The South African Federation of Trade Unions (Saftu) and the Democratic Alliance have both warned Finance Minister Malusi Gigaba and his deputy Sfiso Buthelezi – who also chairs the Public Investment Corporation (PIC) – to keep their hands off the PIC, with the DA saying it seems Gigaba and Buthelezi are “planning a raid on the pensions of millions of hard-working government employees and pensioners”.
Saftu said in a statement on Saturday it was alarmed at the latest reports that National Treasury was pushing the PIC, Africa’s biggest money manager, to come up with as much as R100 billion to fund struggling state-owned enterprises (SOEs).
The union federation said 88.2 percent of the R1.857 trillion the PIC managed was in the Government Employees Pensions Fund (GEPS), which existed to ensure retired workers got a decent retirement income, and a further 6.7 percent of the PIC’s money was the Unemployment Insurance Fund (UIF), which provided short-term relief for retrenched workers.
Thus 94.9 percent of the PIC’s funds belonged to workers, and should be used in the workers’ interests, Saftu said.
The GEPS, a defined benefit pension fund, legally had to pay out the full pensions and benefits government employees and dependants were entitled to. It invested in shares, bonds, and other funds, and its mandate was to invest to ensure the highest possible returns.
“While the funds should be invested in socially desirable enterprises that benefit society as a whole, they must also be invested in a wide spread of companies that are most likely to be profitable and provide the best return to the PIC and ultimately to the workers.
“Yet, now, if media reports are correct, the Treasury wants the PIC to buy the government’s entire R12 billion stake in Telkom, 39 percent of its value, to pay for a bailout of the ‘technically insolvent’, in other words bankrupt, South African Airways,” Saftu said.
PIC CEO Daniel Matjila had reportedly rejected this, but agreed to buy R2 billion worth of Telkom shares because buying R12 billion would leave the PIC “overexposed” to just one entity – Telkom.
To use workers’ money for a R12 billion bailout of SAA would be bad enough, but the reports said that after bailing out SAA, government would be looking for more cash for similar bailouts for Eskom, PetroSA, and Denel.
These were the SOEs at the centre of allegations of corruption and mismanagement by the “network of looters around the Gupta family”. This was one of the reasons cited by rating agencies when they cut South Africa to junk status in April. They were exactly the sort of dodgy investments which the PIC’s mandate to invest responsibly ought to exclude.
Saftu was further concerned Buthelezi had been accused of being a beneficiary of companies that illegally secured contracts worth at least R150 million from the Passenger Rail Agency of South Africa (Prasa) and some of its suppliers while he was its board chairman.
“If the PIC keeps paying out GEPF funds to bail out loss-making SOEs, which cannot raise loans on the market because the government was downgraded by the ratings agencies, the GEPF itself will eventually become unsustainable. But if this happens, because the GEPF is a guaranteed benefit fund, which legally must pay out the guaranteed level of pensions and benefits, the government, which means the taxpayers, will then have to bail out the GEPF.
“This huge diversion of public funds will then inevitably lead to both tax increases and public spending cuts, further delays in implementing the National Health Insurance scheme, comprehensive social security, free education, infrastructure maintenance, and cuts in the existing levels of spending on essential services. It will therefore be an assault on the living standards of the poor and the goal of a better life for all,” Saftu said.
The federation demanded an immediate moratorium on any further use of GEPF funds by the PIC until those guilty of corruption and mismanagement had been prosecuted and forced to repay the money they stole, and until the boards of these loss-making monoliths had been sacked and replaced by democratic and accountable representatives of the community, workers, and the country.
Earlier, DA spokesman Alf Lees said the reports that the Treasury was trying to force the PIC to commit to providing an alarming R100 billion to bail out the numerous SOEs, including R12 billion for SAA, were disturbing, to say the least.
“While the DA has repeatedly warned of this possibility, in particular for the SAA bailout, these reports confirm the possibility that the minister and deputy … are planning a raid on the pensions of millions of hard-working government employees and pensioners,” he said.
It was therefore deeply concerning that there was also allegedly a plot to remove Matjila, which was reportedly “a greedy attempt” by the wealthy, politically connected Gupta family to hijack the PIC and “loot from the people of our country”.
Gigaba was yet again seemingly at the centre of a push to put the pensions of millions of government employees at risk, and in the process play the role of the mismanagement and corruption enabler.
“Gigaba must not be allowed to plunder the PIC and the future financial security of government employees just to bail out utterly dysfunctional state-owned enterprises that have been run into the ground under the ANC,” Lees said.
– African News Agency (ANA)