PRETORIA - The Democratic Alliance is concerned that a statement issued by the Public Investment Corporation (PIC) board regarding the fund manager's investments in Eskom "is not entirely honest and transparent", the party said on Saturday.
"Firstly, if the PIC has indeed prepared an internal document which proposes a R90 billion Eskom debt-for-equity swap plan, then this document should be publicly released immediately. This 'proposal' is nothing more than a euphemism for writing off this Eskom debt. There is no hope of the PIC recouping this money," DA shadow minister of finance Geordin Hill-Lewis said in a statement.
Even the rumour of this proposal had already caused distress among other Eskom debt holders, the debt market, and among pensioners, he said.
Earlier on Saturday, the PIC board confirmed that the entity had developed a discussion document on options regarding its investments in state-owned power utility Eskom.
"The Public Investment Corporation (PIC) wishes to clarify and place in context reports that it is intending to convert its bond investment in the power utility Eskom into equity," the board said in a statement.
The reports were based on an interview that PIC chairman Reuel Khoza had with television news channel eNCA, in which Khoza stated that the PIC had developed a discussion document on its investment in Eskom.
"In that regard, the PIC confirms that it has developed a discussion document which sets out a wide range of possible options. Whatever solution the PIC eventually supports, if any, will meet the risk and return expectations of our clients and be fully consistent with our fiduciary responsibilities."
Therefore, the PIC considered any "misinterpretation of the aforementioned as unfortunate and regrettable", the board statement concluded.
eNCA reported on Thursday that the PIC had tabled a proposal to help bail out Eskom. Trade union federation Cosatu had previously mooted using R250 billion in PIC funds to pay some of the utility's burgeoning debt.
Khoza said the PIC had not received any formal communication from Cosatu, but he believed there was a way to help Eskom, eNCA reported.
In his statement on Saturday, Hill-Lewis said the PIC had a duty to play open cards with the public and the millions of pensioners it served, and should release this document.
Secondly, Khoza needed to explain the inconsistencies between Thursday’s interview and Saturday’s statement. In his interview with eNCA on Thursday, Khoza said the Government Employees Pension Fund (GEPF) was “in principle in agreement” with this proposal.
"The statement today [Saturday] suggests no such discussion has even taken place, and the proposal is still internal to the PIC. This inconsistency must be explained. Has the PIC discussed this proposal with the GEPF or not? Has the GEPF given its in principle agreement or not? If Dr Khoza has been less than frank, this would be cause for serious concern," he said.
Thirdly, the response had been issued two days after Khoza’s comments about this “proposal" on Thursday. A clarifying response should have been issued immediately.
"We believe the PIC is trying to make a genuine effort to improve its governance after the findings of the Mpati Commission. This is a golden opportunity to show their commitment to greater transparency and to delivering on their core investment mandate.This proposed debt write-off has enormous implications for South Africa, and the PIC must not hide it from the country. It should play completely open cards with the public," Hill-Lewis said.
The PIC, Africa's biggest fund manager by far, is wholly owned by the South African government, represented by the minister of finance. The PIC's clients are mostly public sector entities, including the GEPF, Unemployment Insurance Fund (UIF), Compensation Commissioner Fund (CC), Compensation Commissioner Pension Fund (CP), and Associated Institutions Pension Fund (AIPF).