Treasury.

As a result, the letter from the PSA’s legal team states bluntly: “We take your response therefore as a refusal to produce any such records.”

The PSA also wants an assurance from the minister that he will “comply strictly” with the terms of the PIC Act and “afford each depositor a reasonable opportunity to submit nominations”. This would create an opportunity for the GEPF and the unions to nominate potential members to the board.

This action by the PSA comes at a time when rumours are swirling about the PIC and the government-allied Cosatu unions discussing a possible link. The situation is also complicate by the stalled public sector pay talks where unions affiliated to the Federation of Unions (Fedusa) and the SA Federation (Saftu) have refused to sign the “final offer” by government.

By demanding “complete transparency” from the PIC, the PSA’s Tahir Maepa said “we may be opening a can of worms”. However he feels that full disclosure is long overdue.

The PIC has also been informed publicly that unions could move their pension funds to another manager should they not be satisfied with the current arrangement. The warning came from Dennis George, general secretary of the Federation of Unions of SA (Fedusa) to which the PSA is affiliated.

“This is something we will consider,” said Maepa. The switch to another manager would also not affect the defined benefit status of government pension funds since the government guarantee was a “contract between government and its employees”. It did not involve the PIC.

“We have given them until the end of the month to respond,” said Maepa. Depending on that response, another — legal — chapter in this saga could begin.