Over the past month, the Government Employees’ Pension Fund (GEPF) and its fund manager, the Public Investment Corporation (PIC), have been at the centre of what appears to be a disinformation campaign.
This has been fuelled by social media posts claiming that there was an alleged multibillion-rand legal claim against the portfolio assets of the GEPF managed by the PIC.
Social media posts claimed that the fund was insolvent and would not be able to pay out pensions.
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Fortunately, many South Africans are now becoming savvy to the misinformation peddled on social media and, hopefully, members of the GEPF did not panic.
The background to this allegation was a document sent to Parliament and other regulatory bodies raising concerns about the exposure of the GEPF to an investment made by a subsidiary of Nedbank Limited, operating in the UK, which would give rise to a financial liability.
According to a statement issued by the PIC this week, both Nedbank and Old Mutual (which was previously affiliated with Nedbank), have denied these allegations.
The PIC explained that the only way it was linked to this allegation was that the corporation and its client, the GEPF, are investors in both Old Mutual and Nedbank.
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As the largest pension fund in South Africa, the GEPF makes up about 20% of the total shareholding on the JSE and has investments in most of South Africa’s largest companies.
“It is solely upon this fact that the PIC and the GEPF are connected to the allegations and the conclusions reached.
“Old Mutual and Nedbank are limited liability companies.
“Therefore, the PIC’s exposure, acting on behalf of the GEPF, to any claims against Old Mutual and Nedbank, assuming they are legitimate, is limited to their shareholding only.
“This is the case with all investments in companies with limited liability globally.”
In other words, even if there was a problem with one of Nedbank’s subsidiaries, the exposure of the PIC would be very limited.
Given this context, the claims made in the document were nonsensical.
It stated that the GEPF could face a claim of £158 billion (R3.34 trillion) and, as a result, the state pension fund would cease to exist.
In response, the PIC said:
Most fund managers and pension fund managers in South Africa would most likely have investments in these two large companies and face similar claims.
Yet none of them had been targeted in this campaign.
The complaint was sent to several regulatory and investigative bodies in South Africa, the UK and the US.
According to the PIC statement, “none of the regulatory and investigative bodies has confirmed the veracity of these allegations”.
It was unclear what the motive behind this misinformation campaign was, and the pension fund said: “We request our stakeholders to refrain from spreading unsubstantiated allegations as these cause unnecessary panic among GEPF members.”
The FSCA commented: “In 2021 the FSCA received a complaint in which it was alleged that authorities in the UK would impose a penalty of £5 billion on a UK-based subsidiary of Nedbank and that this “fact” had been known by certain entities and deliberately hidden from the public.
“If such liability existed and such fact had been withheld from the public as alleged, then that could potentially have constituted a contravention of Section 81 of the Financial Markets Act 19 of 2012 (FMA) - which section prohibits the publication of false, misleading or deceptive statements of material fact regarding a listed company through omission or commission.
“Pursuant to the complaint, the FSCA conducted a preliminary investigation, and after considering the facts available at the time, decided to close its file. As per standard practice the matter may be revisited should any relevant new facts come to light.”