Vuyo Jack. Picture: SUPPLIED
Vuyo Jack. Picture: SUPPLIED

Having a politician chair the Public Investment Corporation (PIC) will “exacerbate” risk for the state-owned asset manager and will not improve its governance, one of the organisation's former directors said on Monday. 

“There is no legal or economic principle that supports that the chair of the PIC should be the deputy finance minister. By putting a political chair in place, it exacerbates the risk, without enhancing the returns or improving the governance of the institution,” Vuyo Jack, who served as a PIC nonexecutive director from December 2012 to November 2015, said at the inquiry into the organisation led by retired judge Lex Mpati.


The corporation has been embroiled in many controversies, including allegations of corruption.

The inquiry  heard previously  that the practice of appointing the deputy finance minister as chair of the PIC was not mandated by legislation.

The PIC, which manages more than R2-trillion on behalf of public bodies, most notably the Government Employees Pension Fund (GEPF), differs from many other state-owned enterprises like Eskom and Transnet that choose established business people to chair its boards.

Jack,  mandated by the board to address organisational and governance challenges at the PIC as far back as 2014, co-ordinated, in conjunction with work by consulting firms KPMG and Deloitte, a draft governance-review report.

The report identified organisational issues in relation to  delegation of authority, leadership, dereliction of duty, misalignment of incentives and weak monitoring and accountability procedures that hamstrung the PIC.

With the benefit of comparing the PIC with other large investment managers and pension funds such as CalPERS and Blackrock following a trip sponsored by the PIC for this exact purpose, the draft report made recommendations, one of which was to clarify the role of the board chair.

“The potential hazard, we contend, is not primarily the idea of a shareholder chairing the board, but whether in the wisdom of the board a political chair is prudent, given the fluid nature of politics,” Jack's report said.

Should the shareholder remain adamant that a politician must chair the PIC, the report suggested appointing a nonpolitical deputy chair to balance the competing  expedient needs of a politician  against the fiduciary requirements of the organisation.

“The deputy chairperson’s views must take precedence on certain issues where there is potential political conflict of interest that might arise for the chair,” Jack said. 

Last Tuesday, the National Assembly adopted the PIC Amendment Bill,  intended to strengthen  accountability, transparency and corporate governance at the asset manager. 

This was despite the DA, African Christian Democratic Party (ACDP), the UDM and COPE arguing that having a deputy minister as chair of the PIC board would open the way for political interference.

Parliamentary finance committee chair Yunus Carrim said the provision was justified in that the fiscus had ultimate responsibility for the GEPF. However, the provision was counter-balanced by the fact that the PIC would be accountable to parliament for its decisions and would also have trade union representatives on its board to oversee the deputy minister.

The bill has  been referred to the National Council of Provinces.

With Linda Ensor