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Cape Town – Parliament’s standing committee on finance has agreed with trade unions who say the will refuse to bail out cash-strapped state-owned enterprises through the Government Employees Pension Fund (GEPF).
The fund has 1.2 million members and administers pensions and other benefits for SA government employees. It is managed by the Public Investment Corporation (PIC).
Yunus Carrim (ANC), chairperson of Parliament's oversight committee on finance, said in a statement on Wednesday that unions were correct when they resolved that the PIC should not be investing in “ailing SOEs that are badly governed, mismanage their resources [and] serve the narrow interests of an elite".
"[Such SOEs] do not advance the country’s developmental needs and will not provide an adequate return on investment for the members of the GEPF,” he said.
The committee on Tuesday heard representations from trade union federations, which were preceded by briefings by the PIC and GEPF about their annual reports for the 2016/17 financial year.
The trade unions told the committee that they would resist any attempt by government to use worker funds to bail out state-owned entities. They also insisted on having representation on the PIC and GEPF to influence investment decisions.
Carrim said the committee will consider proposing changing current legislation to allow union representatives to serve on the boards of the PIC and the GEPF.
“The PIC should (also) seriously consider the trade unions proposals on an appropriate housing loan scheme for public sector employees who do not qualify for a loan from the commercial banks,” Carrim said.
Forensic audit questions
Committee members from across the political spectrum agreed on Tuesday that Finance Minister Malusi Ggigaba’s call for a forensic audit of the PIC’s investments needed clarification.
“From what the committee can tell, the PIC has performed well, including through securing above-inflation returns on investment, receiving unqualified audit opinions over many years, including the Auditor-General Award for clean audit in 2017,” Carrim said in his statement on Wednesday. .
Gigaba ordered a forensic audit of the all the PIC's investments over the past two years on October 11.He requested that the audit be carried out by a “reputable independent forensic company”.
The finance minister asked his deputy Sfiso Buthelezi to submit the terms of reference of the audit to his office by October 23.
But Carrim questioned why the audit was needed at all.
“It is not clear to the committee why the Minister wants a forensic investigation of the PIC’s investment decisions and we believe he needs to consult the trade unions on this,' he wrote.
“If he insists that he wants such an investigation, he will need to show that it is in the interest of the members of the GEPF and the public and provide rationale for and the terms of reference of the investigation to the committee”.
In addition, Carrim said the PIC board needs to carry out a "thorough inquiry" into who was behind the allegations against its CEO Dan Matjila, and report back to Parliament on progress on this within two months.
Fin24 reported on Tuesday that Xolani Mkhwanazi, deputy chairperson of the PIC said there was no investigation into an alleged smear campaign to discredit Matjila.
Mkhwanazi blamed the smear campaign on someone who "hacked" the PIC’s IT system, adding the matter was now closed.
Draft bill
Carrim said the committee will need to work with Parliament’s legal services unit to prepare a draft Bill before the end of 2017. This bill will "give effect to the relevant decisions it takes".
DA spokesperson on finance David Maynier has already drafted a private member’s bill to amend the current Public Investment Corporation Act of 2004 so as to create a new process for appointing the PIC chairperson, provide for a different structure of the PIC board and impose a duty on the PIC to disclose all investments.
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