Cadre-driven economy and the Civil Service Pension Fund


By Fanie Cronje

A good indication of how the cadre system works in the economy is found in the (entire) AmaBhungane and the Moti group’s court case. The recent court ruling also raises serious questions about the suitability of Dondo Mogojane, the chief executive officer of the Moti Group, to act as chairman of the Board of Trustees of the Public Service Pension Fund.

The manner in which he handles the court case raises doubts as to whether he is suitable to carry out the policy of transparency of the pension fund, which is precisely being questioned. As chairman of the pension fund, he is also jointly responsible for the investment by and recommendations to the public investment corporation for the investments of the public service pension fund.

The court case

On 1 July 2023, in an urgent court application, the Moti group obtained an injunction to prohibit the investigative journalist group, AmaBhungane, from publishing information derived from Moti documents. The application was handled in such a way that AmaBhungane was not aware of it and therefore could not oppose it.

On 27 June 2023, at the request of AmaBhungane, the previous order was set aside. In its verdict, the court was vitriolic about the events which it described as a shocking abuse of the court procedure. The audi alterem partemrule, freedom of the press and the protection of whistleblowers were also discussed.

It must also be remembered that Dodo Mogajane was at all relevant times the chief executive officer of the Moti group. He is certainly entitled to his private life, but members of the Public Service Pension Fund are certainly also entitled to expect the chairman of their pension fund to act in such a way that his suitability and desirability to lead them, and especially to to act as the custodian of their pension fund, cannot be questioned.

The Civil Service Pension Fund

What’s also troubling is that the whole affair is about secrecy. The Public Service Pension Fund is not exactly known for its openness. It is also well known for its masterful dodging of questions. To name just two examples:

  1. From the minutes of the parliamentary Standing Committee on Finance on 20 February 2020, it appears that 74 questions from members of the committee were not answered.
  2. The Mpati committee which investigated irregularities in the investment of funds from the pension fund by the Public Investment Corporation, the report released three years ago in March 2020 contains 377 recommendations for implementation by both bodies. Both regularly report that an unknown number of recommendations have been carried out. However, what was carried out and how it was carried out remains a secret and is accepted without complaint by standing committees. This defeats the whole purpose of the commission which has cost the taxpayer billions.

The question is, is he really suitable? There was indeed a very large amount already done in politically driven investments as clearly spelled out by AMAGP’s (Representative of the members of the public service pension fund) calculation is that there has already been more than R35 billion of Public Service pension funds lost through politically friendly investments. The question should also be asked whether it is currently desirable for him to act as chairman.

The further question, however, is what role do politicians play in the management of the pension fund’s financial affairs? Serious concerns were also expressed by the Mpati Commission and recommendations were made about political interference in the affairs of the Public Service Pension Fund.

The board of the pension fund consists of 16 members. Eight are appointed by the employer (the state). Six are appointed by trade unions. Cosatu, which is part of the tripartite alliance that governs the country, each of its subsidiaries also appoints a trustee. This means that the trustees appointed by the government and its trade union representatives form a majority.

Of course, all are cadres who will see to it that “their master’s” interests are promoted. This is clearly visible right now. At the Public Investment Corporation, things are even worse. The entire council is appointed by the minister of finance and according to the PIC Act the deputy minister of finance is the chairman. It is therefore no wonder that political considerations take priority in investments.

The purpose of the Public Service Pensions Act of 1996, that funds should be invested for the benefit of the fund, is completely ignored. Transformation and other political goals are instead pursued by the cadres to the detriment of the members of the pension fund.

Based on the above, the question about the suitability of Mogojane can be answered. His current actions regarding the court case make the answer no. At the very least, he should stand aside for the duration of the litigation.

Regarding the role of the politicians?

They should remove the laws that discriminate against the Civil Service Pension Act. The fund should instead be made a private organization with an elected board. Furthermore, it must be ensured that the government pays its years-old overdue contributions to the fund. Likewise, the oversight function of parliamentary committees, which currently has too many loopholes, must be restored – which allowed both the Public Service Pension Fund and the Public Investment Corporation to get away with the proverbial murder.

The reason: the two laws establishing the Public Service Pension Fund and the Public Service Pension Fund put the finance minister practically in total control of the Public Service Pension Funds.

The Pension Funds Act (PFA), which regulates private pension funds, contains a number of provisions that protect those funds from abuse, for example:

  1. Pension funds may not be invested “in the business of the employer” not.
  2. All investments must be invested in the best interests of the fund.

None of these protective provisions appear in the Government Employees Pension Law (GEPL) or the Public Investment Corporation Act (PICA). On the contrary, the GEPL gives the minister of finance the power to, together with the Public Service Pension Fund’s trustees, determine the investment policy – practically he prescribes it.

Thus, the chief executive officer of the Moti group has the “power of attorney” to invest the hard-earned money of the retired civil servants, practically at will. One hand washes the other – even if it’s the same person’s hands.

The cadre-driven economy

Now with regard to the cadre-driven economy, one can already see the consequences. The collapse of the infrastructure for water and as we all know also the power grid. Think also of the SAA, the post office, Denel and many more and one can clearly see the impact of the policy.

But it would appear that the ultimate goal, perhaps unconsciously and out of ignorance, is the total destruction of the economy. It is clear that the financial favoring of the cadres – that privileged few who, in their own opinion, waged the noble battle against apartheid – is now contrary to the aims of the Freedom Manifesto and to the detriment of the country and the economy. It is no longer possible for the ANC to change this, because its consequences, namely the criminal cartels, cannot be stopped by the ANC, precisely because of their involvement through the cadre system.

The actions of persons like Mogojane together with legislation intended to control the economy which is currently considered the private initiative economy are two sides of the same coin.

For example, if one looks at investments from the Public Service Pension Fund in a variety of companies, including the Ayo company, this has led to significant losses for the Public Service Pension Fund. (The Ayo company is owned by the Sekunjalo Investments group). The settlement reached with the Ayo company, in which R4.3 billion was invested and where only a fraction of the money “invested” in Ayo was recovered in terms of an out-of-court settlement, only ensured that the fund billions lost

So there is no doubt that getting rid of the economic system of cadre favoritism is quite possibly one of the most important steps and certainly the first step in addressing criminality in the country. (Yes it must be true if the ANC reacts with such outrage over similar statements by John Steenhuisen and the DA).

For example, it would appear as if infrastructure in the water pipeline is stolen and that the same groups then submit a tender to carry out the restoration – certainly a handy and “creative business model” to sustainably create one’s own business. At this stage it seems that everyone is playing along, politicians and civil servants, probably especially in the SAPS. And why wouldn’t they? So the beneficiaries then become more and more prosperous.

  • Fanie Cronje is an independent content creator and has already produced and presented two series entitled “Growing Federalism” and “Landbou Allegaartjie” which are available on AfriForumTV. He also hosts programs on Ramkatradio.