The government is intent on clearing the Public Investment Corporation (PIC) of any claims that undermine its reputation, its chairman Mondli Gungubele said on Wednesday.
Gungubele, who is also the Deputy Minister of Finance, was speaking in the wake of revelations that Finance Minister Nhlanhla Nene has decided to reconsider corruption allegations made in 2017 against PIC CEO Dan Matjila and that he has asked the board to provide him with the details of the matter.
The allegations include that Matjila channeled funds for corporate social investment to a girlfriend — a matter investigated in 2017 by the board, which reportedly found the claims to have been without foundation. However, a new police investigation into Matjila last week prompted Nene to write to Gungubele, requesting a full briefing and a record of its deliberations.
"I don’t want to claim an immediate knowledge of the PIC, but all I can say is that there is a series of questions that are controversial, which the minister dictates we attend to. He has asked for a series of reports. The first report is going to land on his table today," said Gungubele.
He added: "We are going to await the minister’s response with regards to that. Because of how significant the reputation of PIC is, the minister is trying to ... clear anything that undermines the significance of that reputation."
Gungubele was speaking to BusinessLIVE from Busan, Korea’s second city, where the African Development Bank’s annual planning meeting is being held. The meeting has been convened by its board of governors, who are mainly the finance ministers of its member states.
Commenting on the likely impact on the budget of the recent settlement following public-sector wage talks, Gungubele said the government’s expenditure ceiling was non-negotiable "because investors won’t take us seriously".
Public servants are set to receive above-inflation wage increases of between 6% and 7%. "Whatever happens there, you’ll have to do something within [that] framework," said Gungubele.
SAA
The former Ekurhuleni mayor also opened up on efforts to revive the troubled South African Airways (SAA), saying it will cost less to fix the airline than to dispose of it. He emphasised that the national carrier was too strategic to be allowed to fail.
Last week, SAA CEO Vuyani Jarana revealed that the airline needed to raise R21.7bn over the next three years to turn it around and make it profitable.
The size of the required capital injection has led to concern about the impact it would have on the fiscus, although Jarana said the funding would only partly consist of a capital injection from the Treasury, with the rest being covered by debt raised from commercial lenders, guaranteed by the government.
Gungubele said SAA connected no less than 37 destinations on the continent, making it a strategic asset. "And OR Tambo being the busiest airport in Africa … for a state not to have its own airline is a serious weakness. We messed SAA up, we must resolve it — because it didn’t mess itself up.
"We know … corruption, fraud, mismanagement and all those kinds of things … it’s not that SAA cannot be what it’s supposed to be, but the most key thing is that it is too strategic for the country to just be thrown away."
Gungubele said the option to dispose of SAA was not a cost-effective one. "We’ve discovered that is the most expensive [option] … because on a recovery path you talk about 20-something billion [rand], but on the disposing path it’s no less that R60bn, because all debtors are going to call their money, and so on. So there is only one sensible thing [which is that] SAA must stay; let’s correct our mess."
But Gungubele also emphasised that it is no longer unthinkable for the government to approve an equity partner for the airline. "The government has opened up with regards to that. It’s being looked at but I cannot talk specifics at the moment.
When asked about whether SA was seeking funding support from the African Development Bank, Gungubele sought to paint a picture of the clean-up that the Cyril Ramaphosa administration was seeking to do.
"What we are trying to do in SA at the moment, we are trying to put our house in order, let me say that upfront … because some of the problems we find ourselves in, if we rush to pour money into those problems we stand the risk of repeating the problems we are coming across."
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