The Public Investment Corporation (PIC). Photo: File
The Department of Employment and Labour, particularly the Compensation Fund and the Unemployment Insurance Fund, have monies invested through the Public Investment Corporation (PIC).
Naturally, a portion of these funds is invested in listed companies, which is the prudent course of action. However, a significant proportion is invested in unlisted entities.
The Department recently reviewed the performance of these unlisted investments, and the results have been dismal. As of March 2024, the underperformance of these investees has led to what can only be described as a “bloodbath.”
For instance, a company called MUSA Capital received an investment of R250 million in April 2018. This investment has completely collapsed and is now worth nothing. Another company, Zanalwandle, received R3 million in April 2021, and it too is now worthless.
The investment in BUSAMED, made in October 2020, has lost 34% of its initial value. Fountain Civil Engineering, which received R20 million in April 2015, has lost 65%. This list goes on. I allege that this is sheer recklessness. It must be noted that the monies within the Compensation Fund and the Unemployment Insurance Fund belong to the workers of South Africa.
In addition to these funds failing to adequately serve the public, their investments have shown reckless mismanagement. The Department of Employment and Labour cannot continue in this manner. To be fair, some investments have yielded up to 15% growth, but the majority have lost value or completely collapsed.
We are not talking about a few million rand – many of these cases involve hundreds of millions. For example, the Razorite Health Fund solicited an investment of R799 million, but over a decade, it has only achieved a 2% growth rate. This is unsustainable. It’s one thing for the government to take risks with its own money, but here we are dealing with workers’ money. Not only is this unacceptable, but it borders on criminal negligence.
Workers have no say in how these funds are invested, and it appears that many of these unlisted entities have not been thoroughly vetted, potentially raising further concerns about their legitimacy.
Now that Minister Meth is fully aware of how the departments under her jurisdiction have mishandled public funds, we expect a statement from her outlining how she plans to reform the department’s approach and how she will manage future investments. While these investments occurred before she took office, it is now her responsibility to ensure that such reckless behaviour ends.
Many will be watching closely to see how future investments are handled, and our new Minister will be judged accordingly. I hope she will take a vigilant stance on safeguarding workers’ money and ensure that this type of conduct does not recur. Those responsible for the misconduct outlined above should face some form of consequence management.
Speaking of consequence management, the Auditor-General (AG) was empowered to hold individual government officials accountable by issuing certificates of debt.
MPs Dr Burke and Honourable Bouw-Spies have noted that not a single certificate of debt has ever been issued.
Such a certificate allows the AG to order an official to repay money lost due to mismanagement. As pointed out by the MPs, there has been “no shortage of opportunities to do so.”
A staggering 87% of municipalities failed to achieve a clean audit, resulting in a financial loss of R14 billion. Yet, no official has been held accountable.
It is hoped that the AG will now begin issuing these certificates and expedite those that are already in the pipeline. When government officials squander public funds, as we have seen in the past, we expect the AG to act swiftly and decisively.
The AG should not hesitate, and we expect the new Government of National Unity to enforce this power without delay.
* Michael Bagraim.
** The views expressed here are not necessarily those of Independent Media.
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