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PIC mandates make state capture a tricky matter - Matjila

Oct 31 2017 14:20
Lameez Omarjee

Johannesburg – It will be difficult to capture the Public Investment Corporation (PIC) as it has mandates with its clients that prescribe how their funds are managed, CEO Dan Matjila said on Tuesday.

Speaking at a briefing on the Government Employee Pension Fund’s (GEPF's) investment processes, Matjila shed light on the PIC's mandate and duty towards the GEPF. He clarified that National Treasury has no say on the investment mandates of its clients.

Previously, Matjila had to fend off moves to unseat him at the PIC. He had to answer to the board on allegations that he had attempted to help Gupta-linked allies gain access to PIC funds, facilitate bailouts of struggling state-owned entities and also help a “special friend” gain access to funds, Fin24 reported.

“The board had to do what they had to do,” Matjila said on the matter. “They had to run a transparency process, a thorough process… They have resolved the allegations were baseless and (even) issued a statement that they have confidence in me. That matter is closed.

“I am okay, we have a job to do. I have (the) support of my colleagues. We are working hard to generate returns for clients,” he said.

Matjila also spoke on state capture concerns and indicated that although it could be possible to capture the corporate management of the PIC, capturing mandates of clients would be difficult.

“It is a rigorous process between a client and the PIC on a quarterly basis. There is a fair amount of checks and balances.”

'Client monies safe'

“From where I sit, all I can say is that client monies are safe,” he said.

On the PIC’s role toward the GEPF, he reiterated that the investment mandate was given by the GEPF, and that it prescribes the parameters of strategic asset allocations.

The GEPF determines how much of the assets should be invested in equities, bonds and so forth. “They even prescribe the minimum credit in some of the investment in the credit space,” he added.

“The mandate is derived from clients and not National Treasury.” Treasury is the shareholder, and the relationship is through a memorandum of incorporation and shareholder's compact that defines how the PIC can conduct its business, he explained.

The minister’s role is to appoint the board, through consultation with Cabinet, said Matjila. He went on to say that the minister should have due regard for nominations submitted by depositors.

“Most importantly, the board members must have requisite knowledge,” said Matjila.

The minister should choose board members who are “fit and proper” for the core activity of the PIC which is investment management, he said.

Matjila concluded by saying that the PIC managed to grow its returns for the GEPF and that these returns were not just financial, but had a positive social impact through the creation of jobs, housing finance and education.

“Our approach is simple - we chase risk adjusted returns when doing investment,” he said. 


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