State pension fund hit by R7.4bn in write-offs

04 December 2018 - 10:21 By Linda Ensor
Renosi Mokate, chair of the GEPF board of trustees.
Renosi Mokate, chair of the GEPF board of trustees.

The pension fund responsible for managing the savings of government employees has written off two of its most controversial investments at a cost of R5.3bn.

The Government Employees Pension Fund’s (GEPF) R4.3bn investment in Steinhoff’s empowerment shareholder, Lancaster, which is partially owned by Pepkor Holdings chair Jayendra Naidoo, was rendered worthless after the 2017 accounting scandal wiped off about R200bn of the furniture retailer’s value.

The GEPF also wrote off about R1bn of loans and investments in companies controlled by Iqbal Surve, the owner of Independent Media, the publisher of The Star newspaper.

The fund, which has assets of about R1.8-trillion, had R7.4bn in impairments for the 2017/18 financial year, compared with R995m the previous year, according to its annual report tabled in parliament on Monday.

Lancaster 101 became Steinhoff’s strategic black empowerment partner after the Public Investment Corporation (PIC) loaned R9.35bn to Lancaster in 2016 to acquire Steinhoff shares in a bid to drive transformation within the international retailing group.

Naidoo, a former trade unionist, resigned as a member of Steinhoff’s supervisory board in January.

He shot to prominence as chief negotiator for the notorious arms deal of the late 1990s, which was plagued by corruption allegations, though he was not personally implicated.

Attempts to contact Naidoo for comment on the impairment were unsuccessful.

The GEPF, through the PIC, owned about R28bn of Steinhoff at the end of March 2017, equivalent to about 10% of the company and 1% of the fund’s assets.

The annual report also revealed that the pension fund had written off a total of R1.06bn in loans and investments in Surve’s company Sekunjalo and in Independent News and Media SA due to their failure to honour their payment obligations.