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A new but familiar custodian at the Public Investment Corporation

A new but familiar custodian at the Public Investment Corporation
Abel Sithole is the new CEO of the Public Investment Corporation. (Photo supplied)

Finance Minister Tito Mboweni, who oversees the Public Investment Corporation’s operations, announced that Cabinet has approved the appointment of Abel Sithole as CEO for five years. Sithole is currently the principal officer of the Government Employees Pension Fund — the PIC’s biggest client.

After a year-long search for a permanent CEO of the Public Investment Corporation (PIC), the government has approved the appointment of Abel Sithole to lead the state-owned asset manager.

In a statement on Wednesday 27 May, Finance Minister Tito Mboweni, who oversees the PIC’s operations, announced that Cabinet has approved the appointment of Sithole as CEO for five years.

Sithole’s appointment is part of sweeping executive changes at the PIC following the final findings of the commission of inquiry into the governance issues and affairs of the asset manager. The PIC is also expected to announce the appointment of the new chief investment officer, chief financial officer, chief risk officer, and chief technology officer.

Sithole is currently the principal officer – similar to a CEO – of the Government Employees Pension Fund (GEPF), which is the PIC’s biggest client.  At the end of its 2019 financial year, the PIC managed R2.13-trillion in government pension savings on behalf of the GEPF, and other social funds including the Unemployment Insurance Fund and Compensation Fund. Of the total money that the PIC managed (R2.13-trillion), 87% belonged to the GEPF, the custodian of pension savings belonging to 1.7-million current and retired public servants.

The PIC invests the pension savings of GEPF members into various asset classes such as JSE-listed shares, government bonds, and others, to generate returns, which are paid out to public servants when they retire.

Sithole’s PIC appointment creates a key vacancy at the GEPF and it’s not clear when he officially starts his duties at the asset manager.  The National Treasury said PIC board chair Reuel Khoza will further elaborate on the process to be followed for the appointment of Sithole. Khoza was not available to comment on the appointment.

Sithole’s appointment as CEO took more than a year because executive appointments at state-owned entities have to be approved by the board, government ministers and Cabinet – often protracting the process.

The final report of a commission of inquiry, which was headed by Judge Lex Mpati and whose findings were published on 12 March, found that Matjila had breached his fiduciary duties as an executive when approving investments in insolvent companies.

Sithole has been the principal officer of the GEPF since July 2015 and is also the commissioner of the Financial Sector Conduct Authority, which is SA’s capital markets regulator. His move to the PIC comes at a time when the asset manager is still dealing with the trail of governance issues, corruption allegations, and ill-fated investments left behind by former and long-time CEO Dan Matjila.

Matjila, who had a 15 year-long career at the PIC, resigned in November 2018 and was replaced by interim appointments including Matshepo More (the now suspended PIC CFO) and Vuyani Hako (the executive head of properties) until a permanent CEO was found.

The final report of a commission of inquiry, which was headed by Judge Lex Mpati and whose findings were published on 12 March, found that Matjila had breached his fiduciary duties as an executive when approving investments in insolvent companies.

Among these companies are those owned by businessman Iqbal Survé; the PIC invested R4.3-billion in AYO Technology Solutions and extended loans amounting to R1.4-billion to the Sekunjalo Group from 2013 to help it buy Independent Media, which owns publications including The Star and Cape Argus. Sekunjalo hasn’t paid back loans linked to Independent Media, resulting in the PIC and GEPF impairing them in their financial books.

Sithole’s more than four-year tenure at the GEPF has been marred by its alarmingly weak mandate and oversight over investments made by the PIC. For example, he told the inquiry that the PIC didn’t involve or inform it when it made the ill-fated investment in AYO. BM

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