A deepening crisis at South Africa’s biggest money manager the Public Investment Corporation is threatening to cast a pall over the economy and throw into doubt potential deals, including the bailout of one of the nation’s largest clothing retailers.
Nine PIC directors quit on Friday, saying the institution overseeing the pension funds of most South African civil servants has entered a “state of paralysis” following misconduct claims against some board members. Those included questionable investments in the bonds of cash-strapped state power producer Eskom and the purchase of shares in an overvalued and a little-known technology company.
The state-owned money manager with more than R2trn in assets is typically front and center of major domestic investments in South Africa, including rescue talks to help debt-laden retailer Edcon stay afloat in a depressed consumer environment and stagnant economy. Finance Minister Tito Mboweni has started the process to appoint a new board, a spokesman said on Monday. The outgoing directors have said they will stay on until new ones have been appointed.
Political Interference
The PIC’s chairman has historically been the country’s deputy finance minister, in this case Mondli Gungubele, one of those who resigned on Friday. That’s raised the question of how much political influence affects decisions, such as to invest in Eskom, which has long been a financial headache for the National Treasury.
A former PIC board member last week told a commission of inquiry that the money manager would be better off without ministers on the board, while a representative of a local pensioners group said the PIC has “no mandate to invest in politically driven investments that yield no returns.”
Fears that South African lawmakers have had too much influence have reared their head in the past, notably when PIC bought a state-owned stake in wireless carrier Vodacom at a discount, so the government could fund Eskom. But not all the fund manager’s controversies have been overtly political.
Former Chief Executive Officer Dan Matjila allegedly used his position at PIC to support a business owned by a romantic partner, an accusation he’s denied.
Criminal Activity

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