Africa’s Biggest Fund Manager Given More Board Independence
Africa’s Biggest Fund Manager Given More Board Independence
(Bloomberg) -- South African Finance Minister Tito Mboweni increased the independence of the continent’s biggest fund manager by ending the tradition of appointing his deputy to chair the custodian of government-worker pensions.
The chairman of the Public Investment Corp. will instead be chosen from members of a 14-strong interim board announced by the finance ministry on Wednesday, which includes union representatives for the first time. The makeup of the board is a temporary arrangement lasting from Friday through July of next year. A judicial commission of inquiry into allegations of PIC wrongdoing is set to present findings this month.
The new board has its work cut out. The Pretoria-based manager of more than 2 trillion rand ($142 billion) is running several internal probes on key employees and has its third chief executive officer in seven months. That’s on top of the ongoing inquiry, which is this week hearing from Daniel Matjila, the ex-CEO accused by several witnesses of approving questionable deals. He denies the allegations.
The previous set of board members offered to resign in early February, saying the PIC had entered a “state of paralysis” following misconduct claims against some directors. They offered to stay on until a new board was appointed.
New directors include Ivan Fredericks, general manager of labor group the Public Servants Association of South Africa. Bloomberg News reported in May that the new board would have an independent chairman and union representation. Another prominent new board member is Maria Ramos, a former director general of the National Treasury and CEO of lender Absa Group Ltd. until earlier this year.
This allows “labor to be the vanguard of public servants’ pension money and how it is invested,” the 240,000-strong Public Servants Association said in a statement welcoming the appointments. “The real work to restore faith in the PIC and its functioning begins now.”
The break from the practice of appointing the deputy finance minister as the PIC chairman is probably an attempt to reduce opportunities for corruption, according to Ralph Mathekga, an analyst and author of books on South African politics.
“When you impose a chairperson of the board it disrupts the normal chain of accountability,” Mathekga said by phone on Wednesday. “Empowering the board to choose its own chairperson is more to indicate to them that they will be in the hot seat if things go wrong.”
At about the time the previous board resigned, the PIC started a forensic investigation into allegations of wrongdoing made by an anonymous whistle-blower against three directors. In the past year, half of the PIC’s executive committee have been suspended or resigned.
In January, a former board member told the commission of inquiry that the money manager would be better off without the deputy finance minister in the role because it inadvertently leads to the perception of political interference.
The following month a senior official of the Congress of South African Trade Unions emailed the PIC Chairman Mondli Gungubele, who was then deputy finance minister, and said if the PIC didn’t lead the rescue of a retailer it would be difficult for its members to vote for the ruling party in May elections.
--With assistance from Amogelang Mbatha.
To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Antony Sguazzin, John Bowker
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