Inquiry piles pressure on beleaguered PIC

Pressure is building on the Public Investment Corporation on several fronts – in the courts, in Parliament and now in the form of a commission of inquiry into alleged improprieties at state-owned fund manager, notes Legalbrief. ‘The commission’s terms of reference will include a review of the PIC’s governance and operating model, possible changes to the PIC’s founding legislation and its memorandum of incorporation and investment decision-making framework,’ National Treasury said. ‘The names of the chair of the commission and the supporting team, as well as the detailed terms of reference of the commission, will be announced in due course,’ it added, according to a Fin24 report. The announcement comes three weeks after Minister of Finance Nhlanhla Nene informed the PIC's board of an independent inquiry into the PIC’s ‘governance issues’. The PIC invests on behalf of the large Government Employee Pension Fund (GEPF) and four smaller state-run funds, including the Unemployment Insurance Fund. The PIC has been under the spotlight due to some controversial investment decisions, and allegations of impropriety surrounding its CEO Dan Matjila for allegedly using PIC funds to help out the business of a woman said to be his romantic partner, Pretty Louw, which he denies.

Amendments to the founding legislation of the PIC are already a focus of attention in Parliament. Two Bills are before the Finance Committee, one initiated by the committee and another by DA MP David Maynier. Both seek to compel greater transparency of the PIC and want, for example, to disclose its unlisted investments, notes a Business Day report. Apart from the allegations over the ‘girlfriend’, made by an anonymous whistle-blower, several PIC transactions have been heavily criticised for being commercially ill-advised. The most recent of these is the PIC’s R4.3bn private placement into Iqbal Surve’s Ayo, at an extraordinarily high valuation. Eight months after the listing, with the share price in the doldrums, the PIC is almost R2bn out of pocket on its investment. The announcement yesterday seems to imply that the investigation will not probe Ayo.

More trouble for the PIC is in the offing from the Public Servants Association (PSA), which has filed an application in a bid to force the Minister of Finance, the PIC and the GEPF to reveal information relating to the PIC board and the R5bn bridging loan granted to Eskom in February. The PSA affidavit is brought in terms of the Promotion of Access to Information Act (PAIA), says a Fin24 report. The union, which represents 237 000 members in the public service, says it is concerned about the way the GEPF and the PIC are managing government employees’ pensions. The report notes the PSA has been vocal about demanding accountability from the PIC, which manages around R2.2trn, the majority of which is workers’ pension funds. At the heart of the PSA’s application is the submission of a PAIA request to National Treasury in November. The union wanted information relating to the appointment of PIC board members since 2013 and records of how depositors’ nominations were taken into account.