Eskom pension fund grants its former CEO a R350m investment mandate

Following Business Maverick’s previous report on the transaction, and significant subsequent correspondence with related parties, the EPPF finally admitted via its public relations firm that it committed R350-million to Mpande Property Fund (with a Deed of Adherence being signed in September 2019). 

 “Details on this investment will be included in the FY2020 Annual Report, as the deed of adherence was signed after the 2019 financial year-end,” the EPPF says. 

They say they “do not preclude anyone from transacting with the fund – so long as the investment or transaction makes economic sense…

“All investments, including the Mpande investment, are subjected to the fund’s rigorous assessment processes to ensure that they meet our investment criteria. However, in the case of Mpande, the fund took additional steps to ensure probity and impartiality in its assessment of the investment opportunity.

“To protect the interest of the Fund and remove any bias, perceived or real, the Fund employed the services of independent specialists to review the investment before a decision was taken to invest.”

They also say that “the Mpande investment is not a related-party transaction because the transaction was initiated and completed long after the applicable cooling-off period; the EPPF and Luthuli have no other business or personal relationship; the EPPF had no pre-existing interest in the management company (Manco) of the Mpande Property Fund.”

Whether the deal makes economic sense will have to be seen. The fund is not prepared to reveal who the independent specialists were, or divulge the transaction’s details submitted to the investment sub-committee of the board of trustees that signed off on the matter, due to “confidentiality considerations”.

Despite the claims of the fund, simply stating that the deal with Mpande Property Fund is not a related-party transaction is a question of debate. The lack of divulgence of supplementary information or subsequent disclosure at the conclusion of the transaction does suggest the fund was aware, at the very least, that the assignment of the mandate would be controversial. 

The King IV report on corporate governance states that, “Independence generally means the exercise of objective, unfettered judgment. When used as the measure by which to judge the appearance of independence, or to categorise a non-executive member of the governing body or its committees as independent, it means the absence of interest, position, association or relationship which, when judged from the perspective of a reasonable and informed third party, is likely to influence unduly or cause bias in decision-making.”

The EPPF states in its 2019 Integrated Report it is “fully compliant” with the King IV code.

Although King IV discourages, even rejects, a tick-box approach for the assessment of independence, it does provide a list of factors/criteria which may be considered during an independence inquiry, including whether a particular director may be independent. One of these is whether the person has been in the employ of the organisation as an executive manager during the preceding three financial years or is a related party to such executive manager.

Business Maverick has it on good authority, from insider accounts and proven paperwork, that the conflict of interest policy was amended before September last year (prior to the current CEO Linda Mateza taking up her post) to allow for the transaction with Luthulli to fall within the fund’s regulations. The fund denies this is so.