EDITORIAL: PIC inquiry will be the most challenging of all
The public are front-row spectators on the years of corruption that have flourished in the state and the ANC
With three major public inquiries under way, the public are now front-row spectators on the years of corruption that have flourished in the state and the ANC.
Of the three — the commission into state capture, the inquiry into the fitness National Prosecuting Authority (NPA) officials Nomgcobo Jiba and Lawrence Mrwebi to hold office, and the commission of inquiry into the Public Investment Corporation — the PIC inquiry will likely turn out to be most difficult.
The terms of reference of the inquiry state that the commission will inquire and make findings on whether certain “transactions contravened PIC policy or resulted in any undue benefit for any PIC director or employee” and whether “any PIC director or employee used his or her position to improperly benefit another person”.
The role of the PIC board will be probed, while internal matters ranging from the treatment of whistle-blowers to alleged discrimination in remuneration policy are included for investigation.
An important part of the investment mandate is transformation. Making investment decisions that further transformation involves a good deal of discretion. Why does one deal make it on to the agenda of the investment committee rather than another?
At face value, the terms of reference appeared to restrict the inquiry to events between 2015 and 2018. But at its first meeting the commissioners decided that, on their reading, the commission could probe any PIC-related matter that it wanted to. This is an encouraging sign that the head of the commission Judge Lex Mpati and the commissioners Gill Marcus and Emmanuel Lediga mean business.
The inquiry should quite easily be able to interrogate the formal decision-making process at the PIC and the basis on which the investment committee took certain decisions, especially on those deals in which, at first glance, the business case is doubtful or very risky. It could, for instance, recommend better checks and balances on decision-making processes and the powers of delegation at the PIC — two issues that quite clearly need addressing.
It can also look at the appointment of PIC board members and public disclosure requirements, some of which are already before parliament as proposals to amend the Public Investment Corporation Act.
But to really get to the bottom of corruption and politically influenced deal-making the commission has a difficult task and here’s why.
An important part of the investment mandate is transformation. Making investments decisions that further transformation involves a good deal of discretion. Why does one deal make it on to the agenda of the investment committee rather than another? Why do some black entrepreneurs win the ear of the PIC but not others?
Then there are the informal interactions that contribute to dealmaking. We know from the Budlender inquiry that former PIC CEO Dan Matjila privately met politicians who sought to lobby him outside of the formal channels of the PIC.
The third problem is the prevalence of proxies for politically exposed individuals. Deals are made with black entrepreneurs who on the face of it have no political exposure. Proving links with prominent politicians is virtually impossible, even though talk among insiders is rife about who is in which deal to represent whom.
The fourth problem is the hidden hand of the ANC in the dealings. Occasionally we have caught glimpses that hint at the involvement of the treasurers-general of the ANC or individuals known as ANC moneymen. This is made hard to probe because of the fifth problem: the conspiracy of silence in business.
There are countless off-the-record claims of bribery involving PIC officials and of claims by individuals that the PIC has muscled them out or side-stepped them and gone on to invest in proposals that they initially brought to the fund manager. But nobody is prepared to go public for fear of crossing the PIC and being denied a seat at the table in the future.
These are big hurdles for the inquiry that it will be important to overcome. All of these issues are linked in some way to the role of the PIC as an investor in private unlisted enterprises. The commission will need to weigh up in its recommendations whether that is a role that needs to be reined in for the future.