When gamekeeper turns poacher
The look into internal workings of the PIC offers a great opportunity for rethink and perhaps restructure. Flaws and failures require resolution for the long term.
The latest annual report of the Public Investment Corporation creates the impression of SA’s largest asset manager doing a mighty fine job. But revelations before the commission of inquiry into PIC irregularities reflect precisely the opposite. They cannot both be right.
Whatever the findings ultimately produced by the commission, chaired by retired judge Lex Mpati, things can never be the same again; neither for the PIC itself nor for its major client, the Government Employees Pension Fund. The PIC directly manages almost 90% of the GEPF’s R2 trillion investment portfolio.
Together, the PIC and GEPF have been presented as the manager-client model for SA retirement funds to emulate. Clearly, the model is flawed. Amidst the alleged shenanigans at the PIC, where was its board to whom the chief executive reported? And where was the GEPF board to ensure that the PIC complied with its mandated responsibilities?
The PIC directors resigned en masse, ostensibly because the evidence before Mpati had made their jobs impossible. Should allegations be proven – there’s a long way to go – dismissals in disgrace might seem more appropriate. For their part, the GEPF trustees cannot indefinitely leave their stewardship role unexplained.
It is they who provided the PIC with its investment mandate. It is they who, the GEPF annual report proclaims, govern the fund and are accountable for its investment and administrative performance. They also protect its values, from integrity and transparency to the flag-carrier for stakeholder activism and responsible investment.
Yet, from under the noses of committees and sub-committees, the PIC faces interrogation from the commission for a fundamental tenet of the mandate whereby the GEPF trustees “require global best practice in terms of risk management, monitoring and reporting”.