The Public Investment Corporation (PIC) has been asked to account to the Government Employees Pension Fund (GEPF) about an allegedly dubious land investment worth more than R570m.
GEPF chair Renosi Mokate and principal executive officer Abel Sithole were questioned by MPs about the deal on Wednesday during a meeting of parliament’s finance committee.
The PIC acts as an asset manager for the GEPF, which has assets under management of more than R1.8-trillion. The PIC acts on the basis of a GEPF mandate and the fund monitors and exercises oversight over the investments made.
The undeveloped land in question — Palmietfontein — is between Klerksdorp and Stilfontein in the North West. The land has been rezoned for mixed-use residential development. The PIC acquired a 60% share in the land, which is being developed by Isago Holdings. Claims have been made by the DA and Freedom Front Plus (FF+) that the price the PIC paid for the land was grossly inflated.
“On the face of it, the deal raises a number of red flags and looks quite dodgy — the seemingly exorbitant price paid for the land, the zoning of the land, the location not being suited to development, and the individuals involved in the deal. All this must be explained in full by the PIC so as to assure the public and pensioners that there is nothing improper or corrupt happening here,” DA MP Geordin-Hill Lewis said.
“The PIC has been awash with scandal in recent years, and we hoped that it had turned a corner. This is why it is essential that the PIC is fully open and transparent on this deal and sets out the facts clearly. It is concerning that they still have not done so.”
FF+ MP Wouter Wessels claimed that the land consists of a lot of dolomite and is therefore unsuitable for development.
Mokate said the GEPF has asked the PIC for a full report on the deal, which is awaited. It would be considered at the March meeting of the investment committee.
Sithole added that the PIC did buy land in advance of development, saying independent valuations for the redeveloped property had been presented.
“I think that, based on what the valuator recommended, the indications are that we paid a fair price for the land. It is not unusual for the GEPF via the PIC to look for areas of development, especially in areas where we are not currently focused on. A lot of our property investments tend to be in urban areas and we are looking to move away from the big urban areas to look for other avenues of investment outside of that and to buy land in anticipation of future development. The actual approach is not unreasonable.”
PIC head of corporate affairs Deon Botha has been quoted by Business Report as saying that the valuation of the land was done by an independent property evaluator. He noted that the land had been approved for the establishment of a township comprising retail, office, industrial, low- to medium-density housing, schools and healthcare facilities.
“The transaction was subjected to a thorough investment process before being approved. Before approving the transaction, the PIC conducted due diligence on the transaction. The due diligence entailed obtaining an independent valuation; an independent town planning report; environmental, social and governance (ESG) due diligence; legal due diligence; and risk due diligence,” he said.
Botha was not available for comment on Wednesday.
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