David Masondo’s return to finance ministry means a PIC board overhaul unlikely

The reappointment of David Masondo as the deputy finance minister will likely pave the way for him to continue serving as the Public Investment Corporation’s (PIC’s) board chair. 

The PIC is a state-owned asset management firm which, as of March 2023, managed investments worth R2.59-trillion on behalf of its clients — the biggest being the Government Employees’ Pension Fund.  

The PIC is the largest investor on the JSE and a big backer of the debt of state-owned enterprises such as Eskom and Transnet, with a view of generating financial returns to pay out, among other things, the pension savings of public servants and other benefits. 

Historically (since about 1994), it has been a tradition at the PIC to appoint the deputy finance minister as the board chair. However, the tradition is now built into law after Rampahosa signed the PIC Amendment Act in 2021, legalising the appointment of deputy finance ministers to be at the helm of the PIC’s governance affairs. This drew fierce criticism, with some arguing that it compromised the PIC’s independence and gave politicians too much power over the entity. 

A year before Ramaphosa signed the PIC Amendment Act, the Mpati Commission of Inquiry into allegations of impropriety at the PIC recommended that deputy finance ministers should no longer chair the board. 

The inquiry found that the appointment of politicians to the PIC board previously caused significant damage and leadership instability, given the many changes to ministers under the Jacob Zuma presidency.  

Having politicians at the PIC also risked interference with investment decisions.

Read more in Daily Maverick: Political interference fears: Deputy finance minister David Masondo takes over as chair of the PIC board

Masondo’s return to the PIC has not been formally announced by Finance Minister Enoch Godongwana and National Treasury, which oversees the corporation’s governance affairs including making board appointments with concurrence from the Cabinet. 

However, two individuals close to the PIC told Daily Maverick that Masondo will likely return to the PIC to finish his term. 

“We continue to work with him at a board level,” said a PIC board member. 

https://www.youtube.com/watch?v=q1wJ_YDIVRE

The term of the current PIC board, which Masondo has led since November 2021 along with 10 others, is expected to end in October 2024. Had Masondo not been reappointed by Rampahosa as the deputy finance minister, it would have led to a leadership shake-up at the PIC. This would likely have seen an interim board chair being appointed. 

In a recent interview with Daily Maverick, Masondo said his return to the PIC would depend on whether Ramaphosa planned to keep him as the second-in-command to Godongwana under a Government of National Unity. 

“The president has to constitute his national executive of government. The law is quite clear on who should chair the PIC; it says preferably the deputy minister of finance,” Masondo said on 25 June on the sidelines of a National Treasury and Presidency conference on economic structural reforms. 

Read more in Daily Maverick: Ex-deputy finance minister David Masondo optimistic on economic policy reforms under SA’s GNU

It’s unclear whether Masondo will be available to serve during the next term of the PIC board when the current term expires in October. Those close to Masondo expect him to continue for as long as he remains the deputy finance minister. DM