The South African Federation of Trade Union has added its voice of caution to reports that government plans to dip into Public Investment Corporations funds to prop up struggling state-owned companies.
Saftu said on Saturday that Treasury was reportedly pushing the PIC to come up with as much as R100bn.
“88.2% of the R1.857 trillion which the PIC manages is in the Government Employees Pensions Fund (GEPS), which exists to ensure retired workers get a decent retirement income; and a further 6.7% is of the PIC’s money is the Unemployment Insurance Fund (UIF), which provides short-term relief for retrenched workers,” said Saftu.
“Thus 94.9% of the PIC’s funds is workers’ money! And it should be used in the workers’ interests!”
Saftu spokesperson, Patrick Craven, said that the “GEPS is a defined benefit pension fund, which legally must pay out the full pensions and benefits that government employees and dependents are entitled to. It invests in shares, bonds and other funds and its mandate is to invest to achieve ensure the highest possible return.”
“While the funds should be invested in socially desirable enterprises which benefit society as a whole, they must also be invested in a wide spread of companies which are most likely to be profitable and provide the best return to the PIC and ultimately to the workers,” he said.
“Yet now, if media reports are correct, the Treasury wants the PIC to buy the government’s entire R12 billion stake in Telkom, 39% of its value, to pay for a bailout of the ‘technically insolvent’, in other words bankrupt, South African Airways,” Craven said.
He said PIC Chief Executive Officer Daniel Matjila had reportedly rejected this, but had reportedly agreed to buy just R2 billion worth of Telkom shares, as buying R12 billion would leave the PIC ‘over-exposed’ to just one entity.
“To use workers’ money for a R12 billion bailout of SAA would be bad enough but the reports are that after bailing out for SAA, the government will be looking for more cash for similar bail-outs for Eskom, PetroSA and Denel,” Craven said.
He said these are the state-owned enterprises which have been at the centre of allegations of corruption and mismanagement by the network of looters around the Gupta family.
SAFTU is further concerned that the PIC’s Chairman is Sfiso Buthelezi, who is also deputy finance minister, and who has been accused of being a beneficiary of companies that illegally secured contracts worth at least R150 million from the Passenger Rail Agency of South Africa (Prasa) and some of its suppliers while he was its board chairperson.”
“This huge diversion of public funds will then inevitably lead to both tax increases and public spending cuts, further delays in implementing the national health insurance scheme, comprehensive social security, free education, infrastructure maintenance, and cuts in the existing levels of spending on essential services,” Craven said.
