PIC Act’s aim: transparency
The Public Investment Corporation (PIC) is now required to receive a mandate from its depositors regarding how its funds are managed. According to the PIC Amendment Act, which was signed into law by President Cyril Ramaphosa on Monday, the fund manager is also required to publish and submit a report on all investments to the minister of finance for tabling.
The act also stipulates that the finance minister must table a report annually to parliament on all investments of deposits and request approval of any significant transactions in line with the Public Finance Management Act (PFMA).
The Act aims to strengthen accountability and transparency at the fund manager, following revelations at the Mpati Commission that it had been involved in a number of suspect investments, including its billion-rand investment in Iqbal Survé-linked Ayo Technology.
While the Mpati Commission’s terms of reference did not include the Government Employees Pension Fund (GEPF) and the Unemployment Insurance Fund (UIF), the inquiry found that the PIC’s former management did not inform the two organisations on some crucial investment decisions.
With regards to the PIC’s disastrous R4.3-billion in Ayo, PIC CEO Abel Sithole (who was the GEPF’s principal officer) told the commission the PIC did not involve or inform the GEPF when it considered and made the investment in Ayo, nor did it highlight the investment in its subsequent reporting to the GEPF, but only responded when the GEPF began asking questions.
This was in contravention of the R2 billion cap on the amounts the PIC could invest in a single asset without approval by the GEPF.
The Act also requires the PIC to have three board members selected by organised labour in the Public Service Collective Bargaining Council.
Labour federation Cosatu has welcomed this move as it will be the first time in the fund manager’s history that workers are represented on the board. “While there is no silver bullet in the fight against corruption, the PIC Amendment Act will be a critical tool in the hands of workers, parliament and the public,” said Cosatu.