Cape Town – A “radical” proposal for the disclosure of minutes of meetings relating to investment decisions taken by the Public Investment Corporation (PIC) to strengthen the asset manager’s transparency was not well received by MPs.
The proposal by non-profit company amaBhungane, known for its investigative journalism, was made at a public hearing on amendments for the Public Investment Corporation Act of 2004 on Thursday.
Stefaans Brümmer appeared before the standing committee on finance (SCOF) on behalf of amaBhungane. He highlighted significant public interest in the PIC, the biggest single investor in the economy which oversees investments of the Government Employees Pension Fund.
“We want to make a radical proposal to extend disclosure – not just the actual investments that should be disclosed, but the process by which investment decisions are taken."
Brümmer called for a provision similar to the Promotion of Access to Information Act process to have access to investment decision minutes.
“We do recognise commercial confidentiality is an issue,” he admitted. Brümmer said in the case of commercial confidentiality the PIC could redact (withhold) information, but if there is an overriding public interest it should be disclosed, possibly by court rulings. If records are already publicly available, the information cannot be refused either.
Concerning market sensitivity, Brümmer said a prescribed period should pass after an investment has been made so that markets cannot be “distorted”.
SCOF chair Yunus Carrim argued that this won't work in a market economy. “I do not believe that what you are asking for is doable in the current context of a market economy. You are asking for minutes of investment decisions - on that you do not have a case,” said Carrim.
However, he said that this does not mean the PIC should not be or accountable, adding that matters relating to questionable investments are to be discussed next Tuesday
Economic Freedom Fighters MP Floyd Shivambu argued that the PIC makes it possible for black South Africans to participate in the economy, and that it is being unfairly targeted.
To this Brümmer responded that more transparency would not take away power from executives, competent managers or prevent BEE. It will simply ensure that members of the public, who are the ultimate stakeholders, have access to the process.
“Transparency is not an antidote to empowerment. Transparency is an antidote to corruption and abuse of power,” said Brümmer.
PIC in competition
CEO Dan Matjila also put forward the PIC’s position on disclosure.
He explained that like any other asset manager, the PIC is regulated by the Financial Services Board. The difference is that private asset managers are privately owned, while the PIC is owned by the state.
“We are regulated by the FAIS (Financial Advisory and Intermediary Services) Act,” he said. This means the PIC cannot simply disclose client portfolios. The client has to give the PIC permission to do that, once they are satisfied with valuations and once the financial reports are prepared. “We can’t publish at random,” he said.
He added that the PIC is prepared to publish information, but because of the nature of this information, it must be managed in a way that won't create anxiety. Matjila said that the JSE also has a register with shareholdings of different entities in stocks listed on the exchange.
“We need to be careful in a market economy. We need to compete against the private sector and we are doing well to deliver on our mandate and exceeding client expectations… the rules of the game are similar to that of our competition.”
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