The cabinet announced on Thursday that deputy finance minister David Masondo would chair the new board of the Public Investment Corporation (PIC), a move that is likely to spark concerns of political interference at SA’s biggest asset manager.
The PIC, which manages about R2-trillion, mostly for government employees and pensioners, has been struggling to restore its reputation following years of questionable investment decisions amid allegations of impropriety and that investments were influenced by political connections and considerations.
The term of the previous interim board, which was chaired by businesses stalwart Reuel Khoza, concluded at the end of October. That board had been appointed by former finance minister Tito Mboweni with an initial 12-month term in June 2019 to stabilise the organisation, which was reeling from damaging allegations made at the Mpati commission of inquiry.
Members of the previous permanent board had resigned en masse earlier in 2019 amid the judicial inquiry into the firm. President Cyril Ramaphosa established the commission of inquiry in 2018 to probe allegations of impropriety at the PIC, which was chaired by retired judge Lex Mpati.
While in most instances the PIC has in the past been chaired by the deputy finance minister, Mboweni emphasised the need for an independent chair to steady the ship.
But the cabinet, in line with the recently amended law governing the PIC, has now reversed Mboweni’s approach. This is also despite the inquiry’s finding that the frequent changes to the finance minister as the shareholder representative and the role of the deputy minister as chair, regardless of skills and experience, contributed to ineffective governance at the PIC under the leadership of former CEO Dan Matjila.
But despite this finding, the PIC Amendment Act, which was signed into law by Ramaphosa in February, requires that the chair of the fund manager’s board be a deputy minister appointed by the finance minister or any other deputy minister in the economic cluster.
Briefing the media on the outcomes of the cabinet meeting held earlier in the week, minister in the presidency Mondli Gungubele said on Thursday that the appointment of the board members was subject to the verification of their qualifications and relevant clearance.
The rest of the members of the new board are: Ntombifuthi Mtoba; Tryphosa Ramano; Bonke Dumisa; Esther Barbara Watson; Beverly Bouwer; Walter Hlaise; Brian Mavuka; Makano Mosidi; Frans Baleni, a former general secretary of the National Union of Mineworkers; Mugwena Maluleke, the general secretary of the SA Democratic Teachers Union; Lufuno Mulaudzi, a leader of the Public Servants Association; and PIC CEO Abel Sithole.
Cosatu, a key ANC alliance partner that has long called for stronger union representation on the PIC board to ensure that investment decisions also consider workers’ interests, said the appointments would stabilise and strengthen the firm. Cosatu said it was not worried about the appointment of Masondo as chair, as long as systems to enforce accountability and curb corruption were in place.
“It's not about the individual. For us, what’s critical is the accountability and the systems to prevent corruption and protect workers’ money,” said Matthew Parks, Cosatu’s parliamentary co-ordinator.
The PIC has faced criticism for not doing enough to recover money it says it is owed by the likes of Ayo Technology Solutions, a company that counts Iqbal Survé as an indirect shareholder. In one of its most controversial deals in recent times, the asset manager invested as R4.3bn into the company in 2017. It bought a 29% stake at R43 a share, implying a valuation of R14.8bn at the time. But a few months before, financial statements showed that Ayo had total assets of R292m and a book value of R67m.
Since then, the share has traded at far below the original valuation.
Parks said while the interim board had managed to stop the rot and steady the firm, there was still a lot of work to be done including recovering monies from dubious investment deals.
“We will hold them accountable. The investments should be about growing the economy and workers’ pensions … some investments we have seen previously do not make sense,” Parks said.
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