Incoming Public Investment Corporation CEO, Abel Sithole, has his work cut out. The biggest trade union federation, Cosatu, wants him to prioritise workers, while others say his success will be judged on how far the PIC will push its developmental mandate and economic transformation under his tenure.
As the current Principal Executive Officer of the Government Employees Pension Fund (GEPF), Sithole has worked closely with the PIC, especially after the contentious investments that ruined the asset manager's credibility, including AYO Technology Solutions, Steinhoff International Holdings and Erin Energy.
So, for the PIC board, if anybody could sail the ship in the right direction while managing the different interests that all want to have a share in the PIC pie, Sithole is a solid choice, said PIC board chair Reuel Khoza.
"If anybody can do this, it would be him," said Khoza.
However, Sithole's push for increased offshore exposure for GEPF members' money and his chairmanship at the then-Financial Services Board when it deregistered almost 7 000 pension funds has earned him some naysayers.
He's expected to make contentious decisions
"For me, the PIC has to understand its developmental role first, and Abel Sithole's previous incarnation at the GEPF has showed him to be too conservative for the challenges that we are facing as a country. He was advocating that we should be investing more money overseas while our economy was collapsing," said economist, Duma Gqubule.
However, Khoza says the observation that Sithole is conservative is unfounded and his track record at the Eskom Pension and Provident Fund and at Metropolitan shows that he invested widely. "That observation may be construed from him being meticulous, and because if he does take risk, he takes calculated, intelligent risk."
Gqubule said the PIC's immediate priorities are – together with the SA Reserve Bank – to help narrow the government deficit, help Eskom with its liquidity problems and release its surpluses to help the ailing SA economy. In its 2018/19 financial year, the PIC made R57 billion surplus and has accrued surpluses of similar levels for the past five years.
Workers want to be a priority
Cosatu's spokesperson Sizwe Pamla said it's all good and well for the PIC to pursue decent returns for the GEPF members. However, big payouts at retirement don't help poor workers when they don't own their homes, and have no access to good affordable healthcare or social infrastructure to make their golden years comfortable.
"They have to look at the infrastructure of the country as a whole. But also, the workers themselves, what are they getting now? The government employees' housing scheme is an issue for us: 800 000 of public servants out of 1.2 million don't have houses," said Pamla.
He said most workers spend all their retirement savings building homes for themselves when they eventually retire, but they should be given an ability to solve those immediate needs when they are still working. Sithole's tenure at the GEPF has made him understand better these issues and needs to find a way for the PIC to work with the relevant bodies to solve this.
Black Business Council President, Sandile Zungu, said while the PIC should at all times think about its responsibility towards GEPF pensioners, its role in growing and transforming the economy is equally important because civil servants' benefits are underwritten by taxpayers.
He said because the PIC is the go-to institution for most people who want to fund large business transactions, and because there is usually no other alternative for black-owned businesses, it is the only institution that can "move the needle" on economic transformation.
"So we do expect him to put the PIC's foot on a pedal as far as empowerment ownership is concerned," said Zungu.
He added that how vocal the PIC will become at all AGMs of the companies it's invested in will be a yardstick for his success in this transformation mandate. The PIC owns about 10% of the JSE and over a decade ago was instrumental in facilitating transformation in Barloworld and Sasol.
"But we trust Abel. I've known him since the days I was a director at Metropolitan Life Holdings and he was an executive. [He is] someone that has a lot of integrity, a very focused technocratic person, " said Zungu.
Root out corruption in the PIC
Cosatu has been calling for a forensic audit of all 1 200-odd listed and unlisted PIC investments. The PIC Board has appointed retired Constitutional Court Judge Justice Yvonne Mokgoro to guide the PIC's disciplinary process and lead the implementation of the Mpati commission report's findings published in March. Pamla said the PIC must stop being a piggy bank for the connected corrupt individuals.