It doesn’t really get more sinister than secret negotiations between the elites of Corporate South Africa and the ruling African National Congress on how the money of ordinary South Africans can be handed over to government. Yet, here we are.
The last few months have seen significant discussion around the issue of asset prescription – compelling financial institutions to invest the savings and pensions of ordinary South Africans in projects and failing enterprises run by a government that has tapped South Africa’s fiscal reservoir dry. The cause of these discussions shouldn’t be in dispute: IRR campaigning to warn South Africans against this and engage with banks, asset managers and other financial institutions has grabbed the public’s attention and mobilised South Africans against the de facto expropriation of savings and pensions.
Recently, the IRR came into conflict with Magda Wierzycka, CEO of Sygnia Asset Management, who accused us of blackmail for asking her company to make clear its position on the matter of handing over control of the savings and pensions of clients to government. Shortly afterwards, the IRR was criticised by Leon Campher, CEO of the Association for Savings and Investment South Africa (ASISA), who accused us of stirring up panic through our warnings against allowing the government to use private assets to make up for squandered resources.
The irrational and borderline hysterical reactions from the financial industry, both in public and in private, indicated that, to put it simply, something was up. Then, nearly a week ago, an explanation for Corporate South Africa’s unease over our questions came to the fore: Dr Kgosientsho Ramokgopa, head of the Investment and Infrastructure Office in the Presidency, let slip that several private financial and banking entities had been in negotiations with the government for months on how to make their clients’ money available to government to fund expenditure.
Negotiations
On hearing of these negotiations, the IRR sent several letters to prominent corporate entities responsible for managing the savings of countless South Africans, to ask if they were in any way involved in these negotiations.
We asked the financial institutions:
- Have you been party to negotiations with the government or any government representatives relating to making funds available, in the form of pensions or savings, to the government for any form of government or government-run projects?
- Have you knowingly been represented in such negotiations?
- Were your clients informed of your participation in any such negotiations?
- What steps are you taking to safeguard the pensions and savings of clients against the risks of such assets being used for funding government or government-run projects?
- In light of vast government corruption, the lack of progress in prosecuting people implicated in state capture, and the reality that much of the structure of state capture remains in place, how do you address the concern that assets or resources made available to the government risk being used to fund corrupt political patronage networks as part of a ‘second wave’ of state capture?
- Should the pensions and savings of your clients be made available to government or any government entity, what considerations have been given to liability in terms of the consequences of unsound investment decisions?
Terse reply
Among the recipients was Standard Bank, which this week responded with the following terse reply:
I refer to the above letter.
We have considered your request and will not be providing comments.
Kind regards,
Lungisa Fuzile
CEO, Standard Bank of South Africa
As someone who has engaged and corresponded with many corporate entities, I must admit that this is one of the most astonishing responses I’ve seen. Fair questions asked about a matter of immense importance to all South Africans, a matter that cuts to the trust clients have in those they’ve entrusted with their savings and pensions – and the best Standard Bank could do was decline to comment. Extraordinary. On the security of the savings and pensions of their clients, Standard Bank simply won’t play open cards.
The reality is that prescribed assets – forcing South Africans to hand over control of their money to government – will inevitably usher in a second wave of state capture. This second wave of state capture, like the first, will have as its objective the corrupt fuelling of the ANC’s vast patronage network – the only true force keeping the party together, a vital tool in enabling the ANC to cling to power.
Prescribed assets, therefore, is a policy that will risk prolonging the tenure of a deeply corrupt government.
No excuse
Corporate entities and leaders like Standard Bank will have no excuse when, in years to come, the savings and pensions have run out – just as taxes have run out now. They will not be able to feign ignorance or outrage. Corporates and their leaders and decision-makers must be held accountable, given South Africa’s experience of such tainted entities as KPMG and the disgusting spectacle of VBS pensioners losing what little they had.
How can South Africans trust these corporate entities when, for months, they and their representatives appeared to tell bare-faced lies to the South African people in response to IRR questions, investigations, and warnings? For months they repeated the lame platitude that the handing over of control of savings and pensions wasn’t ‘on the table’. Yet, now it seems that they placed this disastrous policy – once used by none other than P. W. Botha – on the table themselves.
The assets, savings and pensions managed by these corporate entities are neither theirs to give away nor the government’s to claim. Handing over control of the savings and pensions of clients to government is nothing short of expropriation without compensation. Which investors or asset managers worth their salt even entertain the notion that a pension invested in Eskom might deliver positive returns? On the line is not the assets of Standard Bank or other corporates negotiating secretly with government, but the assets of clients, of ordinary South Africans who simply played by the rules.
‘State capture’
Earlier this year, I wrote in the Daily Friend: ‘State capture has only ever been the symptom of a deeply corrupt system based on the ideological funnelling of massive state expenditure into the patronage network of the ANC. The ideology that government must be the biggest spender inevitably gave way to government becoming the biggest looter. To her credit, Ms Wierzycka was a vocal critic of government failings when President Jacob Zuma occupied the Union Buildings.
‘Yet, in a decade of steadily mounting government expenditure, corporate South Africa has remained silent on one bad policy after another. This silence bordered, in some cases, on indulgence and appeasement. One way or another, South Africa has landed itself in a place where it seems that both government and corporate South Africa have failed – one to implement constructive policies, the other to call out policies that have wreaked immense damage on the economy, to the detriment of ordinary South Africans who work hard to earn an income, and play by the rules to provide for their retirement. These collective failures of policy and responsible corporate citizenship demand the highest levels of scrutiny. This is the foundational motivation of the IRR’s campaign to #SaveSavings and #ProtectPensions, based on the mandate of thousands of members who are clients of corporate SA, the tenets of constitutional democracy, and the ethical and even legal responsibility of transparent corporate governance.’
The time really has come for South Africans, the clients of these corporate entities, to realise the risk they are being placed in by those they have entrusted with their assets. The IRR has been fighting against this disastrous form of expropriation without compensation for three years and will continue fighting. But ordinary South Africans must now help us take the fight to those who would negotiate away lifesavings to a corrupt government, behind closed doors.
Demand answers
The first step in the battle of ideas is simply to demand answers from those who should give them. This is something we at the IRR understand very well. After all, as Helen Suzman, who started her career at the IRR, famously said: ‘It is not my questions that embarrass South Africa; it is your answers.’
Well, in the case of Standard Bank’s response on whether it will serve its clients or the ANC, it’s rather the lack of answers that is now the problem. If you want to demand answers from your bank or asset manager, click here: https://irr.org.za/campaigns/pensions.
If you like what you have just read, support the Daily Friend