What you need to know about the scandal-plagued PIC

The Public Investment Corporation (PIC) has been in the spotlight as a commission inquiry investigates allegations of impropriety at the state-owned firm.

Last week saw the en masse resignation of the PIC board after members were implicated at the ongoing inquiry.

Read: PIC board will continue to serve until replacements kick in - Xolani Mkhwanazi

But what exactly is the PIC and why are these findings important?

The PIC is a public asset management firm that's entirely owned by the South African government.

The Finance Minister, currently Tito Mboweni, is the sole shareholder representative of the government.

The PIC manages public sector funds, most significantly the Government Employees Pension Fund (GEPF) and the Unemployment Insurance Fund (UIF).

Also read: Mondli Gungubele explains why he quit the PIC board

The Business Day's Carol Paton explains that the PIC invests in a variety of areas, including shares on the Johannesburg Stock Exchange (JSE), government bonds, private equity and developmental BEE deals.

The PIC was set up by the government to look after the large amounts of money that it collects. The PIC behaves like an asset manager and invests this money on behalf of the government.

Carol Paton, Deputy editor - Business Day

The PIC has nearly R2 trillion of civil servants’ pensions under its custody and is Africa’s biggest pension fund.

It's the biggest investor on the JSE and its the biggest investor in the economy.

Carol Paton, Deputy editor - Business Day

If the PIC fails to effectively manage pension funds, it is taxpayers who have to cover the shortfalls, Paton says.

Read more: Former PIC boss had corruption case opened against him, inquiry hears

The PIC can also influence the share price and its sheer size makes it vulnerable to corruption.

When you have such an enormous pot of money, you often get corruption.

Carol Paton, Deputy editor - Business Day

Minister Mboweni is expected to appoint a new PIC board by next week and Paton says unilateral decision-making power has been questioned.

Meanwhile, many exclusive changes are being proposed in the PIC amendment bill which is still before Parliament.

Listen to the informative discussion on the mechanics of the PIC:


This article first appeared on CapeTalk : What you need to know about the scandal-plagued PIC


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