New PIC Amendment Act aims for more transparent investments
CAPE TOWN - THE PUBLIC Investment Corporation (PIC) Amendment Act, introduced to bring more transparency and accountability to the country’s biggest pension fund investor, has been promulgated two years after the entity’s governance failures were exposed in a commission of inquiry.
According to the act, the chairperson of the PIC would from now on either be the deputy finance minister or any other deputy of the government’s cluster of economic departments, a move that essentially strengthens government control over its asset manager.
Other provisions include a requirement for the PIC to publish the details of new investments on its website on behalf of its clients and to report, annually, the total number and details of “significant transactions” to the minister of finance.
The PIC also has to “publish and submit a report on all investments to the minister of finance for tabling” in Parliament, and the PIC would also need to “consider certain guidelines when investing deposits” on behalf of its clients.
It is also now required to receive a mandate from its depositors regarding how the depositor’s funds were managed. The new law now also requires the PIC to have three board members selected by organised labour in the Public Service Collective Bargaining Council – the first time labour workers will be represented on the board.
Among guidelines that the PIC should also comply with “as far as possible” when investing, according to the act, are among others the creation and protection of local jobs, to industrialise the economy by building the manufacturing sector and boosting exports, promote sustainable development, be in line with government development objectives and transform the economy and prioritise local investment.
PIC chief executive Abel Sithole said the amendment was a significant step towards greater transparency and accountability, regarding the PIC’s investment processes.
“Ultimately, the PIC is accountable to its clients and their beneficiaries and to the government as shareholder and guarantor of its clients. The new legislation provides for greater oversight by all stakeholders,” he said.
The Act’s promulgation follows revelations at the Mpati Commission last year that the PIC had been involved in a number of suspect investments and corporate governance failures.
The inquiry found also that the PIC’s former management did not inform the Government Employees Pension Fund and the Unemployment Insurance Fund on some crucial investment decisions.