Pensioners of the Government Employee Pension Fund are having a ‘Transnet moment’ and they must oppose it with all their might: Public Investment Corporation’s reckless idea to save Eskom by converting debt to equity

29 May 2020 

The proposal that the Public Investment Corporation (PIC) made to the government to convert Eskom bonds to equity is extremely reckless and could result in a storm of litigation. The PIC invested in these bonds on behalf of the Government Employee Pension Fund (GEPF).

The reckless manner in which the Transnet Pension Fund was managed in the past now seems to be looming for GEPF pensioners and it must be opposed at all costs.

It is clear that as investment manager the PIC is not acting in the best interest of the GEPF pensioners, but in the best interest of the ANC government that has for years been dealing recklessly with taxpayers' money by way of general mismanagement and corruption, but particularly with regard to Eskom itself.

The Chairperson of the PIC, Reuel Khoza, stated in an interview with eNCA on the 28th of May 2020, that the PIC could help Eskom get rid of at least R200 billion of its debt by converting all the Eskom bonds in which the PIC and GEPF invested to equity.

Converting these Eskom bonds to shares would be like giving the GEPF pensioners Zimbabwean dollars in exchange for their valuable assets. Eskom shares have no real market value.

In fact, what the PIC is planning to do now is exactly the same as what the trustees did with the Transnet Pension Fund when they and Transnet cooperated and one-sidedly cancelled valuable Transnet bonds, which was one of the main causes of the rapid impoverishment of the Transnet pensioners.

Thus, the FF Plus will send an official letter to the PIC and the board of trustees to caution them that they are playing with fire. If they proceed with their plan, they will walk in the footsteps of the Transnet Pension Fund and they will also come up against a wall of litigation instigated by GEPF pensioners.

The Transnet Pension Fund court case has already set a legal precedent that can be used to oppose this plan in court. On top of that, the trustees of the GEPF and the directors of the PIC could become personally liable for their reckless actions.

Furthermore, it appears as if the PIC held secret talks with Cosatu, which initially made the proposal to government. In his interview, Khoza stated that Cosatu did not formally submit such a proposal to the PIC.

It is, therefore, suspicious that the PIC suddenly decides of its own accord to submit Cosatu's proposal to government. The only explanation is that informal discussions were conducted in secret so that it does not appear as if the PIC is yielding to Cosatu and so that the decision can be presented as being completely autonomous and reasonable.

The FF Plus, however, believes that the truth will come out and that the GEPF pensioners will not be deceived like the Transnet pensioners were.

Issued by Anton Alberts, FF Plus national chairperson, 29 May 2020