Ivan Fredericks, general manager of the Public Servants Association (PSA), may just have put his finger on it. Hours after receiving what must have been boxes of documents from Steinhoff, Fredericks told reporters that the minutes of high-level meetings that were in those boxes showed that the state-owned pension manager, the Public Investment Corp (PIC), had never been represented on the board of the retailer.

That’s not surprising, as the PIC often isn’t represented on boards. What is surprising is that it was only on December 14, more than a week after the retailer admitted to "accounting irregularities" and its stock collapsed, that the PIC demanded representation. As the second-largest shareholder with 8.4%, the PIC should have made this demand much earlier.

Of course, there were powerful personalities on the Steinhoff board, so perhaps two PIC appointees would have made no difference. But perhaps they would have.

Even in companies where the PIC has had board representation, it has achieved little.

Back in 2017, under pressure from the DA’s David Maynier, the PIC eventually released a schedule of its R67.9bn portfolio of unlisted investments. Shockingly, this revealed the PIC had board representation on most of the companies it had tagged as "underperformers".

A chilling 30% of its unlisted investments were underperforming financially; while around 60% were described by the PIC itself as "environmental, social and governance laggards" — a disastrous performance by Africa’s largest investment manager.

Why? Some industry experts say it’s due to a lack of "engagement", others blame a lack of capacity at the PIC. "They’re making huge decisions and don’t have the skills to follow through," says one investment banker.

In December, the Government Employees Pension Fund (GEPF), the PIC’s largest client, tried to comfort its members by saying the potential loss on the PIC’s R28bn direct investment in Steinhoff shares was equivalent to less than 1% of the total assets of the fund.

There was more "good news" for government employees: "As a defined benefit fund, the movement in the value of individual investments does not affect the benefits to members and pensioners," said the GEPF.

Government employees might take comfort from being told that in the context of the R1.8trillion portfolio, these failures are small. But still, it should terrify taxpayers.

It would be difficult to imagine an institutional structure designed to leak value more consistently than that of the PIC. Its client base is protected from the consequences of poor management and it has minimal disclosure obligations.

This is why news that Maynier has submitted a private member’s bill — the Public Investment Corporation Amendment Draft Bill — should be enthusiastically welcomed.

Yunus Carrim, the chair of parliament’s finance committee, is hoping to finalise the bill "reasonably soon". The bill will introduce much-needed disclosure obligations to the PIC, while removing some of the political whimsy from the decision-making process.

In the selection of its unlisted investments, the PIC has huge capacity to direct money towards cronies — political or business. The objectives behind its Isibaya Fund are noble: "to provide finance for projects that generate financial returns while also supporting positive, long-term economic, social and environmental outcomes for SA". But this is often used to justify handing over money to well-connected individuals.

Until Maynier forced the issue in 2017, the PIC and these individuals were safe from the prying eyes of the public. But if the bill goes through, they are going to have to get used to scrutiny as it includes the requirement that all investments are disclosed every year.

Maynier agrees that funds should be used to promote development. "But the process has to be transparent and a return demanded — it should not be tainted by corruption."

The bill also seeks to provide parliamentary oversight of the appointment of the chair of the PIC board. At present, the minister of finance decides who is chair — so right now, the PIC is chaired by deputy finance minister Sfiso Buthelezi.

Maynier’s bill would result in the national assembly recommending a shortlist of candidates to be chair. The bill also requires that the 12-member board include representatives from its major clients.

If the bill is passed, all directives issued by the minister to the PIC would have to be tabled in parliament and published on the PIC website to ensure greater transparency.

The PIC’s response to the bill was, at this early stage, noncommittal. "The PIC is studying the proposed amendment bill," says spokesman Sekgoela Sekgoela.

But more encouraging were reports from deep within the organisation that many welcome the prospect of greater accountability — presumably because it would free them from the burden of having to entertain the demands of well-connected individuals.

Asief Mohamed of Aeon Investment Management is one of the many fund managers who says the bill will create the appropriate level of oversight. But he says the bill should go further: he’d like to see probity checks and regular lifestyle audits of all key decision makers. He believes disclosure should be six-monthly rather than annually.

He is particularly encouraged by the prospect that the PIC will be rescued from the pressure of interest groups, leaving
it better placed to get on with the job of being Africa’s largest and most effective investment manager.