Africa’s biggest fund manager appoints unions to board

South Africa’s Public Investment Corp. has seen dubious investments land it in front of a judicial review.

Johannesburg was established after the discovery of huge gold reserves [Waldo Swiegers/Bloomberg]
Johannesburg was established after the discovery of huge gold reserves [Waldo Swiegers/Bloomberg]

Senior executives from the Public Investment Corp.’s three biggest labor union contributors are set to be appointed to the interim board of the fund manager that’s being investigated over allegations of wrongdoing.

Ivan Fredericks, the general manager of the Public Servants Association, and Mugwena Maluleke, the general secretary of the South African Democratic Teachers Union, could be appointed to the 2 trillion rand ($135 billion) fund manager as early as this week, according to union officials. Union members pensions go to the Government Employees Pension Fund, which then has the PIC manage the funds on its behalf.

The National Education Health & Allied Workers Union will also have a board member, but haven’t decided who, said deputy general secretary December Mavuso. The appointments would mark the first time the PIC has union representatives on its board.

“It’s going to be the first time, it’s a huge change,” Tahir Maepa, the PSA’s deputy general manager for members affairs, said in an interview in Pretoria. “This is going to be a game changer for the PIC going forward.”

No political appointees

The PIC’s current board offered to resign in February as testimony at a judicial inquiry brought to light a string of questionable investment decisions. The fund manager is on its third chief executive officer in six months and senior executives have been suspended.

In a break with tradition, the new board, which will serve until the commission releases its findings, won’t be chaired by the deputy finance minister, according to Maepa, who cited conversations he’s had with the minister. The treasury, which is overseen by the finance minister, didn’t immediately respond to emailed queries.

“This thing of the deputy minister being the chairperson of the board. That is nonsense,” Maepa said. “We need a business person, a private person.”

South Africa’s cabinet has been dissolved following the May 8 election and President Cyril Ramaphosa is expected to announce his new cabinet imminently. Tito Mboweni is likely to be reappointed as finance minister, people familiar with the situation have said.

The PSA has 240,000 members, making it the biggest contributor by members to funds that ultimately flow to the PIC. Sadtu has about 230,000 members and Nehawu about 194,000.

“We are going to need to reach a point where PIC board is also independent of unions as well, but currently because of the trust deficit that is there we have to go there and guard our money ourselves,” Maepa said. “We cannot stay out of the water when we see billions and billions of rand are being lost due to dubious investments.”

Source: Bloomberg

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