Government Employees Pension Fund backs scandal-ridden PIC

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The new head of Africa’s biggest pension fund is retreating from his predecessor’s threat to withdraw money from the Public Investment Corp, as he backs a turnaround at the scandal-plagued asset manager.

That the former overseer of South Africa’s Government Employees Pension Fund is now at the helm of the state-owned PIC is also giving Musa Mabesa the confidence to entrust the bulk of its R1.9 trillion portfolio to the money manager.

Mabesa, 37, took over from Abel Sithole last month as principal executive officer of the GEPF after Sithole moved to the PIC, which counts on the pension fund for the bulk of its assets. While Sithole had said shifting funds from the PIC to other managers was an option, Mabesa is opting to bolster scrutiny of the firm and give it time to rebuild trust.

"Diversifying who we give mandates to is a future discussion we can have," Mabesa said in an interview on Thursday. "We have increased confidence in the PIC’s interim board - and we know Abel."

A judicial inquiry last year exposed lapses in the PIC’s governance and political interference in its investment decisions, with a third of the recommendations aimed at the company’s management. The inquiry also highlighted the PIC’s reliance on the GEPF, which accounts for 86% of its funds under management, and oversees the retirement savings of more than 1.2 million civil servants.

The filling of several high-ranking vacant posts at the PIC also “improves functioning and provides comfort to us,” Mabesa said. Before taking the top role at the fund, Mabesa was head of corporate services at the GEPF.

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