COSATU Submission: Public Investment Corporation, the PIC Amendment Bill & Related Matters 17 June 2019 1
COSATU Interest in the PIC Bill • COSATU, its 16 affiliates, almost 2 million members & 10 million dependents strong support for Bill; • PIC is workers’ monies (87% GEPF, 7% UIF, 4% COIDA); • PIC owns 12.5% of JSE shares and is largest investment fund in SA and Africa; and • PIC is too large to fail. 2
Context of PIC Bill & COSATU Concerns • Explosion of state capture and looting, including at the PIC; • Collapse of SOEs due to looting and mismanagement: • Retrenchments, tax hikes and possible PIC bail outs; • Looting of pensions, e.g. Fidentia and Transnet; • PIC failure to meaningfully account to GEPF & UIF; • Need to restore trust in the PIC; and • Minister Gigaba’s address to COSATU CEC, 2017. 3
PIC Bill Drafting • 2 bills: – DA bill rejected; and – ANC bill passed overwhelmingly by SCOF and NA. • Extensive public participation processes: – More than 4 public hearings; – 2 years of consultations; – Systematic addressing of Treasury & PIC issues; – Active involvement of unions; and – 4 Numerous COSATU concessions.
PIC Act, 2004 • 4 and a half pages Act to protect R2 trillion fund; • Ministerial appointment of PIC Board: – No union representation; • Ministerial directives to PIC: – No checks and balances; • No transparency and accountability provisions; • No depositor mandating requirements; and • No investment guidelines. 5
PIC Amendment Bill: Board Chairperson • Minister to appoint Deputy Minister Finance; or • In consultation with Cabinet, another economic cluster Deputy Minister. • ANC motivations: – GEPF is defined benefit and fiscus must cover any shortfall. – Important economic transformation role of PIC. – Political accountability and oversight; & – Independent chairs and problems of accountability. 6
PIC Amendment Bill: Board Union Representation • 3 union representatives on Board of 13: • To give workers a voice in how their money is spent; • Key anti-corruption and oversight measure; • Selected by Public Service Bargaining Council; • 2 from majority unions, 1 from minority unions; • Accountability to unions and workers; • Not dependent on Ministerial favours; • Will be subject to same criteria as all board members; • COSATU concessions; and • PSA and FEDUSA pull out of PIC stance. 7
PIC Amendment Bill: Transparency & Accountability • Regulations: – Tabling at Parliament for noting and comments; – In line with standard practise; • Annual Reports for Minister to table to Parliament: – All listed investments; – All unlisted investments; – All Ministerial directives. 8
PIC Amendment Bill: Depositors’ Mandate • “The corporation must, when investing a deposit on behalf of depositors, invest to the benefit of the members or beneficiaries of the respective depositors. • The corporation must act in accordance with the instructions of the depositors, and…seek to invest to— • Ensure its security and financial sustainability;” 9
PIC Amendment Bill: Investment Guidelines “The PIC must, as far as possible, seek to invest to— – Ensure its security and financial sustainability; – Create and protect local jobs; – Industrialise the economy of the Republic, by building the manufacturing sector and boosting exports; – Promote sustainable development; – Be in line with the Republic’s development objectives; – Strive to build a capacitated developmental State; – Transform the economy and society; or – Prioritise investments in the Republic.” 10
Resistance to PIC Bill • Beneficiaries of looting & PIC governance crises; • Treasury officials covertly; • Reasons: – Chair should not be DM: Finance; – No worker representatives; • Subsequent positive request from Minister Mboweni for labour representatives to be selected by the PSCBC. – Oppose reporting on listed & unlisted investments; – Depositor mandates; and – Investment guidelines. 11
Resistance to PIC Bill • PIC Commission of Enquiry: – Repeated attempts by Treasury to stop bill; – Pre-empting Commission outcomes; – Commission an extension of executive; – Executive undermining of constitutional role of Parliament; – Committee not executive bill; – Future Commission recommended amendments to Act welcome; and – Urgency of now and dangers of delays. 12
Resistance to PIC Bill • Treasury: – Was part of entire SCOF processes; – All issues addressed and included in bill; – New issues now being raised covertly; – Undermining of ANC, SCOF and NA mandate; – Fears of assertive Parliament (e.g. tax interventions); – Treasury failures to hold PIC accountable and stop looting; – Treasury drafted fatally flawed PIC Act; and – Treasury refusals to engage workers. 13
Way Forward 1. Kill anti-corruption PIC bill: – Amendments, reject, delays, quorums etc; – Green light to looting and anarchy at PIC; – Massive political fall out. or 1. Enact anti-corruption PIC Amendment & further amendment bills; – Rebuild trust and confidence; – Accelerate fight against corruption; – 14 Stabilise and clean up PIC.
Conclusion • President assent of PIC Bill now; • Further amendments recommended by Commission; • COSATU and workers overwhelming support; • Excellent anti-corruption bill; • Key weapon to fight looting of pensions; • Need to stop PIC looting and governance mess; • Cannot afford to delay further; & • Restore hope of workers and pensioners. 15
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