Ramaphosa should send PIC Amendment Bill back to Parliament – Alf Lees

DA MP says draft legislation in current form will not address governance crisis at state asset manager

#PICReport: DA calls on President Ramaphosa to send PIC Amendment Bill back to Parliament

13 March 2020

The Democratic Alliance (DA) is calling on President Cyril Ramaphosa to send the flawed Public Investment Corporation (PIC) Amendment Bill back to Parliament. In its current form, the Bill will not address the governance crisis at the state asset manager as explained in the damning Mpati Report which was released on Thursday.

As part of its findings, the Mpati Commission concluded that the failure to conduct due diligence before investment decisions was partly a result of the Board and the Executive’s poor decision-making processes and disregard for PIC policy and standard operating procedures.

It is therefore clear that the appointment of Board members and the executive needs to transparent and subject to due diligence by Parliament. The Commision report specifically states that “the Deputy Minister of Finance should not be the PIC Chairperson.”

However, the PIC Amendment Bill before the President gives the Finance Minister extensive powers to:

designate the Deputy Minister of Finance or any Deputy Minister in the Economics Cluster to be the Chairperson of the Board; and

appoint members of the Board in consultation with Cabinet.

This severely compromises the independence of the PIC and erodes the ability of the organisation to make rational investment decisions, insulated from any political pressure.

In addition, the Bill has some vague clauses that provide enough wiggle room for anyone who wants to use PIC money for purposes other than productive investments. For example, one clause says ‘the corporation, must as far as possible, seek to invest to be in line with the Republic’s development objectives’. It not impossible to deduce that ‘development objectives’ can be anything from using PIC funds to bailout Eskom or buy overpriced assets such as Sekunjalo companies.

The findings of the PIC Commission have laid bare the governance challenges that led to plunder of state pensioner funds. If Ramaphosa is to sign the PIC Bill in its current form, he will not only go against the Commission but will also expose PIC money to further abuse.

Issued by Alf Lees, DA Member of the Standing Committee on Public Accounts, 13 March 2020