E-tolling: govt pension link confirmed
If the Gauteng e-toll project fails, government will have to bail-out the SA National Roads Agency (Sanral), as well as the civil servants' pension funds. The scheme is a “cover-up” that is reminiscent of the Apartheid era, says the Inkatha Freedom Party (IFP).
The Government Employees Pension Fund (GEPF) has confirmed that, as at the end of February 2012, it holds roughly 50% of Sanral bonds, valued at about R15.7 billion.
“Our investment in conventional and inflation-linked bonds, issued by government and state-owned entities (including Sanral) is informed by our investment policy, which takes into account our long-term liabilities as a pension fund. Importantly, the crafting of our investment policy is done in consultation with the minister of finance, who acts as a guarantor of the fund on behalf of government,” says Arthur Moloto, chairperson of the board of trustees.
He adds that it is in this context that the GEPF takes a dim view of any statements that attempt to insinuate a “cover up”.
“We are steadfast in our view that investment in economic infrastructure, including the country's road network, is critical to the growth of the South African economy, and infrastructural investments remain an attractive asset class with potential for excellent returns in our overall portfolio. We believe these investments are in the best interest of our members (1.2 million public servants and 345 000 pensioners) and the broader South African public in the long term.”
[EMBEDDED]However, the IFP says the investment by the Public Investment Corporation, whose biggest client is the GEPF, of R17 billion in Sanral bonds - 89% of which is made up of the GEPF money ‑ is the real reason behind government's push to ensure the controversial Gauteng e-tolling project succeeds.
Describing the investment as “pre-1994 tactics”, IFP's spokesperson on finance and on the e-tolling project, Narend Singh, says it is finally clear why government wants to save this project at all cost, despite it being unfeasible and despite it receiving so much public resistance.
"Never could one have imagined such a huge cover-up in our post-democratic dispensation. It is now clear that there are huge economic issues at stake. If the tolling project fails, government will not only have to bail-out Sanral, but it will also have to bail-out the civil servants' pension funds as well.
“This matrix that we find ourselves in now is totally untenable, especially since the pensions of ordinary citizens are at stake.”
Singh says information of this nature should have been made available to the standing committee on appropriations during the briefing on the additional R5.7 billion for the Gauteng freeway project, and to Parliament during the debate on this Bill.
The Department of Transport has declined to comment, as it says this is a National Treasury matter.
“The trustees of the fund have every right to invest where they see value, but they shouldn't be putting all their eggs in one basket,” says Democratic Alliance Gauteng transport spokesperson, Neil Campbell.
He explains that the total of R17 billion is a huge investment that should have been split over several entities. “The trustees should be questioned and asked to account for this. It is of concern.”
Justice Project SA national chairperson Howard Dembovsky says this investment explains the urgency that government has put into making sure e-tolling goes ahead.
“It would have been easier to scrap the project if it didn't have its own employees' money tied up in it. This R17 billion smacks of insider trading. If this had happened with a private company they would have been nailed. Instead, we have government throwing out its toys to make sure the project goes ahead.”
Head of communications at the GEPF, Khaya Buthelezi, says it is not entirely true that if e-tolling gets scrapped government will have to bail out the civil servants' pension fund.
“The matter from our side as an investor is very simple. When we purchase bonds in the capital market they are guaranteed. In this case, they are guaranteed by government irrespective of the e-tolls. We did not invest in the Gauteng e-tolls. We invested in Sanral.”
He further explains that the reason for the large investment in one entity is that up until last year the GEPF wasn't allowed to invest offshore.