ALLAN GREENBLO: There’s an opportunity to overhaul the FSCA
Let past and present FSB/FSCA employees speak out about possible shenanigans
It’s unfortunate that Abel Sithole wears a beard. In regular morning appearances before a shaving mirror, his distinct persona in the Government Employees Pension Fund (GEPF) and the Financial Sector Conduct Authority (FSCA) could have had productive face-to-face conversations.
They might have changed the course of recent SA financial history over shenanigans at the Public Investment Corporation (PIC) that the Mpati commission has revealed.
Sithole is principal executive officer of the GEPF. He is also commissioner of the FSCA. It should have been a simple matter for the one to know goings-on in the other, the same individual being central to both, but apparently it wasn’t.
There’s no line of accountability or authority between the GEPF and FSCA, previously known as the Financial Services Board (FSB), although they’re joined at the hip by the PIC:
- The GEPF is SA’s largest pension fund. Governed by its own statute, and not by the Pension Funds Act, it is not supervised by the FSCA;
- The PIC is SA’s largest asset manager because it manages the bulk of GEPF assets. The PIC is supervised by the FSCA;
- The FSCA, its former boards and present management committees are essentially unchanged from its days as the FSB. PIC operations are under supervision of this body.
Where then was the FSCA during the 2017/2018 period that the Mpati commission investigated? Pretty much missing in action, it would seem.
After increasingly strident media reports, several concerning suspected irregularities at the PIC over companies related to Iqbal Survé, the FSCA conducted an on-site visit at the PIC in February 2018. The scope of the visit was limited to mandate compliance, governance framework and processes followed to make investments of behalf of clients.
“Based on the information provided by the PIC, the authority did not identify areas of noncompliance with the focus areas prescribed in the scope of the on-site visit,” said the FSCA in a letter to the commission. It was signed by FSCA executive head Dube Tshidi on behalf of Sithole.
Contrast this with findings in the Mpati commission report. References to accusations by Sithole in his GEPF capacity are frequently made against the PIC. Examples are “a breach of faith and trust”, “material misrepresentation” and only responding about an investment “when the GEPF began asking questions”.
So, to repeat, where was the FSCA?
In his budget speech, finance minister Tito Mboweni announced that a new commissioner for the FSCA is to be appointed; not a moment too soon because Sithole and the management committee have been holding interim appointments for almost two years.
Therein lies a bigger opportunity to freshen the FSCA, just as the Mpati commission paved the way for a new PIC CEO and as the Nugent commission did for Edward Kieswetter on his appointment to the SA Revenue Service (Sars).
What the Mpati and Nugent commissions have shown is the advantages of competent forums in gathering testimony from witnesses unafraid of losing their jobs. There might be more than a few past and present FSB/FSCA employees itching similarly to speak out.
Let them. And if they’re joined by representatives from supervised bodies, otherwise constrained silently to mutter their disaffections, so much the better for clean slates all round.
- Allan Greenblo is editorial director of Today’s Trustee (www.totrust.co.za), a quarterly magazine mainly for the principal officers and trustees of retirement funds.