PIC spends half a billion in land in North West

Image via: Democratic Alliance

‘PIC must come clean on dodgy half-a-billion land purchase,’ says DA

The DA has asked Minister of Finance Tito Mboweni, to probe and provide clarity on the PIC’s dodgy purchase.

PIC spends half a billion in land in North West

Image via: Democratic Alliance

The Democratic Alliance (DA) is on hot on the heels of the Public Investment Corporation (PIC) after it allegedly spent half-a-billion rand on a land purchase, on behalf of the Government Employees Pension Fund (GEPF).

The DA later submitted parliamentary questions to Minister of Finance Tito Mboweni, asking him to probe and provide clarity on the out-of-sorts purchase.  

DA shadow minister of finance Geordin Hill-Lewis said that documents obtained indicate that the PIC allegedly invested R586.5 million on a piece of empty farmland between Klerksdorp and Stilfontein in the North West, which it hopes to turn into a mixed-use residential area.

PIC transaction raises questions 

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,” said Hill-Lewis. 

The DA also pointed out that 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,” he added. 

The blue party also questioned the involvement of a military veterans association. 

PIC refuses to reveal details of the valuation 

The PIC argued that the price they paid for the land was fair, with an independent valuation conducted as part of its due diligence protocol, however 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,” added Hill-Lewis. 

According to Business Insider, the PIC appears to have paid 15% more than the value, the seller, Isago@N12, placed on it. The Municipal Councillors Pension Fund (MCPF), on the other hand, does not believe it got a good deal from Isago.

In mid-2015 the MCPF “bought” 11 stands from Isago in the same Klerksdorp extension where the PIC plans to build homes and offices, for around R140 million. Those pieces of land were never actually transferred to the fund. The MCPF was eventually refunded the full amount — apparently using money from the PIC purchase — after it was placed under administration. 

Ramaphosa pension saga 

There is an almighty war brewing between the PIC and several structures of government after the ANC confirmed that they were considering taking money from the pensions of government employees to save Eskom.

Hill-Lewis called the actions of the government – and particularly, Cyril Ramaphosa – “shameful”, accusing him of bullying the PIC into accepting this contentious pension proposal. According to the DA representative, the president’s office has become “defunct”:

“It would be shameful for the President to offer any support to a plan to use pensioners’ money to pay for the ANC’s mismanagement of Eskom. The PIC says no one – neither Cosatu, the President nor Pravin Gordhan – has spoken to them about this plan. Cosatu’s claim that there is a consensus in support of the plan is a lie.”

“That Ramaphosa is taking the lead from Cosatu, instead of driving the real reforms necessary to save Eskom and solve the power crisis, shows how defunct his Presidency has become… Cyril has decided to raid the pensions of hardworking South Africans to pour into the Eskom black hole with no hope of a return.”

The PIC is yet to formally reject the plan, despite their protestations about being kept in the dark. With a bailout figure of R250 billion proposed, it could ruin the lives of thousands of families.