Over the last month the Government Employees Pension Fund (GEPF) and its fund manager the Public Investment Corporation (PIC) have been the centre of what appears to be a disinformation campaign.
This has been fueled by social media posts claiming that there is an alleged multi-billion-rand legal claim against the portfolio assets of the GEPF, managed by the PIC. Social media posts claim that the GEPF is insolvent and will not be able to pay out pensions.
Fortunately, many South Africans are now becoming savvy to the disinformation pedaled on social media and hopefully members of the GEPF did not panic.
The background to this allegation was a document sent to Parliament and other regulatory bodies raising concerns about the exposure of the GEPF to an investment made by a subsidiary of Nedbank Limited, operating in the United Kingdom, which will give rise to a financial liability.
According to a statement issued by the PIC, both Nedbank Limited and Old Mutual (which was previously affiliated with Nedbank) have refuted these allegations.
As the PIC goes on to explain, the only way it is linked to this allegation is that the PIC and its client GEPF are investors in both Old Mutual and Nedbank.
As the largest pension fund in South Africa the GEPF makes up around 20% of the total shareholding on the JSE and is invested in most of South Africa’s largest companies.
“It is solely upon this fact that the PIC and the GEPF are connected to the allegations and the conclusions reached. Old Mutual and Nedbank are limited liability companies. Therefore, the PIC’s exposure, acting on behalf of the GEPF, to any claims against Old Mutual and Nedbank, assuming they are legitimate, is limited to their shareholding only. This is the case with all investments in companies with limited liability, globally.”
In other words, even if there is a problem with one of Nedbank’s subsidiaries, the exposure of the PIC would be very limited.
Given this context, the claims made in the document were nonsensical. It stated that GEPF could face a claim of £158 bn and as a result the state pension would cease to exist. The PIC responded by stating that “there is simply no factual or legal basis for these assertions.”
Most fund managers and pension fund managers in South Africa would most likely have investments in these two large companies and face similar claims. Yet none of them have been targeted in this disinformation campaign.
The complaint was sent to several regulatory and investigative bodies in South Africa, the UK and USA. According to the PIC press statement “none of the regulatory and investigative bodies have confirmed the veracity of these allegations. The FSCA, after soliciting and obtaining information regarding the complaint, decided to close the matter. This indicates that there is no merit to these allegations.”
While it is unclear what the motive was behind this disinformation campaign, the GEPF has asked that stakeholders refrain from spreading unsubstantiated allegations as these cause unnecessary panic amongst GEPF members.
This article first appeared in City Press.