GEPF has an Oliphant in the room and fund manager raises eyebrows

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Johannesburg - Almost five months after announcing the suspension of the principal officer of the Government Employees Pension Fund (GEPF), John Oliphant, on the grounds of alleged corruption, the fund’s board has yet to launch a disciplinary hearing.

In October last year, when the dramatic news of Oliphant’s suspension was announced, the GEPF board, headed by ANC stalwart Arthur Moloto, said a disciplinary hearing was scheduled to take place in November.

While no date has been announced, unconfirmed reports indicate that the GEPF has appointed senior counsel Martin Brassey and attorney Mpoyana Ledwaba to lead the charges against Oliphant. Brassey’s areas of expertise are labour law and pension law. Ledwaba was attorney and legal adviser to Julius Malema and the Ratanang Family Trust.

The GEPF would not confirm the members of the legal team it was working with but a spokesperson said the GEPF would “like the matter to be resolved as soon as possible”.

The spokesperson confirmed that the new GEPF board, which was appointed last September but has not yet taken office, “will take office at its inaugural meeting to be convened by the minister of finance shortly”.

The controversial decision to suspend Oliphant, who is highly regarded in the local and global investment community for his stance on corporate governance, has coincided with growing concerns about some of the investments undertaken by the Public Investment Corporation (PIC) on behalf of the GEPF.

As a defined benefit fund, the responsibility for any deficit suffered by the GEPF rests with the government and hence taxpayers. One member of the pension fund has said the “reckless” treatment of Oliphant was in line with increasing evidence of such behaviour.

The PIC is tasked with managing the GEPF’s R1.4 trillion of funds, making it the single most powerful investment manager in South Africa.

The PIC’s investment in recent JSE listing Camac Energy, which describes itself as an independent oil and gas exploration and production company focused on Africa, is the latest investment to raise concerns. The PIC paid $270 million, or R2.74 billion at the exchange rate on September 7 when the deal was finalised, for a 30 percent stake.

The concerns relate to the benefits that will accrue to controlling shareholder Kase Lawal. He is, according to the Mail & Guardian, a donor to President Jacob Zuma’s education trust.

An additional concern is the appropriateness of an investment in a company with “going concern” issues.

“Should the PIC be investing pensioners’ money in a company that has evident cash flow problems and, even if it is listed, how liquid will this investment be?” queried an investment analyst, who added that the PIC now had a major stake in a highly complex industry.

Recent statements by Daphne Mashile-Nkosi, the chairwoman of Kalagadi Manganese, that the PIC was considering investing about R3 billion in the mining company prompted DA demands that the public protector investigate the “use of pensioners’ money to bankroll worrisome investments”.

In addition, the PIC’s decision to acquire R500 million of equity in Independent News & Media South Africa (the publisher of Business Report) has led to calls for an investigation by the public protector to determine the basis for the investment and whether the PIC also funded other equity investors in the transaction.

One industry analyst who has studied the PIC’s transformation from the Public Debt Commissioners in 1911 said that in the early years the PIC had no public profile and invested only in government bonds.

“The government used the funds for projects such as Iscor and Sasol. Now the PIC is allowed to invest in an array of asset classes and has become much more public.”

The analyst noted that evidence of political influence on the PIC was not new. “A few years ago there was the Elephant Consortium, which acquired a very profitable stake in Telkom and, much less profitable, was backing for Holcim.”

Last week PIC chief executive Elias Masilela defended the Camac investment, noting that the New York Stock Exchange and the JSE had undertaken due diligences on the company and its directors.

The GEPF said yesterday that there was currently no investment in Kalagadi Manganese.

It also assured its members “their pension benefits are safe as GEPF’s risk management policy and framework provides the necessary process to ensure the PIC is held accountable”.

The spokesperson said the GEPF, which is governed by the Government Employees Pension Law and rules not the Pension Funds Act, had formalised structures in place for reporting on investments. - Business Report


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