This is surely the lowest point for the Public Investment Corporation (PIC). It has no board and swathes of its senior management are suspended amid corruption allegations.
A commission of inquiry is sorting through the mess while pondering a plan for its future.
The PIC is one of the 10 biggest pension fund managers in the world, the custodian of more than R2-trillion in assets and the biggest investor on the JSE.
The core problem is that there is no consensus on what we want the PIC to be. As the government’s financial stress has grown, its role has become increasingly contested.
The government has many liabilities and pensions to civil servants is just one.
Why is it that pensioners — the Government Employees Pension Fund is the largest pot of assets that the PIC manages — get a pool of assets while the government has to scrabble around with increasing desperation to meet other liabilities like SA Airways, Denel and Eskom debt? Civil servants benefit from a defined benefit scheme after all, so the benefits to pensioners do not depend on the performance of the assets (with one minor exception — in theory annual adjustments to pension benefits are guided by the returns to the pool of assets, but in reality these have been based on inflation).
The government has to step in and meet the obligations no matter how assets perform. So why not use the PIC to house assets that commercial investors will not touch?
Over the past few years the PIC has been the default (no pun intended) home for distressed public-sector debt.
Late in 2018 it quietly picked up R290m of Denel’s debt when the arms parastatal could not repay the capital to the City of Johannesburg which had held it. The PIC has been stuffed full of billions in SAA debt as the airline has been abandoned by commercial lenders. It has always been a big buyer of Eskom debt and has lately been advancing short-term cash to rescue its liquidity.