EDITORIAL: Mboweni’s golden opportunity at PIC
If the upheaval of the past few years tells us anything, it is that the PIC board structure needed to change
It is surprising that there is not more outrage at the fact that Africa’s largest investment organisation is not only deeply immersed in a governance crisis, it is also entirely rudderless at the most vulnerable time in its history.
There are real reasons why everyone should care about the turbulence at the Public Investment Corp (PIC), which had R2.08-trillion in assets at last count. It holds the fate of more than 1.2-million pension fund members in its hands and controls 12.5% of all JSE companies.
Last week the crisis assumed a far more ominous form, as the entire board resigned. In their letter to finance minister Tito Mboweni, the directors — including the chair, Mondli Gungubele — said: "There have also been various allegations against at least four directors for now [and] our assessment is that this may not be the end.
"There is clearly a concerted effort to discredit the board of directors to an extent that there cannot be any credibility to the work that is executed in fulfilling its fiduciary responsibilities," they said.
The background is that several months ago, an anonymous whistleblower known as "James Nogu" sent e-mails containing claims against former CEO Daniel Matjila. Though an investigation by advocate Geoff Budlender found some of these claims to be without merit, Matjila later resigned — and President Cyril Ramaphosa launched a judicial commission of inquiry into the PIC.
As the inquiry heated up in recent days, Nogu resurfaced with new claims, this time against four other PIC directors. For example, Nogu claims that Gungubele (who is also the deputy finance minister) lobbied for another director, Sibusisiwe Zulu, to be deputy chair, despite startling claims of impropriety against her. Nogu also says Gungubele supported acting CEO Matshepo More, who approved another apparently shady deal.
In brief, it’s a minefield of claims of nepotism, where romantic partners or friends always end up scoring. It’s hard to say how much merit there is to these claims. It’s the sort of thing that only a forensic probe could confirm, in part because in a R2-trillion fund, R1m here or there is almost a rounding-out error.
Either way, for Mboweni, the en masse resignation is actually a glittering opportunity.
If the upheaval of the past few years tells us anything, it is that the PIC board structure needed to change. The deputy finance minister has, by convention, chaired the PIC in recent years. Which seems fine when your deputy minister has unquestioned integrity. It’s less comforting when Sfiso Buthelezi is in the chair. A seasoned investment expert, with high integrity and without ties to any political party, would be a better bet.
And better representation from a wider range of society should improve board decisions.
For example, the pensioners whose money is invested should have a direct voice. The PIC Amendment Bill, which proposes including union representation on the board, is part of the answer.
But the change will have to entail the organisation embracing a regime of transparency totally alien to its culture.
For months, the DA has been fighting to get greater insight into the PIC’s R70bn portfolio of unlisted investments — exactly the sort of dark pool in which millions can, unnoticed, be spent.
Mboweni now has a chance to renew the PIC, laying the platform for far greater transparency. This is vital as the PIC has, in recent months, been tapped by ailing state-owned companies including Eskom, SAA and Denel, and there are growing calls for its balance sheet to play a greater role in public funding.
Greater transparency over its processes and cash flows, especially into state companies, is the only way to cut through the cloud of suspicion.