Legal action to keep pension money away from Eskom
4 June 2020
Solidarity today instituted legal steps to stop the exchange of Eskom debt for Eskom shares. In a letter of demand addressed to the Government Employees Pension Fund (GEPF) and the Public Investment Corporation (PIC), Solidarity demanded that such plans by the PIC be scrapped. This came after the PIC indicated that it was considering the exchange of bonds held by the PIC on behalf of the GEPF, for shares in Eskom, thereby reducing Eskom’s debt burden.
Solidarity is strongly opposed to such a move or exchange of bonds for shares, specifically in Eskom, as we believe it will be a bad investment that will not benefit GEPF members and pensioners whose funds are invested by the PIC. Such action will merely be an exchange of income-bearing bonds for worthless shares that will not generate any income to the PIC/ GEPF for the next decade and longer. In practical terms, this simply means that approximately R200 billion of Eskom’s debt will be written off at the expense of public servants' retirement security.
“It is outrageous to think that the PIC will deal with its members’ pension money so irresponsibly,” said ZirkGous, organiser at Solidarity’s Public Sector. “GEPF members and pensioners will suffer economic harm because of this. They have worked hard for this nest-egg, which the PIC now handles so imprudently.”
In the letter of demand, Solidarity pointed out to the trustees their fiduciary duty, and also that individual trustees and board members will be held personally liable if they failed to fulfil their fiduciary duty. The mandate of the GEPF and the PIC is to act in the best interests of the members of the pension fund, and it would not be in the best interests of the GEPF members to exchange Eskom debt for shares that will not yield an income.
“Solidarity will not hesitate to institute further legal action against the GEPF and the PIC,” said Anton van der Bijl, head of Solidarity's Legal Services. “This would just be another way of using ordinary people’s retirement money without their permission to fund a struggling state enterprise. We will do everything in our power to stop this unscrupulous exploitation.”
Issued by Anton van der Bijl, Head: Labour Law Services, Solidarity, 4 June 2020
