The union that asked billion Rand questions

Posted on February 22, 2019

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(A version first published in City Press, February 10)

Although unmentioned, considerable credit for the fact that there is a commission of inquiry into the scandal ridden Public Investment Corporation (PIC) should go the PSA (Public Servants’ Association). Probably the largest public sector union in the country, it was the first to raise serious questions about the way the PIC was administered.

Even before the Steinhoff debacle brought matters to a head in December 2017 and cost government pensioners billions of rand, the PSA had red flagged the PIC. General manager Ivan Fredericks and his deputy, Tahir Maepa, expressed concern about what they saw as the lack of adequate oversight of investments made by Africa’s largest investment manager.

Of particular concern at the time were investments made in unlisted entities such as the R1.2 billion in equity and loans provided to controversial businessman Iqbal Survé toward the purchase of the Independent Newspapers group. Such investments were apparently part of the 5% of the PIC’s investment kitty — some R1.8 trillion coming from the Government Employee Pension Fund (GEPF) — that the PIC could invest at its own discretion in social responsibility and Black Economic Empowerment (BEE) ventures.

“But social responsibility does not mean investing in anything that is not profitable,” notes Maepa. “The duty of a fund manager is to ensure adequate oversight and a return on investment.”

By October 2017, Fredericks had called for a full list of such ventures “including actual investments made and [for] the current value of each to be made public”. There was no response.

The PSA then launched a Promotion of Access to Information Act (PAIA) demand as Steinhof imploded. So the union demanded full disclosure of financial and administrative information from Steinhoff that may be used in criminal and civil actions the PSA still contemplates.

The company initially tried to fob the union off on the grounds that it was not a shareholder, but the PSA finally got its way, staging a “raid” on the company. According to Maepa, the documentation the union received reveals that the PIC “failed to play an oversight role in Steinhoff”. This strengthened the demand that workers, answerable to their unions, should be represented on such boards.

The PSA also pointed out that it is the prerogative of the GEPF to decide who should handle their funds; that it was not obligatory for the government owned and guaranteed PIC to do so.

Even as this battle got underway, the Ayo Technologies controversy erupted, with the PIC handing over R4.3 billion to Ayo, a company linked to Survé, to buy more than 99 million shares at R43 each. Most analysts regarded this price as grossly inflated since the company’s asset value was quoted at 15 cents a share. In October last year President Cyril Ramaphosa appointed the current commission of inquiry into the PIC.

As City Press pointed out on February 3, this commission has now heard that the PIC sold other assets held on behalf of government pensioners in order to pay the R4.3 billion. Maepa reacted to the news, noting: “It starts to look as if the PIC behaved like Father Christmas, throwing money around.”

So far as the union is concerned, its PAIA demand remains “on the table” and may still be actioned. “This thing [maladmistration and possible corruption] goes back many years and it’s a lot deeper than most people realise” Maepa said.

Union members are also concerned that Dennis George, general secretary of Federation of Trade Unions to which PSA is affiliated, last year became a a non-executive director of Ayo and has publicly promoted both Survé and Ayo shares, a tranche of which he also bought at R1.50 each.