The man looking after R2.6 trillion for South Africans

As the CEO of the PIC, Abel Sithole is responsible for R2.6 trillion in assets, which mismanagement, questionable investments, and state capture have previously threatened.

The Public Investment Corporation (PIC) is a South African state-owned asset management firm responsible for managing government employees’ pension funds and other social security assets.

As the largest asset management firm in Africa, the PIC has R2.6 trillion of assets under management. Its clients are mostly public sector entities. 

These include the Unemployment Insurance Fund (UIF), Compensation Commissioner Fund (CC), Compensation Commissioner Pension Fund (CP), and Associated Institutions Pension Fund (AIPF).

The PIC’s biggest client is the Government Employees Pension Fund (GEPF). This fund is a major investor in the JSE and Africa’s biggest pension fund.

Civil servant pensions represent almost 90% of the money the PIC manages.

The PIC is South Africa’s largest investor, managing a diversified portfolio across various asset classes, including listed equities, real estate, capital markets, private equity, and impact investing. 

“Through listed investments, the PIC controls over 10% of the Johannesburg Stock Exchange (JSE) and has direct and indirect exposure to almost all sectors of the South African economy,” the PIC explained. 

Its substantial assets give the PIC significant influence over the country’s financial markets.

The PIC has faced several allegations and controversies, particularly regarding its involvement in state capture and questionable investments. 

Over the course of 2017 and 2018, numerous media reports alleged that significant irregularities occurred at the PIC.

In 2018, President Cyril Ramaphosa appointed the commission, led by Justice Lex Mpati, to investigate allegations of irregularities in investments by the PIC.

“The Mpati Commission’s terms of reference involved looking into the veracity of the media reports to determine whether there was any impropriety regarding investment decisions or governance within the organisation.”

This is according to a special report released by the South African Institute of International Affairs (SAIIA) in April. 

Some of the organisation’s contentious investments include AYO Technology Solutions, Steinhoff International Holdings, and Erin Energy.

“Secondly, the commission had to determine whether a PIC director or employee had used his/her position, privileges or confidential information to improperly benefit another person.”

“Finally, it had to investigate whether there was a failure to comply with any legislation or PIC policies concerning the reporting of corruption or protection of whistle-blowers.”

The commission revealed “corporate governance lapses” in the PIC, which have led to a number of investments or transactions being funded without following due processes.

SAIIA said these findings “demonstrated not only a severe lack of ethics and compliance with laws and regulations but also a wanton disregard for the best interests of the PIC and its clients.”

Abel Sithole steps in

In light of the commission’s findings, Sithole was appointed as CEO of the PIC on 1 August 2020, replacing Dan Matjila, who was accused of “gross negligence” in the Mpati report.

Considering the PIC’s tainted past, the organisation needed a person of impeccable integrity. Sithole was the man for the job.

Before this appointment, Sithole was the Principal Executive Officer of the GEPF, where he worked closely with the PIC, especially after controversial investments damaged the asset manager’s credibility.

Sithole even testified at the Mpati commission, stating that the GEPF was unaware of the AYO investment beforehand.

Known for his resistance to political pressure, Sithole said in 2019, amid revelations of the PIC’s wasteful spending on politically linked investments, that the GEPF was not obligated to allocate its money to the PIC.

The PIC board selected someone who could steer the ship in the right direction while managing the different interests. Sithole was a solid choice, PIC board chair Reuel Khoza said.

Sithole has an extensive background in financial services and academia. He graduated with a BA in Mathematics and English from Lawrence University in Wisconsin, where he was a member of its American football team.

He earned a higher education certificate and a high-school teaching license in the US but quickly transitioned to the financial sector.

When he came to South Africa, he worked at Southern Life in Johannesburg. He became a chartered financial planner and later completed an MBA at Wits, after which he held various positions in the pension and asset management industry.

He served as chief executive of Eskom’s pension and provident fund but left his position in 2001 during the fund’s restructuring.

“Sources close to the matter believed that Sithole was pushed out because of his sympathetic attitude towards trade unions,” Business Report noted at the time.

Afterwards, Sithole moved to Metropolitan Life, where he stayed for seven years in various positions, working in asset management and employee benefits.

After his time at Metropolitan, he went into academia, joining the Institute for Futures Research at the University of Stellenbosch Business School as deputy director.

In an interview with Bruce Whitfield on The Money Show, Sithole said that this move was due to his “strong interest in the future”, particularly how to prepare for it financially, through savings.

Sithole has also held a number of other executive roles. During his time as GEPF’s Executive Officer, Sithole was also the Commissioner of the Financial Sector Conduct Authority (FSCA).

He also served two terms as chairperson of the Institute of Retirement Funds (IRF) and was on the boards of the Financial Planning Institute (FPI), and the Savings Institute of South Africa (SISA), and chaired the Financial Services Board.

Morne Mostert, director of the institute, worked with Sithole and believes he is an excellent choice as PIC head. “He is calm and thoughtful, which will be enormously valuable in making complex decisions.”

Mostert noted that Sithole isn’t interested in the spotlight, but rather in the quality of his work, saying that he will also bring significant intellectual gravitas and professional integrity to the role.

“He is not easily swayed by a single political view, and able to see multiple perspectives.”