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Cape Town - It has begun to dawn on public sector trade unionists that a very large sum of money from their pension funds may already have been handed over to politically motivated investments under the guise of promoting black economic empowerment (BEE).
The government employee Pension Fund (GEPF) which probably accounts for at least R1.6trn of the funds handled by the government-controlled Public Investment Corporation (PIC) allows for 5% of such funds to be placed to the advantage of BEE.
But 5% of GEPF funds is equal to at least R16bn. This is a considerable amount of money and the unions, notably the PSA (formerly the Public Servants Association), have realised that they should have greater oversight over how this money is invested.
PSA general manager Ivan Fredericks has already lodged a demand that the labour movement be represented on the board of the PIC.
And he has pointed out that failure to comply could mean the unions moving their funds away from the PIC. He has called for a full list of BEE investments “including actual investments made and the current value of each to be made public”.
There is a range of such investments, some of which seem to have no commercial rationale. However, although the PIC is empowered to invest a portion of government pension funds to promote BEE and other “social areas”, this should not be to the detriment of positive returns.
In recent months, questions have been raised about the rationale behind investment in the Airports Company South Africa and Independent News Media. Several other apparently unprofitable investments in other unlisted entities are also being queried.
Fredericks has also requested that, when listing all investments, the PIC include “a list of politically connected persons” involved in such deals. The PSA also wants the unions to be represented on the boards of companies where employee pension funds are invested.
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