Prescribed assets will be brought in via ANC’s Trojan horse
The PIC Act is merely a prelude to prescribed assets — which the ANC added to its manifesto in a dubious way
The ANC-sponsored parliamentary committee bill to amend the Public Investment Corporation (PIC) Act is likely a Trojan horse that is the prelude to the introduction of prescribed assets by the ANC.
At first sight the offending clause introduced by the ANC may seem innocuous, but this Trojan horse is likely to be an ANC move that is very different from what its appearance suggests.
The offending clause in the bill states that the PIC must seek to invest in what, on the surface would seem to be nice, heartwarming projects such as those that create and protect jobs, and those that industrialise the economy, among others.
What these feel-good contents mask is the danger that the inside the Trojan horse is really an unseen agenda that is, perhaps, even unseen by some MPs on the ANC benches who were directly involved with the bill.
The real danger of this clause is that it is an initial step towards the introduction of prescribed assets — an ANC position apparently slipped into the ANC 2019 election manifesto, as the corridors will have it, after the manifesto was approved by the ANC National Executive Committee (ANC).
The ANC manifesto states that it will “investigate the introduction of prescribed assets on financial institutions’ funds to unlock resources for investments in social and economic development”.
There has been widespread concern and, in many cases, outright rejection of a return to the last-ditch, desperate steps taken by the National Party apartheid government, which took similar steps to force investment in government projects when the government itself simply did not have enough taxpayers’ money to use.
This forced investment in government-determined projects is a frightening possibility. It would have a devastating impact, not only returns for investors and pensioners, but also for the growth of the economy
Of course, this manifesto threat from the ANC is very loosely worded and will not be restricted to the PIC and the more than R2-trillion funds of the Government Employees Pension Fund that it administers. The wording of the prescribed assets clause in the ANC manifesto leaves the way wide open for a prescribed-assets regime to be forced onto all financial institutions including all retirement funds, banks, insurance companies, and so on.
This forced investment in government-determined projects is a frightening possibility. It would have a devastating impact, not only returns for investors and pensioners, but also for the growth of the economy. Instead of savings being invested as the market determines and as is likely to have the greatest impact on economic growth, these savings will, in all likelihood, be channeled into bureaucratically determined projects, such as bankrupt state-owned entities Eskom and SAA.
Another ANC clause in the PIC Bill that clashes with the position of the DA — a position that is shared by perhaps the majority of South Africans given the degree of political interference and looting being exposed in the current commissions of inquiry — forces the finance minister to appoint his deputy or, in special circumstances, another deputy minister from within the economics cluster, as the chair of the PIC board.
While historically it has become the convention for the deputy finance minister to be appointed to this post, the PIC Act does not prescribe this and the shenanigans at the PIC being exposed by the Lex Mpati commission indicates that having a politician as chair has probably seen political agendas restrict the effective oversight of the PIC by its board.
The lessons learnt from the sad saga of state capture must surely be that the chair of the PIC board should not be a political figure, nor, indeed, selected by a political party. That is why the DA proposed that parliament call for nominations for the PIC board chair position. From these nominations parliament would make recommendations to the minister on who should be appointed as the chair of the PIC board. This was rejected by the ANC. It raises the question of why!
The balance of the content of the PIC amendment bill was lifted, in many cases word for word, from the private members bill introduced by David Maynier of the DA and contains important changes, especially for disclosure as to where PIC clients’ funds are invested. This disclosure was a hard fought and won battle by the DA when, in 2016, Mcebisi Jonas, then deputy finance minister, made a list of all unlisted investments available to the DA and then to the standing committee on finance. This disclosure shone light on the long suspected and politically motivated investments, such as in the Iqbal Survé Independent Media and Ayo Technologies.
Despite the DA-sponsored good parts of the ANC-sponsored PIC Amendment Bill, the DA will not support the bill with the inclusion, by stealth, of prescribed assets and the entrenchment of political control of the PIC board.
• Lees is an MP and the DA’s shadow deputy finance minister.