Gigaba denies reported plan to ‘raid’ PIC for R100 billion

A Bloomberg News report that South Africa’s National Treasury is seeking as much as 100 billion rand ($7.5 billion) from the government workers’ pension fund to finance struggling state companies is untrue, Finance Minister Malusi Gigaba said.

The Public Investment Corp., which manages the fund and has about 1.86 trillion rand in assets, has been asked by the Treasury to buy its entire 12 billion-rand stake in Telkom SA SOC Ltd. to pay for a bailout of South African Airways, two people with direct knowledge of the situation told Bloomberg News last week. They asked not to be identified because the talks are private.

PIC Chief Executive Officer Daniel Matjila has rejected the request, saying a purchase of the 39 percent shareholding would leave the company overexposed to the landline provider, they said.

“The minister finds these reports malicious and unconstructive,” the National Treasury said in an emailed statement Monday. “No formal or informal request has been sent to the PIC for such funds.”

Gigaba has called an urgent meeting with the PIC board “to deal with this matter and other pressing issues,” the Treasury said.

State Companies

After a bailout for SAA, which is technically insolvent, the government needs cash for state power utility Eskom Holdings SOC Ltd., oil company PetroSA and defense firm Denel SOC Ltd., according to the people. The companies have been beset by allegations of mismanagement and corruption and the running of state firms was cited by rating agencies when they cut South Africa to junk in April.

Matjila’s refusal to authorize certain transactions because they don’t meet investment criteria has upset “politically connected people,” and when they try to use political pressure, “it doesn’t work,” the Johannesburg-based Sunday Times newspaper cited him as saying.

“I’ve got the keys — they’re looking for the keys to the big safe,” Matjila told the Sunday Times. “If we buy Telkom, we’ll be buying an asset that we believe in. If we were told to put money into an SAA type of asset, we would not do that. Unfortunately SAA does not meet the criteria set by our clients. So we will not be able to invest.”

This also applied to Eskom Holdings SOC Ltd., the state-owned power utility, he told the newspaper.

In August, Gigaba told executives of the Congress of South African Trade Unions, the largest labor federation, that he can’t guarantee the government won’t attempt to make use of funds held by the PIC to recapitalize struggling state-owned companies and fund other projects, Business Day newspaper reported, without saying how it obtained the information.


Read: Treasury seeking R100 billion from PIC for state firms – report

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Gigaba denies reported plan to ‘raid’ PIC for R100 billion