The South African Federation of Trade Unions is alarmed by reports that Treasury is pushing the Public Investment Corporation to come up with billions of rands to fund struggling state companies.
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88.2% of the R1.857 trillion which the PIC manages is in the Government Employees Pensions Fund that exists to ensure retired workers get a decent retirement income.
An additional 6.7% of the PIC's money is the Unemployment Insurance Fund (UIF), which provides short-term relief for retrenched workers.
"This means that 94.9% of the PIC's funds is workers' money that should be used in the workers' interests," says SAFTU's Patrick Craven.
"While the funds should be invested in socially desirable enterprises which benefit society as a whole, they must also be invested in a wide spread of companies which are most likely to be profitable and provide the best return to the PIC and ultimately to the workers".
"Yet now, if media reports are correct, the Treasury wants the PIC to buy the government's entire R12 billion stake in Telkom, 39% of its value, to pay for a bailout of the "technically insolvent", in other words bankrupt, South African Airways," says Craven.
SAFTU says it is further concerned about the PIC's Chairman, Sfiso Buthelezi, who is also deputy finance minister, and who has been accused of being a beneficiary of companies that illegally secured contracts worth at least R150 million from the Passenger Rail Agency of South Africa (Prasa) and some of its suppliers while he was its board chairperson.
"If the PIC keeps paying out GEPF funds to bail out loss-making SOEs, which cannot raise loans on the market because the government was down-graded by the ratings agencies, the GEPF itself will eventually become unsustainable," says Craven.
"If this happens, because the GEPF is a guaranteed benefit fund, which legally must pay out the guaranteed level of pensions and benefits, the government, which means the tax-payers, will then have to bail out the GEPF".
According to Craven SAFTU has rejected the call by FEDUSA that if its members' savings are used to bail out state entities, the workers' pension funds should be handed to privately owned money managers.
"This would put the management of workers' pensions into the hands of private companies motivated by the search for maximum profits, regardless of the ethics of the companies in which they bought stakes, with still no guarantee that they will make any better returns than the PIC and will be even less accountable to the public than the PIC," says Craven
SAFTU says it supports the call by its affiliate NUPSAW for the National Treasury not to use the PIC to re-finance bankrupt SOEs and not to squander workers' money in either public companies bankrupted by cronyism and corruption or private companies who use the workers' money to enrich themselves.
The federation is demanding an immediate moratorium on any further use of GEPF funds by the PIC until those guilty of corruption and mismanagement have been prosecuted and forced to repay the money they have stolen.
