Did the PIC break the rules?

Johannesburg - The Government Employees’ Pension Fund (GEPF) and the Public Investment Corporation (PIC) insist that the R5 billion bridging loan granted to Eskom did not require GEPF board approval.

The Public Servants’ Association (PSA) on Friday demanded full records related to this loan from the GEPF, claiming it was an illegal use of pension funds.

However, the GEPF’s spokesperson, Matau Molapo, said that the R5 billion loan fell within the PIC’s mandate for money market investments.

An equity investment of this size would have required a board meeting, but this was a short-term loan that was fully guaranteed by government, she told City Press.

The interest rate charged on the loan, which is confidential, is also “very favourable” to the GEPF, she said.

“There was no need for a board meeting. Nevertheless, the PIC and GEPF boards were fully engaged,” said Molapo.

The PIC’s head of corporate affairs, Deon Botha, told City Press the same thing.

“The mandate gives the PIC full authority to invest [including in money market instruments] without seeking prior approval from the GEPF,” he said by email.

“The PIC did not request approval from the GEPF, but informed the fund of the investment.”

The deputy general manager of the PSA, Tahir Maepa, said that the union had given the GEPF until the end of next week to demonstrate that the loan was within the mandate of the PIC.

The lawyer’s letter sent to GEPF principal executive officer Abel Sithole and board chair Renosi Mokate demands full disclosure of all details about the loan, including the interest rate charged to the desperate Eskom for a loan that reportedly has to be repaid in a month.

In addition, the PSA wants details of the full terms of the supposed government guarantee backing the loan and the names of every person involved in concluding the loan agreement at the GEPF, the PIC, Eskom and Treasury.

According to Maepa, the GEPF’s already large exposure to state-owned companies and earlier promises from Finance Minister Malusi Gigaba that state companies would not get bailed out with pension money, the “sensible thing to do” would be to have the GEPF board deliberate
on it.

“It may be so that there was a good reason [to extend the loan], but there should still have been that kind of consultation,” he told City Press.

The letter of demand sent to the GEPF gives it until next Friday to provide documentation related to the loan.

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