PIC must come clean on dodgy half a billion land purchase

7 February 2020

Earlier this week, the Democratic Alliance (DA) submitted Parliamentary questions to the Minister of Finance, Tito Mboweni, asking him to probe and give clarity on a half a billion rand land purchase made by the Public Investment Corporation (PIC) on behalf of the Government Employees Pension Fund (GEPF). Documents since obtained indicate that the PIC appears to have invested R586.5 million on a piece of empty farmland (see photo from our visit here) between Klerksdorp and Stilfontein in the North-West province, which it hopes to turn into a mixed-use residential area.

The transaction raises a number of questions, first of which is how the obvious grossly inflated purchase price that the PIC paid for the land was determined. It is difficult to imagine how the valuation could be justified, even if future development is possible, which there is doubt about.

Second, the two investment companies involved in this transaction each have a single director, with both individuals seemingly being the immediate beneficiaries. How were these beneficiaries selected? They have gained value that sharply exceeds the purchase price paid by the pension fund, with both companies, Anglo Saxon Developments and Moedi Bosele Investors, jointly claiming R837 million in value.

Third, what is the basis for the involvement of a military veterans association?

The PIC has argued that the price they paid for the land was fair, with an independent valuation conducted as part of its due diligence protocol. But when asked for the identity of the valuer, and the details of the valuation, the PIC would provide no further detail. This appears to be a suspicious deal by the PIC, and their silence on key questions only raises more suspicion.

The DA will now write to the acting PIC CEO, Vuyani Hako, to request details of the transaction, the basis for the valuation, and the basis for the selection of the beneficiaries.

At a time when the PIC is at the centre of government plans to use pension funds to bailout government corruption, poor investment decisions by the PIC brings into question the asset managers ability to act in the best interests of government employees and pensioners.

Issued by Geordin Hill Lewis, DA Shadow Minister of Finance, 7 February 2020